CONTACT DETAILS
REGISTRY
Level 16, 61 Lavender Street
Milsons Point NSW 2061
AUSTRALIA
Telephone +61 2 9409 3670
Investor Services 1800 ARDENT
Fax +61 2 9409 3670
www.ardentleisure.com.au
c/- Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Locked Bag A14
Sydney South NSW 1235
Telephone 1300 720 560
registrars@linkmarketservices.com.au
Ardent Leisure Trust
ARSN 093 193 438
Ardent Leisure Limited
ABN 22 104 529 106
Ardent Leisure Management Limited
ABN 36 079 630 676
(AFS Licence No. 247010)
ASX RELEASE
24 September 2013
The Manager
Company Notices Section
ASX Limited
20 Bridge Street
SYDNEY
NSW 2000
Dear Sir/Madam
ANNUAL REPORT 2013
Please find attached the Ardent Leisure Group Annual Report 2013 for release to the market in
accordance with Listing Rule 4.7.
Yours faithfully
Alan Shedden
Company Secretary
Ardent Leisure Group is a specialist operator of leisure and entertainment assets across Australia, New Zealand and the United States. The
Group operates Dreamworld, WhiteWater World, SkyPoint, SkyPoint Climb, d’Albora Marinas, AMF and Kingpin bowling centres and Goodlife
fitness centres across Australia and New Zealand. The Group also operates the Main Event family entertainment centres in the United States.
For further information on the Group’s activities please visit our website at www.ardentleisure.com.au
AMF Bowling | d’Albora Marinas | Dreamworld | Goodlife Health Clubs | Kingpin Bowling
Main Event Entertainment | SkyPoint | SkyPoint Climb | WhiteWater World
For personal use only
Ardent Leisure Group Annual Report 2013
For personal use only Ardent Leisure Group is one of the region’s premier
diversified leisure and entertainment businesses
delivering outstanding guest experiences through
unique products, exceptional customer service and
value for money. Our international portfolio of assets
in Australia, the United States and New Zealand
provides investors with access to superior and stable
returns.
INDEX
01 MessAGe froM the chAirMAn
02 MessAGe froM the chief
executive officer
BoArD of Directors
04 Asset LocAtions
06
07 MAnAGeMent
08
10
20
136
137 10 YeAr DistriBution historY
138
139 corPorAte DirectorY
sustAinABiLitY
corPorAte GovernAnce stAteMent
finAnciAL rePort
investor AnALYsis
investor reLAtions
For personal use only
proportion of US dollar denominated
debt to reflect the strong growth
profile of our Main Event Entertainment
division. The Group gearing level at 30
June 2013 was 32.0%, well below the
banking covenant of 40%.
The Group has traded well through a
difficult economic period and has taken
the opportunity to invest in the training
and systems necessary to allow the
Group to capitalise on opportunities
created by improvements in economic
conditions in Australia and the US
Sunbelt region. The Group has over
7,200 employees and has implemented
a continuing program of professional
development, career progression and
leadership training.
Ardent Leisure is one of the largest
multi-faceted leisure retailers in
Australia and has built a sophisticated
information technology capability
to communicate directly with over
800,000 of our customers, through a
variety of social media channels. Unlike
many traditional retailers, the digital
age provides many opportunities for
us to cost effectively communicate
to existing customers and market to
new patrons. We are also seeing an
increased portion of our revenue being
generated through e-commerce and
further digital innovation will provide
exciting revenue growth opportunities
in future periods.
On behalf of all of the Board, I would like
to thank our customers, investors and
especially the team for their support
throughout the year.
Neil Balnaves AO
Chairman
Message from
the Chairman
Dear Investor
I am pleased to report to investors the
outcome of a busy year for the Group
with another set of strong results and
earnings growth. Positive earnings
growth from the Health Club, Main
Event and Theme Parks divisions helped
drive an increase in core earnings of
19.2% against prior year. Earnings from
the Marina division were marginally
improved, while the Bowling division
saw a fall in earnings as the restructure
of the business continues.
The Group has taken the opportunity
to expand our growth divisions and
further diversify earnings both by
division and geography. A successful
$50 million Institutional Placement at
$1.28 per security was announced to
the ASX in September 2012 and this
was followed by a Security Purchase
Plan that was oversubscribed, raising
approximately $22.2 million from
investors. This strong support from
both retail and institutional investors
helped finance key acquisitions in
the Health Club division and provide
additional growth capital for the Main
Event Entertainment business.
In the United States, our Main Event
Entertainment business continues to
perform strongly and take advantage
of favourable business conditions. We
continue to refine the business model
and secure new, low risk development
opportunities across the Sunbelt states
to realise our strategy to expand the
portfolio to 19 centres by the end of
fiscal year 2015. The number of Main
Event Entertainment locations has
increased from 10 to 12 in 2013, with a
further 2 sites committed and a number
of sites under negotiation.
The Health Club division has
continued to expand and Goodlife has
consolidated its position as the second
largest operator of full service health
clubs in Australia. The acquisition
of 11 clubs in the Fenix Fitness
portfolio, 8 Fitness First clubs and
the development of 2 new centres at
Maroochydore (QLD) and Dernancourt
(SA) brings the Goodlife portfolio to
66 clubs across Australia. Operational
initiatives to improve the Goodlife
brand, mission and values will allow
our team to better deliver on our
customer promise and maintain some
of the highest member retention rates
in the industry.
In the Theme Parks division, the creation
of exciting new products continued
with the opening in December 2012 of
the new Kung Fu Panda precinct with
its new thrill ride. The return of Big
Brother to Dreamworld, a new Wiggles
World ride and 2 new Dreamworld
Tiger Cubs all created exceptional
customer value, driving increased
repeat visitations from our guests.
These new products, our upgraded
Food and Beverage offer, improved
standards of customer service and
shopping opportunities reinforced
Dreamworld’s position as Australia’s
very own theme park.
A number of major initiatives including
the return of Big Brother Series 2, the
arrival from Poland of adult tigress
Nika and the introduction of new
tiger activities during the forthcoming
financial year, are expected to create
even more reasons to visit Dreamworld.
A full year of operation from the
SkyPoint Climb adventure attraction
and a refurbishment of the observation
deck have allowed SkyPoint to develop
into a key destination and event venue
in South East Queensland.
The Bowling division, comprising the
AMF and Kingpin Bowling brands, saw
reduced earnings predominantly in
the first half of the year as the business
commenced a process to improve
guest experience, amusement games
product and the Food and Beverage
offerings. The result of these efforts
saw improvement in earnings in the
second half of the financial year.
The d’Albora Marina division again
achieved a solid result with operational
efficiencies offsetting reduced revenues
to post a slight increase in earnings.
The division is progressing with the
planned construction of increased
berthing capacity at The Spit and Akuna
Bay marinas in Sydney.
In June 2013, the Group successfully
negotiated and executed an extension
of existing debt facilities with an
increased facility of $320 million that
matures in two tranches in 3 and 4
years. The number of participating
banks has increased from 2 to 4 to
provide the Group with future funding
flexibility and capacity. The extended
debt facilities also include an increased
Ardent Leisure Group Annual Report 2013
01
For personal use only Message from the
Chief Executive
Officer
Dear Investor
The year under review has delivered
double digit growth in revenue and
core earnings through successfully
providing quality leisure and
entertainment experiences for our
guests at affordable prices.
We have continued to execute on
our strategy to diversify earnings
and benefited from exceptional
performances from the Health Club
division, with earnings up by 52% and
from our Main Event Entertainment
business in the United States, where
earnings in US dollars grew by 34.1%.
We also saw the Theme Park division
return to solid growth, with both
revenues and earnings up on prior year.
The successful execution of our strategy
and the impact of our acquisition of the
portfolio of health clubs in late 2012
resulted in our distribution to investors
increasing to 12.0 cents per security,
representing a yield of approximately
6.98% based upon a security price of
$1.72 at 30 June 2013.
Main Event Entertainment division
Marina division
The Main Event Entertainment business
recorded total revenues of US$73.5
million, representing a 29.8% increase
on prior year revenues of US$56.7
million, while earnings for the year
rose by 34.1% to US$17.2 million. On
a constant centre basis total revenues
grew by 4.5%, while earnings before
property costs increased by 5.9%. This
strong performance was underwritten
by successful, unlimited play marketing
campaigns and an improved Food and
Beverage product range.
During the year new Main Event centres
were opened in Katy and Stafford in
Houston and these centres continue to
significantly exceed portfolio average
revenues and profits. Construction is
now well advanced on our next centre
in Tempe, Phoenix, which is scheduled
to open in the second quarter of the
2014 financial year. We remain on track
to meet or exceed our target of 19 centres
by the end of the 2015 financial year.
Revenues from the Marina division
decreased marginally by 2.2% on prior
year to $23.1 million, principally due
to lower land rentals and reduced
fuel sales caused by adverse weather.
Careful management of costs ensured
earnings remained constant with the
prior year, at $10.7 million. The d’Albora
business will continue to focus on
building occupancies and average
berthing rates in the coming year.
Theme Parks division
The division saw a return to growth
with revenues up $3.4 million, or 3.6%,
to $97.1 million delivering an EBITDA of
$30.5 million, representing an increase
of 5.3% on prior year.
These results reflect an 8.0% increase
in guest attendance resulting from a
revised brand and marketing strategy,
anchored by successful Unlimited
World Pass campaigns. Investment
in unique new product, including the
DreamWorks Kung Fu Panda precinct,
the return of the Big Brother series
and 2 new tiger cubs all added new
guest experiences, improved guest
satisfaction and created in-park
spending opportunities. During the
year, the division grew its margins to
33.2% against 32.5% in the prior year
through refined operating efficiencies
and completion of initiatives to combat
rising energy and water costs.
A full year contribution from our
SkyPoint Climb attraction and the
inclusion of SkyPoint entry in the
Unlimited World Pass offer saw earnings
from the attraction grow strongly.
Our focus on bringing exciting products
to the theme parks has continued with
the return of Big Brother for a second
series in July 2013, a new attraction
based on zombies planned for launch in
September 2013 and the first stage of a
new indigenous precinct expected to be
opened in time for the December 2013
holiday period.
Health Club division
Bowling division
Revenue from our Health Club division
increased by 37.2% to $140.7 million
with earnings up 52% from $20 million
to $30.3 million. This exceptional
result from Goodlife Health Clubs
was driven by strong constant club
performance, where earnings before
property costs grew by 5.4% over
the prior year and by the successful
execution and integration of the Fenix
and Fitness First acquisitions, completed
in the first half of the financial year.
The benefits of increased labour
productivity, improved operational
efficiencies and greater penetration of
personal training services saw operating
margins rise to 42.7%, against 39.2%
achieved in the prior year.
The recruitment of additional corporate
roles will help support the larger
portfolio and underwrite future growth.
The coming financial year will see the
full effect of the Fenix and Fitness First
acquisitions, together with the impact of
greater personal training services being
provided across the entire portfolio.
The Bowling division saw a 0.9%
increase in revenues to $115.2 million
for the year and a corresponding
decline in earnings of 13.8% to $12.8
million, driven largely by poor trading
in the first half of the year. Constant
centre performance improved in the
second half, with constant centre
earnings before property costs flat to
the prior year against a 6.3% decline
in the first half, as a result of stronger
school holiday trading and improved
cost management.
Guests responded well to our value
promotions throughout the school
holiday period, while our program
of centre refurbishment continues
to deliver positive results. Our
newest centre at Penrith in Sydney
has exceeded expectations and has
experienced strong trading since
opening. Ongoing focus is being placed
upon enhancing guest experiences
and delivering increased value to drive
loyalty and repeat visitation.
02
Ardent Leisure Group Annual Report 2013
For personal use only The Group’s business is based on
delivering unique guest experiences
and compelling product offers. Our
team is central to the business and
we have continued to invest heavily
in better recruitment, training,
professional development and
leadership capabilities. This investment
will help to further differentiate our
products from our competitors’ and
deliver ongoing outperformance and
consistently strong earnings.
I would like to acknowledge the
significant support we have received
throughout the year from our guests,
employees, investors and stakeholders.
Greg Shaw
Managing Director and
Chief Executive Officer
03
For personal use only Asset Locations
Australia and New Zealand
ACT
NSW QLD
SA
TAS
VIC
WA
NZ
TOTAL
4
23
12
21
6
2
1
8
1
4
4
66
6
2
11
4
2
45
2
7
4
2
2
12
5
04 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only United States of America
TEXAS
ARIZONA
TOTAL
12
1*
13
* Opening soon
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
05
For personal use only Board of Directors
Greg shaw
Greg Shaw was appointed a
Director in September 2009
following the completion of
the internalisation project.
Greg is the Chief Executive
Officer and Managing
Director of the Group and was
appointed to this role in 2002.
Prior to joining the Group,
Greg was the Managing
Director of Port Douglas
Reef Resorts Limited, a major
resort owner and property
development group. In
this role, Greg was awarded
the Australian Chartered
Accountant in Business
Award for a $6 million profit
turnaround in two years.
Greg qualified as a Chartered
Accountant in 1983.
Greg is a member of the
Safety, Sustainability and
Environment Committee.
Former listed directorships in
last three years:
None
neil Balnaves Ao
Neil Balnaves AO was
appointed as Chairman of
the Group in 2001. Neil has
worked in the entertainment
and media industries for over
48 years previously holding
the position of Executive
Chairman of Southern Star
Group Limited which he
founded. Neil is a Trustee
Member of Bond University
and has an Honorary Degree
of Doctor of the University.
Neil is a member of the
Advisory Council and Dean’s
Circle of the University of
New South Wales (Faculty
of Medicine) and in 2010
received an Honorary
Doctorate of the University.
Neil is a Director of
Technicolor Australia Limited
and serves on the boards
of numerous advisory and
community organisations
and is a Foundation Fellow
of the Australian Institute of
Company Directors. Neil’s
former directorships include
Hanna-Barbera Australia,
Reed Consolidated Industries,
Hamlyn Group, Taft Hardie and
Southern Cross Broadcasting.
In 2006, Neil established
The Balnaves Foundation
a philanthropic fund that
focuses on education,
medicine and the arts. In
2010, Neil was appointed
an Officer of the Order of
Australia for his services to
business and philanthropy.
Neil is Non-Executive
Chairman of the Group,
Chairman of the Remuneration
and Nomination Committee
and is a member of the Audit
and Risk Committee.
Former listed directorships in
last three years:
None
roger Davis
Roger Davis was appointed
a Director of the Company
in 2008. Roger brings over
32 years experience in
banking and investment
banking in Australia, the
US and Japan to the Board.
Roger is presently Chairman
of the Bank of Queensland
and a Consulting Director at
Rothschild (Australia) Limited
and holds directorships at
Argo Investments Limited,
Aristocrat Leisure Limited, The
Trust Company Limited, TIO
Ltd and AIG Australia Limited.
Previously, he was Managing
Director at Citigroup where he
worked for over 20 years and
more recently was a Group
Managing Director at ANZ
Banking Group.
Roger’s former directorships
include the chairmanship
of Esanda, along with
directorships of ANZ (New
Zealand) Limited, Charter Hall
Office Management Limited
(the manager for Charter
Hall Office REIT) and Citicorp
Securities Inc. in the United
States.
Roger holds a BEc (Hons) from
the University of Sydney and
a Master of Philosophy from
Oxford.
Roger is Chairman of the
Safety, Sustainability and
Environment Committee,
and is a member of both
the Remuneration and
Nomination Committee and
the Audit and Risk Committee.
Former listed directorships in
last three years:
Charter Hall Office
Management Ltd
(Resigned 30 April 2012)
06
Ardent Leisure Group Annual Report 2013
Anne Keating
Anne Keating was appointed
a Director or Ardent Leisure
Management Limited in
1998. Ms Keating is currently
a Director of REVA Medical
Inc., Goodman Group and
GI Dynamics, Inc., and is a
member of the Advisory
Council of CIMB Australia.
Anne is also a Director of the
Garvan Institute of Medical
Research and a Governor of
the Cerebral Palsy Alliance
Research Foundation.
Anne’s former directorships
include ClearView Wealth
Limited, STW Communications
Group Limited, Insurance
Australia Group Limited,
NRMA, the WorkCover
Authority of NSW, the Tourism
Task Force (now known as
the Tourism and Transport
Forum), Spencer Street Station
Redevelopment Holdings
Limited and the Victor Chang
Cardiac Research Institute.
Anne was the General
Manager of Australia for
United Airlines from 1993 to
2001.
Anne is a member of the
Group’s Remuneration and
Nomination Committee and
the Audit and Risk Committee.
Former listed directorships in
last three years:
STW Communications
Group Ltd
(Resigned 10 February 2011)
ClearView Wealth Ltd
(Resigned 23 October 2012)
Don Morris Ao
Don Morris was appointed a
Director of both the Company
and the Manager in January
2012 and brings to the Board
significant experience of
advertising, marketing and
promotion, particularly for
tourism entities.
Don was a founding
principal of Mojo Australia
Advertising, creators of
several iconic Australian
advertising campaigns,
including ‘I still call Australia
Home’ for Qantas; the Paul
Hogan ‘Shrimp on the Barbie’
for Australian tourism, and
‘C’mon Aussie C’mon’ for
World Series Cricket.
Don was the former Chair
of the Sydney Olympics
Community Support
Commission and both
the Australian Tourist
Commission and Tourism
Queensland, and a former
director of R M Williams Ltd,
Harvey World Travel Ltd, PMP
Ltd, the Tourism & Transport
Forum, Tourism Asset
Holdings Ltd, Hamilton Island
Enterprises Ltd and Port
Douglas Reef Resorts Ltd.
Don was appointed an Officer
of the Order of Australia in 2002
for services to tourism and
holds a Bachelor of Economics
from Monash University.
Don’s current directorships
include Ausflag Ltd and The
Sport and Tourism Youth
Foundation. He was appointed
an Adjunct Professor in
Tourism, Sport, and Hotel
Management at Griffith
University in 2012.
Don is a member of the
Group’s Remuneration and
Nomination Committee and
the Audit and Risk Committee.
Former listed directorships in
last three years:
None
For personal use only Management
Richard Johnson
Greg Oliver
Richard became Chief Financial Officer
of the Group in December 2004. After
practising as a Chartered Accountant
in London, he specialised in the sports
and leisure industry where he now
has 20 years’ experience. Richard is a
Fellow of The Institute of Chartered
Accountants in England and Wales.
Lee Chadwick
Lee joined the Group in September
2012 as CEO of AMF Bowling. Lee is
an experienced retailer, having held
senior roles with Tesco and Coles and
more recently as the CEO of Fantastic
Furniture.
Craig Davidson
Craig has recently been appointed to
the role of CEO of the Theme Parks
division. Craig was Executive General
Manager Destination Development at
Tourism Australia and brings significant
experience to the role, having been
responsible for the operations of the
Voyages Hotels and Resorts portfolio
and Hamilton Island in Queensland.
Charlie Keegan
Charlie joined Main Event Entertainment
as CEO in October 2006. Charlie has
over 25 years of hospitality industry
experience in North America, with
extensive experience in the casual
dining sector.
Greg joined the Goodlife Health Clubs
business as CEO in June 2010. Greg has
had an extensive professional career in
the fitness industry, having successfully
owned and operated a number of
clubs, created Debit Success, Australia’s
leading fitness direct debit and
membership software provider, and
successfully operated one of Australia’s
largest fitness training organisations.
Marcus Anketell
Marcus joined d’Albora Marinas as
CEO in January 2011, having been
the manager of the Northern Region
for AMF Bowling for the previous five
years. Prior to this, Marcus enjoyed a
successful career in the hospitality and
tourism industry with almost 20 years
of experience in the areas of hotel and
resort management and operations. He
was a founding director and operations
manager of Plaza Hotels Australia and
has undertaken business consultancy
roles both locally and abroad.
Alan Shedden
Alan was appointed Company
Secretary of the Manager and the
Company in 2009. Alan has over 15
years of experience as a Company
Secretary and prior to joining the
Group, held positions at Brookfield
Multiplex and Orange S.A, the mobile
telecommunications subsidiary of
France Telecom S.A. Alan holds a degree
in business studies and is a Fellow of
the Institute of Chartered Secretaries
and Administrators.
Ardent Leisure Group Annual Report 2013
07
George venardos
George Venardos was appointed a
Director of both the Company and
the Manager in September 2009.
George is a Chartered Accountant
with more than 30 years’ experience
in finance, accounting, insurance
and funds management.
His former positions include
Group Chief Financial Officer of
Insurance Australia Group and for
10 years Chairman of the Finance
& Accounting Committee of the
Insurance Council of Australia.
George also held the position of
Finance Director of Legal & General
Group in Australia and was named
Insto Magazine’s CFO of the Year
for 2003.
George holds a Bachelor of
Commerce in Accounting, Finance
and Systems from the University
of New South Wales. He is also a
Fellow of the Institute of Chartered
Accountants in Australia, the
Australian Institute of Company
Directors, and the Taxation Institute
of Australia. He holds a Diploma
in Corporate Management and is
a Fellow of Chartered Secretaries
Australia.
George is a Director of IOOF
Holdings Ltd and Perennial
Investment Partners Ltd and is the
Non-Executive Chairman of both
BluGlass Ltd and Guild Group
Holdings Ltd.
George is Chairman of the Audit
and Risk Committee and is also a
member of the Safety, Sustainability
and Environment Committee and
the Remuneration and Nomination
Committee.
Former listed directorships in last
three years:
Miclyn Express Offshore Ltd
(Resigned 21 June 2013)
For personal use only Sustainability
The Group aims to adopt environmentally, socially and economically
sustainable solutions across all of its areas of business activity.
Koala Conservation
In February 2013, following regulatory
approval granted by the Queensland
Government three of Dreamworld’s
resident koalas arrived in their new
home at San Diego Zoo in California
to join the zoo’s breeding colony. The
three Dreamworld koalas travelled in
purpose built crates decorated with
indigenous art, to join the largest
breeding colony of koalas outside
of Australia in new purpose built
accommodation. Researchers at San
Diego Zoo have partnered with the
Dreamworld Wildlife Foundation
to develop conservation strategies
for koalas and help educate people
about the threats facing native koala
populations. The official opening of
the new Australian Outback precinct
was attended by representatives of
the Yugambeh-language people of
the Gold Coast, Dreamworld and the
Australian Federal Government.
Dreamworld and the Dreamworld
Wildlife Foundation have also partnered
with a variety of interested parties in
the Koala Land project. Koala Land
was established as an educational
forum and tool to assist in creating
a sustainable future for koalas living
amidst the communities on the Koala
Coast of South East Queensland. The
project aims to recommend ways of
protecting koalas and their habitat and
ultimately developing a sustainable
environment where koalas and people
can cohabit.
Save the Bilbies
Collaboration continues between
Dreamworld, the Queensland
Government and the Save The Bilby
Fund to improve the survival prospects
for one of Australia’s most endangered
animals. Dreamworld is home to the
world’s largest captive bilby population
and has already bred and released nine
bilbies into the Currawinya National
Park, a bilby protection park in western
Queensland. In early 2013, a further
three bilby joeys were raised with the
intention of releasing them into their
natural environment.
Dreamworld Tigers
Last year was a critical period
in continuing the Group’s tiger
conservation works as Dreamworld
saw the development of our youngest
tigers, Ravi and Baru, from cute cubs
to adolescent tigers. Importantly, after
a long process of consultation and
regulatory approval, the future of our
tiger display was secured with the
arrival of Nika, Australia’s largest female
tiger, from Krakow Zoo in Poland. A
renewed tiger breeding program at
Dreamworld will support our efforts to
educate our guests and the public on
tiger conservation and the increasing
habitat and poaching threats to the
species.
The Group would like to acknowledge
the invaluable assistance received
from 21st Century Tiger in securing
the necessary permits and support to
transfer Nika to Queensland.
08
Ardent Leisure Group Annual Report 2013
Dreamworld actively promotes tiger
conservation and helps raise funds for
the Dreamworld Wildlife Foundation.
Through a number of activities
performed by the tigers at Dreamworld,
royalties from sales of merchandise
and interactive tiger experiences
are generated and donated to the
Foundation. These royalties are also
supplemented by direct donations from
our guests and our employees through
our workplace giving program, the
website and in-park donation boxes.
Carbon Emissions
The Board of Directors is committed
to managing our impact on the
environment and in particular focuses
on reducing the Group’s energy usage.
Throughout the year, our program of
work in managing and reducing energy
consumption has continued with a
number of initiatives being undertaken.
At a Group-wide level, formal tender
processes were completed to lock in
forward energy rates across Australia.
A number of small scale sites were not
eligible to participate in the commercial
tender process and the Group has
taken advantage of current retailer
discounting to lock in rates for these
locations. The housekeeping program
is finished and included demand and
tariff reviews and the roll in of eligible
large market sites to our contracted
rates.
For personal use only Sustainability
Reduction of energy usage can be achieved through technical means and through
behavioural changes. Operational hygiene has been a major focus during the
year and analysis has clearly shown the need to correctly implement adequate
controls for key plant including air conditioning and lighting. Training of local
management and staff has been rolled out in an effort to change attitudes and
actions relating to energy wastage.
Theme Parks Division
A project to reduce the energy consumption at WhiteWater World has been largely
completed and indicative results show a dramatic drop in weekly usage without
impact on guest experience. The division’s focus has now moved to investigate
the installation of power factor correction equipment and variable speed drives on
water pumps and the potential to install solar water heating around the park.
Bowling Division
The Bowling division has embarked on a project to convert halogen lamps to LED
and retrofit existing T8 fluorescent lamps with the more advanced and economical
T5 fluorescent lamps. Where possible, the Group seeks to secure funding support
for our energy saving initiatives; however, the falling value of NSW Energy Savings
Certificates and the increased auditing and implementation requirements of these
programs mean that a number of refurbishments have been completed without
recourse to state or federal funding. In addition, site assessments have been carried
out to determine the potential benefits of installing power factor correction voltage
optimisation equipment.
Health Club Division
A review of the Group’s portfolio of health clubs has been undertaken and this
has highlighted a small number of high usage problem centres. Reduction of
unnecessarily high energy usage in these centres has been a priority for the division
and has centred on changes to the control environment, staff behaviours and
challenging accepted operational assumptions.
Marina Division
The majority of energy usage at our d’Albora Marina division is consumed by
vessels berthed at our marinas and work continues to manage usage where
possible.
The scale of the Group’s operations has increased over the past year as new centres
have been acquired or developed. The acquisition of the Fenix Fitness Club
portfolio and selected Fitness First clubs in late 2012 has impacted energy usage
as revenue has grown. For the financial year ended 30 June 2013, Group revenue
(excluding Main Event Entertainment operations in the USA) rose to $376.2 million
with a resulting increase in unaudited energy numbers for the Group’s Australian
operations of approximately 59.87 KT of total CO2 emissions.
The Group is registered and reports under the National Greenhouse and Energy
Reporting Act 2007. Reported carbon emissions from Australian operations are set
out below:
Year
Year to
30 June 2011
Year to
30 June 2012
Revenue
(excluding USA)
Scope 1
(Tonnes of CO2)
Scope 2
(Tonnes of CO2)
Total Emissions
(Tonnes of CO2)
$325.3 mil
1,744
50,447
52,191
$334.8 mil
2,646
51,914
54,560
Ardent Leisure Group Annual Report 2013
09
For personal use only Corporate Governance Statement
Principle 1 – Lay solid foundations for
management and oversight
Board Charter
The Directors of the Group have adopted a Board Charter that
sets out the respective roles and responsibilities of the Board
and senior management. The primary role of the Board is to
promote the long term health and prosperity of the Group
and to build sustainable value for security holders.
Specifically, the Board is responsible for:
— Setting objectives, goals and strategic direction;
— Approving and monitoring progress of major capital
expenditure, capital management, acquisitions and
divestments;
— Monitoring financial performance;
— Approval of accounting, risk management and compliance
control systems;
— Monitoring financial and other reporting;
— Appointing and removing the Chief Executive Officer and
Chief Financial Officer;
— Monitoring the performance of management;
— Monitoring compliance with legal and ethical behaviour;
and
— Ensuring effective communications with security holders
and other stakeholders.
The Board Charter also sets out the responsibilities of the
Chairperson and a comprehensive list of matters that are
reserved for the Board of Directors of both the Company and
the Manager. In accordance with the list of matters reserved
for the Board the Board is responsible for:
— The strategic plan and annual operating and capital
expenditure budgets;
— Treasury policies and risk management strategy;
— Establishment, acquisition, cessation or disposal of any
division or business unit;
— Approval of financial statements and any significant
changes to accounting policies;
— Dividend/distribution payments;
— Appointment and removal of auditors;
— Appointment and removal of any of the Chief Executive
Officer, Chief Financial Officer or Company Secretary;
— Appointment of Managing Directors to each of the
divisional subsidiaries;
— Committee charters and composition;
— Amendments to discretions delegated by the Board;
— Charitable and political donations;
— Occupational health and safety (OH&S) policy and
environmental policy;
— Changes to the Group’s capital structure including the
issue of shares, options, equity instruments or other
securities;
— Key public statements which relate to significant issues
concerning changes to key strategy or Group policy;
— Terms and conditions of the appointment of Directors and
the Chief Executive Officer; and
— Employee share schemes and their allocation.
10
Ardent Leisure Group Annual Report 2013
The Board Charter also sets out key delegations of authority
in relation to equity investments, assets acquisition and
disposal, external credit limits, bonds, guarantees and other
contingent liabilities.
Performance Evaluation
In accordance with the Board Charter, the Directors have
undertaken to formally evaluate the performance of the
Chief Executive Officer on an annual basis. The purpose of
the evaluation of the Chief Executive Officer is to provide the
following key benefits:
— Assist the Board in meeting its duty to stakeholders in
effectively leading the Group;
— Ensure the continued development of the Chief Executive
Officer to more effectively conduct his/her role;
— Ensure a formal and documented evaluation process; and
— Leave a record of the Board’s impression of the
performance of the Chief Executive Officer.
The process adopted by the Board to assess the performance
of the Chief Executive Officer is as follows:
— Each Board member is requested to complete an
evaluation table and provide numerical ranking against
the criteria for the Chief Executive Officer’s performance
during the evaluation period;
— Participants are encouraged to provide commentary;
— The evaluation tables are then provided directly to the
Chairman of the Board and upon review the Chairman
may decide to provide an average ranking for each
category; and
— Once final rankings are collated, the Chairman of the Board
discusses the findings with the Chief Executive Officer and
agrees any specific action points to be addressed.
Principle 2 – Structure the Board to add value
The Directors of the Group have set out in the Board Charter
the required composition of the Board subject to any
requirements under the constitutions of the Company and the
Manager:
— Independent Directors should comprise a majority of
the Board;
— Directors appointed to the Board should provide an
appropriate range of qualifications and expertise; and
— In the event that the Chairman ceases to be deemed
independent, then a lead independent Director should
be appointed by the Board.
Right of Access to Information
The Board may seek further information on any issue,
including requesting that particular executives present
information on the performance, strategy, outlook or
particular assets. Each Director is required to enter into a
Deed of Access, Insurance and Indemnity. In addition, each
Director has direct access to the Company Secretary.
For personal use only Confidentiality
All Group related information acquired by Directors during
their appointment is confidential to the Group and should
not be released, either during the term of the Directors’
appointment or following their termination without prior
approval of the Board.
Conflicts of Interest
Directors should not have any business or other relationship
that could materially influence or interfere with the exercise
of their independent judgement apart from those declared
to the Board under the Corporations Act 2001, Australian
Securities Exchange (ASX) Listing Rules and other general law
requirements.
Directors with a material personal interest in a matter must
not be present at a Board meeting during the consideration
of the matter and subsequent vote unless the Board
(excluding the relevant Board member) resolves otherwise.
Directors with a conflict not involving a material personal
interest may be required to absent themselves from the
relevant deliberations of the Board.
Right to Independent Legal Advice
Each Director shall have the ability to request independent
professional legal advice where that Director considers
it necessary to carry out their duties and responsibilities.
Any costs incurred as a result of the Director consulting an
independent expert will be borne by the Group, subject
to the estimated costs being approved by the Chairman in
advance as being reasonable.
The procedure for requesting legal advice is as follows:
— Where a Director considers that he or she may require
independent advice, that Director should approach the
Company Secretary for a list of current advisers. This is
in order to ensure that the Director is able to select an
adviser who is independent of the Group;
— The Director should advise the Chairman of the nature
of and reasons for the advice being sought, the name
of the professional adviser selected by the Director and
the fee estimate for the advice;
— The Chairman will consider the proposal on a timely basis
and if reasonable authorise the request. The Chairman
must not unreasonably withhold such authorisation; and
— The Chairman may delegate the authority to approve the
payment of the professional adviser’s expenses to another
Director or to the Company Secretary.
Relationship with Management
The Board may delegate specific authorities to Board
Committees and to management. These Committees and
delegated authorities typically make decisions regarding
implementation of decisions.
Training
Group Directors are required to keep themselves adequately
informed in respect of relevant industry and regulatory issues
and changes.
In order to assist Directors, each Director may participate in
internal training sessions and conferences organised from
time to time in respect of relevant industry and regulatory
issues and may attend asset tours that are arranged from time
to time.
Additional training requirements may be arranged by the
Company Secretary with the Chairman’s approval.
Director Independence
The Board recognises that independent Directors are
important in assuring investors that the Board is properly
fulfilling its role and is diligent in holding management
accountable for its performance.
A majority of the Board are independent Directors with
the only Executive Director appointed currently being the
Chief Executive Officer. The independence of the Directors
is assessed annually taking into account such matters
as contractual interests, significant security holdings,
relationships with key advisers, suppliers and customers and
any prior executive employment within the Group.
The Board has assessed the independence of each
Director and concluded that none of the Directors has any
material interest in securities and contracts or has relevant
relationships with material advisers or suppliers/customers.
The Board acknowledges that materiality thresholds will differ
for each Director and for the Group as a whole. Accordingly,
for the purposes of the independence assessment the Board
has adopted a materiality threshold of 1% of the Group’s last
reported net assets.
As at 30 June 2013, Directors deemed to be independent were:
Neil Balnaves, Roger Davis, Anne Keating, Don Morris and
George Venardos.
Directors’ interests in securities are set out in section (g) of the
Remuneration Report.
Director, Board and Committee Evaluation
The Board Charter requires that each Director will participate
in an annual performance evaluation which will be
reviewed by the Chairman. The process for conducting
Board and Director evaluations is similar to that adopted
for the review of the Chief Executive Officer and is
conducted in a confidential manner by the Chairman of
the Board. The evaluations include areas such as role of
the Board, composition, meeting conduct, behaviours and
competencies, governance and risk, ethics and stakeholder
relations.
Induction
Upon appointment, each new Director participates in an
induction program. This includes presentations from senior
management and site visits to gain an understanding of the
Group’s operations and procedures.
Each Committee charter adopted by the Board includes a
requirement for an annual self assessment by the Committee
of its performance and charter. These evaluations are
conducted against the existing charter and prevailing
developments in the corporate governance arena.
Ardent Leisure Group Annual Report 2013
11
For personal use only Corporate Governance Statement
Director Competencies
The Board has set out core competencies that should be
present across the Board of Directors. Board members
should have a working knowledge of finance and accounting,
corporate regulation and business strategic theory. The
Board aims to gather a breadth of different experience on
the Board.
The Directors believe that diversity is critical to the effective
functioning of the Board. To this end the Board strives to
ensure that Directors should not all be from one occupational
group or even from the same industrial sector the Group
operates in.
Nomination Committee
The Directors have established a combined Remuneration
and Nomination Committee. This was implemented due
to the relatively infrequent need to call upon the services
of the previous Nomination Committee. The charter for
the combined Remuneration and Nomination Committee
remains broadly similar and includes the review process
for the Board and its Committees and also the time
commitment for Non-Executive directors.
The combined Remuneration and Nomination Committee
consists of a minimum of three members with the majority
of members required to be Independent Directors. The
Remuneration and Nomination Committee is specifically
responsible for making recommendations to the Board in
relation to the identification, assessment and enhancement
of the competencies of Board members, Board and
management succession plans including the appointment
of suitably qualified candidates to the Board and the
appointment of the Chief Executive Officer, the development
of a process for the review of the performance of the
Board, Board Committees and individual Directors and the
assessment of the time required to fulfil the obligations of
a non-executive director and whether Directors are able to
meet these expectations.
Selection Process
In order to provide a formal and transparent procedure
whereby new appointments to the Board are selected, the
Remuneration and Nomination Committee has adopted a
Director selection process to be used once the Board has
decided to appoint or replace a Director.
Process
— Identify the vacant position.
— Identify the core competencies of the position.
— Identify a preferred candidate background
(taking into account the diversity of the Board).
— Appoint a search firm if necessary to ensure an
appropriate selection of candidates.
— If a search firm is appointed, draft and deliver a
brief to the search firm explaining the following:
— Vacant position;
— Competencies required;
— Preferred background;
— Essential qualifications (if any); and
— Countries in which to extend the search.
— Candidates are to be interviewed and a shortlist prepared.
— Select preferred candidates from the shortlist provided
in consultation with executive management.
— Agree a preferred candidate for recommendation
to the Board of Dirctors.
Principle 3 – Promote ethical and responsible
decision‑making
Ethical Conduct
The Board has adopted a suite of policies designed to govern
employees’ behaviour whilst employed by the Group and
ensure that ethical business practices are adopted in the
procurement process.
All employees are required to acknowledge that they
understand and will comply with the Employee Ethical and
Confidentiality Policy.
Media Relations
Employees are prohibited from communicating with
or disclosing to any representative of the media any
information of any nature whatsoever relating to the Group,
or its customers. Only the Chairman, Board of Directors,
Chief Executive Officer and Chief Financial Officer are are
authorised to speak to the media on Group issues. Exceptions
to this rule must have the prior approval of the Chief
Executive Officer. Notwithstanding the general prohibition,
the respective Chief Executives of each business division are
authorised to speak to the media on issues specific to their
area of business.
Intellectual Property
All intellectual property created during an employee’s
employment with the Group is and remains the property of
the Group.
Confidentiality
Employees are required to keep secret during and after their
employment, all information obtained about the business and
affairs of the Group or its customers, except as required by law.
All documents or written material provided to an employee
or used in connection with the Group’s business is the
property of the Group and must not be removed, passed on,
copied or disclosed to third parties except with the Group’s
authority.
Personal Gain
Employees must not misuse their position with the Group or
any information received in the course of their employment
to produce a personal benefit for themselves, their family,
friends or any other person, or to cause a detriment to the
Group. In the event of any conflict of interest, this must be
disclosed to the Group.
12
Ardent Leisure Group Annual Report 2013
For personal use only Employees are prohibited from soliciting or accepting any
gift or benefit which induces or influences the Group to enter
a transaction, business opportunity or business dealing, or
which might reasonably be perceived as such an inducement
or influence.
Ethical Business Practices
All employees and Group suppliers must adopt the
following standards:
— Suppliers should adhere to applicable laws and regulations
that govern them;
— Employment should be freely chosen; there should be no
forced, bonded or involuntary prison labour, employees
should not be required to lodge ‘deposits’ or identity
papers with their employer and should be free to leave
their employer after reasonable notice;
— Employees should have freedom of association and
the right to collective bargaining within the framework
of applicable laws;
— Working conditions should be safe and healthy; applicable
OH&S laws and regulations must be complied with;
— Child labour should be eliminated and suppliers
should conform to provisions of International Labour
Organization Convention 138 and be consistent with the
United Nations Convention on the Rights of the Child;
— Living wages should be paid and they must meet
or exceed national standards. Wages must not be
paid in kind and employees should be provided with
written and understandable information about their
employment conditions;
— Working hours should not be excessive and should
comply with national laws and national benchmark
industry standards;
— Discrimination based on race, caste, national origin,
religion, age, disability, gender, marital status, sexual
orientation, union membership or political affiliation is
prohibited;
— Regular employment should be provided and work
performed must be on the basis of recognised employment
relationships established through national law and practice;
and
— Harsh or inhumane treatment of employees is prohibited.
The Group seeks to collaborate with suppliers in pursuit of
these standards and attempts to guide relationships by the
principle of continuous improvement. Similar ethical trading
standards will be considered acceptable as a reasonable
alternative where suppliers are already working towards this
initiative.
The Group promotes a risk-based approach to implement
these standards by focusing attention on those parts of the
supply chain where risk of not meeting these standards is
highest. This is supported by the provision of appropriate
training and guidelines to implement these standards.
Suppliers are advised that implementation of these standards
may be assessed by the Group or through independent
verification.
Suppliers are required to use reasonable endeavours
to provide workers covered by these standards with a
confidential means to report the suppliers’ failure to observe
these standards.
It is expected that all suppliers will comply with the standards
and the Group reserves the right not to do business with
suppliers where it can be demonstrated that significant
violations exist. In particular, the Group and/or its separate
businesses will not bring suppliers onto its supplier list if
there is evidence of under-age workers or forced, bonded or
involuntary prison labour, or where the supplier’s workers are
found to be subjected to potential life threatening working
conditions or harsh or inhumane treatment.
Whistle Blowing
The purpose of the Whistle Blowing Policy is to establish an
internal reporting system for the reporting of disclosures of
corrupt conduct, illegality or substantial waste of company
assets by the Group or its employees.
Protected Disclosures
The Whistle Blowing Policy clearly defines what disclosures
are protected and these include such disclosures that are
made in accordance with the process outlined in the Policy,
that identify or attempt to identify corrupt conduct, illegality,
or serious and substantial waste of company assets by the
Group or its employees and that are made voluntarily by an
employee of the Group.
Frivolous disclosures or those made solely with the motive
of avoiding dismissal or other disciplinary action are not
covered by the Whistle Blowing Policy. The making of a false
or misleading statement when making a disclosure under the
Whistle Blowing Policy constitutes gross misconduct.
Making a Disclosure
Under the Whistle Blowing Policy, disclosures are made to
a nominated officer. This can be done in person, by email
or via the Group’s third party independent ethics hotline.
Disclosures can be made either inside or outside normal
working hours and locations.
Group employees are encouraged to report known or
suspected incidences of corrupt conduct, illegality or
substantial waste in accordance with the Whistle Blowing
Policy. All Group employees must abstain from any
activity that is, or could be perceived to be, victimisation
or harassment of persons who make disclosures.
The confidentiality of persons they know or suspect to have
made disclosures should be maintained.
The nominated officer is responsible for receiving, forwarding
and acting upon disclosures and must take all necessary
and reasonable steps to ensure that the identities of persons
who make disclosures, and the subjects of disclosures, are
kept confidential. The nominated officer is also responsible
for supporting persons who make disclosures and protecting
them from victimisation, harassment or any other form
of reprisal.
Ardent Leisure Group Annual Report 2013
13
For personal use only Corporate Governance Statement
External Disclosures
Disclosures to persons or bodies external to the Group will
only be protected under the Whistle Blowing Policy if the
person making the external disclosure has already made
the same disclosure through the internal reporting system,
the employee has reasonable grounds for believing that the
disclosure is substantially true, the disclosure itself must be
substantially true and the nominated officer has decided not
to investigate the matter, has not completed the investigation
within six months of the original disclosure or has not
recommended any action in respect of the matter.
Liability on Disclosure
The Whistle Blowing Policy provides that a person is not
subject to any liability for making a protected disclosure
and no action, claim or demand may be taken or made of or
against the person for making the disclosure. A person who
has made a protected disclosure under the Whistle Blowing
Policy is taken not to have committed any offence against any
legislation which imposes a duty to maintain confidentiality
with respect to any information disclosed.
Action Taken
A person who makes a disclosure under the Whistle Blowing
Policy must be notified, within six months of the disclosure
being made, of the action taken or proposed to be taken
in respect of the disclosure.
Fraud
The Group operates a Fraud Policy designed to prevent, deter,
detect and investigate all forms of fraud. For the purposes
of the Fraud Policy, “fraud” is defined as the intentional
distortion of financial statements or other records by persons
internal or external to the organisation which is carried out to
conceal the misappropriation of assets or otherwise for gain.
The Group has adopted a “zero tolerance” towards fraud and
requires that all reported incidents, including internal fraud,
will be thoroughly investigated with utmost confidentiality.
Necessary action will be taken against any individual or group
who has committed fraud and may involve disciplinary action
resulting in dismissal from employment, and civil and/or
criminal legal proceedings. Critical business procedures and
controls are directed to maintain an effective fraud control
environment to assist in fraud prevention and detection.
Any employee who suspects a fraudulent activity must notify
the business Chief Executive or alternatively email details to a
private email address set up exclusively for this purpose.
Securities Trading Policy
The purpose of the Securities Trading Policy is to regulate
trading by all Directors and employees of the Group in any
securities issued or nominated by the Group. This also applies
to financial products issued or created over such securities
(including but not limited to warrants, options and derivatives),
or entering into financing arrangements over financial
products including establishment of a margin loan over
such securities.
This Securities Trading Policy also applies to trading by
Directors’ and employees’:
— Spouses;
— Children under the age of 18 years;
— Dependent children living in the family home;
— Trusts under which they or a member of their family
are a trustee or beneficiary; and
— Companies which they or their family control.
General Prohibition (Insider Trading)
At all times, Directors and employees are prohibited from
trading in securities while in possession of unpublished
price sensitive information. Price sensitive information is
information which is not generally available and which a
reasonable person would expect that if the information were
disclosed, it would have a material effect on the price of
Group securities and it would therefore influence investors in
deciding whether or not to buy, hold or sell securities issued
by the Group.
This prohibition applies even during periods when trading
windows are permitted under this Policy if a person is in
possession of price sensitive information. In addition to
not being able to deal, the person in possession of the
price sensitive information has an obligation to keep that
information confidential and must not communicate it to
another person unless it is information, which is required to
be brought to the attention of the Company Secretary.
Specific Prohibition
All Directors and Nominated Employees are bound as a
condition of their employment to comply with and observe
the Securities Trading Policy.
Trading Windows
Provided Directors and Nominated Employees are not
in possession of unpublished price sensitive information
and have received written consent from the Company
Secretary, or in the case of Directors of the listed company
the Chairman, the times during which they are permitted to
trade in securities issued by the Group are:
— Commencing 24 hours after the announcement
of quarterly results until 30 days thereafter;
— Commencing 24 hours after the announcement
of half yearly results until 30 days thereafter;
— Commencing 24 hours after the announcement
of yearly results until 30 days thereafter; and
— Commencing 24 hours after the Annual General Meeting
(AGM) until 30 days thereafter.
Due to reporting timetables, some of the trading windows
listed above overlap. In order to ensure all Nominated
Employees are aware of their obligations, the Company
Secretary issues an open reminder and a close reminder to all
Nominated Employees. In addition, the Group publishes key
reporting dates on the Group’s website.
The Group may in its discretion vary trading windows
by general announcement.
14
Ardent Leisure Group Annual Report 2013
For personal use only Blackout Periods
All periods outside of the trading windows are blackout
periods in relation to security trading by Directors and
Nominated Employees.
The Group may in its discretion nominate additional blackout
periods by general announcement. These may be required
where additional disclosure documents are released offering
securities or as a result of certain disclosures being lodged
with a stock exchange e.g. the ASX.
Discretion is vested in the Company Secretary to allow
exemptions to trading during blackout periods in special
circumstances only, where no price sensitive information is
on hand and application of the Policy would cause undue
financial hardship.
No Short Term Trading
The Board encourages employees to invest in the Group
and discourages short term trading. Under the terms of
the Securities Trading Policy, Nominated Employees must
not deal in securities for short term gain. Speculating in
short term fluctuations in such securities does not promote
investor and market confidence in the integrity of the Group.
Accordingly, trading in securities issued by Group entities
within six months of an acquisition is prohibited. The Group
may in its discretion vary this rule in relation to a particular
period by general announcement.
The Securities Trading Policy does not prevent Directors and
employees from passive trading such as participating in a
share plan or public offer made by the Group, provided that
at the time the individual elects to participate, he or she is not
in possession of any price sensitive information. Further, the
individual may not subsequently vary that election until such
time as they are again not in possession of such information.
The Securities Trading Policy also prohibits any hedging
of unvested security based incentives by Directors and
Nominated Employees.
Principle 4 – Safeguard integrity in financial reporting
Audit and Risk Committee
The Board has established an Audit and Risk Committee
(“Committee”) consisting of a minimum of three members,
with the majority of members required to be independent
Directors. All members must be able to read and understand
financial statements, and at least one member must have
financial expertise, that is the person must be either a
qualified accountant or other financial professional with
experience of financial accounting matters.
The Chief Executive Officer and the Chief Financial Officer are
not members of the Audit and Risk Committee. They may be
invited to attend meetings of the Audit and Risk Committee
for reasons of efficiency but are not entitled to vote.
The Chairperson will be a non-executive independent
Director appointed by the Board who is not the Chairman
of the Board.
Any Director may attend a meeting of the Committee for
the purposes of discussion but is not entitled to vote. The
Committee will meet at least twice per annum and more
often if deemed necessary. Meetings may be held by
electronic means as allowed under the provisions of the
Corporations Act 2001.
The Committee is established by the Board of Directors to
review, evaluate and make recommendations to the Board in
relation to:
General Risk and Accounting
— Evaluating and monitoring the internal control
environment and Group’s risk management framework;
— Serving as an independent and objective party to review
the financial information presented by management to
security holders, analysts and the general public;
— Overseeing and appraising the coverage and quality of
the audits conducted by the Group’s internal and external
auditors to ensure the widest coverage possible;
— Approving and monitoring policies, procedures and
content of the Group’s statutory and management
reporting;
— Evaluating and monitoring the Group’s fraud management
policies and exposures; and
— Monitoring the Group’s various disclosure obligations.
Risk and Internal Control Environment
— Assessing the overall effectiveness of the Group’s risk
management, internal control and compliance systems;
— Evaluating the current “control culture” of the Group and
the underlying consistency, direction and communication
to employees of appropriate risk policies therein;
— Reviewing existing disaster recovery plans;
— Identifying key risks within the organisation and building
appropriate risk management controls and policies to
minimise the impact and likelihood of same; and
— Ensuring adequate resources are allocated to assist
management and the Board in implementing an
appropriate internal risk culture and discipline.
Financial Reporting
— Considering the appropriateness of the Group’s
accounting policies and principles and how those
principles are applied;
— Reviewing and assessing existing management processes
so as to ensure compliance with applicable laws,
regulations and accounting standards;
— Ensuring that significant adjustments, unadjusted
differences, disagreements with management and critical
accounting policies are discussed in advance with the
external auditor;
— Reviewing the underlying quality and accuracy of the
financial reports from the internal and external auditors
and making recommendations to the Board on their
approval or amendment;
— Evaluating the adequacy and effectiveness of the Group’s
administrative, operating and accounting policies through
communication with management, internal auditors and
external auditors;
— Evaluating and monitoring the adequacy of the Group’s
monthly management and operational reporting; and
Ardent Leisure Group Annual Report 2013
15
For personal use only Corporate Governance Statement
— Reviewing and evaluating appropriate disclosures from
management, the internal auditors and external auditors
on any significant proposed regulatory, accounting or
reporting issue, to assess the potential impact upon the
Group’s financial reporting process.
Internal Audit
— Making recommendations to the Board on the
appointment, and where necessary the removal, of the
internal auditor;
— Reviewing the role, function and performance of the
internal auditor, and management’s response to the
internal auditor’s recommendations; and
— Reviewing the resources of the internal audit function
and ensuring no unjustified restrictions or limitations are
imposed.
External Audit
— Making recommendations to the Board on the
appointment, and where necessary the removal, of the
external auditor;
— Reviewing annually the external auditor’s procedures for
independence together with any relationships or services,
which may impair the external auditor’s independence;
— Reviewing the fees and terms of engagement of the
external auditor, including the proposed audit scope;
— Ensuring there is appropriate communication and
co-ordination between the internal and external auditors
on risks, risks policies and audit results;
— Reviewing all financial reports and management
representation letters and recommending them to the
Board as complete and appropriate; and
— Reviewing annually the performance of the internal
auditor and based on the results of the annual assessment
of the external audit services, determine whether the
external audit services should be re-tendered.
Compliance
— Authorise the Group’s compliance framework and assess
the effectiveness of the framework.
Right to Obtain Information
The Committee is entitled to consult with expert advisers and
seek expert advice where it considers it necessary to carry out
its duties, at the expense of the Group.
The Committee will have a right of access to internal and
external auditors and senior management. The Committee
will also meet separately with the internal and external
auditors at least annually or as otherwise required.
Principle 5 – Make timely and balanced disclosure
Continuous Disclosure Policy
In order to regulate the continuous disclosure regime across
the Group in relation to any securities issued by the Group,
the Board has adopted a Continuous Disclosure Policy.
The Continuous Disclosure Policy aims to ensure that the
Group complies with the continuous disclosure requirements
contained in the Corporations Act 2001 and the ASX Listing
Rules.
16
Ardent Leisure Group Annual Report 2013
The successful operation of the Group’s continuous disclosure
regime promotes investor confidence by providing full and
timely information to the market about the activities of the
Group and serves to educate all relevant Group personnel on
what continuous disclosure is, and how they can ensure they
meet their individual responsibilities.
Commitment to Continuous Disclosure
Subject to the exceptions contained in the ASX Listing
Rules, the Group will immediately notify the market of any
information or matter related to the businesses or financial
condition of the Group which a reasonable person would
expect to have a material effect on the price or value of the
Group’s securities. Such notifications will be made by way of
an announcement to the ASX.
Reporting of Disclosable Information
Directors and employees must ensure that any information
which may require disclosure is reported to the Company
Secretary or his/her nominee as soon as it is known. The
Company Secretary will then determine whether any item
of information is to be disclosed to the ASX. Where the
Company Secretary decides that information reported does
not warrant an ASX release and the Director or employee who
reported the information disagrees with that decision, they
may choose to refer the matter to the Chief Executive Officer.
ASX Announcement Approval
If the Company Secretary determines that an item of
information is to be disclosed to the ASX, then the draft of
the ASX announcement must be approved, either verbally
or in writing, by the Chief Executive Officer prior to release.
ASX announcements deemed to contain price sensitive
information must be circulated to the Board of Directors for
comment prior to release.
Release of Information
Price sensitive information must not be released externally
until it has first been lodged with the ASX and the ASX has
acknowledged that the information has been released to
the market. That is, selective disclosure of such information
cannot be made to brokers, analysts, the media, professional
bodies or any other person until the information has been
given to (and released by) the ASX. This includes information
that is subject to embargo as the ASX does not accept
embargoed information.
In the event that at an analyst or media briefing an
inadvertent disclosure is made which is price sensitive, then
that information must be immediately made available to the
market through the ASX.
Analyst and Media Briefings
All material to be presented at an analyst briefing must be
approved by or referred through the Company Secretary prior
to the briefing.
Trading Halts
The Company Secretary may, with the approval of the
Chairman and the Chief Executive Officer, or failing whom,
the Chief Executive Officer and any other Non-Executive
Director, or failing whom any two Non-Executive Directors,
request the ASX to halt trading in the Group’s securities.
For personal use only
Training and Development
The Continuous Disclosure Policy requires that relevant
employees undergo training with respect to disclosure
requirements.
Board Procedures
The Board of Directors must consider and minute at each
full Board meeting whether there are any matters requiring
disclosure. If no matters require disclosure, this must also be
explicitly included in the minutes.
Guidance for Employees
The Board has approved summary guidance designed to
assist all employees in meeting their reporting obligations
under the Continuous Disclosure Policy. This guidance sets
out financial and qualitative materiality thresholds and
provides answers to common questions in relation to press
speculation and third party announcements.
Financial Materiality Thresholds
Any variation of 10-15% or more from previously released full
year financial forecasts or market consensus forecasts may be
considered to be material and is likely to require immediate
disclosure to the market.
In circumstances where a final contract has not been signed
but an announcement may be required, consideration is to
be given as to whether these limits should apply or be varied.
Where new projects have components from various Group
divisions, the aggregate contribution to profit of the project
should be considered and if over 5% of Group forecast,
should be deemed financially material.
Qualitative Materiality Thresholds
Any other matters that are potentially market sensitive should
be referred to the Company Secretary for consideration.
Examples would include:
— Changes at a senior management level;
— A change in accounting policy; and
— An agreement between the Group and a Director
(or related party of the Director).
Announcements in Response to a Third Party
In accordance with the Continuous Disclosure Policy
and specifically requirements to avoid a false market in
the Group’s securities, the Group has adopted differing
approaches in relation to third party announcements. If the
third party is an ASX listed entity, then the Group will consider
issuing a release to ensure the accuracy of the information
provided to the market. It is however, acknowledged that
third party releases on the ASX are automatically tagged to
the AAD symbol if they affect the Group.
Press releases issued by a non-listed third party entity should
not cause the Group to issue an ASX release unless it would
have done so under the materiality thresholds.
Speculation in the press should only cause the Group
to issue an ASX announcement if it would have done so
under the materiality thresholds listed above or the press
speculation is misleading and may be seen to result in a false
market of AAD securities.
The Group may issue an ASX release in response to press
speculation if requested by the ASX regardless of the
level of materiality.
Media Releases
Releases, interviews and other communications to the media
may be undertaken so long as they do not contain or refer to
price sensitive transactions and do not fall within the Group’s
materiality thresholds. Any discussions with or presentation
to third parties should only be undertaken post release to the
ASX of the subject matter if they include material information.
Website
All releases whether material or not are required to be
posted to the Group website for access by investors and
other interested parties.
Principle 6 – Respect the rights of shareholders
Investor Communications
The Group has adopted a specific investor communications
policy for investors and believes that a flexible approach to
investor communications and early adoption of emerging
technology are the most effective manner of increasing
investor participation in the business of the Group.
Throughout the year, the Group follows a calendar of regular
disclosures to the market on its financial and operational
results. An indicative calendar of events is made available to
investors on the Group’s website at www.ardentleisure.com.
In accordance with the Group’s Continuous Disclosure
Policy, the Group must ensure it does not communicate
inside information to an external party except where that
information has previously been disclosed to the market
generally.
As soon as is practicable, all Group announcements and
copies of analyst and media briefings are posted to the
Group’s website. Other information of relevance to security
holders is also made available on the Group’s website,
including annual and half yearly financial reports, key dates,
distribution history, cost base allocations, management fee
breakdowns and the managed investment trust notices.
The website also contains a link to the Group’s security
registrars and a live feed from the ASX for the Group’s security
price information.
Investors Reports
The Group prepares annual reports for investors for each
financial year ending 30 June and half year for the period
ending 31 December. These reports are posted on the
website on their day of release to the ASX. Investors may
elect to receive a hard-copy of these reports or an email
notification once they become available on the website.
The default option for receiving the annual report is via the
Group’s website at www.ardentleisure.com.
Ardent Leisure Group Annual Report 2013
17
For personal use only Corporate Governance Statement
General Meetings
The Group holds an AGM in October or November each year.
The date, time and venue of the AGM are notified to the ASX
when the financial reports are lodged, generally in August
each year. The Board aims to choose a date, venue and time
considered convenient to the greatest number of investors.
All notices of meetings will be accompanied by clear
explanatory notes on the items of business. A copy of any
such notice of meeting will be placed on the Group’s website.
Should an investor not be able to attend a general meeting,
they are able to vote on the resolutions by appointing a
proxy. The proxy form included with the notice of meeting,
will clearly explain how the proxy form is to be completed
and submitted.
The Board will request the auditor to attend each AGM to
answer questions about the conduct of the audit and the
preparation and contents of the Auditor’s Report.
Investor Benefits Program
Investors with 2,000 or more securities are entitled to
participate in an Investor Benefits Program. The Program
aims to provide qualifying investors with an opportunity
to experience some of the assets owned by the Group at
discounted rates.
Principle 7 – Recognise and manage risk
Safety, Sustainability and Environment Committee
In addition to the Audit and Risk Committee detailed in
Principle 4, the Board has established a Safety, Sustainability
and Environment Committee (SSE Committee). The SSE
Committee was established to monitor, review, evaluate and
make recommendations to the Board in relation to OH&S,
sustainability and the environment.
The SSE Committee was established by the Board of Directors
to monitor, review, evaluate and make recommendations to
the Board in relation to the following matters:
Safety
— The effectiveness of OH&S policies and the safety related
aspects of the operational risk management framework
necessary to maintain a safe environment for both guests
and employees across the Group including drafting,
implementing and recommending improvements;
— Setting appropriate goals to maintain the Group’s lost time
injury frequency rate (LTIFR) below industry benchmarks;
— Monitoring the adequacy of existing OH&S resources as
well as their ongoing training and supervision;
— The scope and results of periodic internal and external
fraud/error
reviews of OH&S and operational risks including the process
of identifying and assessing OH&S risks and the adequacy of
existing OH&S risk management systems; and
— The compliance of the Company with regard to existing and
possible future OH&S regulations and determining what if any
changes need to be made to existing work practices in order
to ensure compliance.
Business
Management
18
Ardent Leisure Group Annual Report 2013
Sustainability
— Reviewing the Group’s policies and procedures in relation
to sustainability;
— Monitoring the adequacy of resources applied to
sustainability as well as their ongoing training and
supervision;
— Reviewing any report on sustainability, which is desirable or
required to be prepared pursuant to any ASX Listing Rule or
legislative requirement or which is proposed for inclusion
in the annual report; and
— The compliance of the Company with regard to current laws
and regulations.
Environment
— Evaluating and monitoring the effectiveness of the Group’s
environmental policies and environmental management
plans;
— Evaluating and monitoring the adequacy of environmental
resources as well as their ongoing training and
supervision;
— Reviewing the scope and results of periodic internal
and external reviews of environmental risks including
the process of identifying and assessing environmental
risks and the adequacy of existing environmental risk
management systems; and
— The compliance of the Company with regard to current
environmental laws and regulations and determining what
if any changes need to be made to existing work practices in
order to ensure compliance.
The SSE Committee will not address matters associated with
financial or monetary risk associated with internal financial
controls.
Risk Management Framework
The risk management framework for the Group requires an
annual review by management and the Board. These reviews
ensure that the risk management framework continues to be
a pro-active tool across the Group.
Scope of Risks Considered
The risk management review covers five key business risks:
Key Business Risk
Risk Categories
enterprise
Continuity, Control, Cost, Culture, Efficiency,
Insurance, Knowledge, Legal & Regulatory,
Performance, Privacy, Resourcing, Strategic
Planning, Strategic Execution, Succession
Cash, Brand/Trademark, Consumables &
Trading Stock, Procurement, Defamatory,
Financial Statements, Furniture & Fittings,
Hardware, Information Systems, Information
& Knowledge, Job, Management Reporting,
Payroll, Personal Property, Software, Office
Supplies, Company Income Tax, GST, FBT,
PAYG, Payroll Tax, Web
Framework Awareness, Change,
Confidentiality, Contract, Culture, Detection,
Documentation, Escalation, Interpretation,
Reporting, Resourcing, Responsibility
For personal use only Board secretarial Admission, Conflict, Documentation, Duties,
environmental
& safety
Management
Governance, Legal, Regulatory, Resolution
Contamination, Media/Publicity, Employee
Safety, Guest & Contractor Safety
Risk Assessment Methodology
The risk assessment methodology adopted for these
reviews includes a three step process. Firstly, the inherent
risk for each risk category is determined by evaluating the
likelihood and consequence of the risk based on the current
and existing processes. Risks are evaluated and ultimately
allocated to one of four distinct categories of Extreme, High,
Moderate and Low. Next, the effectiveness of existing risk
controls is reviewed and a ranking determined on a scale
of Good, Fair or Poor. Finally, after the controls have been
assessed, the residual risk factors are divided into three
categories of High, Medium and Low by merging the inherent
risk rating and the effectiveness of the controls rating.
Risk Gap Analysis
During the year, the Group’s senior executives undertook a
third party facilitated risk gap analysis designed to identify
any material risks that had not otherwise been included in
the risk review process.
Chief Executive Officer and Chief
Financial Officer Declarations
The Board has received confirmation from both the Chief
Executive Officer and Chief Financial Officer that their
declarations made in accordance with section 295A of the
Corporations Act 2001 were based upon a sound system
of risk management and internal control and further that
the system is operating effectively in all material respects in
relation to financial reporting risk.
Principle 8 – Remunerate fairly and responsibly
Remuneration and Nomination Committee
The Directors have established a combined Remuneration
and Nomination Committee due to the relatively infrequent
need to call upon the services of the previous Nomination
Committee. The combined Remuneration and Nomination
Committee consists of a minimum of three members with the
majority of members required to be independent Directors.
The Remuneration and Nomination Committee is specifically
responsible for making recommendations to the Board
in relation to setting policies for remuneration programs
appropriate to the Group and remuneration and incentive
schemes of senior management, reviewing the performance
of the Chief Executive Officer on an annual basis, setting
the Group’s recruitment, retention and termination policies
and procedures for senior management, superannuation,
the remuneration framework for Directors and the approval
of any report on executive remuneration, which is required
pursuant to any ASX Listing Rule or legislative requirement
or which is proposed for inclusion in the annual report.
Further details of the Group’s remuneration policies are set
out in the Remuneration Report on pages 30 to 45.
Diversity Policy
On 30 June 2010 the ASX Corporate Governance Council
introduced three new recommendations relating to diversity
within listed entities. Listing Rule 3.2 requires that ASX listed
entities establish a diversity policy (including a requirement
to set and assess measureable targets for achieving gender
diversity) and that a summary of this policy is disclosed in the
annual report.
On 16 December 2010, the Board adopted a Diversity Policy
that aims to promote diversity across the Group through a
number of initiatives.
Any attempt to change the current status quo is unlikely
to drive short term results or change and it was proposed
that the Group adopt a long term approach that focuses on
increasing diversity at junior levels and addressing the various
reasons that hinder female promotion and involvement at
executive levels. Accordingly the Directors agreed to target
an increase in female participation at a managerial level
across the Group from 36% in 2010 to 50% in 2015.
The table below shows the female participation rates across
the Group since the Board adopted the Diversity Policy in
December 2010:
2011
2012
2013
Female
Male
Female
Male
Female
Male
Board of Directors
Senior Management
All Employees
20.0%
39.4%
63.3%
80.0%
60.6%
36.7%
16.7%
42.0%
59.4%
83.3%
58.0%
40.6%
16.7%
42.3%
60.4%
83.3%
57.7%
39.6%
The Group support a number of initiatives aimed at achieving the target increase and has adopted policies on flexible
working arrangements and paid maternity leave. A mentoring program has also been implemented for female executives and
this has been supported by a number of breakfast briefings designed to highlight the challenges faced in the workplace and
to also provide a networking opportunity with both internal and external parties.
Ardent Leisure Group Annual Report 2013
19
For personal use only Financial report
Directors’ report to stapled security holders
income statements
statements of comprehensive income
Balance sheets
statements of changes in equity
statements of cash flows
notes to the financial statements
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
summary of significant accounting policies
Ardent Leisure trust and Ardent Leisure Limited formation
revenue from operating activities
Borrowing costs
Property expenses
net gain/(loss) from derivative financial instruments
Management fees
other expenses
remuneration of auditor
income tax expense
earnings per security/share
Distributions and dividends paid and payable
receivables
Derivative financial instruments
inventories
Property held for sale
other assets
investment properties
Property, plant and equipment
Livestock
intangible assets
Deferred tax assets
Payables
interest bearing liabilities
Provisions
other liabilities
Deferred tax liabilities
contributed equity
security-based payments
reserves
retained profits/(accumulated losses)
Business combinations
cash and cash equivalents
cash flow information
net tangible assets
related party disclosures
Key management personnel
segment information
capital and financial risk management
contingent liabilities
capital and lease commitments
Deed of cross guarantee
Parent entity financial information
events occurring after reporting date
Directors’ declaration to stapled security holders
independent auditor’s report to the stapled security holders of Ardent Leisure Group
20
Ardent Leisure Group Annual Report 2013
21
50
51
52
53
54
55
55
67
67
67
67
67
68
68
69
69
70
71
72
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85
85
86
87
92
93
94
100
101
101
102
103
113
118
125
126
128
130
131
132
134
For personal use only Directors’ report to stapled
security holders
Directors’ report to stapled security holders
The Directors of Ardent Leisure Management Limited
(Manager), (as responsible entity of Ardent Leisure Trust)
and the Directors of Ardent Leisure Limited present their
report together with the consolidated financial report of
Ardent Leisure Group (Group or Consolidated Group) and the
consolidated financial report of Ardent Leisure Limited Group
(ALL Group) for the year ended 30 June 2013.
The financial report of the Group comprises Ardent Leisure
Trust (Trust) and its controlled entities including Ardent
Leisure Limited (ALL or Company) and its controlled entities.
The financial report of ALL comprises of Ardent Leisure
Limited and its controlled entities.
Ardent Leisure Limited is a company limited by shares,
incorporated and domiciled in Australia. Its registered office
and principal place of business is Level 16, 61 Lavender Street,
Milsons Point NSW 2061.
The units of the Trust and the shares of ALL are combined
and issued as stapled securities in the Group. The units of
the Trust and shares of ALL cannot be traded separately and
can only be traded as stapled securities. Although there is no
ownership interest between the Trust and ALL, the Trust is
deemed to be the parent entity of the Group under Australian
Accounting Standards.
1 Directors
The following persons have held office as Directors of the
Manager and ALL during the period and up to the date of
this report:
• Neil Balnaves AO (Chairman)
4 Operating and financial review
Overview
The Group’s strategy is to focus primarily on domestic leisure
segments with mass market appeal. Over the past six years,
the Group has diversified through the creation of five core
operating divisions, being health clubs, family entertainment
centres in the US, theme parks, marinas and bowling centres.
The Group’s theme parks and marinas divisions occupy
strategic positions within their respective markets while
the other three divisions provide well established operating
platforms with organic growth opportunities to roll out new
centres or make “bolt-on” acquisitions as conditions permit.
During the year, the Group purchased Fenix Fitness
Clubs (Fenix) comprising 10 health clubs in Queensland
and Victoria, and the South Australian portfolio and the
Essendon health club of Fitness First comprising eight
health clubs for a combined cash consideration of $67.6
million. Refer to Note 32 to the financial statements. At the
time, a successful $50.0 million placement of securities and
a $22.2 million Security Purchase Plan were completed to
fund the acquisitions and to provide further funding for the
expansion of the family entertainment centre division.
The Group also renegotiated its syndicated debt facilities,
increasing its available facilities by $91.7 million from $239.8
million to $331.5 million and extending the maturity of
debt to three and four year terms, as set out in note 24
to the financial statements. The Group also increased the
proportion of US$ facilities from US$40 million to US$120
million to facilitate funding of the Main Event division.
• Roger Davis
• Anne Keating
• Don Morris AO
• Greg Shaw
• George Venardos.
2 Principal activities
The Group’s principal activity is to invest in and operate leisure
and entertainment businesses in Australia, New Zealand and
the United States. There were no significant changes in the
nature of the activities of the Group during the year.
3 Distributions
The distribution of income for the year ended 30 June 2013
will be 12.0 cents (2012: 11.7 cents) per stapled security which
will be paid by the Trust. An interim distribution of 6.6 cents
(2012: 6.5 cents) per stapled security was paid in February
2013. A final distribution for the year ended 30 June 2013
of 5.4 cents (2012: 5.2 cents) per stapled security will be paid
in August 2013. A provision has not been recognised in the
financial statements at 30 June 2013 as this distribution had
not been declared at the reporting date. During the year, a
subsidiary of ALL paid to the Trust $3.6 million (2012: $2.5
million) relating to convertible notes which are classified as
equity under Australian Accounting Standards. No dividend
was recommended or paid by ALL in respect of the year
ended 30 June 2013.
21
For personal use only
Directors’ report to stapled
security holders
4 Operating and financial review (continued)
Group results
The performance of the Consolidated Group, as represented by the aggregated results of its operations for the year, was as follows:
Health Clubs
Family entertainment centres
Theme parks
Marinas
Bowling centres
Other
Total
Depreciation and amortisation*
Divisional EBIT
Segment
Revenues
2013
$’000
140,689
72,695
97,086
23,141
115,230
62
Segment
Revenues
2012
$’000
102,577
55,236
93,707
23,672
114,241
641
Segment
EBITDA*
2013
$’000
30,329
17,001
30,450
10,687
12,773
(7)
Segment
EBITDA*
2012
$’000
19,959
12,312
28,904
10,669
14,825
177
448,903
390,074
101,233
86,846
(22,644)
(20,468)
78,589
66,378
Pre-opening expenses, straight lining of fixed rent increase,
IFRS depreciation and Goodlife intagible asset amortisation
(18,496)
not including in divisional EBIT
Property valuation gains/(losses) 90
2,613
Gain on acquisition
Net gain/(loss) from derivative financial instraments
602
Corporate costs including gains on sale of assets, interest
income and foreign exchange gains and losses
Borrowing costs
Net tax expense
(12,159)
(12,288)
(3,334)
(13,013)
(15,507)
—
(392)
(9,365)
(12,914)
(2,560)
Profit
Core earnings (Note 11 to the financial statements)
35,617
12,627
50,257
42,145
* Segment earnings before interest, tax, depreciation and amortisation (EBITDA) excludes pre-opening expenses, straight lining of fixed rent increases, IFRS depreciation and amortisation of Goodlife
intangible assets. IFRS depreciation represents depreciation recorded under Australian Accounting Standards effective 1 July 2005 on property, plant and equipment which were previously classified
as investment properties. Management believes that adjusting the segment result for these items allows the Group to more effectively compare underlying performance against prior periods and
between divisions. Segment EBRITDA, which represents segment EBITDA before property costs, is another measure used by management to assess the trading performance of divisions excluding the
impact of property costs.
Profit for the year increased by $23.0 million, or 182%, to
$35.6 million, mainly due to the following factors:
— Revenue from operating activities increased by $58.8
million, or 15.1%, to $448.9 million and divisional EBITDA
increased by $14.4 million, or 16.6%, to $101.2 million.
Further commentary on divisional results is set out
separately below;
— Pre-opening expenses increased by $1.5 million due to
bowling, health club and family entertainment centre
developments in the year and Goodlife intangible
asset amortisation increased by $4.6 million due to the
acquisition of new health clubs;
— There were $15.5 million of property valuation losses in
the prior year compared to $0.1 million gains in the current
year and a $2.6 million gain on acquisition of health clubs
in the current year;
— Corporate costs increased by $2.8 million, or 29.8%, to
$12.2 million of which $1.3 million was driven by an
increase in business acquisition costs.
22
Ardent Leisure Group Annual Report 2013
— Borrowing costs decreased by $0.6 million, or 4.8%, to
$12.3 million due to a slight reduction in Australian dollar
debt, decreases in Australian interest rates and a higher
proportion of total debt being in US dollars at lower
interest rates; and
— Net tax expense increased by $0.8 million, or 30.2%, due
to increased earnings of the Group and new health clubs
which were acquired in ALL during the period.
The above factors also delivered an increase in core
earnings of $8.1 million, or 19.2%, to $50.3 million (2012:
$42.1 million). Core earnings (as defined in Note 11 to the
financial statements) represents the earnings of the Group
after adding back unrealised items such as unrealised gains
or losses on derivatives, unrealised property valuation
gains and losses, straight lining of fixed rent increases, IFRS
depreciation, amortisation of Goodlife intangible assets and
one-off realised items.
For personal use only
Directors’ report to stapled
security holders
4 Operating and financial review (continued)
Health clubs
The performance of health clubs is summarised as follows:
Total revenue
EBRITDA (excluding pre‑opening expenses)
Operating margin
Property costs (excluding straight-line rent)
EBITDA
2013
$’000
2012
$’000
Change
%
140,689
60,032
42.7%
(29,703)
102,577
40,224
39.2%
(20,265)
30,329
19,959
37.2
49.2
46.6
52.0
The division showed strong performance across its portfolio during the year, with an increase in revenues of 37.2% to $140.7 million
and growth in EBITDA of 52.0% to $30.3 million. This was driven predominantly by acquisitions and developments, accompanied by
improved constant club trading as set out below:
Revenue
2013
$’000
Revenue
2012
$’000
Change
%
EBRITDA
2013
$’000
EBRITDA
2012
$’000
Constant clubs
Clubs closed
New clubs/aquisitions
Corporate and regional office expenses/sales
and marketing 158 264 (40.2) (10,481) (7,611)
94,890
2,450
4,973
94,937
615
44,979
44,642
623
2,570
47,038
98
23,377
—
(74.9)
804.5
Total 140,689 102,577 37.2 60,032 40,224
Change
%
5.4
(84.3)
809.6
37.7
49.2
Fenix and Fitness First health clubs, acquired in the first half of the year, have operated in line with expectations with a turnaround in
member growth in the Fitness First clubs acquired. Membership of the Fitness First clubs grew 3.3% in the June 2013 quarter and is
building momentum.
Major refurbishments at Cottesloe, Helensvale and Prahran are now complete and are expected to positively impact FY14 earnings.
In addition, new clubs at Maroochydore and Dernancourt are contributing strongly with a further new site scheduled to open in
Northlands, Victoria in December 2013.
During the year, the division strengthened its operating margin, with an increase of 3.5% to 42.7%, as benefits of labour productivity,
efficiency and penetration of personal training services continue. FY14 will realise the full year benefit of a personal training model
restructure and digital advertising opportunities.
Additional corporate roles have been added to support the larger portfolio and growth post acquisitions and personal trainer
numbers are set to increase on the back of stronger trainer academy performance and improved point of sale uptake of personal
training offers.
The health club division strategy will be to continue to grow revenue and earnings through new developments, acquisitions and
organic constant club growth.
Family entertainment centres
The performance of Main Event’s family entertainment centres is summarised as follows:
Total revenue
EBRITDA (excluding pre‑opening expenses)
Operating margin
Property costs
EBITDA
2013
US$’000
73,543
26,669
36.3%
(9,513)
2012
US$’000
56,659
20,117
35.5%
(7,322)
17,156
12,795
Change
%
29.8
32.6
29.9
34.1
Ardent Leisure Group Annual Report 2013
23
For personal use only
Directors’ report to stapled
security holders
4 Operating and financial review (continued)
Family entertainment centres
During the year, total US dollar revenue grew by 29.8%, driving EBITDA growth of 34.1%. This was due to new developments and
growth in constant centre revenue and earnings, further analysis of which is set out below:
Revenue
2013
US$’000
Revenue
2012
US$’000
Change
%
EBRITDA
2013
US$’000
Constant centres
New centres
Corporate and regional office expenses/sales
and marketing — — — (4,577)
24,178
7,068
55,108
1,551
57,576
15,967
4.5
929.5
EBRITDA
2012
US$’000
22,834
573
(3,290)
Total 73,543 56,659
29.8
26,669
20,117
Change
%
5.9
1,133.5
39.1
32.6
Constant centre revenue grew by 4.5%, driven by increased guest spend from value-based limited time promotions, improved food
and beverage product range and amusement games. Increasing volumes and disciplined cost management have continued to
improve margins.
The overall economy in Texas and the Sun Belt region continues to grow. New centres in San Antonio, Katy and Stafford are exceeding
portfolio average revenue. A further centre in Tempe, Arizona is expected to open late in the second quarter of FY14. Negotiations are
progressing on four additional sites and the division remains on track to meet the target of 19 centres by the end of FY15.
The family entertainment centre division strategy will be to continue to grow revenue and earnings through new centre development
and constant centre growth.
Theme parks
The performance of the Theme parks division is summarised as follows:
Total revenue
EBRITDA
Operating margin
Property costs
EBITDA
Attendance
Per capita spend ($)
2012
$’000
Change
%
2013
$’000
97,086
32,211
33.2%
(1,761)
93,707
30,485
32.5%
(1,581)
30,450
28,904
1,874,951
51.78
1,736,301
53.97
3.6
5.7
11.4
5.3
8.0
(4.1)
Earnings returned to growth in the current year with a 5.3% lift in EBITDA. This was driven by increased attendance levels resulting
from product, brand and marketing strategies, anchored by successful Unlimited World Pass campaigns with improved value offers.
The new Dreamworks Kung Fu Panda precinct with two new rides opened in December 2012. In addition, the return of Big Brother,
a new ride for Wiggles World and two new Tiger Cubs also added new experiences and customer value. Upgrades to food and
beverage, retail and photographic product offerings also provided improved guest satisfaction and in-park spending opportunities.
SkyPoint earnings also grew strongly, driven by the inclusion of SkyPoint in the Unlimited World Pass offer, a new Brand strategy,
addition of a new breakfast and events business and SkyPoint climb attraction.
During the year, the division grew its margins through refined operating efficiencies and completion of initiatives to combat rising
energy and water costs.
A new Tigress, Nika, arrived in June 2013 to support the Dreamworld breeding program and the conservation work of the
Dreamworld Wildlife Foundation. The outlook for FY14 is positive with the return of Big Brother for a second series in July 2013, an all
new attraction based on Zombies planned for launch in September 2013 and Stage 1 of a new Aboriginal precinct expected to be
opened for the December 2013 holidays.
The division will also continue its investment in digital, social and e-commerce platforms.
The strategy of the theme park division is to grow revenue and earnings by continuing to invest in unique products and by providing
value and a great experience to its customers.
24
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4 Operating and financial review (continued)
Marinas
The performance of marinas is summarised as follows:
Total revenue
EBRITDA
Operating margin
Property costs
EBITDA
2012
$’000
Change
%
2013
$’000
23,141
13,034
56.3%
(2,347)
23,672
13,256
56.0%
(2,587)
10,687
10,669
(2.2)
(1.7)
(9.3)
0.2
Revenue from marinas fell by $0.5 million, or 2.2%, to $23.1 million, however, EBITDA growth was achieved through careful cost
management. Marina revenue principally comprises the following:
Berthing
Land
Fuel and other
Total
2013
$’000
12,891
5,459
4,791
2012
$’000
13,014
5,647
5,011
23,141
23,672
Change
%
(0.9)
(3.3)
(4.4)
(2.2)
Berthing revenues decreased by 0.9% compared to prior year with full year occupancy at 84% and average berthing rates up 2.5%
on the prior year. Land revenues also reduced by 3.3% due to restructured lease arrangements with several major tenants; however,
the land portfolio remains close to full occupancy. Fuel and other revenues are down 4.4% on the prior year with adverse April 2013
weather impacting Nelson Bay’s peak fuel sales period.
The marina division strategy is focused on growing revenue by increasing occupancy at each of its marinas.
Bowling centres
The performance of bowling centres is summarised as follows:
Total revenue
EBRITDA (excluding pre‑opening expenses)
Operating margin
Property costs (excluding straight-line rent)
EBITDA
2013
$’000
2012
$’000
Change
%
115,230
36,381
31.6%
(23,608)
114,241
36,718
32.1%
(21,893)
12,773
14,825
0.9
(0.9)
7.8
(13.8)
The division recorded total revenues of $115.2 million, with growth of 0.9% compared to the prior year. January and April school holiday
performance recorded positive growth, with customers responding well to new value propositions across the school holidays.
Revenue
2013
$’000
Revenue
2012
$’000
Change
%
EBRITDA
2013
$’000
EBRITDA
2012
$’000
Constant centres
Centres closed
New centres
Corporate and regional office expenses/sales
and marketing 196 53 269.8 (15,324) (15,163)
110,187
—
4,001
106,927
—
8,107
50,284
(5)
1,602
48,537
—
3,168
(3.0)
—
102.6
Total 115,230 114,241 0.9 36,381 36,718
Change
%
(3.5)
(100.0)
97.8
1.1
(0.9)
25
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Directors’ report to stapled
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4 Operating and financial review (continued)
Bowling centres (continued)
Constant revenue fell by 3.0% but improved from a decrease of 3.6% in the first half of the year to a decrease of 2.3% in the second
half. Similarly, constant centre EBRITDA trends improved substantially from a first half decline of 6.3% to a 0.2% decline in the
second half. This improvement was driven by strong school holiday results in the second half of the year, accompanied by tighter
management of all controllable costs.
New centres and refurbished centres continue to deliver positive results, with Penrith exceeding expectations and improving
performance trends evident in Liverpool, Dee Why and Norwood. During the year, trading in a number of centres, including Panmure,
North Strathfield and Rooty Hill have been impacted by development and construction works.
The division continues to focus on its strategy of “exciting & entertaining” its customers and is in the process of building value
propositions across all customer segments that is expected to drive loyalty and increased visitation to its centres. FY14 will see
continuing focus on controlling costs, with a number of initiatives planned to assist the division in FY14, as well as investing in better
technologies and equipment.
Overall the Group benefits from the diversity of its five core operating divisions. Each of the divisions has a growth strategy for FY14
with a common theme of offering the customer high quality product, a consistently high level of customer service and value. The
combination of the successful equity raise during the year and the debt facility extension has ensured that the Group has ample
capacity to fund future growth.
5 Significant changes in the state of affairs
In the opinion of the Directors, there were no significant changes in the state of affairs of the Consolidated Group or ALL Group
that occurred during the year not otherwise disclosed in this report or the financial statements.
6 Value of assets
Value of total assets
Value of net assets
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL
Group
2013
$’000
ALL
Group
2012
$’000
799,742 675,910 323,793 221,159
35,626
487,290
82,148
406,655
The value of the Group’s and ALL Group’s assets is derived using the basis set out in Note 1 to the financial statements.
7 Interests in the Group
The movement in stapled securities of the Group during the year is set out below:
Stapled securities on issue at the beginning of the year
Stapled securities issued under Distribution Reinvestment Plan
Stapled securities issued for business acquisitions
Stapled securities issued for Security Purchase Plan
Stapled securities issued as part of ALL’s employee security-based payments plans
Stapled securities on issue at the end of the year
Consolidated
Group
2013
Consolidated
Group
2012
334,209,401 318,147,978
13,045,759
2,595,539
—
420,125
5,647,860
39,062,500
17,363,566
1,520,660
397,803,987 334,209,401
26
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27
For personal use only Directors’ report to stapled
security holders
7 Information on current Directors
Neil Balnaves AO
chairman
Appointed:
Ardent Leisure Management Limited – 26 October 2001.
Ardent Leisure Limited – 28 April 2003
Age: 69
Neil Balnaves was appointed as Chairman of the Group in
2001. Neil has worked in the entertainment and media
industries for over 48 years previously holding the position
of Executive Chairman of Southern Star Group Limited which
he founded. Neil is a Trustee Member of Bond University and
has an Honorary Degree of Doctor of the University. Neil is
a member of the Advisory Council and Dean’s Circle of the
University of New South Wales (Faculty of Medicine) and in
2010 received an Honorary Doctorate of the University.
Neil is a Director of Technicolor Australia Limited and serves
on the boards of numerous advisory and community
organisations and is a Foundation Fellow of the Australian
Institute of Company Directors. Neil’s former directorships
include Hanna-Barbera Australia, Reed Consolidated
Industries, Hamlyn Group, Taft Hardie and Southern Cross
Broadcasting.
In 2006, Neil established The Balnaves Foundation, a
philanthropic fund that focuses on education, medicine and
the arts. In 2010, Neil was appointed an Officer of the Order
of Australia for his services to business and philanthropy.
Neil is non-executive Chairman of the Group, Chairman of the
Remuneration and Nomination Committee and is a member
of the Audit and Risk Committee.
Former listed directorships in last three years:
None
Interest in stapled securities
2,439,062
Roger Davis
Director
Appointed:
Ardent Leisure Management Limited – 1 September 2009.
Ardent Leisure Limited –28 May 2008
Age: 61
Roger Davis was appointed a Director of the Company in
2008. Roger brings to the Board over 32 years of experience
in banking and investment banking in Australia, the US
and Japan. Roger is presently Chairman of the Bank of
Queensland and a Consulting Director at Rothschild
(Australia) Limited and holds directorships at Argo
Investments Limited, Aristocrat Leisure Limited, The Trust
Company Limited, TIO Limited and AIG Australia Limited.
Previously, he was Managing Director at Citigroup where
he worked for over 20 years and more recently was a Group
Managing Director at ANZ Banking Group.
28
Ardent Leisure Group Annual Report 2013
Roger’s former directorships include the chairmanship of
Esanda, along with directorships of ANZ (New Zealand)
Limited, Charter Hall Office Management Limited (the
manager for Charter Hall Office REIT) and Citicorp Securities
Inc. in the United States.
Roger holds a BEc (Hons) from The University of Sydney and a
Master of Philosophy from Oxford.
Roger is Chairman of the Safety, Sustainability & Environment
Committee and is a member of both the Remuneration and
Nomination Committee and the Audit and Risk Committee.
Former listed directorships in last three years:
Charter Hall Office Management Limited (Resigned 30 April 2012)
Interest in stapled securities
130,275
Anne Keating
Director
Appointed:
Ardent Leisure Management Limited – 30 March 1998.
Ardent Leisure Limited – 28 April 2003
Age: 59
Anne Keating was appointed a Director of Ardent Leisure
Management Limited in 1998. Anne is currently a Director of
REVA Medical Inc., Goodman Group and GI Dynamics, Inc. and
is a member of the Advisory Council of CIMB Australia. Anne
is also a Director of the Garvan Institute of Medical Research
and a Governor of the Cerebral Palsy Alliance Research
Foundation.
Anne’s former directorships include ClearView Wealth
Limited, STW Communications Group Limited, Insurance
Australia Group Limited, NRMA, the WorkCover Authority of
NSW, the Tourism Task Force (now known as the Tourism and
Transport Forum), Spencer Street Station Redevelopment
Holdings Limited and the Victor Chang Cardiac Research
Institute. Anne was the General Manager of Australia for
United Airlines from 1993 to 2001.
Anne is a member of the Group’s Remuneration and
Nomination Committee and the Audit and Risk Committee.
Former listed directorships in last three years:
STW Communications Group Limited (Resigned 10 February 2011)
ClearView Wealth Limited (Resigned 23 October 2012)
Interest in stapled securities
74,461
For personal use only Directors’ report to stapled
security holders
7 Information on current Directors (continued)
Don Morris AO
Director
Appointed:
Ardent Leisure Management Limited – 1 January 2012.
Ardent Leisure Limited – 1 January 2012
Age: 69
Don Morris was appointed a Director of both the Company
and the Manager in January 2012 and brings to the Board
significant experience of advertising, marketing and
promotion, particularly for tourism entities.
Don was a founding principal of Mojo Australia Advertising,
creators of several iconic Australian advertising campaigns,
including ‘I still call Australia Home’ for Qantas; the Paul Hogan
‘Shrimp on the Barbie’ for Australian tourism, and ‘C’mon Aussie
C’mon’ for World Series Cricket.
Don was the former Chair of the Sydney Olympics
Community Support Commission and both the Australian
Tourist Commission and Tourism Queensland, and a former
director of R M Williams Limited, Harvey World Travel Limited,
PMP Limited, the Tourism & Transport Forum, Tourism Asset
Holdings Limited, Hamilton Island Enterprises Limited and
Port Douglas Reef Resorts Limited.
Don was appointed an Officer of the Order of Australia
in 2002 for services to tourism and holds a Bachelor of
Economics from Monash University.
Don’s current directorships include Ausflag Limited and The
Sport and Tourism Youth Foundation. He was appointed
an Adjunct Professor in Tourism, Leisure, Sport & Hotel
Management at Griffith University in 2012.
Don is a member of the Remuneration and Nomination
Committee and the Audit and Risk Committee.
Former listed directorships in last three years:
None
Interest in stapled securities
Nil
Greg Shaw
Director and chief executive officer
Appointed:
Ardent Leisure Management Limited – 22 September 2009.
Ardent Leisure Limited – 22 September 2009
Age: 54
Greg Shaw was appointed a Director in September 2009
following the completion of the internalisation project. Greg
is the Chief Executive Officer and Managing Director of the
Group and was appointed to this role in 2002.
Prior to joining the Group, Greg was the Managing Director of
Port Douglas Reef Resorts Limited, a major resort owner and
property development group. In this role, Greg was awarded
the Australian Chartered Accountant in Business Award for a
$6 million profit turnaround in two years. Greg qualified as a
Chartered Accountant in 1983.
Greg is a member of the Safety, Sustainability and
Environment Committee.
Former listed directorships in last three years:
None
Interest in stapled securities
768,369
George Venardos
Director
Appointed:
Ardent Leisure Management Limited – 22 September 2009.
Ardent Leisure Limited – 22 September 2009
Age: 55
George Venardos was appointed a Director of both the
Company and the Manager in September 2009. George is a
Chartered Accountant with more than 30 years’ experience in
finance, accounting, insurance and funds management.
His former positions include Group Chief Financial Officer of
Insurance Australia Group and for 10 years Chairman of the
Finance & Accounting Committee of the Insurance Council of
Australia. George also held the position of Finance Director
of Legal & General Group in Australia and was named Insto
Magazine’s CFO of the Year for 2003.
George holds a Bachelor of Commerce in Accounting, Finance
and Systems from the University of New South Wales. He
is also a Fellow of The Institute of Chartered Accountants
in Australia, the Australian Institute of Company Directors
and the Taxation Institute of Australia. He holds a Diploma
in Corporate Management and is a Fellow of Chartered
Secretaries Australia.
George is a Director of IOOF Holdings Limited and Perennial
Investment Partners Limited, and is the Non-Executive
Chairman of BluGlass Limited and Guild Group Holdings
Limited.
George is Chairman of the Audit and Risk Committee and is
also a member of the Safety, Sustainability and Environment
Committee and the Remuneration and Nomination
Committee.
Former listed directorships in last three years:
Miclyn Express Offshore Limited (Resigned 21 June 2013)
Interest in stapled securities
111,592
Ardent Leisure Group Annual Report 2013
29
For personal use only Directors’ report to stapled
security holders
9 Meetings of Directors
The attendance at meetings of Directors of the Manager and ALL during the year is set out in the following table:
Full meetings
of Directors
Audit and Risk
Meetings of Committees
Remuneration
and Nomination
Safety, Sustainability
and Environment
Eligible to
Eligible to
Eligible to
Eligible to
attend Attended
attend Attended
attend Attended
attend Attended
Neil Balnaves AO
Roger Davis
Anne Keating
Don Morris AO
Greg Shaw
George Venardos
8
8
8
8
8
8
7
8
8
8
8
8
4
4
4
4
N/A
4
4
4
4
4
N/A
4
5
5
5
5
N/A
5
4
5
5
5
N/A
5
N/A
4
N/A
N/A
4
4
N/A
4
N/A
N/A
4
4
10 Company Secretary
The Group’s Company Secretary is Alan Shedden. Alan was appointed to the position of Secretary of the Manager and ALL
on 9 September 2009.
Alan has over 14 years of experience as a Company Secretary and, prior to joining the Group, held positions at Brookfield
Multiplex Limited and Orange S.A., the mobile telecommunications subsidiary of France Telecom S.A. Alan holds a degree in
business studies and is a Fellow of the Institute of Chartered Secretaries and Administrators.
11 Remuneration report
The Manager and the Directors of ALL present the remuneration report for the Group for the year ended 30 June 2013.
The remuneration report is set out under the following main headings:
a) Key remuneration objectives;
b) Remuneration framework and strategy;
c) Details of remuneration – key management personnel;
d) Service agreements of key management personnel;
e) Deferred Short Term Incentive Plan (DSTI)
f) Long Term Incentive Plan (LTIP); and
g) Additional information.
The information provided in the remuneration report has been audited as required by section 308 (3C) of the Corporations
Act 2001.
a) Key remuneration objectives
The objective of the Group’s executive framework is to attract and retain high quality executives by ensuring that executive
remuneration is competitive with prevailing employment market conditions and also providing sufficient motivation by
ensuring that remuneration is aligned to the Group’s results.
In May 2013, the Remuneration and Nomination Committee engaged independent remuneration consultants from Aon Hewitt
to benchmark the remuneration packages and structure of the Chief Executive Officer and the Chief Financial Officer prior to
remuneration and performance reviews to be undertaken after the financial year end. This benchmark exercise did not include
the provision of a recommendation; however, the exercise was conducted on arm’s length terms from management and
reported directly to the Chair of the Remuneration and Nomination Committee. As the Group operates in specialised sectors,
difficulties arise in benchmarking executives’ remuneration. In order to provide a more meaningful assessment, the scope of
the Aon Hewitt benchmark exercise was expanded to (where possible) include unlisted groups and businesses that shared the
same international footprint, diversity of operations and complexity of structure.
The remuneration packages of the Chief Executive Officer and the Chief Financial Officer for the financial year are set out in the
table below:
Position Base salary STI DSTI LTI
Total target
remuneration
Chief Executive Officer $750,000
Chief Financial Officer $400,000
50%
50%
25%
25%
37.5%
37.5%
$1,593,750
$850,000
It should be noted that the Short Term Incentive (STI), DSTI and LTI figures set out above are considered “at risk” and will only be
paid if performance targets have been achieved.
30
Ardent Leisure Group Annual Report 2013
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security holders
11 Remuneration report (continued)
b) Remuneration framework and strategy
The Group’s remuneration framework seeks to align executive
reward with the achievement of strategic objectives and in
particular, the creation of sustainable earnings growth for
investors. In addition, the Board seeks to have reference to
market best practice to ensure that executive remuneration
remains competitive, fair and reasonable.
i) Non-Executive Directors
Fees paid to Non-Executive Directors reflect the demands
which are made on, and the responsibilities of, the Directors.
Non-Executive Directors’ fees are reviewed annually by the
Board and the Remuneration and Nomination Committee.
Non-Executive Directors are paid solely by the way of
directors’ fees and do not participate in any equity or short
term cash-based incentives schemes. Non-Executive Directors
bring a depth of experience and knowledge to their roles
and are a key component in the effective operation of the
Board. The maximum aggregate of directors’ fees payable
to Directors of the Group is set out in clause 16.1 of the
Constitution of Ardent Leisure Limited. The maximum total
aggregate level of directors’ fees payable by the Group is
$940,000 per annum and was set by investors at the 27
October 2011 general meeting.
In 2009, the Board approved a simplified structure for
calculating directors’ fees. The simplified fee structure takes
into account individual Directors’ duties and service and was
applied from 1 September 2009.
Position
Annual fee
$175,000
Chairman
$110,000
Other Non-Executive Director
$20,000
Audit and Risk Committee – Chair
$15,000
Audit & Risk Committee – Member
Remuneration and Nomination Committee membership $7,500
Saftey, Sustainability and Environment
$7,500
Committee membership
ii) Executive pay
The executive pay and reward framework has three
components:
— base pay and benefits;
— performance incentives; and
— other remuneration such as superannuation.
The combination of these comprises the executive’s total
remuneration.
Base Pay
Performance incentives
A total employment cost which
can be made up of a mix of cash
salary, employer superannuation
contributions, non-financial benefits
such as provision of a motor vehicle.
sti
Dsti
LtiP
cash performance bonus
equity incentive based upon
equity incentive aligned
set against pre-determined
actual cash bonus paid and
to targeted investor returns.
key performance indicators.
deferred for one and two years.
secure
At risK
At risK
At risK
Base pay
Base pay includes salary, employer superannuation
contributions and non-cash benefits such as provision of a
motor vehicle. Base pay is reviewed annually to ensure that
executive pay is competitive with the market. There are no
guaranteed base pay increases in the contracts. Base pay is
also reviewed on promotion.
Performance incentives
Performance incentives may take the form of Short Term
Incentives (STI), Deferred Short Term Incentives (DSTI) or
Long Term Incentive Plan (LTIP).
STI
The STI or bonus program is designed to reward executives
for achievement of a number of key performance indicators
(KPIs). These KPIs are split into financial and personal
categories with the financial measures representing 50%
of an executive’s STI entitlement and personal measures
representing the remaining 50% for the year ended 30 June
2013.
KPI
Earnings and revenue-based
financial measures
Personal & Board discretionary
Total
Maximum STI
Entitlement
50%
50%
100%
Ardent Leisure Group Annual Report 2013
31
For personal use only
Directors’ report to stapled
security holders
11 Remuneration report (continued)
For executives who act in Group-wide roles the financial KPIs
are based on Group earnings related measures. In contrast,
divisional earnings measures are used for those executives
who occupy divisional roles.
Personal KPIs for executives are not financial in nature and
are set around execution of improvements and initiatives in
such functions as risk management, compliance, relationship
management, customer satisfaction, employee engagement
and other strategic initiatives. Examples of personal KPIs are
set out in the table below:
Example of personal KPIs
— Develop a dynamic capital adequacy plan to address the
following criteria:
• Competitive cost of capital;
• Innovative funding flexibility;
• Distribution/dividend policy; and
• Future balance sheet and cash flow capacity to
meet the strategic needs of the Group.
— Review and present the Group’s five year strategic vision
and plan.
— Drive improvements across the Group in employee
workers compensation claims with a view to creating a
long term reduction in lost time injury frequency rate.
The extent to which an executive achieves their personal
and financial KPIs is assessed by the Remuneration and
Nomination Committee based upon recommendations
from the Managing Director. The resulting cash bonuses
are traditionally payable in cash by 30 September each year.
Using a profit target ensures variable award is only available
when value has been created for investors and when profit is
consistent with the Group’s business plan.
Maximum achievable awards to key management personnel
(KMP) under the STI range between 25% and 50% of an
executive’s base salary (including superannuation) dependent
upon the executive’s position.
DSTI
The DSTI program was established by the Directors on 1 July
2010 to provide a retention incentive for key employees.
The DSTI is linked to the actual achievement of KPIs under
the STI plan with a percentage of the actual STI paid to an
executive being matched in performance rights to acquire
fully paid Group stapled securities for $nil exercise price. The
performance rights issued under the DSTI vest in two equal
tranches in 12 months and 24 months.
It should be noted that KMP are required to forego a
component of their LTIP entitlement in order to participate
in the DSTI. In this way, a component of the LTIP was simply
moved into the DSTI and overall remuneration packages
remained broadly unchanged.
32
Ardent Leisure Group Annual Report 2013
LTIP
The LTIP was established by the Board of Directors in 2009 to
replace the Executive Securities Plan (ESP) and to take into
account changes to the Australian taxation regime in relation
to employee share plans. Awards of performance rights
under the LTIP range between 10% and 50% of an executive’s
base salary (including superannuation) dependent upon
the executive’s role. Further details of the LTIP are set out in
section (f) below.
iii) Alignment with investor interests
The Directors are committed to the alignment of executives’
remuneration with investors’ interests and seek to achieve
this through the most appropriate mix of base pay and short
term and long term incentives.
In the 2013 financial year, KMP KPIs were set to drive
divisional and Group earnings, with targets set within the
Group’s budgetary framework. In this way, the KPIs used to
determine performance under the STI are used to align KMP
remuneration with sustainable earnings growth and other
operational long term goals. The DSTI is aligned to these
KPIs and acts as a two year retention tool to ensure that
earnings targets are not achieved at the expense of long term
profitability and growth.
The LTIP further aligns executives’ remuneration with long
term investor returns through the total shareholder return
performance hurdle. In this way, the LTIP provides a direct
link between executive reward and investor return and
offers no benefit to individual executives unless the Group’s
performance exceeds the 50th percentile of the benchmark
Australian Securities Exchange (ASX) Small Industrials index.
c) Details of remuneration – key management personnel
Key management personnel (KMP) are defined in AASB
124 Related Party Disclosures as those having authority and
responsibility for planning, directing and controlling the
activities of the Group. In December 2012, the Directors
reviewed the list of those executives previously assessed as
being KMP to take into account the growing diversity of the
Group’s earnings streams. Based upon divisional earnings
materiality to the Group, and in addition to the Group’s Non-
Executive Directors, KMP for the year ended 30 June 2013
were considered to comprise the following:
Position
Chief Executive Officer
Chief Financial Officer
CEO - Bowling
CEO - Theme parks
CEO - Main Event
CEO Health clubs
Name
Greg Shaw
Richard Johnson
Lee Chadwick
Todd Coates
Charlie Keegan
Greg Oliver
For personal use only
Directors’ report to stapled
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11 Remuneration report (continued)
Details of the remuneration of KMP of the Group for 2013 and 2012 are set out in the table below. The table sets out the total
cash benefits paid to the KMP in the relevant period and, under the heading “Security-based payments”, shows a component
of the fair value of the performance rights. The fair value of the performance rights at grant date is recognised over the vesting
period as an employee benefit expense. Further details of the fair value calculations are set out in sections (e) and (f) below.
Short‑term
benefits
Post‑employment
benefits
Other long‑term
benefits
Cash
Super‑
bonus annuation Retirement Retention
$
$
$
$
Security‑
based
Other Termination payment payments
$
Total cash
$
$
$
Security‑
based
Total payment
$ % of total
Salary
Year $
Independent Directors
Neil Balnaves AO
Chairman
Roger Davis
Anne Keating
2013 181,098
2012 181,725
2013 128,440
2012 128,440
2013 121,560
2012 121,560
Donald Morris AO (1) 2013 121,560
2012 58,198
2013 133,027
2012 133,027
George Venardos
—
—
—
—
—
—
—
—
—
—
16,402
15,775
11,560
11,560
10,940
10,940
10,940
5,238
11,973
11,973
Executive Director
Greg Shaw
Chief Executive Officer
Other key management
personnel
Current Executives
Richard Johnson
Chief Financial Officer
2013 733,530
2012 734,225
281,250
345,000
16,470
15,775
2013 383,530 160,000
2012 384,225 185,080
16,470
15,775
Lee Chadwick (2)
2013 268,107
CEO – Bowling 2012 N/A
Todd Coates (3)
CEO – Theme parks
Charlie Keegan
CEO – Main Event
Greg Oliver
CEO – Health Clubs
2013 333,530
2012 241,037
2013 318,440
2012 288,628
2013 387,966
2012 344,225
40,192
N/A
12,500
37,115
97,737
92,602
99,360
98,100
Past Executives
Marcus Anketell (4)
CEO – Marinas
2013 N/A
2012 189,055
N/A
33,812
Roy Menachemson (5)
CEO – Development
2013 N/A
2012 345,075
N/A
145,242
Jordan Rodgers(6)
Ex CEO – Bowling
2013 N/A
2012 275,318
N/A
51,012
Noel Dempsey (7) 2013 N/A
Ex CEO – Theme parks 2012 55,363
N/A
—
14,084
N/A
16,470
11,831
—
—
16,470
15,775
N/A
13,322
N/A
15,775
N/A
15,775
N/A
1,315
Total 2013
Total 2012
3,110,788 691,039 141,779
3,480,101 987,963 160,829
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
N/A
—
—
—
—
—
—
N/A
—
N/A
—
N/A
—
N/A
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
N/A
—
—
—
—
—
—
N/A
—
N/A
—
N/A
—
N/A
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
N/A
—
—
—
—
5,564
—
N/A
—
N/A
—
N/A
—
N/A
—
—
—
—
—
—
—
—
—
—
—
197,500
197,500
140,000
140,000
132,500
132,500
132,500
63,436
145,000
145,000
—
—
—
—
—
—
—
—
—
—
197,500
197,500
140,000
140,000
132,500
132,500
132,500
63,436
145,000
145,000
—
—
—
—
—
—
—
—
—
—
— 1,031,250
— 1,095,000
469,616 1,500,866
506,179 1,601,179
31.3%
31.6%
—
—
560,000 254,042
585,080 272,578
814,042
875,658
31.2%
31.8%
—
N/A
322,383
N/A
362,500
289,983
—
N/A
—
—
416,177
381,230
290,982
158,779
509,360
458,100
139,044
114,339
—
—
—
—
—
—
N/A
—
N/A
—
N/A
263,189
N/A
18,680
N/A
506,092
N/A
107,135
322,383
N/A
362,500
289,983
707,159
540,009
648,404
572,439
N/A
254,869
N/A
613,227
—
N/A
—
—
41.1%
29.4%
21.4%
20.0%
N/A
7.3%
N/A
17.5%
N/A
39,074
N/A
381,179
N/A
(45,909)
N/A
335,270
N/A
(13.7%)
N/A
243,349
N/A
300,027
N/A
9,020
N/A
309,047
N/A
2.9%
5,564
— 3,949,170 1,153,684 5,102,854
22.6%
— 282,423 4,911,316 1,140,801 6,052,116
18.8%
Don Morris AO was appointed a Non-Executive Director of the Group effective 1 January 2012 and is considered KMP from this date.
Lee Chadwick was appointed CEO of the Bowling division on 10 September 2012 and is considered KMP from this date.
Todd Coates was appointed CEO of the Theme Parks division on 3 October 2011 and is considered KMP from this date. Todd Coates resigned from the Group effective 31 July 2013.
(1)
(2)
(3)
(4) Marcus Anketell has not met the definition of KMP for the financial year ended 30 June 2013.
(5)
(6)
(7) Noel Dempsey resigned from the Group effective 31 July 2011.
Roy Menachemson has not met the definition of KMP for the financial year ended 30 June 2013.
Jordan Rodgers resigned from the Group effective 20 April 2012.
Ardent Leisure Group Annual Report 2013
33
For personal use only
Directors’ report to stapled
security holders
11 Remuneration report (continued)
No termination benefits were paid to KMP during the current
financial year. There are no cash bonuses or options forfeited
with respect to specified executives not previously disclosed.
No payments were made to KMP by the Group before they
became employees.
Security-based payments included in the tables above reflect
the amounts in the Income Statements of the Group. For
Australian KMP, this amount is based on the fair value of
the equity instruments at the date of the grant rather than
at vesting or reporting date for those instruments not yet
vested. For US KMP, this amount is based on the fair value of
the equity instruments at the reporting date. During the year,
795,504 plan securities were issued to Australian employees
under the terms of the DSTI (2012: 420,125). If the fair
value recorded in the Income Statement was based on the
movement in the fair value of the instruments between
reporting dates, the amount included in KMP compensation
would be increased by $1,900,016 to $3,053,700 (2012:
increased by $503,000 to $1,644,000).
34
Ardent Leisure Group Annual Report 2013
For personal use only Directors’ report to stapled
security holders
11 Remuneration report (continued)
d) Services agreements of key management personnel
Remuneration and other terms of employment for KMP are
formalised in service agreements. Each of these agreements
provides for the payment of performance related cash
bonuses and participation in the Group’s long term incentive
plans. Other major provisions of the agreements relating to
remuneration are set out below:
Greg Shaw
chief executive officer
Term
No fixed term.
Base salary
$750,000 for the year ended 30 June 2013.
Termination
Employment shall continue with the Group unless the
executive gives the Group six month’s notice in writing, or
the Group gives the executive 12 month’s notice in writing.
Richard Johnson
chief financial officer
Term
No fixed term.
Base salary
$400,000 for the year ended 30 June 2013.
Termination
Employment shall continue with the Group unless either
party gives six month’s notice in writing.
Lee Chadwick
ceo – Bowling
Term
No fixed term.
Base salary
$350,000 for the year ended 30 June 2013.
Termination
Employment shall continue with the Group unless either
party gives three month’s notice in writing.
Todd Coates
ceo – theme Parks
Term
No fixed term.
Base salary
$350,000 for the year ended 30 June 2013.
Termination
Employment shall continue with the Group unless either
party gives three month’s notice in writing.
Charlie Keegan
ceo – Main event
Term
Contract to 14 February 2015 with automatic renewal on a
year by year basis thereafter.
Base salary
USD$325,000 for the year ended 30 June 2013.
Termination
During the contract term, employment shall continue with
the Group unless the executive gives three month’s notice in
writing. An early termination payment equal to one year’s
salary is payable to the executive if the Group terminates
the executive during the contract, other than for gross
misconduct.
Greg Oliver
ceo – health clubs
Term
No fixed term, however may not be terminated earlier than
September 2015 unless certain early termination conditions
are triggered.
Base salary
$410,000 for the year ended 30 June 2013.
Termination
Employment shall continue with the Group unless either
party gives three month’s notice in writing.
All base salary amounts are inclusive of any superannuation
payment and will be reviewed annually. With the exception
of the terms noted above, there are no contracted
termination benefits payable to any KMP.
Ardent Leisure Group Annual Report 2013
35
For personal use only Directors’ report to stapled
security holders
11 Remuneration report (continued)
e) Deferred Short Term Incentive Plan (DSTI)
Who can participate?
All employees are eligible for participation at the discretion
of the Board.
Types of securities issued?
Performance rights that can be converted into fully paid
securities once vested. The performance rights differ
from options in that they do not carry an exercise price.
Performance rights do not represent physical securities and
do not carry any voting or distribution entitlements.
Treatment of non-Australian residents
Due to restrictions on the issue of securities to employees
who are not Australian residents, the DSTI contemplates that
cash awards will be granted to those executives and will be
subject to the same tenure hurdles.
What restrictions are there on the securities?
Performance rights are non-transferable.
When can the securities vest?
The plan contemplates that the performance rights will vest
equally one and two years following the grant date.
What are the vesting conditions?
Plan performance rights will normally vest only if the
participant remains employed by the Group (and is not under
notice terminating the contract of employment from either
party) as at the relevant vesting date.
Did any of the securities vest?
During the financial year, a total of 910,553 performance
rights vested.
36
Ardent Leisure Group Annual Report 2013
Australian Employees
Since the DSTI was approved in July 2010, incentives
have been provided to certain executives under the
DSTI. Under the terms of the DSTI, participants may be
granted performance rights of which one half will vest
one year after grant date and one half will vest two years
after grant date. The first set of performance rights were
granted under the DSTI on 16 December 2010, with the first
possible vesting date being the day after the full year results
announcement for the year ended 30 June 2011. A total of
795,504 performance rights vested on 24 August 2012 and
30 October 2012 and a corresponding number of stapled
securities were issued to Australian employees under the
terms of the DSTI (2012: 420,125).
The characteristics of the DSTI indicate that, at the Ardent
Leisure Group level, it is an equity settled share-based
payment under AASB 2 Share-based Payment as the holders
are entitled to the securities as long as they meet the
DSTI’s service criteria. However, as ALL is considered to be a
subsidiary of the Trust, in the financial statements of the ALL
Group the DSTI is accounted for as a cash settled share-based
payment.
Fair value – Australian employees
The fair value of the performance rights granted under the
DSTI is recognised in the Group financial statements as an
employee benefit expense with a corresponding increase
in equity. The fair value of each grant of performance rights
is determined at grant date using a binomial tree valuation
model and then is recognised over the vesting period during
which employees become unconditionally entitled to the
underlying securities.
The fair value of the performance rights granted under the
DSTI is recognised in the ALL Group financial statements as
an employee benefit expense with a corresponding increase
in liabilities. The fair value of each grant of performance
rights is determined at each reporting date using a binomial
tree valuation model with the movement in fair value of the
liability being recognised in the Income Statement.
At each reporting date, the estimate of the number of
securities that are expected to vest is revised. The employee
benefit expense recognised each financial period takes into
account the most recent estimate.
US employees
Due to restrictions on the issue of securities to US residents,
those US executives eligible for the DSTI are subject to a
shadow performance rights scheme whereby a cash payment
is made instead of performance rights being granted. At
the end of each vesting period the number of performance
rights which would have vested is multiplied by the Group
stapled security volume weighted average price (VWAP)
for the five trading days immediately following the vesting
date and an equivalent cash payment is made. Due to the
nature of the scheme, this is considered to be a cash settled
share-based payment under AASB 2. A total of 115,049 cash
settled performance rights vested on 24 August 2012 to US
employees under the terms of the DSTI (2012: 40,802).
For personal use only Directors’ report to stapled
security holders
11 Remuneration report (continued)
e) Deferred Short Term Incentive Plan (DSTI) (continued)
Fair value – US employees
The fair value of each grant of performance rights is determined at each reporting date using a binomial tree valuation model.
This is recorded as a liability with the movement in the fair value of the financial liability being recorded through the Income
Statement.
At each reporting date, the Group revises its estimate of the number of performance rights that are expected to vest and the
corresponding number of securities to be acquired. The employee benefit expense recognised each period takes into account
the most recent estimate.
Valuation inputs
For the performance rights outstanding at 30 June 2013, the table below shows the fair value of the performance rights on
each grant date as well as the factors used to value the performance rights at the date of grant. This valuation is used to value
the performance rights granted to Australian employees at 30 June 2013:
Grant 2011
2012
Grant date 12 September 2011 24 August 2012
Vesting dates – year 1 24 August 2012 31 August 2013
30 October 2012
Vesting date – year 2 31 August 2013 31 August 2014
2.80% per annum
Average risk free rate 3.57% per annum
35% per annum
Expected price volatility 40% per annum
9.1% per annum
Expected distribution yield 11.0% per annum
Stapled security price at grant date $1.055
$1.29
Valuation per performance right on issue $0.90
$1.15
The table below shows the fair value of the performance rights in each grant as at 30 June 2013 as well as the factors used
to value the performance rights as at 30 June 2013. This valuation is used to value the performance rights granted to US
employees at 30 June 2013:
Grant 2011
2012
Grant date 12 September 2011 24 August 2012
Vesting date – year 1 24 August 2012 31 August 2013
Vesting date – year 2 31 August 2013 31 August 2014
Average risk free rate 2.58% per annum 2.58% per annum
Expected price volatility 31% per annum 31% per annum
Expected distribution yield 6.9% per annum 6.9% per annum
Share price at year end $1.715 $1.715
Valuation per performance right at year end $1.5050 $1.6485
Grants of performance rights are made annually with the grant date being the date of the issue of the offer letters to employees.
Although the grant date may vary from year to year, the testing period (subject to any hurdles) remains constant with the
vesting date being 24 hours immediately following the announcement of the Group’s full year financial results.
Tenure hurdle
The vesting of the performance rights is subject to a tenure hurdle and participants must remain employed by the Group (and
not be under notice terminating the contract of employment from either party) as at the relevant vesting date.
Ardent Leisure Group Annual Report 2013
37
For personal use only
Directors’ report to stapled
security holders
11 Remuneration report (continued)
e) Deferred Short Term Incentive Plan (DSTI) (continued)
Performance rights
The number of performance rights on issue and granted to the Group’s KMP is set out below:
30 June 2013
Current Executives
Lee Chadwick
Todd Coates
Richard Johnson
Greg Oliver
Greg Shaw
Equity‑settled
Charlie Keegan
Cash‑settled
Past Executives
Marcus Anketell
Roy Menachemson
Opening
balance
—
—
142,761
133,924
260,836
Granted
Exercised
Lapsed
Closing
balance
Vested and
exercisable
Unvested
—
34,169
69,732
86,607
122,576
—
—
(91,350)
(79,424)
(165,002)
—
(34,169)
—
—
—
—
—
121,143
141,107
218,410
537,521
313,084
(335,776)
(34,169)
480,660
128,892
83,307
(77,624)
128,892
83,307
(77,624)
—
—
134,575
134,575
—
—
—
—
—
—
—
—
—
—
121,143
141,107
218,410
480,660
134,575
134,575
21,991
65,021
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Total performance rights
753,425
396,391
(413,400)
(34,169)
615,235
—
615,235
f) Long Term Incentive Plan (LTIP)
Who can participate?
All employees are eligible for participation at the discretion
of the Board.
Types of securities issued?
Performance rights that can be converted into fully paid
securities once vested. The performance rights differ
from options in that they do not carry an exercise price.
Performance rights do not represent physical securities and
do not carry any voting or distribution entitlements.
Treatment of non-Australian residents
Due to restrictions on the issue of securities to employees
who are not Australian residents, the LTIP contemplates that
cash awards will be granted to those executives and will be
subject to the same performance hurdles.
What restrictions are there on the securities?
Performance rights are non-transferable.
When can the securities vest?
The plan contemplates that the performance rights will
vest equally in the two, three and four years following the
grant date assuming the total shareholder return (TSR)
performance hurdle has been met.
What are the vesting conditions?
In order for any or all of the performance rights to vest
under the TSR performance hurdle, the Group’s TSR for the
performance period must exceed the 50th percentile of the
TSRs of the benchmark group for the same period. A sliding
scale of vesting applies above the 50th percentile threshold.
38
Ardent Leisure Group Annual Report 2013
What does total shareholder return (TSR) include?
TSR is the total return an investor would receive over a set
period of time assuming that all distributions were reinvested
in the Group’s securities. The TSR definition takes account of
both capital growth and distributions.
What is the benchmark group?
The benchmark group comprises the ASX Small Industrials
Index.
Did any of the securities vest?
During the financial year, a total of 734,083 performance
rights reached vesting following an independent third party
assessment of the Group’s TSR performance compared to
the benchmark.
Australian Employees
Since 1 July 2009, long term incentives have been provided to
certain executives under the LTIP. Under the terms of the LTIP
and the initial grant, employees may be granted performance
rights of which one third will vest two years after grant
date, one third will vest three years after grant date and one
third will vest four years after grant date. The percentage
of performance rights which may vest is subject to the TSR
performance of the Group relative to its peer group, which is
the ASX Small Industrials Index. The first set of performance
rights were granted under the scheme on 4 December 2009,
with the first possible vesting date being the day after the full
year results announcement for the year ended 30 June 2011.
For personal use only
US employees
Due to restrictions on the issue of securities to US residents,
those US executives eligible for the LTIP are subject to a
shadow performance rights scheme whereby a cash payment
is made instead of performance rights being granted. At
the end of each vesting period, the number of performance
rights which would have vested is multiplied by the Group
stapled security VWAP for the five trading days immediately
following the vesting date and an equivalent cash payment
is made. Due to the nature of the scheme, this is considered
to be a cash settled share-based payment under AASB 2. A total
of 38,401 cash settled performance rights vested on 24 August
2012 to US employees under the terms of the LTIP (2012: nil).
Fair value – US employees
The fair value of each grant of performance rights is
determined at each reporting date using a Monte Carlo
simulation valuation model. This is recorded as a liability
with the difference in the movement in the fair value of
the financial liability being recorded through the Income
Statement.
At each reporting date, the estimate of the number of
performance rights that are expected to vest is revised. The
employee benefit expense recognised each period takes into
account the most recent estimate.
Directors’ report to stapled
security holders
11 Remuneration report (continued)
f) Long Term Incentive Plan (LTIP) (continued)
During the year, the relative TSR performance of the Group
was tested in accordance with the LTIP. In the case of the
second tranche of performance rights issued in 2009, the
Group’s performance over the testing period achieved the
52nd percentile and accordingly 55.3% of the performance
rights vested to participants and the remainder of the tranche
automatically lapsed. The first tranche of performance
rights issued in 2010 were also tested and, as the Group’s
TSR performance reached the 82nd percentile, 100% of the
tranche vested to participants.
A total of 695,682 performance rights vested on 24 August
2012 and 30 October 2012 and a corresponding number of
stapled securities were issued to Australian employees under
the terms of the LTIP (2012: nil).
The characteristics of the LTIP indicate that, at the Ardent
Leisure Group level, it is an equity settled share-based
payment under AASB 2 Share-based Payment as the holders
are entitled to the securities as long as they meet the
LTIP’s service and performance criteria. However, as ALL is
considered to be a subsidiary of the Trust, in the financial
statements of the ALL Group the LTIP is accounted for as a
cash settled share-based payment.
Fair value – Australian employees
The fair value of the performance rights granted under the
LTIP is recognised in the Group financial statements as an
employee benefit expense with a corresponding increase in
equity. The fair value of the performance rights is determined
at grant date using a Monte Carlo simulation valuation
model and then is recognised over the vesting period during
which employees become unconditionally entitled to the
underlying securities.
The fair value of the performance rights granted under the
LTIP is recognised in the ALL Group financial statements as an
employee benefit expense with a corresponding increase in
liabilities. The fair value of each grant of performance rights
is determined at each reporting date using a Monte Carlo
simulation valuation model with the movement in fair value
of the liability being recognised in the Income Statement.
At each reporting date, the estimate of the number of
securities that are expected to vest is revised. The employee
benefit expense recognised each financial period takes into
account the most recent estimate.
Ardent Leisure Group Annual Report 2013
39
For personal use only Directors’ report to stapled
security holders
11 Remuneration report (continued)
f) Long Term Incentive Plan (LTIP) (continued)
Valuation inputs
For performance rights outstanding at 30 June 2013, the table below shows the fair value of the performance rights on each
grant date as well as the factors used to value the performance rights at the grant date. This valuation is used to value the
performance rights granted to Australian employees at 30 June 2013:
Grant 2009 2010 2011
2012
Grant date
Vesting date – year 2
Vesting date – year 3
Vesting date – year 4
Average risk free rate
Expected price volatility
Expected distribution yield
Staple security price at grant date
Valuation per performance right on issue
4 December 2009
19 August 2011
24 August 2012
31 August 2013
4.64% per annum
55% per annum
10.0% per annum
$1.635
$0.89
16 December 2010
24 August 2012
31 August 2013
31 August 2014
5.10% per annum
45% per annum
10.0% per annum
$1.065
$0.52
12 September 2011
31 August 2013
31 August 2014
31 August 2015
3.49% per annum
40% per annum
11.0% per annum
$1.055
$0.44
24 August 2012
31 August 2014
31 August 2015
31 August 2016
2.73% per annum
35% per annum
9.1% per annum
$1.290
$0.61
The table below shows the fair value of the performance rights for each grant as at 30 June 2013 as well as the factors used to
value the performance rights at 30 June 2013. This valuation is used to value the performance rights granted to US employees
at 30 June 2013:
Grant 2009 2010 2011
2012
Grant date
Vesting date – year 2
Vesting date – year 3
Vesting date – year 4
Average risk free rate
Expected price volatility
Expected distribution yield
Share price at year end
Valuation per performance right at year end
4 December 2009
19 August 2011
24 August 2012
31 August 2013
2.58% per annum
31% per annum
6.9% per annum
$1.751
$0.91
16 December 2010
24 August 2012
31 August 2013
31 August 2014
2.58% per annum
31% per annum
6.9% per annum
$1.715
$1.49
12 September 2011
31 August 2013
31 August 2014
31 August 2015
2.58% per annum
31% per annum
6.9% per annum
$1.715
$1.37
24 August 2012
31 August 2014
31 August 2015
31 August 2016
2.58% per annum
31% per annum
6.9% per annum
$1.715
$1.09
Grants of performance rights are made annually with the grant date being the date of the issue of the offer letters to employees.
Although the grant date may vary from year to year, the testing period (subject to any hurdles) remains constant with the vesting
date being 24 hours immediately following the announcement of the Group’s full year financial results.
Performance hurdles
In order for any or all of the performance rights to vest under the LTIP, the Group’s TSR for the performance period must exceed
the 50th percentile of the TSRs of the benchmark for the same period. A sliding scale of vesting applies above the 50th
percentile threshold.
TSR of the Group relative Proportion of performance
to TSRs of comparators rights vesting
Below 51st percentile 0%
51st percentile 50%
Between 51st percentile and 75th percentile Straight line vesting between 50% and 100%
75th percentile or higher 100%
TSR over a performance period is measured against the benchmark group securities calculated at the average closing price
of securities on the ASX for the calendar month period up to and including each of the first and last dates of the performance
period. Distributions are assumed to be re-invested at the distribution date and any franking credits (or similar) are ignored.
40
Ardent Leisure Group Annual Report 2013
For personal use only
Granted
Exercised
Lapsed
Closing
balance
Vested and
exercisable
Unvested
—
—
—
—
—
—
—
—
—
—
911,888
246,436
1,709,787
2,868,111
179,765
179,765
Directors’ report to stapled
security holders
11 Remuneration report (continued)
f) Long Term Incentive Plan (LTIP) (continued)
Performance rights
The number of performance rights on issue and granted to the Group’s KMP is set out below:
30 June 2013
Current Executives
Lee Chadwick
Todd Coates
Richard Johnson
Greg Oliver
Greg Shaw
Opening
balance
—
—
879,065
191,928
1,648,245
—
71,815
246,225
84,127
461,671
—
—
(166,598)
(29,619)
(312,372)
—
(71,815)
(46,804)
—
(87,757)
—
—
911,888
246,436
1,709,787
Equity‑settled
2,719,238
863,838
(508,589)
(206,376) 2,868,111
172,966
51,115
(32,756)
(11,560)
179,765
172,966
51,115
(32,756)
(11,560)
179,765
Charlie Keegan
Cash‑settled
Past Executives
Marcus Anketell
Roy Menachemson
45,809
314,938
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Total performance rights 3,252,951
914,953
(541,345)
(217,936) 3,047,876
—
3,047,876
g) Additional information
Performance of the Group
Over the past five years, core earnings of the Group have increased by 11.1% and the market capitalisation of the Group
has increased by 98.8%. In prior years, the definition of KMP meant that KMP remuneration only included fees to Directors
and management fees payable to the Manager. In 2010, following the internalisation of the Manager, the definition of
KMP extended to include executives of both the Manager and ALL. The change in definition of KMP has meant that KMP
remuneration significantly increased from 1 July 2009 so that five year comparisons do not correlate to changes in Group
earnings and market capitalisation.
2013
2012
2011
2010
2009
Security price as at 30 June
Half year distribution per security
Distribution reinvestment price
Full year distribution per security
Distribution reinvestment price
Number of securities on issue as at 30 June
Market capitalisation as at 30 June ($ million)
Investor value of $5,000
Investment as at 30 June 2008
(Based upon an initial security price of $1.49)
$1.72
$0.0660
N/A
$0.0540
$1.6841
$1.42
$0.0650
$0.9727
$0.0780
$1.4048
397,803,987 334,209,401 318,147,978 309,109,468 241,590,377
$343.1
$0.99
$0.0650
$1.6826
$0.0430
$0.9915
$1.28
$0.0650
$1.0073
$0.0520
$1.2373
$1.28
$0.0650
$0.9872
$0.0500
$1.2496
$682.2
$426.1
$405.6
$306.0
$9,229
$6,409
$5,780
$4,049
$5,363
Ardent Leisure Group Annual Report 2013
41
For personal use only
Directors’ report to stapled
security holders
11 Remuneration report (continued)
g) Additional information (continued)
Details of remuneration: cash bonuses and options
All service and performance criteria were met by executives
eligible for a bonus with respect to their performance in
the 30 June 2012 financial year. These bonuses were paid
during the year and no amounts were forfeited. No part of
the bonuses is payable in future years. Bonuses with respect
to performance within the 30 June 2013 financial year have
been accrued but are subject to approval by the Group’s
Remuneration and Nomination Committee before payment.
Plan securities and performance rights granted to executives
vest over varying periods of one, two, three and four years,
provided the vesting conditions are met. No plan securities
or performance rights will vest if the conditions are not satisfied;
hence, the minimum value of the plan securities and
performance rights yet to vest is $nil.
DSTI
Under the terms of the initial 2010 grant, performance rights
under the DSTI were allocated on the basis of a valuation
dated 23 August 2010. A valuation difference of $0.13 per
performance right between the allocation date and the grant
date was caused by an increase in the Group’s security price
between these dates and a shorter vesting period.
Under the terms of the 2011 grant, performance rights were
allocated on the basis of a valuation dated 12 September 2011
and there was no valuation difference.
Under the terms of the 2012 grant, performance rights were
allocated on the basis of a valuation dated 24 August 2012 and
there was no valuation difference.
LTIP
Under the terms of the initial 2009 grant, performance rights
under the LTIP were allocated on the basis of a valuation
dated 11 November 2009. A valuation difference of $0.2033
per performance right between the allocation date and the
grant date was caused by an increase in the Group’s security
price between these dates.
Under the terms of the 2010 grant, performance rights were
allocated on the basis of a valuation dated 23 August 2010
being the date 24 hours after the release of the 2010 financial
year results. A valuation difference of $0.06 per performance
right between the allocation date and the grant date was
caused by an increase in the Group’s security price between
these dates.
Under the terms of the 2011 grant, performance rights were
allocated on the basis of a valuation dated 12 September 2011
and there was no valuation difference.
Under the terms of the 2012 grant, performance rights were
allocated on the basis of a valuation dated 24 August 2012
and there was no valuation difference.
42
Ardent Leisure Group Annual Report 2013
For personal use only Directors’ report to stapled
security holders
10 Remuneration report (continued)
g) Additional information (continued)
Details of remuneration: cash bonuses and options (continued)
The table below sets out the maximum number of performance rights that vested during the financial year and that are yet
to vest. The percentage of cash STI (as listed in the table in section (c) above) that was awarded to the Group’s KMP and the
percentage that was forfeited because the executive did not meet the performance criteria is also set out below. No part of
any cash STI is payable in future years.
Cash STI
awarded
Cash STI
forteited
%
—
%
—
32.0
68.0
80.0
20.0
92.0
8.0
granted Tranche performance rights may vest
Lapsed
Vested
Year Financial years in which
Current executives
Equity settled
Lee Chadwick — — —
Todd Coates LTIP 2012 T1
T2
T3
DSTI 2012 T1
T2
Richard Johnson LTIP 2009 T2
T3
2010 T1
T2
T3
2011 T1
T2
T3
2012 T1
T2
T3
DSTI 2010 T2
2011 T1
T2
2012 T1
T2
Greg Oliver LTIP 2010 T1
T2
T3
2011 T1
T2
T3
2012 T1
T2
T3
DSTI 2010 T2
2011 T1
T2
2012 T1
T2
Year Number
Number
Number
—
—
—
2015
2016
2017
2014
2015
2013
2014
2013
2014
2015
2014
2015
2016
2015
2016
2017
2013
2013
2014
2014
2015
2013
2014
2015
2014
2015
2016
2015
2016
2017
2013
2013
2014
2014
2015
23,938
23,938
23,939
17,084
17,085
104,707
104,707
108,695
108,696
108,696
114,521
114,521
114,522
82,075
82,075
82,075
39,939
51,411
51,411
34,866
34,866
29,619
29,620
29,620
34,356
34,356
34,357
28,042
28,042
28,043
24,924
54,500
54,500
43,303
43,304
23,938
23,938
23,939
17,084
17.085
46,804
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
57,903
—
108,695
—
—
—
—
—
—
—
—
39,939
51,411
—
—
—
29,619
—
—
—
—
—
—
—
—
24,924
54,500
—
—
—
Ardent Leisure Group Annual Report 2013
43
For personal use only
Directors’ report to stapled
security holders
11 Remuneration report (continued)
g) Additional information (continued)
Details of remuneration: cash bonuses and options (continued)
granted Tranche performance rights may vest
Lapsed
Vested
Year Financial years in which
Cash STI
awarded
Cash STI
forteited
Year Number
Number
Number
%
%
25.0
75.0
Current executives (continued)
Equity settled (continued)
Greg Shaw LTIP 2009 T2
T3
2010 T1
T2
T3
2011 T1
T2
T3
2012 T1
T2
T3
DSTI 2010 T2
2011 T1
T2
2012 T1
T2
Cash Settled
Charlie Keegan LTIP 2009 T2
T3
2010 T1
T2
T3
2011 T1
T2
T3
2012 T1
T2
T3
DSTI 2010 T2
2011 T1
T2
2012 T1
T2
2013
2014
2013
2014
2015
2014
2015
2016
2015
2016
2017
2013
2013
2014
2014
2015
2013
2014
2013
2014
2015
2014
2015
2016
2015
2016
2017
2013
2013
2014
2014
2015
196,325
196,325
203,804
203,804
203,805
214,727
214,727
214,728
153,890
153,890
153,891
69,169
95,833
95,834
61,288
61,288
25,863
25,863
18,453
18,453
18,454
21,960
21,960
21,960
17,038
17,038
17,039
26,357
51,267
51,268
41,653
41,654
87,757
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
11,560
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
108,568
—
203,804
—
—
—
—
—
—
—
—
69,169
95,833
—
—
—
14,303
—
18,453
—
—
—
—
—
—
—
—
26,357
51,267
—
—
—
95.0
5.0
Directors’ Interests in Securities
Changes to Directors’ interests in stapled securities during the period are set out below:
Neil Balnaves AO
Roger Davis
Anne Keating
Don Morris AO
Greg Shaw
George Venardos
44 Ardent Leisure Group Annual Report 2013
Opening balance
Acquired
Disposed Closing balance
1,169,062
50,857
62,743
—
268,771
84,581
1,270,000
79,418
11,718
—
499,598
27,011
1,636,014
1,887,745
—
—
—
—
—
—
—
2,439,062
130,275
74,461
—
768,369
111,592
3,523,759
For personal use only
Directors’ report to stapled
security holders
11 Remuneration report (continued)
Corporations Amendment (Improving Accountability on
Director and Executive Remuneration) Act 2011
On 1 July 2011, the Corporations Amendment (Improving
Accountability on Director and Executive Remuneration)
Act 2011 came into force. The new legislative requirements
under the Corporations Act 2001 in relation to remuneration
votes and the “two strikes” rule operate such that a company
receiving a 25% or more “NO” vote against its remuneration
report resolution at the Annual General Meeting (AGM) in
two consecutive years will be required to put a spill resolution
to the meeting whereby investors can vote to hold a further
meeting where all board directors will be subject to re-election.
In addition, KMP and their closely related parties are
prohibited from voting on the adoption of the Remuneration
Report and any other remuneration related resolutions at the
AGM. In order to ensure that KMP and their closely related
parties do not exercise their votes the Group issued an
instruction to them prior to the AGM and instructed the
security registrars to apply appropriate voting exclusions.
At the AGM held on 30 October 2012 the following votes
were cast on the adoption of the 2012 Remuneration Report:
Adoption of the
Remuneration Report
Votes
For
%
97.3
Votes
Against
Votes
Abstain
%
1.5
%
1.2
12 Non‑audit services
The Group may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s
expertise and experience with the Group are important.
Details of the amounts paid to the auditor
(PricewaterhouseCoopers) for audit and non-audit services
provided during the year are disclosed in Note 9 to the
financial statements.
The Directors have considered the position and, in
accordance with the recommendation received from the
Audit and Risk Committee, are satisfied that the provision
of the non-audit services is compatible with the general
standard of independence for auditors imposed by the
Corporations Act 2001. The Directors are satisfied that the
provision of non-audit services by the auditor, as set out in
Note 9 to the financial statements, did not compromise the
auditor independence requirements of the Corporations Act
2001 for the following reasons:
— All non-audit services have been reviewed by the Audit
and Risk Committee to ensure that they do not impact the
integrity and objectivity of the auditor; and
— None of the services undermine the general principles
relating to auditor independence as set out in Accounting
Professional and Ethical Standards Board APES 110 Code of
Ethics for Professional Accountants.
13 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 48.
14 Events occurring after reporting date
Subsequent to 30 June 2013, a distribution of 5.4 cents per
stapled security has been declared by the Board of Directors.
The total distribution amount of $21.5 million will be paid on
or before 30 August 2013 in respect of the half year ended
30 June 2013.
Since the end of the financial year, the Directors of the
Manager and ALL are not aware of any other matter or
circumstance not otherwise dealt with in this report or
the financial report that has significantly affected or may
significantly affect the operations of the Group, the results
of those operations or the state of affairs of the Group in
financial years subsequent to the year ended 30 June 2013.
15 Likely developments and expected results
of operations
The financial statements have been prepared on the basis of
the current known market conditions. The extent to which
any potential further deterioration in either the capital or
physical property markets may have on the future results
of the Group is unknown. Such results could include the
potential to influence property market valuations, the ability
of borrowers, including the Group, to raise or refinance debt,
and the cost of such debt and the ability to raise equity.
At the date of this report and to the best of the Directors’
knowledge and belief, there are no other anticipated changes
in the operations of the Group which would have a material
impact on the future results of the Group.
16 Indemnification and insurance of officers and
auditor
Manager
No insurance premiums are paid for out of the assets of the
Trust for insurance provided to either the officers of the
Manager or the auditor of the Trust. So long as the officers of
the Manager act in accordance with the Trust Constitution
and the Corporations Act 2001, the officers remain
indemnified out of the assets of the Trust against losses
incurred while acting on behalf of the Trust. The auditor of the
Trust is in no way indemnified out of the assets of the Trust.
ALL
Under ALL’s Constitution, ALL indemnifies:
— All past and present officers of ALL, and persons concerned
in or taking part in the management of ALL, against all
liabilities incurred by them in their respective capacities in
successfully defending proceedings against them; and
— All past and present officers of ALL against liabilities
incurred by them, in their respective capacities as an
officer of ALL, to other persons (other than ALL or its
related parties), unless the liability arises out of conduct
involving a lack of good faith.
Ardent Leisure Group Annual Report 2013
45
For personal use only Directors’ report to stapled
security holders
16 Indemnification and insurance of officers and
auditor (continued)
ALL (continued)
During the reporting period, ALL had in place a policy of
insurance covering the Directors and officers against liabilities
arising as a result of work performed in their capacity as
directors and officers of ALL.
17 Fees paid to and interests held in the Trust by the
Manager or its associates
The interests in the Trust held by the Manager or its related
entities as at 30 June 2013 and fees paid to its related entities
during the financial year are disclosed in Notes 7 and 36 to
the financial statements.
18 Environmental regulations
The Group is subject to significant environmental regulation
in respect of its operating activities. During the financial year,
the Group’s major businesses were subject to environmental
legislation in respect of its operating activities as set out
below:
a) Dreamworld
Dreamworld and WhiteWater World theme parks are
subject to various legislative requirements in respect of
environmental impacts of their operating activities. The
Queensland Environmental Protection Act 1994 regulates
all activities where a contaminant may be released into the
environment and/or there is a potential for environmental
harm or nuisance. In accordance with Schedule 1 of the
Environmental Protection Regulation 1998, Dreamworld
holds licences or approvals for the operation of a helipad,
motor vehicle workshop, train-shed and storage and use of
flammable/combustible goods. During the year, Dreamworld
and WhiteWater World complied with all requirements of the
Act.
The environment committee meets on a bi-monthly basis to
pursue environmental projects and improve environmental
performance. An energy conservation programme was rolled
out throughout the organisation. A mobile phone recycling
programme continued throughout the park as well as other
local organisations. Proceeds from the programme have
also been raised to improve wildlife protection in parts of
Africa where mobile phone components are sourced from. A
range of existing recycling programmes continue to operate
effectively, including glass, plastic, waste metals, paper,
waste oils and cardboard. A water efficiency management
plan continues to operate effectively, with a net reduction
of consumption over the past eight years. Staff also carried
out voluntary programmes aimed at the humane treatment
of pests, removal of noxious weeds and other sustainability
initiatives. These initiatives were additionally integrated into
existing staff training programmes to further strengthen
environmental culture within the organisation.
Dreamworld’s noise conservation programme ensures
that noise emissions emanating from park activities do
not contravene State regulations or adversely impact
surrounding neighbours. Local government regulations for
the staging of night time events and functions were complied
with at all times.
46
Ardent Leisure Group Annual Report 2013
Dreamworld’s Life Sciences department is subject to the
Quarantine Act 1908. In accordance with the Australian
Quarantine Regulations, Dreamworld holds an approved
post-arrival facilities licence and an approved zoo permit. In
accordance with the Nature Conservation Act 1992 and the
Nature Conservation Regulation 1994, Dreamworld holds a
“Wildlife Exhibitors Licence” and in accordance with Land
Protection (Pest and Stock Route Management) Regulation
2003, Dreamworld holds a “Declared Pest Permit”. All licenses
and permits remain current and Dreamworld has complied
fully with the requirements of each.
There are two water licences for the Dreamworld/WhiteWater
World property. These relate to water conservation
and irrigation. There have been no issues or events of
non-compliance recorded by management or the regulatory
authorities regarding water use.
b) d’Albora Marinas
Schedule 1 Environment Protection Licences are held for
all five NSW marinas in the portfolio in accordance with the
Protection of the Environment Operations Act 1997 (NSW).
There are no specific environmental licence requirements in
Victoria relating to the Pier 35 or Victoria Harbour marinas.
In July 2002, the NSW Environmental Protection Authority
(EPA) was notified of long term historic groundwater
contamination at the Rushcutters Bay marina, and the
plan to manage the contamination. d’Albora Marinas has
been working in consultation with the EPA to rectify the
site contamination. The costs to rectify the site are not
considered material to the Group
c) Bowling centres – Australia
Bowling centres are subject to environmental regulations
concerning their food facilities. This is primarily trade waste
and grease traps. The Group has adequate management
systems and the correct licence requirements in place
concerning the disposal of such waste in accordance with
each State or Territory’s legislation. Cooking oil is replaced
and disposed of by external organisations at all locations.
All hazardous substances are disposed of according
to manufacturers and EPA regulations. A register of all
hazardous substances and dangerous goods is located at
centre level.
Lane cleaning and maintenance products are largely
water-based products, excluding approach cleaner, which
is a solvent-based product. This product is disposed
of in accordance with each State and Territory’s EPA
requirements.
Noise is adequately monitored for both internal and external
environmental breaches. Noise emissions fall within
acceptable levels for both residential and industrial areas
and all EPA requirements. No complaints have been received
since acquisition of the business.
d) Bowling centres – New Zealand
There are no specific requirements relating to the New Zealand
centres that are not reflected in the above statement.
For personal use only Directors’ report to stapled
security holders
e) Family entertainment centres – United States of America
Main Event is subject to various Federal, State and local
environmental requirements with respect to development
of new centres in the United States of America. At a Federal
level, the Environmental Protection Agency is responsible
for setting national standards for a variety of environmental
programs, and delegates to states the responsibility for issuing
permits and for monitoring and enforcing compliance. The
Texas Commission on Environmental Quality (TCEQ) is the
environmental agency of record for the State.
A prerequisite for any building permit for new centre
construction is full compliance with all city and State
planning and zoning ordinances. A building permit,
depending on locality, may require soils reports, site line
studies, storm water and irrigation regulation compliance,
asbestos free reports, refuse and grease storage permits,
health and food safety permits, and complete Occupational
Safety and Health Administration (OSHA) Material Safety
Data Sheets (MSDS) documentation.
With respect to operating activities at Main Event, the
OSHA requires that MSDS be available to all Main Event
employees for explaining potentially harmful chemical
substances handled in the workplace under the hazard
communication regulation. The MSDS is also required to
be made available to local fire departments and local and
State emergency planning officials under section 311 of the
Emergency Planning and Community Right-to-Know Act.
At this time, there are no known issues of non-compliance
with any environmental regulation at Main Event.
f) Goodlife Health Clubs
Goodlife is subject to environmental regulations across
the business and has initiatives in place to meet all areas of
environmental compliance.
Water conservation is a high priority and management has
implemented a range of strategies to meet current water
regulations as per each State’s regulations. A recycling
programme has been implemented across the business,
assisting with reduction of waste products and meeting
environmental standards.
Hazardous substances and dangerous goods are strictly
monitored in the business and where possible non-hazardous
chemicals are used. All hazardous chemicals and dangerous
goods are disposed as per current regulations. All clubs hold
site specific chemical registers with safe work methods.
Noise emissions do not contravene State regulations or
impact on surrounding business or neighbourhoods.
g) Greenhouse gas and energy data reporting requirements
The Group is subject to the reporting requirements of
both the Energy Efficiency Opportunities Act 2006 and the
National Greenhouse and Energy Reporting Act 2007.
The Energy Efficiency Opportunities Act 2006 requires the
Group to assess its energy usage, including the identification,
investigation and evaluation of energy saving opportunities,
and to report publicly on the assessments undertaken,
including what action the Group intends to take as a result.
The Group continues to meet its obligations under this Act.
The National Greenhouse and Energy Reporting Act 2007
requires the Group to report its annual greenhouse gas
emissions and energy use. The Group has implemented
systems and processes for the collection and calculation
of the data required. The Group submitted its 2011/2012
emissions report under the Act in October 2012.
The Group is not subject to any other significant
environmental regulations and there are adequate systems in
place to manage its environmental responsibilities.
19 Rounding of amounts to the nearest thousand dollars
The Group is a registered scheme of a kind referred to in
Class Order 98/100 (as amended) issued by the Australian
Securities and 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 to the nearest thousand dollars in
accordance with that Class Order, unless otherwise indicated.
This report is made in accordance with a resolution of the
Boards of Directors of Ardent Leisure Management Limited
and Ardent Leisure Limited.
Neil Balnaves AO
Director
Sydney
21 August 2013
Ardent Leisure Group Annual Report 2013
47
For personal use only Auditor’s independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Ardent Leisure Group for the financial year ended 30 June 2013, I declare that 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.
This declaration is in respect of Ardent Leisure Group, which includes Ardent Leisure Trust and Ardent Leisure Limited and the entities
they controlled during the period.
Timothy J Allman
Partner
PricewaterhouseCoopers
Brisbane
21 August 2013
PricewaterhouseCoopers, ABN 52 780 433 757
Riverside Centre, 123 Eagle Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under the Professional Standards Legislation
48
Ardent Leisure Group Annual Report 2013
For personal use only
Ardent Leisure Group Annual Report 2012
49
For personal use only Income Statements
For the year ended 30 June 2013
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
Note
ALL Group
2013
$’000
ALL Group
2012
$’000
Income
3
Revenue from operating activities
Management fee income 7(b)
Property valuation gains
Net gain from derivative financial instruments 6
Interest income
Gain on acquisition 32
Gain on sale of assets
448,903
—
90
602
228
2,613
313
390,074
—
—
—
443
—
—
448,903
1,200
—
—
185
2,613
293
390,074
1,600
—
—
369
—
—
452,749
390,517
453,194
392,043
Total income
Expenses
Purchases of finished goods
Salary and employee benefits
Borrowing costs
Property expenses
Depreciation and amortisation
Loss on sale of assets
Advertising and promotions
Repairs and maintenance
Pre-opening expenses
Business acquisition costs
Property valuation losses
Net loss from derivative financial instruments
Other expenses
Total expenses
Profit before tax expense
US withholding tax expense
Income tax expense
Profit
Attributable to:
Stapled security holders
Profit
4
5
42,051
167,469
12,288
68,749
37,303
—
17,575
20,711
2,527
1,507
38,531
153,192
12,914
55,906
30,218
66
15,880
17,916
1,064
166
— 15,507
392
33,578
6
—
8 43,618
42,051
169,621
7,531
120,241
18,141
—
17,575
20,711
2,438
1,607
—
—
43,084
38,531
153,855
7,501
107,106
11,511
45
15,880
17,916
1,064
66
—
—
32,941
413,798
375,330
443,000
386,416
38,951
15,187
186 222
2,338
3,148
10
10,194
—
3,101
5,627
—
2,383
35,617
12,627
7,093
3,244
35,617
35,617
12,627
12,627
7,093
7,093
3,244
3,244
The above Income Statements should be read in conjunction with the accompanying notes.
Basic earnings per security/share (cents)
11
Diluted earnings per security/share (cents) 11
9.32
9.24
3.87
3.83
Distribution in respect of the year ended 30 June
Distribution per security/share in respect
of the year ended 30 June (cents) 12
12 47,734
38,454
12.00
11.70
1.86
1.84
—
—
0.99
0.98
—
—
50
Ardent Leisure Group Annual Report 2013
For personal use only
Statements of Comprehensive Income
For the year ended 30 June 2013
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
Note
ALL Group
2013
$’000
ALL Group
2012
$’000
Profit
35,617
12,627
7,093
3,244
Other comprehensive income:
Items that may be reclassified to profit and loss
Cash flow hedges
Foreign exchange translation difference
Items that will not be reclassified to profit and loss
Revaluation of property, plant and equipment
Income tax relating to these items
Other comprehensive income for the year, net of tax
Total comprehensive income for the year, net of tax
Attributable to:
Stapled security holders
Total comprehensive income for the year, net of tax
30
30
30
30
1,529
(636)
(1,791)
1,383
—
2,472
—
542
9,103
—
9,996
45,613
45,613
45,613
(7,621)
1,980
—
(646) — (646)
(8,675)
3,952
2,472
9,565
3,952
9,565
3,952
9,565
1,876
5,120
5,120
5,120
The above Statements of Comprehensive Income should be read in conjunction with the accompanying notes.
Ardent Leisure Group Annual Report 2013
51
For personal use only
Balance Sheets
As at 30 June 2013
Current assets
Cash and cash equivalents
Receivables
Derivative financial instruments
Inventories
Property held for sale
Other
Total current assets
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
Note
ALL Group
2013
$’000
ALL Group
2012
$’000
575
33 12,953 11,693 12,481 8,554
13 7,049 5,679 9,290 11,520
—
14
270
8,817
15 9,780 8,817
16 4,210
—
17 9,402 9,942 5,956 7,581
— 4,210
—
9,780
43,969
36,401
41,717
36,472
Non-current assets
—
18 95,232 94,915
Investment properties
42,601
Property, plant and equipment
402,409
19 461,915
353
Livestock 20 305 353
Intangible assets 21 196,788 139,838 196,788 139,739
1,994
Deferred tax assets
22 1,533 1,994
—
83,450
305
1,533
Total non‑current assets
Total assets
Current liabilities
Payables
Derivative financial instruments
Interest bearing liabilities
Current tax liabilities
Provisions
Other
Total current liabilities
Non-current liabilities
Derivative financial instruments
Interest bearing liabilities
Provisions
Deferred tax liabilities
Total non‑current liabilities
Total liabilities
Net assets
755,773
639,509
282,076
184,687
799,742
675,910
323,793
221,159
247
584
23 63,977 59,800 54,343 48,234
—
14
24 238 229 238 229
2,617 2,002 2,617 2,002
25 2,990 2,735 2,990 2,735
26 2,101 1,718 2,101 1,694
—
72,507 66,731 62,289 54,894
14 1,307 3,204
—
24 227,628 193,225 168,346 124,544
25 2,011 1,631 2,011 1,631
27 8,999 4,464 8,999 4,464
—
239,945 202,524 179,356 130,639
312,452 269,255 241,645 185,533
487,290 406,655 82,148 35,626
Equity
Contributed equity
(45,504)
Reserves
Retained profits/(accumulated losses) 31 31,691 30,259
28 501,416 421,900 14,202 11,960
(576) (3,048)
30
(2,837) (6,310)
(45,817)
Total equity attributable to shareholders 487,290 406,655 10,789
Non‑controlling interests
2,602
— 71,359 33,024
—
Total equity
487,290 406,655 82,148 35,626
The above Balance Sheets should be read in conjunction with the accompanying notes.
52
Ardent Leisure Group Annual Report 2013
For personal use only
Statements of Changes in Equity
For the year ended 30 June 2013
Contributed
equity
$’000
Reserves
$’000
(accumulated Non‑controlling
interests
$’000
losses)
$’000
Note
Total
$’000
Retained profits/
Consolidated Group
Total equity at 1 July 2011
Profit for the period as reported in the 2012
financial statements
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as owners:
30
Security-based payments
Contributions of equity, net of issue costs
28
Security-based payments - securities/shares issued 28
Distributions paid and payable
31
30
Reserve transfers
Total equity at 30 June 2012
Profit for the period
Other comprehensive income
Total comprehensive income
404,010
(30,214)
46,980
—
420,776
—
—
—
—
(8,675)
12,627
12,627
—
— — (8,675)
(8,675)
12,627
—
3,952
—
17,422
468
—
—
421,900
—
—
1,019
—
—
—
(7,634)
(45,504)
—
9,996
—
—
—
1,019
17,422
468
(36,982) — (36,982)
—
—
—
—
—
7,634
30,259
35,617
—
—
—
—
—
406,655
35,617
9,996
45,613
—
9,996
35,617
Transactions with owners in their capacity as owners:
30
Security-based payments
Contributions of equity, net of issue costs
28
Security-based payments - securities/shares issued 28
31
Distributions paid and payable
30
Reserve transfers
—
77,585
1,931
—
—
(862)
—
—
—
(9,447)
— — (862)
77,585
—
—
1,931
—
—
(43,632) — (43,632)
—
9,447
—
Total equity at 30 June 2013
501,416
(45,817)
31,691
—
487,290
ALL Group
Total equity at 1 July 2011
Profit for the period as reported in the 2012
financial statements
Other comprehensive income
Total comprehensive income
10,567
(4,924)
(7,093)
33,024
31,574
—
—
—
—
1,876
1,876
3,244
—
3,244
— — 1,876
3,244
—
5,120
Transactions with owners in their capacity as owners:
Contributions of equity, net of issue costs
28
Security-based payments - securities/shares issued 28
31
Dividends paid and payable
1,358
35
—
—
—
—
—
—
1,358
35
(2,461) — (2,461)
—
—
Total equity at 30 June 2012
Profit for the period
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as owners:
28
Contributions of equity, net of issue costs
Security-based payments - securities/shares issued 28
Issue of convertible notes
Dividends paid and payable
31
11,960
—
—
—
2,185
57
—
—
(3,048)
—
2,472
2,472
(6,310)
7,093
—
7,093
33,024
—
—
—
35,626
7,903
2,472
9,565
—
—
—
—
—
—
—
2,185
—
—
57
38,335
38,335
(3,620) — (3,620)
Total equity at 30 June 2013
14,202
(576)
(2,837)
71,359
82,148
The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.
Ardent Leisure Group Annual Report 2013
53
For personal use only
Statements of Cash Flows
For the year ended 30 June 2013
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
Note
ALL Group
2013
$’000
ALL Group
2012
$’000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Property expenses paid
Realised gains/(losses) on derivative financial instruments
Interest received
Rent payments to the Trust
Receipts of funds for property costs from the Trust
US withholding tax paid
Income tax paid
492,258
(338,753)
(69,945)
246
228
—
—
(214)
(1,469)
494,486
426,597
426,599
(336,526) (299,632)
(298,734)
(67,868) (51,260)
(57,691)
—
(1,035)
369
148
—
(102,808) (102,178)
— 48,912 44,771
—
—
(1,469) (428)
—
185
(243)
(431)
Net cash flows from operating activities
34(a)
82,369
68,613
34,912
18,239
Cash flows from investing activities
Payment for property, plant and equipment
Purchase of assets for the Trust
Receipt of funds for assets purchased on behalf of the Trust
Proceeds from sale of plant and equipment
Proceeds from sale of land and buildings
Payment for purchase of businesses net of cash acquired
(62,780)
—
—
543
—
(67,510)
(47,957)
—
—
5,089
24,168
(10,251)
(34,128) (15,035)
(29,499) (35,137)
33,821
36,902
32
502
24,168
—
(67,510) —
Net cash flows from investing activities
(129,747)
(28,951)
(96,814)
10,930
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Borrowing costs
Proceeds from issue of stapled securities
Costs of issue of stapled securities
Dividends paid to the Trust
Proceeds from loans from the Trust
Repayments of borrowings to the Trust
Repayments of principal of finance leases
Repayments of borrowings to third parties
Distributions paid to stapled security holders
55,159
—
2,601,809
(2,575,014)
(11,810)
72,225
(1,628)
—
—
—
983,711
(985,931)
(12,660)
—
—
—
—
—
—
—
(7,475) (7,581)
—
2,034
—
(45)
(3,620) (2,461)
53,266
(126,592) (72,912)
(249) — (249) —
—
—
— — 38,336
108,332
(22,468)
(36,644)
—
Net cash flows from financing activities
48,689
(37,348) 65,880 (29,688)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate changes on cash and cash equivalents
1,311
11,693
(51)
2,314 3,978 (519)
9,706
9,402
8,554
(51) (329)
(327)
Cash at the end of the year
33
12,953
11,693
12,481
8,554
The above Statements of Cash flows should be read in conjunction with the accompanying notes.
54
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies
Ardent Leisure Group (Group or Consolidated Group) is a
‘stapled’ entity comprising of Ardent Leisure Trust (Trust) and
its controlled entities, and Ardent Leisure Limited (ALL or
Company) and its controlled entities. The units in the Trust
are stapled to shares in the Company. The stapled securities
cannot be traded or dealt with separately. The stapled
securities of the Group are listed on the Australian Securities
Exchange (ASX).
The significant policies which have been adopted in the
preparation of these consolidated financial statements for
the year ended 30 June 2013 are set out below. These policies
have been consistently applied to the years presented, unless
otherwise stated.
a) Basis of preparation
As permitted by Class Order 05/642, issued by the Australian
Securities and Investments Commission, this financial report
is a combined report that presents the consolidated financial
statements and accompanying notes of both the Ardent
Leisure Group and the Ardent Leisure Limited Group (ALL Group).
The financial report of Ardent Leisure Group comprises the
consolidated financial report of Ardent Leisure Trust and its
controlled entities, including Ardent Leisure Limited and its
controlled entities.
The financial report of Ardent Leisure Limited Group
comprises the consolidated financial report of Ardent Leisure
Limited and its controlled entities.
These general purpose financial statements have been
prepared in accordance with the requirements of the
Trust Constitution, Australian Accounting Standards
and Interpretations issued by the Australian Accounting
Standards Board, and the Corporations Act 2001.
Ardent Leisure Group is a for-profit entity for the purposes of
preparing financial statements.
Compliance with IFRS as issued by the IASB
Compliance with Australian Accounting Standards ensures
that the financial statements comply with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Consequently, these financial statements have also been
prepared in accordance with and comply with IFRS as issued
by the IASB.
Historical cost convention
The financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
investment properties, property, plant and equipment and
derivative financial instruments held at fair value.
Critical accounting estimates
The preparation of financial statements in conformity with
Australian Accounting Standards may require the use of
certain critical accounting estimates and management
to exercise its judgement in the process of applying the
Group’s accounting policies. Other than the estimation of
fair values described in Note 1(f ), Note 1(g), Note 1(l), Note
1(m), Note 1(p), Note 1(s)(v), Note 1(s)(vi) and Note 1(ac) and
assumptions related to deferred tax assets and liabilities,
impairment testing of goodwill and Director valuations
for some property, plant and equipment and investment
properties, no key assumptions concerning the future, or
other estimation of uncertainty at the reporting date, have
a significant risk of causing material adjustments to the
financial statements in the next annual reporting period.
New and amended standards adopted by the Group
None of the new standards and amendments to standards
that are mandatory for the first time for the financial
year beginning 1 July 2012 affected any of the amounts
recognised in the current period or any prior period and are
not likely to affect future periods.
Early adoption of standards
The Group has not elected to apply any pronouncements
before their operative date in the annual reporting period
beginning 1 July 2012.
Deficiency of current assets
As at 30 June 2013, the Group and ALL Group have
deficiencies of current assets of $28.5 million (2012: $30.3
million) and $20.6 million (2012: $18.4 million) respectively.
Due to the nature of the business, the majority of sales are for
cash whereas purchases are on credit resulting in a negative
working capital position. Surplus cash is used to repay
external loans resulting in a deficiency of current assets at 30
June 2013. The Group has $102.2 million (2012: $46.1 million)
of unused loan capacity at 30 June 2013 which can be drawn
on as required. The ALL Group has $300.3 million (2012: $58.4
million) of unused capacity in its bank loans and its loans with
the Trust which can be utilised to fund any deficiency in its
net current assets. Refer to Note 24.
b) Principles of consolidation
As the Trust is deemed to be the parent entity under
Australian Accounting Standards, a consolidated financial
report has been prepared for the Group as well as a
consolidated financial report for the ALL Group. The
consolidated financial report of the Group combines the
financial report for the Trust and ALL Group for the year.
Transactions between the entities have been eliminated
in the consolidated financial reports of the Group and ALL
Group. Accounting for the Group is carried out in accordance
with Australian accounting standards.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
55
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies (continued)
b) Principles of consolidation (continued)
Controlled entities are all those entities (including special
purpose entities) over which the Group has the power
to govern the financial and operating policies, generally
accompanying an equity holding of more than one half
of the voting rights. The existence and effect of potential
voting rights that are currently exercisable or convertible
are considered when assessing whether the Group controls
another entity.
Controlled entities are fully consolidated from the date
on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for
the acquisition of controlled entities by the Group (refer to
Note 1(ac)).
The Group treats transactions with non-controlling interests
that do not result in a loss of control as transactions with
equity owners of the Group. A change in ownership interest
results in an adjustment between the carrying amounts of
the controlling and non-controlling interests to reflect their
relative interests in the subsidiary. Any difference between
the amount of the adjustment to non-controlling interests
and any consideration paid or received is recognised in a
separate reserve within equity attributable to owners of
Ardent Leisure Group.
When the Group ceases to have control, joint control or
significant influence, any retained interest in the entity is
remeasured to its fair value with the change in carrying
amount recognised in profit or loss. The fair value is the
initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate, jointly
controlled entity or financial asset. In addition, any amounts
previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This
may mean that amounts previously recognised in other
comprehensive income are reclassified to profit or loss.
If the ownership interest in an associate or a jointly controlled
entity is reduced but joint control or significant influence
is retained, only a proportionate share of the amounts
previously recognised in other comprehensive income are
reclassified to profit or loss where appropriate.
The Group applies a policy of treating transactions with
non-controlling interests as transactions with parties external
to the Group. Disposals to non-controlling interests result
in gains and losses for the Group that are recorded in
the Income Statement. Purchases from non-controlling
interests result in goodwill, being the difference between any
consideration paid and the relevant share acquired of the
carrying value of identifiable net assets of the subsidiary.
Inter-entity transactions, balances and unrealised gains on
transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by
the Group.
A business segment is a group of assets and operations
engaged in providing products or services that are subject
to risks and returns that are different to those of other
business segments.
c) Cash and cash equivalents
For Statement of Cash Flows presentation purposes, 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 and
which are subject to an insignificant risk of changes in value,
and bank overdrafts.
d) Receivables
Trade receivables are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest rate method less provision for doubtful debts. They
are presented as current assets unless collection is not
expected for more than 12 months after the reporting date.
The collectability of debts is reviewed on an ongoing basis.
Debts which are known to be uncollectible are written off
in the period in which they are identified. A provision for
doubtful debts is raised where there is objective evidence
that the Group will not collect all amounts due. The amount
of the provision is the difference between the carrying
amount and estimated future cash flows. Cash flows relating
to current receivables are not discounted.
The amount of any impairment loss is recognised in the
Income Statement within other expenses. When a trade
receivable for which a provision has been recognised
becomes uncollectible in a subsequent period, it is written
off against the provision. Subsequent recoveries of amounts
previously written off are credited against other expenses in
the Income Statement.
e) Inventories
Inventories are valued at the lower of cost and net realisable
value. Cost of goods held for resale is determined by
weighted average cost. Cost of catering stores (which by
nature are perishable) and other inventories is determined by
purchase price.
56 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies (continued)
f) Investment properties
Investment properties comprise investment interests in land
and buildings (including integral plant and equipment) held
for the purposes of letting to produce rental income.
Initially, investment properties are measured at cost including
transaction costs. Subsequent to initial recognition, the
investment properties are then stated at fair value. Gains and
losses arising from changes in the fair values of investment
properties are included in the Income Statement in the
period in which they arise.
At each reporting date, the fair values of the investment
properties are assessed by the Manager by reference to
independent valuation reports or through appropriate
valuation techniques adopted by the Manager. Fair value
is determined assuming a long term property investment.
Specific circumstances of the owner are not taken into
account.
The use of independent valuers is on a progressive basis over
a three year period, or earlier, where the Manager believes
there may be a material change in the carrying value of the
property.
Where an independent valuation is not obtained, factors
taken into account where appropriate, by the Directors in
determining fair value may include:
— assuming a willing buyer and a willing seller,
without duress and an appropriate time to
market the property to maximise price;
— information obtained from valuers, sales and
leasing agents, market research reports, vendors
and potential purchasers;
— capitalisation rates used to value the asset,
market rental levels and lease expiries;
— changes in interest rates;
— asset replacement values;
— discounted cash flow models;
— available sales evidence; and
— comparisons to valuation professionals performing
valuation assignments across the market.
The global market for many types of real estate has been
severely affected by the recent volatility in global financial
markets. The lower levels of liquidity and the volatility in the
banking sector have translated into a general weakening
of market sentiment towards real estate and the number of
real estate transactions has significantly reduced.
Fair value of investment property is the price at which the
property could be exchanged between knowledgeable,
willing parties in an arm’s length transaction. A “willing
seller” is neither a forced seller nor one prepared to sell at a
price not considered reasonable in the current market. The
best evidence of fair value is given by current prices in an
active market for similar property in the same location and
condition. The current lack of comparable market evidence
relating to pricing assumptions and market drivers means
that there is less certainty in regards to valuations and the
assumptions applied to valuation inputs. The period of time
needed to negotiate a sale in this environment may also be
significantly prolonged.
The fair value of investment property has been adjusted to
reflect market conditions at the end of the reporting period.
While this represents the best estimates of fair value as at the
reporting date, the current market uncertainty means that if
investment property is sold in the future, the price achieved
may be higher or lower than the most recent valuation, or
higher or lower than the fair value recorded in the financial
statements. This is particularly relevant in periods of market
volatility.
As the fair value method has been adopted for investment
properties, the buildings and any component thereof are
not depreciated. Taxation allowances for the depreciation
of buildings and plant and equipment are claimed by the
Trust and contribute to the tax deferred component of
distributions.
g) Property, plant and equipment
Revaluation model
The revaluation model of accounting is used for land and
buildings and major rides and attractions. All other classes
of property, plant and equipment (PPE) are carried at historic
cost. Initially, PPE is measured at cost. For assets carried
under the revaluation model, PPE is carried at a revalued
amount, being its fair value at the date of revaluation less
any subsequent accumulated depreciation and subsequent
accumulated impairment losses. Revaluations are made with
sufficient regularity to ensure that the carrying amount does
not differ materially from that which would be determined
using fair value at the reporting date.
Increases in the carrying amounts arising on revaluation of
PPE are credited, net of tax, to other reserves in equity. To
the extent that the increase reverses a decrease previously
recognised in profit or loss, the increase is first recognised
in profit or loss. Decreases that reverse previous increases of
the same asset are first charged against revaluation reserves
directly in equity to the extent of the remaining reserve
attributable to the asset; all other decreases are charged to
the Income Statement. Each year, the difference between
depreciation based on the revalued carrying amount of the
asset is charged to the Income Statement and depreciation
based on the asset’s original cost, net of tax, is transferred
from the asset revaluation reserve to retained profits.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
57
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies (continued)
g) Property, plant and equipment (continued)
At each reporting date, the fair values of PPE are assessed by
the Manager by reference to independent valuation reports
or through appropriate valuation techniques adopted by
the Manager. Fair value is determined assuming a long term
property investment. Specific circumstances of the owner
are not taken into account.
The use of independent valuers is on a progressive basis over
a three-year period, or earlier, where the Manager believes
there may be a material change in the carrying value of the
property.
Where an independent valuation is not obtained, factors
taken into account where appropriate, by the Directors in
determining fair value may include:
— assuming a willing buyer and a willing seller,
without duress and an appropriate time to market
the property to maximise price;
— information obtained from valuers, sales and
leasing agents, market research reports, vendors
and potential purchasers;
— capitalisation rates used to value the asset,
market rental levels and lease expiries;
— changes in interest rates;
— asset replacement values;
— discounted cash flow models;
— available sales evidence; and
— comparisons to valuation professionals performing
valuation assignments across the market.
The global market for many types of real estate has been
severely affected by the recent volatility in global financial
markets. The lower levels of liquidity and the volatility in the
banking sector have translated into a general weakening
of market sentiment towards real estate and the number of
real estate transactions has significantly reduced.
Fair value of PPE is the price at which the property could be
exchanged between knowledgeable, willing parties in an
arm’s length transaction. A “willing seller” is neither a forced
seller nor one prepared to sell at a price not considered
reasonable in the current market. The best evidence of
fair value is given by current prices in an active market for
similar property in the same location and condition. The
current lack of comparable market evidence relating to
pricing assumptions and market drivers means that there is
less certainty in regards to valuations and the assumptions
applied to valuation inputs. The period of time needed to
negotiate a sale in this environment may also be significantly
prolonged.
The fair value of PPE has been adjusted to reflect market
conditions at the end of the reporting period. While this
represents the best estimates of fair value as at the reporting
date, the current market uncertainty means that if PPE is sold
in the future, the price achieved may be higher or lower than
the most recent valuation, or higher or lower than the fair
value recorded in the financial statements. This is particularly
relevant in periods of market volatility.
Depreciation
Land is not depreciated. Depreciation on other assets is
calculated using the straight-line method to allocate their
cost or revalued amounts, net of their residual values, over
their estimated useful lives as follows:
2013
2012
Buildings
Leasehold
improvements
Major rides and attractions
Plant and equipment
Furniture, fittings and
equipment
Motor vehicles
40 years
Over the life
of lease
20 - 40 years
4 - 25 years
4 - 13 years
8 years
40 years
Over the life
of lease
20 - 40 years
4 - 25 years
4 - 13 years
8 years
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at each reporting date. An
asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount (refer to Note 1(m)).
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in the
Income Statement. When revalued assets are sold, it is Group
policy to transfer the amounts included in reserves in respect
of those assets to retained profits.
h) Leases
Where the Group has substantially all the risks and rewards
of ownership, leases of property, plant and equipment are
classified as finance leases. Finance leases are capitalised at
inception at the lower of the fair value of the leased property
and the present value of the minimum lease payments. The
corresponding rental obligations, net of finance charges, are
included in interest bearing liabilities. Each lease payment is
allocated between the liability and finance cost. The finance
cost is charged to the Income Statement over the lease
period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period. The
PPE acquired under finance leases are depreciated over the
shorter of the asset’s useful life and the lease term.
Leases in which a significant portion of the risks and rewards
of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net
of any incentives received from the lessor) are charged to the
Income Statement on a straight-line basis over the period
of the lease. Lease income from operating leases where the
Group is a lessor is recognised in income on a straight-line
basis over the lease term.
58 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies (continued)
i) Investments and other financial assets
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an
active market. They arise when the Group provides money,
goods or services directly to a debtor with no intention of
selling the receivable. They are included in current assets,
except for those with maturities greater than 12 months after
the reporting date which are classified as non current assets.
Loans and receivables are carried at amortised cost using the
effective interest rate method. The Group assesses at each
reporting date whether there is objective evidence that a
financial asset or group of financial assets is impaired.
j) Assets held for sale
Assets are classified as held for sale and stated at the lower of
their carrying amount, and fair value less costs to sell if their
carrying amount will be recovered principally through a sale
transaction rather than through continuing use and a sale is
considered highly probable.
An impairment loss is recognised for any initial or subsequent
write-down of the asset to fair value less costs to sell. A gain
is recognised for any subsequent increases in fair value less
costs to sell of an asset, but not in excess of any cumulative
impairment loss previously recognised. A gain or loss not
previously recognised by the date of the sale of the asset is
recognised at the date of derecognition.
Assets are not depreciated or amortised while they are
classified as held for sale. Assets classified as held for sale are
presented separately from the other assets in the Balance
Sheet.
k) Livestock
Livestock is stated at historical cost less depreciation.
Historical cost includes expenditure that is directly
attributable to the acquisition of the animals. The fair value
of the livestock is not materially different to its carrying value.
Depreciation on livestock is calculated using the straight-line
method to allocate their cost or revalued amounts, net of
their residual values, over the useful lives of the assets which
range from 5 - 50 years (2012: 5 - 50 years).
l) Intangible assets
Brands
Brands acquired are amortised on a straight-line basis over
the period during which benefits are expected to be received,
which is 10 years (2012: 10 years).
Customer relationships
Customer relationships acquired are amortised over the
period during which the benefits are expected to be received,
which is four years (2012: four years). The amortisation charge
is weighted towards the first year of ownership where the
majority of economic benefits arise.
Other intangible assets
Intellectual property purchased is amortised on a straight-line
basis over the period during which benefits are expected to
be received, which is seven years (2012: seven years). Liquor
licences are amortised over the length of the licence which
are between 10-16 years (2012: 10–16 years), depending on
the length of the licence.
Goodwill
Goodwill is measured as described in Note 1(ac). Goodwill
on acquisitions of subsidiaries is included in intangible
assets. Goodwill on acquisitions of associates is included
in investments in associates. Goodwill is not amortised but
it is tested for impairment annually, or more frequently if
events or changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated impairment
losses. Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the
purposes of impairment testing (refer to Note 1(m)). The
allocation is made to those cash-generating units or groups
of cash-generating units that are expected to benefit from
the business combination in which the goodwill arose,
identified according to operating segments (refer to Note 38).
m) Impairment of assets
Goodwill and intangible assets that have an indefinite useful
life are not subject to amortisation and are tested annually
for impairment or more frequently if events or changes in
circumstances indicate that they might be impaired. Other
assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount
may not be recoverable.
An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value
less costs to sell, and its value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets
or groups of assets (cash-generating units). Non-financial
assets other than goodwill that suffered impairment are
reviewed for possible reversal of the impairment at each
reporting date.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
59
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies (continued)
n) Payables
Liabilities are recognised for amounts to be paid in the
future for goods or services received, whether or not billed
to the Group. The amounts are unsecured and are usually
paid within 30 or 60 days of recognition. Trade payables
are presented as current liabilities unless payment is not
due within 12 months from the reporting date. They are
recognised initially at their value and subsequently measured
at amortised cost using the effective interest rate method.
o) Interest bearing liabilities
Borrowings are initially recognised at fair value, net of
transaction costs incurred and are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised
in the Income Statement over the period of the borrowing
using the effective interest rate method. Fees paid on the
establishment of loan facilities, which are not an incremental
cost relating to the actual drawdown of the facility, are
recognised as prepayments and amortised on a straight-line
basis over the term of the facility.
Finance leases are recognised as interest bearing liabilities
to the extent that the Group retains substantially all the risks
and rewards of ownership.
Interest bearing liabilities are classified as current liabilities
unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the
reporting period.
p) Derivatives
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The
method of recognising the resulting gain or loss depends on
whether the derivative is designated as a hedging instrument
if hedging criteria are met and if so, the nature of the item
being hedged. The Group may designate certain derivatives
as either hedges of exposures to variability in cash flows
associated with future interest payments on variable rate
debt (cash flow hedges) or hedges of net investments in
foreign operations (net investment hedges).
The Group documents at the inception of the hedging
transaction the relationship between the hedging
instruments and hedged items, as well as its risk management
objective and strategy for undertaking various hedge
transactions. The Group also documents its assessment, both
at hedge inception and on an ongoing basis, of whether the
derivatives that are used in hedging transactions have been
and will continue to be highly effective in offsetting changes
in fair values or cash flows of hedged items.
The fair values of various derivative financial instruments used
for hedging purposes are disclosed in Note 14. Movements
in the cash flow hedge reserve in equity are shown in Note
30. The full fair value of a hedging derivative is classified as a
non-current asset or liability when the remaining maturity is
more than 12 months. They are classified as current assets or
liabilities when the remaining maturity of the hedged item
is less than 12 months. Trading derivatives are classified as
current assets or liabilities.
i) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge
accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting are
recognised immediately in the Income Statement.
ii) Cash flow hedges
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income and
accumulated in reserves in equity. The gain or loss relating
to the ineffective portion is recognised immediately in the
Income Statement. Amounts accumulated in equity are
recycled in the Income Statement in the period when the
hedged item impacts the Income Statement.
When a hedging instrument expires or is sold or terminated,
or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity
at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in the Income
Statement. When a forecast transaction is no longer expected
to occur, the cumulative gain or loss that was reported in
equity is immediately transferred to the Income Statement.
iii) Net investment hedges
The effective portion of changes in the fair value of
derivatives that are designated and qualify as net investment
hedges is recognised in other comprehensive income and
accumulated in reserves in equity. This amount will be
reclassified to the Income Statement on disposal of the
foreign operation. The gain or loss relating to the ineffective
portion is recognised immediately in the Income Statement.
Gains and losses accumulated in equity are included in the
Income Statement when the foreign operation is partially
disposed of or sold.
q) Borrowing costs
Borrowing costs are recognised as expenses using the
effective interest rate method, except where they are
included in the costs of qualifying assets.
Borrowing costs include interest on short term and long
term borrowings, amortisation of ancillary costs incurred in
connection with the arrangement of borrowings and finance
lease charges.
Borrowing costs associated with the acquisition or
construction of a qualifying asset are capitalised as part of
the cost of that asset. Borrowing costs not associated with
qualifying assets, are expensed in the Income Statement.
60 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies (continued)
q) Borrowing costs (continued)
The capitalisation rate used to determine the amount
of borrowing costs to be capitalised is the weighted
average interest rate applicable to the Group’s outstanding
borrowings during the year. The average capitalisation
rate used was 5.05% per annum (2012: 6.23% per annum)
for Australian dollar debt and nil per annum (2012: nil per
annum) for US dollar debt.
r) Provisions
Provisions are recognised when the Group has a present
legal or constructive obligation as a result of past events,
it is probable that an outflow of resources will be required
to settle the obligation, and the amount has been reliably
estimated. Provisions are not recognised for future operating
losses.
Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a
whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same
class of obligations may be small.
Provisions are measured at the present value of
management’s best estimate of the expenditure required
to settle the present obligation at the reporting date. The
discount rate used to determine the present value reflects
current market assessments of the time value of money and
the risks specific to the liability. The increase in the provision
due to the passage of time is recognised as interest expense.
s) Employee benefits
i) Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non monetary
benefits, annual leave and accumulating sick leave expected
to be settled within 12 months of the reporting date are
recognised in other payables in respect of employees’ services
up to the reporting date and are measured at the amounts
expected to be paid when the liabilities are settled. Liabilities
for non-accumulating sick leave are recognised when the
leave is taken and measured at the rates paid or payable.
ii) Long service leave
The liability for long service leave is recognised in the
provision for employee benefits and measured as the present
value of expected future payments to be made in respect
of services provided by employees up to the reporting date
using the projected unit credit method. Consideration is
given to expected future wage and salary levels, experience
of employee departures and periods of service. Where
amounts are not expected to be settled within 12 months,
expected future payments are discounted to their net
present value using market yields at the reporting date on
high quality corporate bonds, except when there is no deep
market in which case market yields on national government
bonds are used, with terms to maturity and currency that
match, as closely as possible, to the estimated future cash
outflows.
The obligations are presented as current liabilities in the
Balance Sheet if the Group does not have an unconditional
right to defer settlement for at least 12 months after the
reporting date, regardless of when the actual settlement is
expected to occur.
iii) Profit sharing and bonus plans
The Group recognises a provision where contractually
obliged or where there is a past practice that has created a
constructive obligation.
iv) Termination benefits
Termination benefits are payable when employment is
terminated before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for
these benefits. The Group recognises termination benefits
when it is demonstrably committed to either terminating the
employment of current employees according to a detailed
formal plan without possibility of withdrawal or to providing
termination benefits as a result of an offer made to encourage
voluntary redundancy. Benefits falling due more than 12
months after the end of the reporting period are discounted
to present value.
v) Long term incentive plan (LTIP)
Australian employees
Since 1 July 2009, long term incentives have been provided to
certain executives under the LTIP. Under the terms of the LTIP
and the initial grant, employees may be granted performance
rights, of which one third will vest two years after grant
date, one third will vest three years after grant date and one
third will vest four years after grant date. The percentage
of performance rights which will vest is subject to the
performance of the Group relative to its peer group, which is
the ASX Small Industrials Index. The first set of performance
rights were granted under the scheme on 4 December 2009,
with the first vesting date being the day after the full year
results announcement for the year ended 30 June 2011.
The characteristics of the LTIP indicate that, at the Ardent
Leisure Group level, it is an equity settled share-based
payment under AASB 2 Share-based Payment as the holders
are entitled to the securities as long as they meet the
LTIP’s service and performance criteria. However, as ALL is
considered to be a subsidiary of the Trust in the financial
statements of the ALL Group, the LTIP is accounted for as a
cash settled share-based payment.
The fair value of the performance rights granted under the
LTIP is recognised in the Group Financial statements as an
employee benefit expense with a corresponding increase
in equity. The fair value of the performance rights at grant
date is determined using a Monte Carlo simulation valuation
model and then recognised over the vesting period during
which employees become unconditionally entitled the
underlying securities.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
61
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies (continued)
s) Employee benefits (continued)
v) Long term incentive plan (LTIP) (continued)
The fair value of the performance rights granted under the
LTIP is recognised in the ALL Group financial statements
as an employee benefit expense with a corresponding
increase in liabilities. The fair value of the performance rights
is determined at each reporting date using a Monte Carlo
simulation valuation model, with the movement in fair value
of the liability being recognised in the Income Statement.
At each reporting date, its estimate of the number of
securities that are expected to vest is revised. The employee
benefit expense recognised each period takes into account
the most recent estimate.
US employees
For US executives eligible for the LTIP, a shadow performance
rights scheme has been set up whereby a cash payment is
made instead of performance rights being granted. At the
end of the vesting period for each grant of performance
rights, a calculation is made of the number of performance
rights which would have been granted and payment is
made based on the Group stapled security volume weighted
average price (VWAP) for the five trading days immediately
following the vesting date. Due to the nature of the scheme,
this scheme is considered to be a cash settled share-based
payment under AASB 2.
The fair value of each grant of performance rights is
determined at each reporting date using a Monte Carlo
simulation valuation model. This is recorded as a liability
with the difference in the movement in the fair value of
the financial liability being recorded through the Income
Statement.
At each reporting date, the estimate of the number of
securities that are expected to vest is revised. The employee
benefit expense recognised each period takes into account
the most recent estimate.
vi) Deferred Short Term Incentive (DSTI)
Australian employees
Since 1 July 2010, long term incentives have been provided
to executives under the DSTI. Under the terms of the DSTI,
employees may be granted DSTI performance rights, of
which one half will vest one year after grant date and one half
will vest two years after grant date so long as the executive
remains employed by the Group. The first set of performance
rights were granted under the scheme on 16 December 2010,
with the first vesting date being the day after the full year
results announcement for the year ended 30 June 2011.
The characteristics of the DSTI indicate that, at the Ardent
Leisure Group level, it is an equity settled share-based
payment as the holders are entitled to the securities as long
as they meet the DSTI’s service criteria. However, as ALL is
considered to be a subsidiary of the Trust, in the financial
statements of the ALL Group the DSTI is accounted for as a
cash settled share-based payment.
The fair value of the performance rights granted under the
DSTI is recognised in the Group financial statements as an
employee benefit expense with a corresponding increase in
equity. The fair value of the performance rights at grant date
is determined using a binomial tree valuation model and then
recognised over the vesting period during which employees
become unconditionally entitled to the underlying securities.
The fair value of the performance rights granted under the
DSTI is recognised in the ALL Group financial statements as
an employee benefit expense with a corresponding increase
in liabilities. The fair value of each grant of performance
rights is determined at each reporting date using a binomial
tree valuation model, with the movement in fair value of the
liability being recognised in the Income Statement.
At each reporting date, the estimate of the number of
securities that are expected to vest is revised. The employee
benefit expense recognised each period takes into account
the most recent estimate.
US employees
For US executives eligible for the DSTI, a shadow performance
rights scheme has been set up whereby a cash payment is
made instead of performance rights being granted. At the
end of the vesting period for each grant of performance
rights, a calculation is made of the number of performance
rights which would have been granted and payment is
made based on the Group VWAP for the five trading days
immediately following the vesting date. Due to the nature
of the scheme, this scheme is considered to be a cash settled
share-based payment under AASB 2.
The fair value of each grant of performance rights is
determined at each reporting date using a binomial tree
valuation model. This is recorded as a liability with the
difference in the movement in the fair value of the financial
liability being recorded through the Income Statement.
At each reporting date, the estimate of the number of
securities that are expected to vest is revised. The employee
benefit expense recognised each period takes into account
the most recent estimate.
t) Tax
The Trust is not subject to income tax. However, both of its
controlled entities, Ardent Leisure (NZ) Trust and ALL Group,
are subject to income tax.
Under current Australian income tax legislation, the Trust
is not liable to pay income tax provided its income, as
determined under the Trust Constitution, is fully distributed
to unit holders, by way of cash or reinvestment. The liability
for capital gains tax that may otherwise arise if the Australian
properties were sold is not accounted for in these financial
statements, as the Trust expects to distribute such amounts
to its unit holders.
62 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies (continued)
t) Tax (continued)
tax is also recognised in other comprehensive income or
directly in equity respectively.
The income tax expense or revenue for the period is the tax
payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of
the reporting period in the countries where the Company’s
subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken
in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the consolidated financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not
accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting
nor taxable profit or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and
are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled.
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.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and
tax bases of investments in foreign operations where the
Company is able to control the timing of the reversal of the
temporary differences and it is probable that the differences
will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to
offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Ardent Leisure Limited and its wholly-owned Australian
controlled entities have implemented the tax consolidation
legislation as of 8 February 2005. As a consequence, these
entities are taxed as a single entity and the deferred tax assets
and liabilities of these entities are set off in the consolidated
financial statements.
Current and deferred tax is recognised in profit or loss, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the
Companies within the Group may be entitled to claim
special tax deductions for investments in qualifying assets
(investment allowances). The Group accounts for such
allowances as tax credits. This means that the allowance
reduces income tax payable and current tax expense. A
deferred tax asset is recognised for unclaimed tax credits that
are carried forward as deferred tax assets.
u) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. 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 taxation authority
is included with other receivables or payables in the
Balance Sheet.
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
taxation authority, are presented as operating cash flow.
v) Equity
Incremental costs directly attributable to the issue of new
stapled securities or options are recognised directly in equity
as a reduction in the proceeds of stapled securities to which
the costs relate. Incremental costs directly attributable to the
issue of new stapled securities or options for the acquisition
of a business are not included in the cost of the acquisition as
part of the purchase consideration.
w) Reserves
In accordance with the Trust Constitution, amounts may
be transferred from reserves or contributed equity to fund
distributions.
x) Revenue
Revenue is measured at the fair value of the consideration
received or receivable. Amounts disclosed as revenue are net
of returns, trade allowances and amounts collected on behalf
of third parties. The Group recognises revenue when the
amount of revenue can be reliably measured, it is probable
that further economic benefits will flow to the entity and
specific criteria have been met for each of the Group’s
activities as described below. Revenue is recognised for the
major business activities as follows:
i) Rendering of services
Revenue from rendering of services including health club
memberships, theme park and SkyPoint entry and bowling
games is recognised when the outcome can be reliably
measured and the service has taken place. Where health
club membership is for a fixed period and paid in advance,
the revenue is recognised on a straight-line basis over
the membership period. Revenue relating to theme park
annual passes is recognised as the passes are used.
Ardent Leisure Group Annual Report 2013
63
Ardent Leisure Group Annual Report 2013
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies (continued)
x) Revenue (continued)
ii) Sale of goods
Revenue from sale of goods including merchandise and
food and beverage items is recognised when the risks
and rewards of ownership have passed to the buyer.
iii) Rental revenue
Rental income represents income earned from the sub-lease
of properties leased by the Group, and is brought to account
on a straight-line basis over the lease term.
iv) Interest income
Interest income is recognised on a time proportion basis
using the effective interest rate method. When a receivable
is impaired, the Group reduces the carrying amount to
its recoverable amount, being the estimated future cash
flow discounted at the original effective interest rate of
the instrument, and continues unwinding the discount
as interest income. Interest income on impaired loans is
recognised using the original effective interest rate.
y) Foreign currency translation
i) Functional and presentation currencies
Items included in the financial statements of each of
the Group’s entities are measured using the currency of
the primary economic environment in which the entity
operates (functional currency). The consolidated financial
statements are presented in Australian dollars, which is the
Group’s functional and 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 translation at year end exchange rates of
monetary assets and liabilities denominated in foreign
currencies are recognised in the Income Statement, except
when deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges or they are attributable
to part of the net investment in a foreign operation.
iii) Foreign operations
Assets and liabilities of foreign controlled entities are
translated at exchange rates ruling at reporting date while
income and expenses are translated at average exchange
rates for the period. Exchange differences arising on
translation of the interests in foreign controlled entities
are taken directly to the foreign currency translation
reserve. On consolidation, exchange differences on loans
denominated in foreign currencies, where the loan is
considered part of the net investment in that foreign
operation, are taken directly to the foreign currency
translation reserve. At 30 June 2013, the spot rate used
was A$1.00 = NZ$1.1800 (2012: A$1.00 = NZ$1.2777)
and A$1.00 = US$0.9127 (2012: A$1.00 = US$1.0242). The
average spot rate during the year ended 30 June 2013
was A$1.00 = NZ$1.2454 (2012: A$1.00 = NZ$1.2822) and
A$1.00 = US$1.0207 (2012: A$1.00 = US$1.0394).
z) Segment information
Segment income, expenditure, assets and liabilities are those
that are directly attributable to a segment and the relevant
portion that can be allocated to the segment on a reasonable
basis. Segment assets include all assets used by a segment
and consist primarily of cash, receivables (net of any related
provisions) and investments. Any assets used jointly by
segments are allocated based on reasonable estimates
of usage.
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker,
who is responsible for allocating resources and assessing
performance of the operating segments, has been identified
as the Board of Directors.
The main income statement items used by management
to assess each of the divisions are divisional revenue
and divisional EBITDA before property costs and after
property costs. In addition, depreciation and amortisation
are analysed by division. Each of these income statement
items is looked at after adjusting for pre-opening expenses,
straight lining of rent, IFRS depreciation and amortisation of
Goodlife intangible assets and other non-recurring realised
items. As shown in Note 11, these items are excluded from
management’s definition of core earnings.
aa) Earnings per stapled security
Basic earnings per stapled security are determined by
dividing profit by the weighted average number of ordinary
stapled securities on issue during the period.
Diluted earnings per stapled security are determined by
dividing the profit by the weighted average number of
ordinary stapled securities and dilutive potential ordinary
stapled securities on issue during the period.
ab) Fair value estimation
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or
for disclosure purposes.
The fair value of financial instruments traded in active
markets is based on quoted market prices at the reporting
date. The quoted market price used for financial assets held
by the Group is the current bid price; the appropriate quoted
market price for financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in
an active market is determined using valuation techniques.
The Group uses a variety of methods and makes assumptions
that are based on market conditions existing at each
reporting date. Quoted market prices or dealer quotes for
similar instruments are used for long term debt instruments
held. Other techniques, such as estimated discounted cash
flows, are used to determine fair value for the remaining
financial instruments. The fair value of interest rate swaps
is calculated as the present value of the estimated future
cash flows. The fair value of forward exchange contracts is
determined using forward exchange market rates at the
reporting date.
64 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies (continued)
ab) Fair value estimation (continued)
The nominal value less estimated credit adjustments of trade
receivables and payables approximate their fair values. The
fair value of financial liabilities for disclosure purposes is
estimated by discounting the future contractual cash flows at
the current market interest rate that is available to the Group
for similar financial instruments.
ac) Business combinations
The acquisition method of accounting is used to account for
all business combinations, including business combinations
involving entities or businesses under common control,
regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of
a business comprises the fair values of the assets transferred,
the liabilities incurred and the equity interests issued by the
Group. The consideration transferred also includes the fair
value of any contingent consideration arrangement and the
fair value of any pre-existing equity interest in the subsidiary.
Acquisition related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at
the acquisition date. On an acquisition by acquisition basis,
the Group recognises any non-controlling interest in the
acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount
of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in
the acquiree over the fair value of the Group’s share of the net
identifiable assets acquired is recorded as goodwill. If those
amounts are less than the fair value of the net identifiable
assets of the business acquired and the measurement of all
amounts has been reviewed, the difference is recognised
directly in profit or loss as a gain on acquisition.
Where settlement of any part of cash consideration is
deferred, the amounts payable in the future are discounted to
their present value as at the date of exchange. The discount
rate used is the entity’s incremental borrowing rate, being
the rate at which a similar borrowing could be obtained
from an independent financier under comparable terms and
conditions. Contingent consideration is classified either as
equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with
changes in fair value recognised in profit or loss.
Goodwill acquired is not deductible for tax.
ad) Dividends/distributions
Provision is made for the amount of any dividend/
distribution declared, being appropriately authorised
and no longer at the discretion of the entity, on or before
the end of the financial year but not distributed at the
reporting date.
ae) Convertible notes
A subsidiary of ALL, Ardent Leisure Note Issuer Pty Limited,
has issued convertible notes to the Trust. Due to the terms
associated with these notes, the notes have been classified
as equity in the financial statements of the ALL Group. Given
that this equity is not payable to the shareholders of ALL, the
notes are included in equity attributable to non-controlling
interests.
af) Parent entity financial information
The financial information for the parent entity of the Group
(Ardent Leisure Trust) and ALL Group (Ardent Leisure Limited),
has been prepared on the same basis as the consolidated
financial statements, except as set out below:
i) Investments in subsidiaries, associates and jointly
controlled entities
Investments in subsidiaries, associates and jointly controlled
entities are accounted for at cost in the financial statements
of the parent entities. Dividends received from associates and
jointly controlled entities are recognised in the parent entity’s
profit or loss, rather than being deducted from the carrying
amount of these investments.
ii) Tax consolidation legislation
Ardent Leisure Limited and its wholly-owned Australian
controlled entities have implemented the tax consolidation
legislation. The head entity, Ardent Leisure Limited, and
the controlled entities in the tax consolidated group
account for their own current and deferred tax amounts.
These tax amounts are measured as if each entity in the tax
consolidated group continues to be a standalone taxpayer in
its own right.
In addition to its own current and deferred tax amounts,
Ardent Leisure Limited also recognises the current tax
liabilities (or assets) and the deferred tax assets arising from
unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
The entities have also entered into a tax funding agreement
under which the wholly-owned entities fully compensate
Ardent Leisure Limited for any current tax payable assumed
and are compensated by Ardent Leisure Limited for any
current tax receivable and deferred tax assets relating to
unused tax losses or unused tax credits that are transferred
to Ardent Leisure Limited under the tax consolidation
legislation. The funding amounts are determined by reference
to the amounts recognised in the wholly-owned entities’
financial statements.
The amounts receivable/payable under the tax funding
agreement are due upon receipt of the funding advice from
the head entity, which is issued as soon as practicable after
the end of each financial year. The head entity may also
require payment of interim funding amounts to assist with its
obligations to pay tax instalments.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
65
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
1 Summary of significant accounting policies (continued)
af) Parent entity information (continued)
ii) Tax consolidation legislation (continued)
Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as current
amounts receivable from or payable to other entities in
the group. Any difference between the amounts assumed
and amounts receivable or payable under the tax funding
agreement are recognised as a contribution to (or distribution
from) wholly-owned tax consolidated entities.
iii) Financial guarantees
Where the parent entity has provided financial guarantees
in relation to loans and payables of subsidiaries for no
compensation, the fair values of these guarantees are
accounted for as contributions and recognised as part of the
cost of the investment.
iv) Share-based payments
The grant by the parent entity of options over its equity
instruments to the employees of subsidiary undertakings
in the Group is treated as a capital contribution to that
subsidiary undertaking. The fair value of employee services
received, measured by reference to the grant date fair value,
is recognised over the vesting period as an increase to
investment in subsidiary undertakings, with a corresponding
credit to equity.
ag) New accounting standards and interpretations
Certain new standards, amendments and interpretations to
existing standards have been published that are mandatory
for the Group for accounting periods beginning on or after
1 July 2013 but which the Group has not yet adopted. Based
on a review of these standards, the majority of the standards
yet to be adopted are not expected to have a significant
impact on the financial statements of the Group. The Group’s
and the parent entity’s assessment of the impact of those new
standards and interpretations which may have an impact is
set out below.
AASB 9 Financial Instruments, AASB 2009‑11 Amendments
to Australian Accounting Standards arising from AASB 9
and AASB 2010‑7 Amendments to Australian Accounting
Standards arising from AASB 9 (effective from 1 January 2015)
AASB 9 Financial Instruments addresses the classification
and measurement of financial assets and may affect the
Group’s accounting for its financial assets. The standard is
not applicable until 1 January 2015 but is available for early
adoption. The Group is yet to assess its full impact. However,
initial indications are that there should be no material impact
on the Group’s or the parent entity’s financial statements. The
Group does not intend to adopt AASB 9 before its operative
date, which means that it would be first applied in the annual
reporting period ending 30 June 2016.
AASB 10 Consolidated Financial Statements, AASB 11 Joint
Arrangements, AASB 12 Disclosure of Interests in Other
Entities, revised AASB 127 Separate Financial Statements,
AASB 128 Investments in Associates and Joint Ventures
and AASB 2011‑7 Amendments to Australian Accounting
Standards arising from the Consolidation and Joint
Arrangements Standards (effective 1 January 2013)
In August 2011, the Australian Accounting Standards Board
(AASB) issued a suite of six new and amended standards
which address the accounting for joint arrangements,
consolidated financial statements and associated disclosures.
AASB 10 replaces all of the guidance on control and
consolidation in AASB 127 Consolidated and Separate
Financial Statements, and Interpretation 12 Consolidation
– Special Purpose Entities. The core principle that a
consolidated entity presents a parent and its subsidiaries as
if they are a single economic entity remains unchanged, as
do the mechanics of consolidation. However, the standard
introduces a single definition of control that applies to all
entities. It focuses on the need to have both power and rights
or exposure to variable returns before control is present.
Power is the current ability to direct the activities that
significantly influence returns. Returns must vary and can
be positive, negative or both. There is also new guidance on
participating and protective rights and on agent/principal
relationships. The Group does not expect the new standard
to have a significant impact on its composition.
AASB 13 Fair Value Measurement and AASB 2011‑8
Amendments to Australian Accounting Standards arising
from AASB 13 (effective 1 January 2013)
AASB 13 was released September 2011. It explains how to
measure fair value and aims to enhance fair value disclosures.
The Group has yet to determine which, if any, of its current
measurement techniques will have to change as a result of
the new guidance. It is therefore not possible to state the
impact, if any, of the new rules on any amounts recognised
in the financial statements. However, application of the new
standard will impact the type of information disclosed in the
notes to the financial statements. The Group does not intend
to adopt the new standard before its operative date, which
means that it would be first applied in the annual reporting
period ending 30 June 2014.
AASB 2011‑4 Amendments to Australian Accounting
Standards to Remove Individual Key Management
Personnel Disclosure Requirements (effective 1 January 2013)
In July 2011, the AASB decided to remove the individual key
management personnel (KMP) disclosure requirements from
AASB 124 Related Party Disclosures, to achieve consistency
with the international equivalent standard and remove a
duplication of the requirements with the Corporations Act
2001. While this will reduce the disclosures that are currently
required in the notes to the financial statements, it will
not affect any of the amounts recognised in the financial
statements. The amendments apply from 1 July 2013
and cannot be adopted early. The Corporations Act 2001
requirements in relation to remuneration reports will remain
unchanged for now, but these requirements are currently
subject to review and may also be revised in the near future.
66 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
Annual Improvements Project ‑ 2009‑2011 cycle (effective for annual periods beginning on or after 1 January 2013)
In May 2012, the IASB made a number of amendments to International Financial Reporting Standards as a result of the
2009-2011 annual improvements project. The Group will apply the amendments from 1 July 2013. These changes are not
applicable until 1 January 2013 but are available for early adoption. The Group is yet to assess their full impact.
ah) Rounding
The Group is a registered scheme of a kind referred to in Class Order 98/100 (as amended) issued by the Australian Securities
and Investments Commission relating to the “rounding off” of amounts in the financial report. Amounts in the financial report
have been rounded to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated.
2 Ardent Leisure Trust and Ardent Leisure Limited formation
The Trust was established on 6 February 1998. On 23 December 2005, the Manager executed a supplemental deed poll to
amend the Trust Constitution. The amendments removed the 80 year life of the Trust, to enable the units on issue to be
classified as equity under Australian Accounting Standards. ALL was incorporated on 28 April 2003. The Manager and ALL
entered into the stapling deed effective 1 July 2003.
3 Revenue from operating activities
Revenue from services
Revenue from sale of goods
Revenue from rentals
Other revenue
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
328,958 284,106
83,433
92,487
22,195
26,896
340
562
328,958
92,487
26,896
562
284,106
83,433
22,195
340
Revenue from operating activities
448,903
390,074
448,903
390,074
4 Borrowing costs
Borrowing costs paid or payable
Less: Capitalised borrowing costs
Borrowing costs expensed
5 Property expenses
Landlord rent and outgoings
Insurance
Rates
Land tax
Other
6 Net gain/(loss) from derivative financial instruments
Gain on derivatives – unrealised
Gain on derivatives – realised
Termination of US$ interest rate swap
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
12,765
(477)
13,308
(394)
7,531
—
7,501
—
12,288
12,914
7,531
7,501
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
64,474 52,225
699 508
2,755 1,834
730 1,013
91 326
120,241
—
—
—
—
107,106
—
—
—
—
68,749
55,906
120,241
107,106
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
339
263
—
602
643
809
(1,844)
(392)
—
—
—
—
—
—
—
—
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
67
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
7 Management fees
The Manager of the Trust is Ardent Leisure Management Limited which, until 1 September 2009, was a wholly-owned
subsidiary of Macquarie Group Limited. On 1 September 2009, ALL acquired all of the shares in the Manager from Macquarie
Group Limited.
The Manager’s registered office and principal place of business are Level 16, 61 Lavender Street, Milsons Point NSW 2061.
a) Base management fee
On the acquisition of the Manager by ALL, the Trust Constitution was changed and the management fees structure was
amended. The base management fee since 1 September 2009 is based on an allocation of costs incurred by ALL and its
controlled entities to manage the Trust but is eliminated in the aggregated results of the Group.
b) Management fee calculation
The management fee paid earned by the Manager during the year is detailed as follows:
Base management fee
8 Other expenses
Audit fees
Consulting fees
Consumables
Custodian fees
Electricity
Foreign exchange loss
Fuel and oil
Insurance
Legal fees
Merchant fees
Motor vehicles
Permits and fees
Printing, stationery and postage
Registry fees
Stapled security holder communication costs
State taxes
Stock exchange costs
Taxation fees
Telephone
Training
Travel costs
Valuation fees
Other
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
—
—
—
1,200
1,600
—
1,200
1,600
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
113
602
528
503
724
2,737 2,228
103
13,978 10,941
32
1,197
1,954
351
4,437
1,045
2,331
2,131
62
271
397
55
101
1,577
1,198
1,818
108
14
—
1,158
2,367
388
7,102
1,130
4,216
2,691
125
256
540
83
98
1,692
1,176
1,949
51
638
378
528
2,737
—
13,978
—
1,158
2,367
357
7,102
1,130
4,216
2,691
160
268
540
79
76
1,692
1,176
1,949
—
502
349
724
2,228
—
10,941
6
1,197
1,954
313
4,437
1,045
2,293
2,131
—
221
388
—
83
1,577
1,198
1,818
—
38
43,618
33,578
43,084
32,941
68 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
9 Remuneration of auditor
During the financial year, the auditor of the Group, PricewaterhouseCoopers (PwC), earned the following remuneration:
Consolidated
Group
2013
$
Consolidated
Group
2012
$
ALL Group
2013
$
ALL Group
2012
$
Audit and other assurance services – PwC Australia
Audit and other assurance services – related practices of PwC Australia 51,496
Taxation services – PwC Australia
Taxation services – related practices of PwC Australia
Other services - PwC Australia
Other services - related practices of PwC Australia
551,148 458,931
44,055
22,372 21,300
75,937 79,722
1,500
8,100
2,000
—
709,053 607,508
326,504
51,496
—
75,937
8,100
—
462,037
304,511
44,055
5,400
77,374
1,500
2,000
434,840
10 Income tax expense
a) Income tax expense
Current tax
Deferred tax
Over provided in prior year
income tax expense is attributable to:
Profit from continuing operations
Deferred income tax expense/(benefit) included in
income tax expense comprises:
(Increase)/decrease in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Consolidated
Group
2013
Note $’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
1,408
1,778
(38)
3,148
2,635
2,680
1,361
(241) 1,778 (241)
(38) (56)
(56)
2,338
3,101
2,383
3,148
2,338
3,101
2,383
22 (2,434)
27 4,212
638
(2,434)
638
(879) 4,212 (879)
1,778
(241) 1,778 (241)
b) Numerical reconciliation of income tax expense
to prima facie tax expense
Profit from continuing operations before income tax expense
Less: Profit from the Trusts
38,951
(33,444)
Prima facie profit/(loss)
Tax at the Australian tax rate of 30% (2012: 30%)
Tax effects of amounts which are not deductible/(taxable)
in calculating taxable income:
Entertainment
Non-deductible depreciation and amortisation
Non-deductible interest due to thin capitalisation
Sundry items
Business acquisition costs
Gain on acquisition
Foreign exchange conversion differences
Difference in overseas tax rates
Over provided in prior year
Income tax expense
5,507
1,652
48
2,076
—
(566)
482
(784)
(60)
338
(38)
15,187
(15,623)
(436)
(131)
10,194
—
10,194
3,058
5,627
—
5,627
1,688
61
2,496
35
48
—
—
61
525
35
(187) 54 12
—
482
—
(784)
(60) (30)
341
148
(38) (56)
—
—
(30)
150
(56)
3,148
2,338
3,101
2,383
Ardent Leisure Group Annual Report 2013
c) Income tax expense relating to items of other comprehensive income
Losses on land and buildings revaluation
30 —
(646) — (646)
—
(646) — (646)
Ardent Leisure Group Annual Report 2013
69
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
10 Income tax expense (continued)
d) Unrecognised temporary differences
The tax consolidated group has franking credits of $4,640,856 (2012: $4,686,467). It is the tax consolidated group’s intention
to assign these franking credits to dividends paid to the Trust by its subsidiaries and then distribute these franking credits to
security holders where possible.
e) Tax consolidation legislation
ALL and its wholly owned Australian controlled entities have implemented the tax consolidation legislation as of 8 February
2005. The accounting policy in relation to this legislation is set out in Note 1(t).
On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing
agreement which, in the opinion of the Directors, limits the joint and several liability of the wholly owned entities in the case of
a default by the head entity, ALL.
The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate ALL for
any current tax payable assumed and are compensated by ALL for any current tax receivable and deferred tax assets relating to
unused tax losses or unused tax credits that are transferred to ALL under the tax consolidation legislation. The funding amounts
are determined by reference to the amounts recognised in the wholly owned entities’ financial statements.
The amounts receivable/payable under the tax funding agreement are payable upon demand by the head entity. The head
entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding
amounts are netted off in the non-current intercompany payables.
11 Earnings per security/share
Basic earnings per security/share (cents)
Diluted earnings per security/share (cents)
Core earnings per security/share (cents)
Diluted core earnings per security/share (cents)
Consolidated
Group
2013
Consolidated
Group
2012
ALL Group
2013
ALL Group
2012
9.32
9.24
13.14
13.04
3.87
3.83
12.91
12.79
1.86
1.84
N/A
N/A
0.99
0.98
N/A
N/A
Earnings used in the calculation of basic and diluted earnings
per security/share (’000)
Earnings used in the calculation of core earnings per
security/share (refer to calculation in table below) (’000)
35,617
12,627
7,093
3,244
50,257
42,145
N/A
N/A
Weighted average number of stapled securities on issue used
in the calculation of basic and core earnings per security/share (‘000) 382,334
326,444
382,334
326,444
Weighted average number of stapled securities held by ALL
employees under employee share plans (refer to Note 29) (‘000)
3,192
3,133
3,192
3,133
Weighted average number of stapled securities on issue used
in the calculation of diluted earnings per security/share (‘000)
385,526
329,577
385,562
329,577
Calculation of core earnings
The table below outlines the Manager’s adjustments to profit under Australian Accounting Standards to determine the amount
the Manager believes should be available for distribution for the current year. The Manager uses this amount as guidance for
distribution determination.
Core earnings is a financial measure which is not prescribed by Australian Accounting Standards and represents the profit under
Australian Accounting Standards (statutory profit) adjusted for certain unrealised and non-cash items, reserve transfers and
one off realised items. Under the Trust Constitution, the amount distributed to stapled security holders by the Trust is at the
discretion of the Manager. Management will use the core earnings calculated for assessing the performance of the Group and
as a guide to assessing an appropriate distribution to declare. This measure is considered more relevant than statutory profit
as it represents an estimate of the underlying recurring cash earnings of the Group and provides more meaningful comparison
between financial years.
70 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
11 Earnings per security/share (continued)
The adjustments between profit under Australian Accounting Standards and core earnings may change from time to time
depending on changes to accounting standards and the Manager’s assessment as to whether non-recurring or infrequent
items (such as realised gains on the sale of properties) will be distributed to stapled security holders.
Profit used in calculating earnings per security/share
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
35,617
12,627
Unrealised items
— Unrealised gains on derivative financial instruments
(339) (643)
— Property valuation (gains)/losses – investment properties (90) 15,507
Non-cash items
— Straight-lining of fixed rent increases
— Amortisation of Goodlife intangible assets
— Tax impact of amortisation of Goodlife intangible assets
Reserve transfers
— Transfer to asset revaluation reserve (1)
Distributable earnings
One off realised items
— Pre-opening expenses
— Early termination of US$ interest rate swap
— Tax liability arising from retrospective change in tax legislation
— Business acquisition costs
— Gain on acquisition
— Loss on sale of freehold land and buildings
Core earnings
2,199
1,311
7,739
3,180
(2,322) (954)
6,920
6,570
48,836
38,486
2,527 1,064
1,844
519
166
—
66
—
—
1,507
(2,613)
—
50,257 42,145
(1) The transfer from asset revaluation reserve represents depreciation recorded under Australian Accounting Standards effective 1 July 2005 on property, plant
and equipment which were previously classified as investment properties (IFRS depreciation).
12 Distributions and dividends paid and payable
a) Consolidated Group
The following distributions were paid and payable by the Trust:
Distribution
cents per
stapled security
Total
amount
$’000
Tax
deferred
%
CGT
concession
amount
%
Taxable
%
2013 distributions for the half year ended:
31 December 2012
30 June 2013 (1)
6.60
5.40
26,253
21,481
12.00
47,734
68.70
—
31.30
2012 distributions for the half year ended:
31 December 2011
30 June 2012 (2)
6.50
5.20
21,075
17,379
11.70
38,454
58.56
—
41.44
(1) The distribution of 5.40 cents per stapled security for the half year ended 30 June 2013 was not declared prior to 30 June 2013. Refer to Note 44.
(2) The distribution of 5.20 cents per stapled security for the half year ended 30 June 2012 was not declared prior to 30 June 2012.
b) ALL Group
During the year, a subsidiary of ALL paid to the Trust $3.6 million (2012: $2.5 million) relating to convertible notes which are
classified as equity under Australian Accounting Standards. No dividends have been paid or provided for during the current or
previous financial year.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
71
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
13 Receivables
Trade receivables
Receivables from the Trust
Provision for doubtful debts
Sundry receivable
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
7,658
—
(609)
7,049
—
5,940
—
(774)
7,658
2,241
5,940
5,866
(609) (774)
5,166
513
9,290
—
11,032
488
7,049
5,679
9,290
11,520
The Group has recognised an expense of $46,000 in respect of bad and doubtful trade receivables during the year ended 30
June 2013 (2012: $60,000). The expense has been included in other expenses in the Income Statement.
14 Derivative financial instruments
Current assets
Forward foreign exchange contracts
Current liabilities
Forward foreign exchange contracts
Interest rate swaps
Non-current liabilities
Interest rate swaps
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
575
575
270
270
—
—
— 247
584
584
1,307
1,307
—
247
3,204
3,204
—
—
—
—
—
—
—
—
—
—
—
—
Forward foreign exchange contracts
The Group has entered into forward foreign exchange contracts to buy US dollars and sell Australian dollars. These contracts
total A$5.2 million (2012: A$6.2 million).
In the prior year, the Group entered into forward foreign exchange contracts to sell US dollars and receive Australian dollars at
an average exchange rate of A$1.00 = US$0.7948. These contracts totalled A$1.1 million and the last of these contracts matured
in December 2012.
The forward contracts do not qualify for hedge accounting and accordingly, changes in fair value of these contracts are
recorded in the Income Statement. Notwithstanding the accounting outcome, the Manager considers that these derivative
contracts are appropriate and effective in offsetting the economic foreign exchange exposures of the Group.
72 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
14 Derivative financial instruments (continued)
Interest rate swaps
The Group has entered into interest rate swap agreements totalling $120.0 million (2012: $80.0 million) that entitle it to receive
interest, at quarterly intervals, at a floating rate on a notional principal and obliges it to pay interest at a fixed rate. The interest
rate swap agreements allow the Group to raise long term borrowings at a floating rate and effectively swap them into a fixed
rate. The Group also has forward starting interest rate swaps totalling $60.0 million (2012: $60.0 million) with start dates of
September 2013 and end dates of December 2014.
With the exception of one $40 million swap, all interest rate swap contracts qualify as cash flow hedges. Accordingly, the
change in fair value of these swaps is recorded in the cash flow hedge reserve. Amounts accumulated in equity are recycled in
the Income Statement in the period when the hedged item impacts the Income Statement. For the one swap which does not
qualify as a cash flow hedge, the changes in fair value are recorded directly in the Income Statement.
The table below shows the maturity profile of the interest rate swaps:
Less than 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than 5 years
15 Inventories
Goods held for resale
Provision for diminution
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
80,000
60,000
40,000
—
—
—
—
80,000
60,000
—
—
—
—
—
—
—
—
—
180,000 140,000
—
—
—
—
—
—
—
—
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
9,800
(20)
8,881
(64)
9,800
8,881
(20) (64)
9,780
8,817
9,780
8,817
There was no reversal of write downs of inventories recognised as a benefit during the year ended 30 June 2013 (2012: $nil).
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
73
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
16 Property held for sale
Family entertainment centres
Opening balance
Transfer from property, plant and equipment
Disposals
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
4,210
4,210
—
—
4,210
4,210
—
—
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
—
4,210
—
4,210
7,651
—
7,651
—
—
4,210
(7,651) — (7,651)
—
4,210
—
During the year, the Group reclassified the property, plant and equipment relating to a family entertainment centre under
construction at Tempe, Arizona, as held for sale, as it is envisaged that its carrying value will be recovered principally through a
sale and leaseback transaction rather than through continuing use, and a sale is considered highly probable.
17 Other assets
Prepayments
Accrued revenue
18 Investment properties
Consolidated Group
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
8,097
1,305
9,402
9,321
621
9,942
4,651
1,305
5,956
6,960
621
7,581
Cumulative
revaluation
(decrements)/
Cost
increments
Consolidated 2013 2013
Group Property Note Valuer $’000 $’000
Cumulative
revaluation
Consolidated (decrements)/
increments
2012
$’000
book value
2013
$’000
Cost
2012
$’000
Consolidated
book value
2012
$’000
Excess land at
Dreamworld (a) (1) 2,874
Marinas (b) (2) 73,000
(462)
2,412
19,820 92,820
2,874
72,773
(462)
19,730
2,412
92,503
Total 75,847 19,358 95,232
75,647
19,268
94,915
(a) The remaining excess land has been valued by Directors at $2.4 million (2012: $2.4 million).
(b) The total carrying value of d’Albora Marinas (including plant and equipment of $6.6 million) is $99.4 million (2012: $97.7 million). The fair value was assessed
to be $99.4 million (2012: $97.7 million).
(1) Peter Bouwmeester, CBRE Valuations Pty Limited, independently valued the property at 31 January 2012.
(2) Greg Thomson, FAPI, Knight Frank, Valuation Services (NSW) Pty Limited independently valued five of the seven properties at 30 June 2013. The remaining
two properties were last independently valued at 30 June 2012.
74 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2012
18 Investment properties (continued)
A reconciliation of the carrying amount of investment properties at the beginning and end of the current year is set out below:
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
Carrying amount at the beginning of the year
Additions
Revaluation increments/(decrements)
94,915 96,279
227 1,127
(2,491)
90
Carrying amount at the end of the year
95,232
94,915
—
—
—
—
Amounts recognised in the Income Statement for investment properties:
Revenue from investment properties
Property expenses incurred on investment properties
18,350 18,661
(2,587)
(2,347)
—
—
At 30 June 2013, the Group had receivables from third parties totalling $566,478 (2012: $541,000) relating to leases on its
investment properties.
—
—
—
—
—
—
19 Property, plant and equipment
Consolidated Group
Cumulative
Cost less revaluation
accumulated
increments/
depreciation (decrements)
2013
2013
$’000
Property Note $’000
Consolidated
book value
2013
$’000
Cost less
accumulated
depreciation
2012
$’000
Cumulative
revaluation
increments/
(decrements)
2012
$’000
Consolidated
book value
2012
$’000
Theme Parks (1) (2) 208,581 22,616
—
Marinas (3) 6,574
1,900
Bowling centres (4) 101,967
(86)
Family entertainment centres (5) 46,984
—
Health clubs (6) 70,122
—
Other (7) 3,257
231,197
6,574
103,867
46,898
70,122
3,257
207,252
5,197
93,092
25,432
47,754
1,434
20,434
—
1,900
(86)
—
—
227,686
5,197
94,992
25,346
47,754
1,434
Total 437,485
24,430 461,915
380,161
22,248
402,409
(1) The book value of Dreamworld and WhiteWater World (including intangible assets of $0.8 million) is $216.5 million (2012: $215.0 million). In an independent
valuation performed at 30 June 2013 by Jones Lang LaSalle, the fair value for the theme parks was assessed to be $216.5 million (2012: $215.0 million).
(2) The book value of SkyPoint (including intangible assets of $3.6 million (2012: $3.6 million) is $19.0 million (2012: $16.8 million). In an independent valuation
performed at 30 June 2013, the fair value for SkyPoint was assessed to be $19.0 million.
(3) The Directors have valued the property, plant and equipment of d’Albora Marinas at $6.6 million (2012: $5.2 million).
(4) The one remaining freehold building was independently valued at 30 June 2010 at $1.9 million. At 30 June 2013, the Directors assessed the fair value of the
freehold building to be $1.9 million (2012: $1.9 million) and the remaining property, plant and equipment to be $102.0 million (2012: $93.1 million).
(5) The freehold land and buildings of the two family entertainment centres were sold and leased back during the prior year. At 30 June 2013, the Directors
assessed the fair value of the remaining property, plant and equipment to be $47.0 million (2012: $25.3 million).
(6) The Directors have valued the property, plant and equipment of Goodlife at 30 June 2013 at $70.1 million (2012: $47.8 million).
(7) The fair value of other property, plant and equipment was assessed by the Directors to be $3.3 million at 30 June 2013 (2013: $1.4 million).
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
75
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
19 Property, plant and equipment (continued)
A reconciliation of the carrying amount of property, plant and equipment at the beginning and end of the current and previous
years is set out below:
Property
Land and
Major rides
buildings and attractions
$’000
$’000
Plant and
equipment
$’000
Plant and
equipment
under
finance lease
$’000
Furniture,
fittings and
equipment Motor vehicles
$’000
$’000
Total
$’000
Consolidated Group – 2013
Carrying amount at the
beginning of the year
Additions
Acquired through
business combinations
Transfer to property
held for sale
Disposals
Depreciation
Foreign exchange movements
Revaluation increments
216,813
21,791
65,279
1,971
110,084
32,784
11,374
—
3,866
673
—
—
9,232
5,929
495
328
137
55
402,409
62,612
15,790
(4,210)
—
(8,177)
1,985
9,103
—
(3)
(2,253)
—
—
—
(227)
(16,712)
—
—
(91)
3,851 —
—
—
— — (4,210)
— — (230)
(136) (29,398)
5,839
9,103
—
—
(2,029)
3
—
Carrying amount at
the end of the year
248,679
64,994
133,646
582
13,630
384
461,915
Property
Major rides
Land and
buildings and attractions
$’000
$’000
Plant and
equipment
$’000
Plant and
equipment
under
finance lease
$’000
Furniture,
fittings and
equipment Motor vehicles
$’000
$’000
Total
$’000
Consolidated Group – 2012
Carrying amount at the
beginning of the year
Additions
Acquired through
business combinations
Disposals
Depreciation
Foreign exchange movements
Revaluation decrements
237,687
20,768
60,205
7,356
109,063
16,377
33
686
6,376
4,713
413
90
413,777
49,990
1,227
(15,330)
(7,344)
469
(20,664)
—
—
(2,282)
—
—
321
(1,306)
(15,254)
—
(33)
(13)
883 —
—
—
—
1,548
—
(59) (16,728)
—
(116) (26,867)
(1,858)
1
1,353
— — (20,664)
—
Carrying amount at
the end of the year
216,813
65,279
110,084
673
9,232
328
402,409
76 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
19 Property, plant and equipment (continued)
Property
ALL Group – 2013
Carrying amount at the beginning of the year
Additions
Acquired through business combinations
Transfer to property held for sale
Disposals
Depreciation
Foreign exchange movements
Land and
buildings
$’000
Plant and
equipment
$’000
Plant and
equipment
under
finance lease
$’000
Total
$’000
5,823
14,133
11,374
(4,210)
—
(1,017)
1,953
36,105
19,995
4,416
42,601
673
34,128
—
15,790
—
— — (4,210)
(209) — (209)
(91) (10,335)
5,685
—
(9,227)
3,732
Carrying amount at the end of the year
28,056
54,812
582
83,450
Property
ALL Group – 2012
Carrying amount at the beginning of the year
Additions
Acquired through business combinations
Disposals
Depreciation
Foreign exchange movements
Revaluation increments
Land and
buildings
$’000
Plant and
equipment
$’000
Plant and
equipment
under
finance lease
$’000
Total
$’000
13,744
5,088
—
(15,324)
(102)
464
1,953
34,988
9,268
321
(1,193)
(8,147)
868
—
48,765
33
15,042
686
—
321
(33) (16,550)
(13) (8,262)
1,332
—
1,953
—
Carrying amount at the end of the year
5,823
36,105
673
42,601
20 Livestock
At 1 July
Cost
Accumulated depreciation
Net book amount
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
828
(475)
847
(423)
828
847
(475) (423)
353
424
353
424
Year ended 30 June
424
353
Opening net book amount
Additions
— 24 — 24
Disposal — (43) — (43)
(48) (52)
Depreciation
353
424
(52)
(48)
Closing net book amount
At 30 June
Cost
Accumulated depreciation
Net book amount
305
353
305
353
828
(523)
828
(475)
828
828
(523) (475)
305
353
305
353
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
77
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
21 Intangible assets
Customer relationships at cost
Accumulated amortisation
Brand at cost
Accumulated amortisation
Other intangible assets at cost
Accumulated amortisation
Goodwill at cost
Accumulated impairment charge
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
28,652
(19,058)
15,362
(11,973)
28,652
15,362
(19,058) (11,973)
9,594
3,389
9,594
3,389
6,539
(3,760)
6,539
(3,106)
6,539
6,539
(3,760) (3,106)
2,779
3,433
2,779
3,433
2,080
(1,878)
2,080
(1,760)
652
652
(450) (431)
202
320
202
221
195,770
(11,557)
144,253
(11,557)
195,770
144,253
(11,557) (11,557)
184,213
132,696
184,213
132,696
Total intangible assets
196,788 139,838 196,788 139,739
Customer relationships
Opening net book amount
Additions
Amortisation
closing net book amount
Brand
Opening net book amount
Amortisation
closing net book amount
Other intangible assets
Opening net book amount
Additions
Amortisation
closing net book amount
Goodwill
Opening net book amount
Additions
Foreign exchange movements
closing net book amount
Total intangible assets
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
3,389
13,290
(7,085)
3,875
2,040
(2,526)
3,389
13,290
3,875
2,040
(7,085) (2,526)
9,594
3,389
9,594
3,389
3,433
(654)
4,087
(654)
3,433
4,087
(654) (654)
2,779
3,433
2,779
3,433
320
219
— 21 — 19
(19) (17)
(118)
(119)
221
418
202
320
202
221
132,696
46,550
4,967
125,736
5,212
1,748
132,696
46,550
4,967
125,736
5,212
1,748
184,213
132,696
184,213
132,696
196,788
139,838
196,788
139,739
78 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
21 Intangible assets (continued)
Customer relationships
Customer relationships relate to the relationships with health club members which were acquired as part of the various
acquisitions of health clubs.
Brand
The brand relates to the Goodlife brand acquired in September 2007.
Other intangible assets
Other intangible assets represent registered trademarks associated with Dreamworld operations, intellectual property
associated with Australian Tour Desk and liquor licences held by the bowling centres.
Goodwill
Goodwill represents goodwill acquired by the Group as part of various acquisitions. The movement in goodwill at cost in the
period is predominantly due to health club acquisitions (refer to Note 32) and the movement in the USD:AUD foreign exchange rate.
Goodwill is monitored by management at the operating segment level. Management reviews the business performance based
on geography and type of business. The Group has six reportable segments.
A segment level summary of the goodwill allocation is presented below:
Consolidated Group and ALL Group
2013
Theme parks
Bowling centres
Family entertainment centres
Health clubs
2012
Theme parks
Bowling centres
Family entertainment centres
Health clubs
Australia
$’000
United States
$’000
New Zealand
$’000
Total
$’000
—
4,366
4,366
—
16,822 — 3,329
20,151
— 46,445 — 46,445
113,251
113,251
—
—
134,439 46,445 3,329 184,213
Australia
$’000
United States
$’000
New Zealand
$’000
4,366
16,823
—
66,701
—
—
— 3,079
—
—
41,728
—
Total
$’000
4,366
19,901
41,728
66,701
87,889
41,728
3,079
132,696
Impairment tests for goodwill
Goodwill is allocated to the Group’s cash generating units (CGUs) identified according to business segment and country of operation.
Key assumptions used for value in use calculations
The table below shows the key assumptions used in the value in use calculations used to test for impairment in the business
segments to which a significant amount of goodwill was allocated:
Growth rate (1)
Discount rate (2)
2012
% per annum % per annum % per annum % per annum
2013
2013
2012
Theme parks(3)
Bowling centres
Family entertainment centres
Health clubs
N/A
2.00
3.00
2.00
N/A
2.00
3.00
2.00
N/A
9.44
7.92
9.44
N/A
9.44
8.23
9.44
(1) Average growth rate used to extrapolate cash flows beyond the budget period.
(2)
In performing the value in use calculations for each CGU, the Group has applied pre tax discount rates to discount the forecast future attributable pre-tax cash
flows.
(3) All non-current assets in the Theme parks division are already held at fair value at 30 June 2013 and were independently valued by Jones Lang LaSalle (refer to
Note 19). As a result, no impairment testing is required at 30 June 2013.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
79
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
21 Intangible assets (continued)
The period over which management has projected the CGU cash flows is based upon the individual CGU’s lease term available.
These assumptions have been used for the analysis of each CGU within the business segment. The weighted average growth
rates used are consistent with forecasts included in industry reports. The discount rates used are pre tax and reflect specific
risks relating to the relevant segments and the countries in which they operate.
The recoverable amount of a CGU is determined based on value in use calculations. These calculations use cash flow projections
based on the 2014 financial year budget approved by the Board and three year forecasts approved by management. Cash flows
beyond the three year period are extrapolated using the growth rates stated above. The growth rate does not exceed the long
term average growth rate for the business in which the CGU operates.
Sensitivity to changes in assumptions
Management recognises that the calculation of recoverable amount can vary based on the assumptions used to project or
discount cash flows and that changes to key assumptions can result in recoverable amounts falling below carrying amounts. In
relation to the CGUs above, the recoverable amounts are well in excess of the carrying amount associated with each segment.
The Directors consider that the growth rates are reasonable, and do not consider a change in any of the other key assumptions
to be reasonably possible.
22 Deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Doubtful debts
Employee benefits
Provisions and accruals
Inventory diminution
Deferred income
Difference in overseas tax rates
Lease incentives
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
100
5,710
496
19
184
—
1,649
43
4,611
117
6
106
2
—
100
5,710
496
19
184
—
1,649
43
4,611
117
6
106
2
—
Deferred tax assets
8,158
4,885
8,158
4,885
Set-off of deferred tax balances pursuant to set-off provisions
Australia
United States
Net deferred tax assets
(4,263)
(2,362)
1,533
(2,550)
(341)
1,994
(4,263) (2,550)
(2,362) (341)
1,533
1,994
Movements
Balance at the beginning of the year
Credited/(charged) to the Income Statement (refer to Note 10)
Acquisition of businesses
4,885
2,434
839
5,297
5,297
4,885
(638) 2,434 (638)
226
839
226
Balance at the end of the year
8,158
4,885
8,158
4,885
Deferred tax assets to be recovered within 12 months
Deferred tax assets to be recovered after more than 12 months
5,922
2,236
3,830
1,055
5,922
2,236
3,830
1,055
8,158
4,885
8,158
4,885
80 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
23 Payables
Current
Custodian fee
Interest payable
GST payable
Trade creditors
Property expenses payable
Employee share plan
Deferred settlement for acquisition of businesses
Straight-line rent liability
Employee benefits
Deferred income
Other creditors and accruals
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
—
48
50
7
82
26
1,867 — 1,528
16,316
12,776
16,316
—
895
1,083
4,426
252
356
—
712
—
825
11,114
12,425
12,102
11,749
12,102
7,625
7,146
7,625
11,514
15,082
12,071
—
—
1,143
12,776
—
3,033
—
—
11,749
7,146
12,387
Total payables
63,977
59,800
54,343
48,234
24 Interest bearing liabilities
Current
Finance leases
Total current
Non-current
Finance leases
Bank loan – term debt
Less: Amortised costs – bank loan
Loan from the Trust (1)
Total non‑current
Total interest bearing liabilities
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
238
229
238
238
229
238
229
229
61
229,253
(1,686)
—
287
193,730
(792)
—
287
61
55,159 —
—
124,257
(473)
113,599
227,628
193,225
168,346
124,544
227,866
193,454
168,584
124,773
(1) Further information relating to these loans is included in Note 36.
The term debt is secured by mortgages over all freehold property, leasehold mortgages over key bowling centre, health club
and marina leases, registered security interests over all present and after acquired property of key Group companies, and
pledged interests over all US property. The terms of the debt also impose certain covenants on the Group as follows:
(i) Gearing ratio, being the ratio of total debt to total debt plus equity, must not exceed 40%;
(ii) Debt serviceability ratio, being the ratio of debt to EBITDA adjusted for unrealised and one off items (adjusted EBITDA),
must not exceed 3.25; and
(iii) Fixed charge cover ratio, being the ratio of adjusted EBITDA to fixed charges, must be no less than 1.75.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
81
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
24 Interest bearing liabilities (continued)
Total secured liabilities and assets pledged as security
The carrying amounts of assets pledged as security for current and non-current borrowings are:
Assets pledged as security
Current
Floating charge
Cash and cash equivalents
Receivables
Derivative financial instruments
Inventories
Property held for sale
Other
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
12,953
7,049
575
9,780
4,210 — 4,210 —
8,554
12,481
11,693
5,679
11,520
9,290
270 — —
8,817
9,780
8,817
9,402
9,942
5,956
7,581
Total current assets pledged as security
43,969 36,401 41,717 36,472
Non-current
Mortgage
Land and buildings
Investment properties
Floating charge
Property, plant and equipment
Livestock
Intangible assets
Finance lease
Plant and equipment
248,679
95,232
216,813
28,056
94,915 — —
5,823
343,911 311,728 28,056
5,823
212,654
305
12,575
184,923
353
7,142
54,812
305
12,575
36,105
353
7,043
225,534 192,418 67,692 43,501
582
673
582
673
Total non‑current assets pledged as security
570,027 504,819 96,330 49,997
Total assets pledged as security
613,996 541,220 138,047 86,469
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the
lessor in the event of default.
82 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
24 Interest bearing liabilities (continued)
Credit facilities
As at 30 June 2013, the Group had unrestricted access to the following credit facilities:
A$ syndicated facility
Amount used
Amount unused
US$ syndicated facility
Amount used
Amount unused
Trust facility
Amount used
Amount unused
Total facility
Total amount used
Total amount unused
Consolidated Group
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
200,000
(152,995)
200,750
(154,675)
—
—
47,005 46,075
—
131,478
(76,258)
39,055
(39,055)
109,565
(55,159)
55,220
—
54,406
—
—
—
—
—
—
—
—
— 359,495
—
182,657
(113,599) (124,257)
—
— 245,896 58,400
331,478
(229,253)
239,805
(193,730)
469,060
182,657
(168,758) (124,257)
102,225 46,075 300,302 58,400
The Group has access to a A$200.0 million (2012: A$200.8 million) syndicated facility and a US$120.0 million (2012: US$40.0
million) syndicated facility. A$100.0 million of the AUD facility will mature on 1 July 2016 and A$100.0 million will mature on 1
July 2017. US$90.0 million of the USD facility will mature on 1 July 2016 and US$30.0 million will mature on 1 July 2017.
All of the facilities have a variable interest rate. As detailed in Note 14, the interest rates on the loans are partially fixed using
interest rate swaps. The weighted average interest rates payable on the loans at 30 June 2013, including the impact of the
interest rate swaps, is 6.23% per annum for AUD denominated debt (2012: 6.33% per annum) and 1.59% per annum for USD
denominated debt (2012: 2.07% per annum).
ALL Group
Subject to the Trust loan facility conditions being met, the facilities may be drawn down with two business days notice.
Australian Trust loan facilities totalling $249.9 million have a maturity date of 31 August 2018. In addition, the ALL Group has
a US$100.0 million facility with the Trust maturing on 31 August 2018. The ALL Group also had a US$25.0 million facility which
expired on 31 August 2011 and was repaid during the previous financial year.
The ALL Group has access to a US$100.0 million (2012: $nil) syndicated facility. US$70.0 million of the facility will mature on 1
July 2016 and US$30.0 million will mature on 1 July 2017.
Information about the Group’s exposure to interest rates and foreign exchange risk is provided in Note 39.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
83
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
25 Provisions
a) Distributions to stapled security holders
Opening balance
Distributions declared
Distributions paid
Distributions reinvested
Closing balance
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
—
43,632
(36,644)
(6,988)
—
—
36,982
(22,467)
(14,515)
—
3,620
—
2,461
(3,620) (2,461)
—
—
—
—
—
A provision for the distribution relating to the half year to 30 June 2013 was not recognised as the distribution had not been
declared at the reporting date.
b) Other provisions
Current
Employee benefits
Sundry (1)
Total current
Non-current
Employee benefits
Total non‑current
Total provisions
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
2,448
542
2,307
428
2,448
542
2,307
428
2,990
2,735
2,990
2,735
2,011
1,631
2,011
1,631
2,011
1,631
2,011
1,631
5,001
4,366
5,001
4,366
Movements in sundry provisions
Carrying amount at the beginning of the year
Additional provisions recognised
Amounts utilised
428
473
(359)
1,417
257
(1,246)
1,417
428
473
257
(359) (1,246)
Carrying amount at the end of the year
542
428
542
428
(1) Sundry provisions include employee sick leave provisions, insurance excess/deductible amounts for public liability insurance, fringe benefits tax provisions
and other royalty provisions.
The current provision for employee benefits includes accrued long service leave which covers all unconditional entitlements where
employees have completed the required period of service and also those where employees are entitled to pro-rata payments in
certain circumstances. This is presented as current, since the Group does not have an unconditional right to defer settlement for any
of these obligations. However, based on past experience, the Group does not expect all employees to take the full amount of accrued
leave or require payment within the next 12 months.
84 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
26 Other liabilities
Security deposits
27 Deferred tax liabilities
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
2,101
1,718
2,101
2,101
1,718
2,101
1,694
1,694
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Intangible assets
Prepayments
Accrued revenue
Depreciation of property, plant and equipment
3,649
337
16
11,622
1,894
474
7
4,980
3,649
337
16
11,622
1,894
474
7
4,980
Deferred tax liabilities
15,624
7,355
15,624
7,355
Set-off deferred tax balances pursuant to set-off provisions:
Australia
United States
(4,263)
(2,362)
(2,550)
(341)
(4,263) (2,550)
(2,362) (341)
Net deferred tax liabilities
8,999
4,464
8,999
4,464
Movements
Balance at the beginning of the year
Charged/(credited) to the Income Statement (refer to Note 10)
Charged to asset revaluation reserve (refer to Note 30)
Acquisition of businesses
7,355
4,212
6,958
6,958
7,355
(879) 4,212 (879)
646
630
—
4,057
4,057
— 646
630
Balance at the end of the year
15,624
7,355
15,624
7,355
1,113
Deferred tax liabilities to be settled within 12 months
Deferred tax liabilities to be settled after more than 12 months 14,511
482
6,873
1,113
14,511
482
6,873
15,624
7,355
15,624
7,355
Ardent Leisure Group Annual Report 2013
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85
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
28 Contributed equity
No. of stapled
securities/shares Details
Date of income
entitlement
Note
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
318,147,978
5,668,287
420,125
7,377,472
2,595,539
Securities/shares on issue
DRP issue
Security-based payments -
securities/shares issued
DRP issue
Prahran placement
30 Jun 2011
1 Jul 2011
1 Jul 2011
1 Jan 2012
15 Mar 2012
334,209,401
5,647,860
1,491,186
39,062,500
17,363,566
29,474
Securities/shares on issue
DRP issue
Security-based payments
securites/shares issued
Fenix/Fitness First
placement
Security Purchase Plan
Issue cost paid
Security-based payments -
securites/shares issued
30 Jun 2012
1 Jul 2012
1 Jul 2012
20 Sep 2012
23 Oct 2012
404,010
7,084
468
7,431
2,907
421,900
(i)
(ii)
(i)
(iii)
(i)
(ii)
421,900
6,988
1,931
(iv)
50,000
(iv) 22,225
(1,628)
10,567
532
35
594
232
11,960
11,960
196
57
1,408
626
(45)
—
3 Apr 2013
(ii)
—
397,803,987 Securities/shares on issue
30 Jun 2013
501,416
421,900
14,202
11,960
(i)
Distribution Reinvestment Plan (DRP) issues
The Group has established a DRP under which stapled security holders may elect to have all or part of their distribution entitlements satisfied by the issue of
new stapled securities rather than being paid in cash. The discount available on stapled securities issued under the DRP is 2.0% on the market price.
(ii) Security-based payments
The Group has Deferred Short Term Incentive and Long Term Incentive remuneration plans under which performance rights are issued to certain
management and other personnel within the Group as part of their remuneration arrangements. These performance rights are subject to vesting conditions
as set out in Note 29. Upon vesting, the Group issues stapled securities to these personnel.
(iii) Prahran placement
On 14 March 2012, the Group issued 2,595,539 stapled securities as part of the consideration to acquire the Prahran health club. Refer to Note 32 for further
details.
(iv) Fenix/Fitness First placement and Security Purchase Plan
On 20 September 2012 and 23 October 2012, the Group issued stapled securities under a placement and a Security Purchase Plan respectively to partly fund
the acquisition of Fenix and Fitness First health clubs, as set out in Note 32.
86 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
29 Security‑based payments
a) Deferred Short Term Incentive Plan (DSTI)
Who can participate?
All employees are eligible for participation at the discretion of
the Board.
Types of securities issued?
Performance rights that can be converted into fully paid
securities once vested. The performance rights differ
from options in that they do not carry an exercise price.
Performance rights do not represent physical securities and
do not carry any voting or distribution entitlements.
Treatment of non-Australian residents
Due to restrictions on the issue of securities to employees
who are not Australian residents, the DSTI contemplates that
cash awards will be granted to those executives and will be
subject to the same tenure hurdles.
What restrictions are there on the securities?
Performance rights are non-transferable.
When can the securities vest?
The plan contemplates that the performance rights will vest
equally one and two years following the grant date.
What are the vesting conditions?
Plan performance rights will normally vest only if the
participant remains employed by the Group (and is not under
notice terminating the contract of employment from either
party) as at the relevant vesting date.
Did any of the securities vest?
During the financial year, a total of 910,553 performance
rights vested.
Australian Employees
Since the DSTI was approved in July 2010, long term
incentives have been provided to certain executives under
the DSTI. Under the terms of the DSTI, participants may
be granted performance rights of which one half will vest
one year after grant date and one half will vest two years
after grant date. The first set of performance rights were
granted under the DSTI on 17 December 2010, with the first
possible vesting date being the day after the full year results
announcement for the year ended 30 June 2011. A total of
795,504 performance rights vested on 24 August 2012 and
30 October 2012 and a corresponding number of stapled
securities were issued to employees under the terms of the
DSTI (2012: 420,125).
The characteristics of the DSTI indicate that, at the Ardent
Leisure Group level, it is an equity settled share-based
payment under AASB2 Share-based Payment as the holders
are entitled to the securities as long as they meet the DSTI’s
service criteria. However, as ALL is considered to be a
subsidiary of the Trust, in the financial statements of the ALL
Group the DSTI is accounted for as a cash settled share-based
payment.
Fair value – Australian employees
The fair value of the performance rights granted under the
DSTI is recognised in the Group financial statements as an
employee benefit expense with a corresponding increase
in equity. The fair value of each grant of performance rights
is determined at grant date using a binomial tree valuation
model and then is recognised over the vesting period during
which employees become unconditionally entitled to the
underlying securities.
The fair value of the performance rights granted under the
DSTI is recognised in the ALL Group financial statements as
an employee benefit expense with a corresponding increase
in liabilities. The fair value of each grant of performance
rights is determined at each reporting date using a binomial
tree valuation model with the movement in fair value of the
liability being recognised in the Income Statement.
At each reporting date, the estimate of the number of
securities that are expected to vest is revised. The employee
benefit expense recognised each financial period takes into
account the most recent estimate.
US employees
Due to restrictions on the issue of securities to US residents,
those US executives eligible for the DSTI are subject to a
shadow performance rights scheme whereby a cash payment
is made instead of performance rights being granted. At
the end of each vesting period, the number of performance
rights which would have vested is multiplied by the Group
stapled security volume weighted average price (VWAP)
for the five trading days immediately following the vesting
date and an equivalent cash payment is made. Due to the
nature of the scheme, this is considered to be a cash settled
share-based payment under AASB 2. A total of 115,049 cash
settled performance rights vested on 24 August 2012 to US
employees under the terms of the DSTI (2012: 40,802).
Fair value – US employees
The fair value of each grant of performance rights is
determined at each reporting date using a binomial tree
valuation model. This is recorded as a liability with the
movement in the fair value of the financial liability being
recorded through the Income Statement.
At each reporting date, the Group revises its estimate of the
number of performance rights that are expected to vest and
the corresponding number of securities to be acquired. The
employee benefit expense recognised each period takes into
account the most recent estimate.
Ardent Leisure Group Annual Report 2013
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87
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
29 Security‑based payments (continued)
a) Deferred Short Term Incentive Plan (DSTI) (continued)
Valuation inputs
For the performance rights outstanding at 30 June 2013, the table below shows the fair value of the performance rights on
each grant date as well as the factors used to value the performance rights at the date of grant. This valuation is used to value
the performance rights granted to Australian employees at 30 June 2013:
Grant
Grant date
Vesting dates - year 1
Vesting date - year 2
Average risk free rate
Expected price volatility
Expected distribution yield
Stapled security price at grant date
Valuation per performance right on issue
2011
2012
12 September 2011
24 August 2012
30 October 2012
31 August 2013
3.57% per annum
40% per annum
11.0% per annum
$1.055
$0.90
24 August 2012
31 August 2013
31 August 2014
2.80% per annum
35% per annum
9.1% per annum
$1.29
$1.15
The table below shows the fair value of the performance rights in each grant as at 30 June 2013 as well as the factors used
to value the performance rights as at 30 June 2013. This valuation is used to value the performance rights granted to US
employees at 30 June 2013:
Grant
2011
2012
Grant date
Vesting date - year 1
Vesting date - year 2
Average risk free rate
Expected price volatility
Expected distribution yield
Share price at year end
Valuation per performance right at year end
12 September 2011
24 August 2012
31 August 2013
2.58% per annum
31% per annum
6.9% per annum
$1.715
$1.5050
24 August 2012
31 August 2013
31 August 2014
2.58% per annum
31% per annum
6.9% per annum
$1.715
$1.6485
Grants of performance rights are made annually with the grant date being the date of the issue of the offer letters to
employees. Although the grant date may vary from year to year, the testing period (subject to any hurdles) remains constant
with the vesting date being 24 hours immediately following the announcement of the Group’s full year financial results.
Tenure hurdle
The vesting of the performance rights is subject to a tenure hurdle and participants must remain employed by the Group (and
not be under notice terminating the contract of employment from either party) as at the relevant vesting date.
The employee benefit expense recognised each period takes into account the most recent estimate.
Consolidated
Group
2013
Rights
Consolidated
Group
2012
Rights
ALL Group
2013
Rights
ALL Group
2012
Rights
Performance rights issued to participating executives:
Performance rights
1,327,804
1,430,238 1,327,804 1,430,238
Grant date
Expiry date
Exercise
price
Valuation
per right
Balance at
beginning
of the year
Granted
Exercised
Fail
to vest
Cancelled
Balance
at the end
of the year
16 Dec 2010
12 Sep 2011
24 Aug 2012
24 Aug 2012
31 Aug 2013
31 Aug 2014
nil 95.0 cents 380,379
90.0 cents 1,049,859
—
nil
nil 114.7 cents
— (530,174)
—
894,025
—
(380,379) —
— (44,154)
— (41,752)
— —
475,531
852,273
1,430,238
894,025
(910,553)
—
(85,906) 1,327,804
The rights have an average maturity of six months.
88 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
29 Security‑based payments (continued)
b) Long Term Incentive Plan (LTIP)
Who can participate?
All employees are eligible for participation at the discretion
of the Board.
Types of securities issued?
Performance rights that can be converted into fully paid
securities once vested. The performance rights differ
from options in that they do not carry an exercise price.
Performance rights do not represent physical securities and
do not carry any voting or distribution entitlements.
Treatment of non-Australian residents
Due to restrictions on the issue of securities to employees
who are not Australian residents, the LTIP contemplates that
cash awards will be granted to those executives and will be
subject to the same performance hurdles.
What restrictions are there on the securities?
Performance rights are non-transferable.
When can the securities vest?
The plan contemplates that the performance rights will
vest equally in two, three and four years following the
grant date assuming the total shareholder return (TSR)
performance hurdle has been met.
What are the vesting conditions?
In order for any or all of the performance rights to vest
under the TSR performance hurdle, the Group’s TSR for the
performance period must exceed the 50th percentile of the
TSRs of the benchmark group for the same period. A sliding
scale of vesting applies above the 50th percentile threshold.
What does total shareholder return (TSR) include?
TSR is the total return an investor would receive over a set
period of time assuming that all distributions were reinvested
in the Group’s securities. The TSR definition takes account of
both capital growth and distributions.
What is the benchmark group?
The benchmark group comprises the ASX Small Industrials
Index.
Did any of the securities vest?
During the financial year a total of 734,083 performance
rights reached vesting following an independent third party
assessment of the Group’s TSR performance compared to the
benchmark.
Australian Employees
Since 1 July 2009, long term incentives have been provided to
certain executives under the LTIP. Under the terms of the LTIP
and the initial grant, employees may be granted performance
rights of which one third will vest two years after grant
date, one third will vest three years after grant date and one
third will vest four years after grant date. The percentage
of performance rights which may vest is subject to the
performance of the Group relative to its peer group, which is
the ASX Small Industrials Index. The first set of performance
rights were granted under the scheme on 4 December 2009,
with the first possible vesting date being the day after the full
year results announcement for the year ended 30 June 2011.
During the year, the relative TSR performance of the Group
was tested in accordance with the LTIP. In the case of the
second tranche of performance rights issued in 2009, the
Group’s performance over the testing period achieved the
52nd percentile and accordingly 55.3% of the performance
rights vested to participants and the remainder of the tranche
automatically lapsed. The first tranche of performance
rights issued in 2010 were also tested and, as the Group’s
TSR performance reached the 82nd percentile, 100% of the
tranche vested to participants.
A total of 695,682 performance rights vested on 24 August
2012 and 30 October 2012 and a corresponding number of
stapled securities were issued to Australian employees under
the terms of the LTIP (2012: nil).
The characteristics of the LTIP indicate that, at the Ardent
Leisure Group level, it is an equity settled share-based
payment under AASB 2 Share-based Payment as the holders
are entitled to the securities as long as they meet the
LTIP’s service and performance criteria. However, as ALL is
considered to be a subsidiary of the Trust, in the financial
statements of the ALL Group the LTIP is accounted for as a
cash settled share-based payment.
Fair value – Australian employees
The fair value of the performance rights granted under the
LTIP is recognised in the Group financial statements as an
employee benefit expense with a corresponding increase in
equity. The fair value of the performance rights is determined
at grant date using a Monte Carlo simulation valuation
model and then is recognised over the vesting period during
which employees become unconditionally entitled to the
underlying securities.
The fair value of the performance rights granted under the
LTIP is recognised in the ALL Group financial statements as an
employee benefit expense with a corresponding increase in
liabilities. The fair value of each grant of performance rights
is determined at each reporting date using a Monte Carlo
simulation valuation model with the movement in fair value
of the liability being recognised in the Income Statement.
At each reporting date, the estimate of the number of
securities that are expected to vest is revised. The employee
benefit expense recognised each financial period takes into
account the most recent estimate.
US employees
Due to restrictions on the issue of securities to US residents,
those US executives eligible for the LTIP are subject to a
shadow performance rights scheme whereby a cash payment
is made instead of performance rights being granted. At
the end of each vesting period, the number of performance
rights which would have vested is multiplied by the Group
stapled security VWAP for the five trading days immediately
following the vesting date and an equivalent cash payment
is made. Due to the nature of the scheme, this is considered
to be a cash settled share-based payment under AASB 2. A
total of 38,401 cash settled performance rights vested on 24
August 2012 to US employees under the terms of the LTIP
(2012: nil).
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
89
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
29 Security‑based payments (continued)
b) Long Term Incentive Plan (LTIP) (continued)
Fair value – US employees
The fair value of each grant of performance rights is determined at each reporting date using a Monte Carlo simulation
valuation model. This is recorded as a liability with the difference in the movement in the fair value of the financial liability
being recorded through the Income Statement.
At each reporting date, the estimate of the number of performance rights that are expected to vest is revised. The employee
benefit expense recognised each period takes into account the most recent estimate.
Valuation inputs
For performance rights outstanding at 30 June 2013, the table below shows the fair value of the performance rights on each
grant date as well as the factors used to value the performance rights at the grant date. This valuation is used to value the
performance rights granted to Australian employees at 30 June 2013:
Grant
2009 2010
2011
2012
Grant date
Vesting date - year 2
Vesting date - year 3
Vesting date - year 4
Average risk free rate
Expected price volatility
Expected distribution yield
Stapled security price at grant date
Valuation per performance right on issue
4 December 2009 16 December 2010
19 August 2011 24 August 2012
24 August 2012 31 August 2013
31 August 2013 31 August 2014
4.64% per annum 5.10% per annum
55% per annum 45% per annum
10.0% per annum 10.0% per annum
$1.635 $1.065
$0.89 $0.52
12 September 2011
31 August 2013
31 August 2014
31 August 2015
3.49% per annum
40% per annum
11.0% per annum
$1.055
$0.44
24 August 2012
31 August 2014
31 August 2015
31 August 2016
2.73% per annum
35% per annum
9.1% per annum
$1.290
$0.61
The table below shows the fair value of the performance rights for each grant as at 30 June 2013 as well as the factors used
to value the performance rights at 30 June 2013. This valuation is used to value the performance rights granted to US
employees at 30 June 2013:
Grant
2009 2010
2011
2012
Grant date
Vesting date - year 2
Vesting date - year 3
Vesting date - year 4
Average risk free rate
Expected price volatility
Expected distribution yield
Share price at year end
Valuation per performance right on issue
4 December 2009 16 December 2010
19 August 2011 24 August 2012
24 August 2012 31 August 2013
31 August 2013 31 August 2014
2.58% per annum 2.58% per annum
31% per annum 31% per annum
6.9% per annum 6.9% per annum
$1.715 $1.715
$0.91 $1.49
12 September 2011
31 August 2013
31 August 2014
31 August 2015
2.58% per annum
31% per annum
6.9% per annum
$1.715
$1.37
24 August 2012
31 August 2014
31 August 2015
31 August 2016
2.58% per annum
31% per annum
6.9% per annum
$1.715
$1.09
Grants of performance rights are made annually with the grant date being the date of the issue of the offer letters to
employees. Although the grant date may vary from year to year, the testing period (subject to any hurdles) remains constant
with the vesting date being 24 hours immediately following the announcement of the Group’s full year financial results.
90 Ardent Leisure Group Annual Report 2013
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Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
29 Security‑based payments (continued)
b) Long Term Incentive Plan (LTIP) (continued)
Performance hurdles
In order for any or all of the performance rights to vest under the LTIP, the Group’s TSR for the performance period must
exceed the 50th percentile of the TSRs of the benchmark for the same period. A sliding scale of vesting applies above the 50th
percentile threshold.
TSR of the Group relative Proportion of performance
to TSRs of comparators rights vesting
Below 51st percentile 0%
51st percentile 50%
Between 51st percentile and 75th percentile Straight line vesting between 50% and 100%
75th percentile or higher 100%
TSR over a performance period is measured against the benchmark group securities calculated at the average closing price
of securities on the ASX for the calendar month period up to and including each of the first and last dates of the performance
period. Distributions are assumed to be re-invested at the distribution date and any franking credits (or similar) are ignored.
The number of rights outstanding and the grant dates of the rights are shown in the tables below:
Consolidated
Group
2013
Rights
Consolidated
Group
2012
Rights
ALL Group
2013
Rights
ALL Group
2012
Rights
Performance rights issued to participating executives:
Performance rights
4,027,154
3,870,399
4,027,154
3,870,399
Grant date
Expiry date
Exercise
price
Valuation
per right
Balance at
beginning
of the year
Granted
Exercised
Fail
to vest
Cancelled
Balance
at the end
of the year
4 Dec 2009
16 Dec 2010
12 Sep 2011
24 Aug 2012
24 Aug 2013
31 Aug 2014
31 Aug 2015
31 Aug 2016
nil
nil
nil
nil
89.0 cents 1,026,591
52.3 cents 1,350,701
43.7 cents 1,493,107
60.9 cents
— (283,856) (229,436)
—
— (450,230)
—
— —
—
—
— 1,167,132
466,444
(46,855)
900,471
—
—
1,493,107
— 1,167,132
3,870,399 1,167,132
(734,086)
(229,436)
(46,855) 4,027,154
The rights have an average maturity of one year and three months.
The expense recorded in the Group financial statements in the year in relation to the performance rights was $1,378,478 (2012:
$1,700,804). The expense recorded in the ALL Group financial statements in the year in relation to the performance rights was
$3,634,433 (2012: $2,363,905).
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
91
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
30 Reserves
Asset revaluation reserve
Opening balance
Revaluation – Theme parks
Revaluation – Bowling centres
Revaluation – Health clubs
Revaluation – Main Event
Tax on Main Event revaluation
Transfer to retained profits – realised items
Closing balance
Capital reserve
Opening balance
Transfer from retained profits – pre-opening expenses
Closing balance
Cash flow hedge reserve
Opening balance
Movement in effective cash flow hedges
Closing balance
Foreign currency translation reserve
Opening balance
Translation of foreign operations
Closing balance
Stapled security-based payment reserve
Opening balance
Option expense
Closing balance
Performance fee reserve
Opening balance
Closing balance
Goodlife put and call option reserve
Opening balance
Closing balance
Total reserves
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
437
5,173
1,349
2,581
—
—
(6,920)
2,082
3,416
15,274
—
—
(13,183)
—
—
1,305
—
—
2,277
1,980
1,980
—
(646) — (646)
—
—
(6,570)
2,620
437
3,416
3,416
(5,912)
(2,527)
(4,848)
(1,064)
(8,439)
(5,912)
(3,098)
1,529
(1,307)
(1,791)
(1,569)
(3,098)
—
—
—
—
—
—
—
—
—
—
—
—
(38,523)
(636)
(39,906)
1,383
(4,154) (4,696)
542
2,472
(39,159)
(38,523)
(1,682) (4,154)
2,729
(862)
1,867
1,132
1,132
1,710
1,019
2,729
1,132
1,132
—
—
—
—
—
—
—
—
—
—
(2,269)
(2,269)
(2,310) (2,310)
(2,269)
(2,269)
(2,310) (2,310)
(45,817)
(45,504)
(576) (3,048)
92 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
30 Reserves (continued)
The asset revaluation reserve is used to record increments and decrements on the revaluation of property, plant and
equipment.
The capital reserve is used to record one off costs incurred in the identification of new acquisitions or development of new
sites which are not able to be capitalised by the Group as well as the difference between the amount paid and the net assets
acquired in the acquisition of non-controlling interests.
The cash flow hedge reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised
directly in equity as described in Note 1(p)(ii).
Exchange differences arising on the translation of foreign controlled entities are taken to the foreign currency translation
reserve. In addition, on consolidation, exchange differences on loans denominated in foreign currencies are taken directly to
the foreign currency translation reserve where the loan is considered part of the net investment in that foreign operation.
The stapled security-based payment reserve is used to recognise the fair value of options issued to employees but not yet
exercised under the Group’s DSTI and LTIP.
The performance fee reserve was used to recognise the fair value of stapled securities not yet issued to the Manager in
settlement for the performance fee earned in the relevant period. The performance fee of $1.1 million was earned in the period
to 30 June 2009. On the internalisation of the Manager, the performance fee payment was waived by Macquarie Group Limited
but under the accounting standards, the reserve is not reversed.
The Group had the option to acquire the non-controlling interests in Ardent Leisure Health Clubs 1 Pty Limited. In accordance
with AASB 132 Financial Instruments: Presentation, on first recognition the Group recorded the potential obligation under the
put option on the Balance Sheet as a financial liability calculated as the present value of the redemption amount on the first
exercise date. Under the Group’s economic equity approach, the initial recognition of the redemption amount was recorded
in the Goodlife put and call option reserve. Movements in the financial liability due to changes in the expected redemption
amount and unwinding of the present value discount was taken to the Income Statement as finance costs in subsequent
periods. During the prior period, the Group acquired the remaining interest in Ardent Leisure Health Clubs 1 Pty Limited but
due to the accounting standards, the reserve remained.
31 Retained profits/(accumulated losses)
Opening balance
Net profit for the year
Available for distribution
Transfer from asset revaluation reserve
Transfer from capital reserve
Distribution paid and payable
Closing balance
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
30,259
35,617
65,876
6,920
2,527
(43,632)
46,980
12,627
(6,310) (7,093)
3,244
7,093
59,607 783 (3,849)
—
—
(3,620) (2,461)
6,570
1,064
(36,982)
—
—
31,691
30,259
(2,837) (6,310)
The distribution of 5.4 cents per stapled security for the year ended 30 June 2013 totalling $21.5 million had not been declared
at year end. This will be paid on or before 30 August 2013 as described in Note 44.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
93
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
32 Business combinations
Current period
Fenix
On 9 October 2012, the Group acquired Fenix Fitness Clubs (Fenix), a portfolio comprising 10 operating clubs in Queensland
and Victoria and two additional Victorian clubs in the development stage, for $62.7 million. Transaction costs totalling
$1,102,294 were incurred on this project, expensed in the Income Statement and recognised within operating cash flows in
the Statement of Cash Flows.
The acquired business contributed revenues of $23.6 million and a profit before allocation of Group costs and tax of $9.5
million to the Group for the period from 9 October 2012 to 30 June 2013. If the acquisition had occurred on 1 July 2012, it
would have contributed revenues of $30.1 million and a profit before allocation of Group costs and tax of $10.9 million for
the year ended 30 June 2013.
Provisional details of the fair value of the assets and liabilities acquired and goodwill are as follows:
Purchase consideration:
Cash paid
Total purchase consideration
Fair value of the net identifiable asset acquired
Goodwill
Consolidated
Group
$’000
ALL Group
$’000
62,713
62,713
62,713
62,713
16,163
16,163
46,550
46,550
The goodwill is attributable to the health clubs’ strong market position and profitable trading history and synergies expected to
arise after the Group’s acquisition. None of the goodwill is expected to be deductible for tax purposes.
Consolidated Group Consolidated ALL Group
Acquiree’s Group Acquiree’s
carrying amount Fair value carrying amount
$’000 $’000 $’000
ALL Group
Fair value
$’000
Customer relationship intangible assets 318 12,160 318 12,160
Property, plant and equipment 12,202 8,787 12,202
8,787
Net deferred tax assets/(liabilities) 1,776 (3,015) 1,776 (3,015)
193
Current tax receivable 193 193 193
Payables (1,501) (1,501)
(1,501) (1,501)
Employee benefits provision (243) (243) (243) (243)
Other current assets 1,218 1,218 1,218
1,218
Other current liabilities (5,562) (1,436) (5,562) (1,436)
Net identifiable assets acquired 8,401 16,163 8,401 16,163
Outflow of cash to acquire business:
Cash consideration
62,713
Less: cash balances acquired (796) (796)
62,713
Outflow of cash
61,917
61,917
Consolidated
Group
$’000
ALL Group
$’000
94 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
32 Business combinations (continued)
Current period (continued)
Fitness First – South Australia and Essendon
On 31 October 2012, the Group acquired the South Australian portfolio and the Essendon health club of Fitness First, for $4.9 million.
Transaction costs totalling $378,454 were incurred on this project, expensed in the Income Statement and recognised
within operating cash flows in the Statement of Cash Flows.
The acquired business contributed revenues of $8.2 million and a profit before allocation of Group costs and tax of $1.5 million
to the Group for the period from 31 October 2012 to 30 June 2013. If the acquisition had occurred on 1 July 2012, it would have
contributed revenues of $13.6 million and a profit before allocation of Group costs and tax of $1.1 million for the year ended 30
June 2013.
Final details of the fair value of the assets and liabilities acquired and gain on acquisition are as follows:
Purchase consideration:
Cash paid
Total purchase consideration
Fair value of the net identifiable assets acquired
Gain on acquisition
Consolidated
Group
$’000
ALL Group
$’000
4,913
4,913
4,913
4,913
5,297
384
5,297
384
Consolidated Group Consolidated ALL Group
Acquiree’s Group Acquiree’s
carrying amount Fair value carrying amount
$’000 $’000 $’000
ALL Group
Fair value
$’000
1,130
Customer relationship intangible assets — 1,130
—
Property, plant and equipment 5,847 4,783 5,847
4,783
Net deferred tax liabilities — (219) — (219)
Payables (291) (291)
(291) (291)
Employee benefits provision (97) (138) (97) (138)
32
Other current assets 32 32 32
Net identifiable assets acquired 5,491 5,297 5,491
5,297
Outflow of cash to acquire business:
Cash consideration
4,913
Less: cash balances acquired (3) (3)
4,913
Outflow of cash
4,910
4,910
Consolidated
Group
$’000
ALL Group
$’000
Ardent Leisure Group Annual Report 2013
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95
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
32 Business combinations (continued)
Current period (continued)
Fitness First – Jindalee and Mount Gravatt
On 6 November 2012, the Group acquired the Jindalee and Mount Gravatt health clubs of Fitness First, for $1 and received a
working capital adjustment of $46,372. Transaction costs totalling $126,679 were incurred on this project, expensed in the
Income Statement and recognised within operating cash flows in the Statement of Cash Flows.
The acquired business contributed revenues of $2.3 million and a loss before allocation of Group costs and tax of $0.1
million to the Group for the period from 6 November 2012 to 30 June 2013. If the acquisition had occurred on 1 July 2012,
it would have contributed revenues of $4.4 million and a profit before allocation of Group costs and tax of $0.1 million for
the year ended 30 June 2013.
Final details of the fair value of the assets and liabilities acquired and gain on acquisition are as follows:
Purchase consideration:
Cash received
Total purchase consideration
Fair value of the net identifiable assets acquired
Gain on acquisition
Consolidated
Group
$’000
ALL Group
$’000
(45) (46)
(45) (46)
2,184
2,229
2,184
2,230
Consolidated Group Consolidated ALL Group
Acquiree’s Group Acquiree’s
carrying amount Fair value carrying amount
$’000 $’000 $’000
ALL Group
Fair value
$’000
2,220
Property, plant and equipment 2,394 2,220 2,394
Net deferred tax assets — 16
16
—
Payables (36) (36) (36) (36)
Employee benefits provision (14) (19) (14) (19)
3
Other current assets 3 3 3
Net identifiable assets acquired 2,347 2,184 2,347
2,184
Outflow of cash to acquire business:
Cash consideration received
Less: cash balances acquired
Inflow of cash
Consolidated
Group
$’000
ALL Group
$’000
(46) (46)
(1) (1)
(47) (47)
96 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
32 Business combinations (continued)
Prior period
Waverley Park health club
On 9 December 2011, the Group acquired a health club at Waverley Park, Victoria, for $1.6 million. Of this, $0.3 million of the
purchase price was deferred until June 2012 and a further $0.3 million was deferred until December 2012. Transaction costs
totalling $11,974 were incurred on this project, expensed in the Income Statement and recognised within operating cash
flows in the Statement of Cash Flows.
The acquired business contributed revenues of $1.0 million and a net profit before allocation of Group costs and tax of $0.1
million to the Group for the period from 9 December 2011 to 30 June 2012. If the acquisition had occurred on 1 July 2011,
it would have contributed revenues of $1.8 million and a profit of $0.2 million for the year ended 30 June 2012.
Final details of the fair value of the assets and liabilities acquired and goodwill are as follows:
Purchase consideration:
Cash paid
Deferred consideration
Total purchase consideration
Fair value of the net identifiable assets acquired
Goodwill
Consolidated
Group
$’000
ALL Group
$’000
902
628
902
628
1,530
1,530
243
243
1,287
1,287
The goodwill is attributable to the health club’s strong market position and profitable trading history and synergies expected to
arise after the Group’s acquisition. None of the goodwill is expected to be deductible for tax purposes.
Consolidated Group Consolidated ALL Group
Acquiree’s Group Acquiree’s
carrying amount Fair value carrying amount
$’000 $’000 $’000
ALL Group
Fair value
$’000
Customer relationship intangible assets — 470 — 470
Property, plant and equipment 92 80
80
Net deferred tax liabilities — (70) — (70)
(229) (229)
Payables (229) (229)
Employee benefits provision (8) (8)
(8) (8)
92
Net identifiable assets acquired (145) 243 (145)
243
Outflow of cash to acquire business:
Cash consideration
Less: deferred settlement
Outflow of cash
330
1,562
— (330)
330
1,232
Consolidated
Group
June 2013
$’000
Consolidated
Group
June 2012
$’000
Ardent Leisure Group Annual Report 2013
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97
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
32 Business combinations (continued)
Prior period (continued)
Caroline Springs health club
On 1 March 2012, the Group acquired a health club at Caroline Springs, Victoria, for $2.4 million. Of this, $0.4 million of the
purchase price was deferred until May 2012 and a further $0.4 million was deferred until September 2012. Transaction costs
totalling $10,142 were incurred on this project, expensed in the Income Statement and recognised within operating cash
flows in the Statement of Cash Flows.
The acquired business contributed revenues of $0.7 million and a net profit before allocation of Group costs and tax of $0.1
million to the Group for the period from 1 March 2012 to 30 June 2012. If the acquisition had occurred on 1 July 2011, it
would have contributed revenues of $2.3 million and a profit of $0.4 million for the year ended 30 June 2012.
Final details of the fair value of the assets and liabilities acquired and goodwill are as follows:
Purchase consideration:
Cash paid
Deferred consideration
Total purchase consideration
Fair value of the net identifiable assets acquired
Goodwill
Consolidated
Group
$’000
ALL Group
$’000
1,581
779
1,581
779
2,360
2,360
851
851
1,509
1,509
The goodwill is attributable to the health club’s strong market position and profitable trading history and synergies expected to
arise after the Group’s acquisition. None of the goodwill is expected to be deductible for tax purposes.
Consolidated Group Consolidated ALL Group
Acquiree’s Group Acquiree’s
carrying amount Fair value carrying amount
$’000 $’000 $’000
ALL Group
Fair value
$’000
43
43
Other current assets 43 43
Customer relationship intangible assets — 590
—
590
Property, plant and equipment 635 598 635
598
Net deferred tax liabilities — (96) — (96)
Payables (271) (271) (271) (271)
Employee benefits provision (13) (13) (13) (13)
Net identifiable assets acquired 394 851 394
851
Outflow of cash to acquire business:
Cash consideration
Less: deferred settlement
Outflow of cash
400
2,381
— (400)
400
1,981
Consolidated
Group
June 2013
$’000
Consolidated
Group
June 2012
$’000
98 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
32 Business combinations (continued)
Prior period (continued)
Prahran health club
On 14 March 2012, the Group acquired a health club at Prahran, Victoria, for $3.9 million. Of this, $2.9 million was issued as
securities for the Ardent Leisure Group. Transaction costs totalling $9,353 were incurred on this project, expensed in the
Income Statement and recognised within operating cash flows in the Statement of Cash Flows.
The acquired business contributed revenues of $0.7 million and a net profit before allocation of Group costs and tax of
$0.1 million to the Group for the period from 14 March 2012 to 30 June 2012. If the acquisition had occurred on 1 July
2011, it would have contributed revenues of $2.2 million and a profit of $0.7 million for the year ended 30 June 2012.
Final details of the fair value of the assets and liabilities acquired and goodwill are as follows:
Purchase consideration:
Cash paid
Equity issued
Total purchase consideration
Fair value of the net identifiable assets acquired
Goodwill
Consolidated
Group
$’000
ALL Group
$’000
900
2,907
900
2,907
3,807
3,807
1,391
1,391
2,416
2,416
The goodwill is attributable to the health club’s strong market position and profitable trading history and synergies expected to
arise after the Group’s acquisition. None of the goodwill is expected to be deductible for tax purposes.
Consolidated Group Consolidated ALL Group
Acquiree’s Group Acquiree’s
carrying amount Fair value carrying amount
$’000 $’000 $’000
ALL Group
Fair value
$’000
14
Other current assets 14 14 14
Customer relationship intangible assets — 980 — 980
Property, plant and equipment 2,379 870 2,379 870
Net deferred tax liabilities — (236) — (236)
Payables (214) (214) (214) (214)
Employee benefits provision (23) (23) (23) (23)
Net identifiable assets acquired
2,156
1,391
2,156
1,391
Outflow of cash to acquire business:
Cash consideration
Outflow of cash
Consolidated
Group
June 2013
$’000
Consolidated
Group
June 2012
$’000
900 900
900
900
Ardent Leisure Group Annual Report 2013
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99
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
33 Cash and cash equivalents
For the purposes of the Statements of Cash Flows, cash includes cash at banks. Cash as at 30 June 2013 as shown in the
Statements of Cash Flows is reconciled to the related items in the Balance Sheets as follows:
Cash at bank
Cash on deposit
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
12,890
63
11,566
127
12,418
63
8,427
127
Total cash and cash equivalents
12,953 11,693 12,481
8,554
Cash on deposit at call in the Group bears an average floating interest rate of 2.69% per annum (2012: 3.43% per annum).
Cash on deposit at call in the ALL Group bears an average floating interest rate of 2.75% per annum (2012: 3.50% per annum).
100 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
34 Cash flow information
a) Reconciliation of profit to net cash flows from operating activities
Profit
35,617
12,627
7,093
3,244
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
Non-cash items
Depreciation of property, plant and equipment
Amortisation
Depreciation of livestock
Security-based payments
Provision for doubtful debts
Gain/(loss) on sale of PPE & livestock
Foreign exchange loss
Property valuation (gains)/losses
Classified as financing activities
Borrowing costs
Classified as investing activities
Unrealised gains on derivatives
Gain on acquisition
Changes in asset and liabilities:
Decrease/(increase) in assets
— Receivables
— Inventories
— Deferred tax assets
— Other assets
Increase/(decrease) in liabilities
— Payables and other liabilities
— Provisions
— Payable to the Trust
— Current tax liabilities
— Deferred tax liabilities
29,398
7,857
48
1,378
46
(313)
—
(90)
26,867
3,299
52
1,701
60
66
32
15,507
10,335
7,758
48
3,634
46
(293)
—
—
8,262
3,197
52
2,364
60
45
6
—
12,288
12,914
7,531
7,501
(339)
(643)
(2,613) —
—
(2,613)
—
—
(1,441)
(963)
1,344
992
(2,984)
(1,222)
413
(2,138) (2,528)
(963) (1,222)
413
1,344
(6,254) 2,078 (4,211)
(1,462)
380
—
350
(108)
3,619
4,122
5,376
(836) 380 (836)
(3,692) (3,365)
350
1,888
(108) (250)
—
1,888
(250)
Net cash flows from operating activities
82,369 68,613 34,912 18,239
b) Non-cash financing and investing activities
The following items are not reflected in the Statements of Cash Flows:
Distributions by the Group satisfied during the year by the issue
of stapled securities under the DRP
6,988
14,515
196
1,126
35 Net tangible assets
Net tangible assets are calculated as follows:
Total assets
Less: Intangible assets
Less: Total liabilities
Net tangible assets
Total number of stapled securities on issue
Net tangible asset backing per stapled security
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
799,742
675,910
(196,788) (139,838)
(312,452) (269,255)
290,502
266,817
397,803,987 334,209,401
$0.80
$0.73
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
101
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
36 Related party disclosures
a) Directors
The following persons have held office as Directors of the Manager and ALL during the period and up to the date of this report:
• Neil Balnaves, AO (Chairman)
• Roger Davis
• Anne Keating
• Don Morris, AO
• Greg Shaw
• George Venardos.
b) Parent entity
The immediate and ultimate parent entity of the Group is Ardent Leisure Trust.
The immediate parent entity of the ALL Group is Ardent Leisure Limited. The ultimate parent of the ALL Group is Ardent
Leisure Trust.
c) Key controlled entities
These financial statements incorporate the assets, liabilities and results of the following wholly-owned principal subsidiaries in
accordance with the accounting policy disclosure as described in Note 1(b):
Entity
Activity
Pincipal Lessee: Marinas, Bowling centres
Freehold owner: Theme parks
Principal Lessee: Bowling
Principal Lessee: Health clubs
Controlled entities of Ardent Leisure Trust:
Ardent Leisure Trust
Ardent Leisure (NZ) Trust
Goodlife Subtrust
Controlled entities of Ardent Leisure Limited:
Ardent Leisure Limited
Bowling Centres Australia Pty Limited
Ardent Leisure Operations (NZ) Limited
Goodlife Operations Pty Limited
Main Event Holdings, Inc
Theme parks, Marinas
Bowling Centres
Bowling Centres
Health Clubs
Family Entertainment
Country of
Class of
establishment equity securities
Australia
Ordinary
New Zealand
Australia
Ordinary
Ordinary
Australia
Australia
New Zealand
Australia
USA
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
102 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
36 Related party disclosures (continued)
d) Transactions with related parties
Key management personnel
Transactions with key management personnel are shown in Note 37.
e) Transactions with controlled entities
All transactions with controlled entities were made on normal commercial terms and conditions and at market rates, except that
there are no fixed terms for the repayment of loans between the parties. Outstanding balances are unsecured and are repayable
in cash. The terms and conditions of the tax funding agreement are set out in Note 10(e). The transactions incurred in the year
with controlled entities were:
Consolidated
Group
2013
$
Consolidated
Group
2012
$
ALL Group
2013
$
ALL Group
2012
$
Purchases of goods
Fees paid to related parties
Reimbursable expense to related parties
Tax consolidation legislation
Current tax payable assumed from wholly-owned tax consolidated entities
Loans from Ardent Leisure Trust
Balance at the beginning of the year
Loans advanced
Loan repayments made
Foreign exchange movements
Interest charged
Balance at the end of the year
(99,890)
(1,919)
(102,769) —
—
(124)
(1,919) (124)
—
—
—
—
—
—
—
—
(6,130,526) (2,968,627)
— (124,257,619) (137,360,880)
— (110,206,569) (50,403,197)
— 133,797,179
72,912,199
(5,726,799) (2,416,551)
—
(7,204,972) (6,989,190)
—
—
(113,598,780) (124,257,619)
37 Key management personnel
a) Key remuneration objectives
The objective of the Group’s executive framework is to attract and retain high quality executives by ensuring that executive
remuneration is competitive with prevailing employment market conditions and also providing sufficient motivation by
ensuring remuneration is aligned to the Group’s results.
In May 2013, the Remuneration and Nomination Committee engaged independent remuneration consultants from Aon Hewitt
benchmark the remuneration packages and structure of the Chief Executive Officer and the Chief Financial Officer prior to
remuneration and performance reviews to be undertaken after the financial year end. This benchmark exercise did not include
the provision of a recommendation; however, the exercise was conducted on arm’s length terms from management and
reported directly to the Chair of the Remuneration and Nomination Committee. As the Group operates in specialised sectors,
difficulties arise in benchmarking executives’ remuneration. In order to provide a more meaningful assessment, the scope of
the Aon Hewitt benchmark exercise was expanded to (where possible) include unlisted groups and businesses that shared the
same international footprint, diversity of operations and complexity of structure.
The remuneration packages of the Chief Executive Officer and the Chief Financial Officer for the financial year are set out in the
table below:
Position
Base salary
STI
DSTI
LTI
Chief Executive Officer
Chief Financial Officer
$750,000
$400,000
50% 25%
50% 25%
37.5%
37.5%
Total target
remuneration
$1,593,750
$850,000
It should be noted that the Short Term Incentive (STI), DSTI and LTIP figures set out above are considered “at risk” and will only
be paid if performance targets have been achieved.
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103
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
37 Key management personnel (continued)
b) Remuneration framework and strategy
The Group’s remuneration framework seeks to align executive reward with the achievement of strategic objectives and, in
particular, the creation of sustainable earnings growth for investors. In addition, the Board seeks to have reference to market
best practice to ensure that executive remuneration remains competitive, fair and reasonable.
i) Non-Executive Directors
Fees paid to Non-Executive Directors reflect the demands which are made on, and the responsibilities of, the Directors.
Non-Executive Directors’ fees are reviewed annually by the Board and the Remuneration and Nomination Committee.
Non-Executive Directors are paid solely by the way of directors’ fees and do not participate in any equity or short term cash-
based incentives schemes. Non-Executive Directors bring a depth of experience and knowledge to their roles and are a key
component in the effective operation of the Board. The maximum aggregate of directors’ fees payable to Directors of the Group
is set out in clause 16.1 of the Constitution of Ardent Leisure Limited. The maximum total aggregate level of directors’ fees
payable by the Group is $940,000 per annum and was set by investors at the 27 October 2011 general meeting.
In 2009, the Board approved a simplified structure for calculating directors’ fees. The simplified fee structure takes into account
individual Directors’ duties and service and was applied from 1 September 2009.
Position
Chairman
Other Non-Executive Director
Audit & Risk Committee – Chair
Audit & Risk Committee – Member
Remuneration & Nomination Committee Membership
Safety, Sustainability & Environment Committee Membership
ii) Executive pay
The executive pay and reward framework has three components:
— base pay and benefits;
— performance incentives; and
— other remuneration such as superannuation.
The combination of these comprises the executive’s total remuneration.
Base Pay
Performance incentives
Annual fee
$175,000
$110,000
$20,000
$15,000
$7,500
$7,500
sti
Dsti
Lti
cash performance bonus
set against pre-determined
key performance indicators
equity incentive based upon
equity incentive aligned
actual cash bonus paid and
to targeted investor returns.
deferred for one and two years.
A total employment cost which
can be made up of a mix of cash
salary, employer superannuation
contributions and non-financial
benefits such as provision of a
motor vehicle.
secure
At risK
At risK
At risK
Base pay
Base pay includes salary, employer superannuation contributions and non-cash benefits such as provision of motor vehicle.
Base pay is reviewed annually to ensure that executive pay is competitive with the market. There are no guaranteed base pay
increases in the contracts. Base pay is also reviewed on promotion.
Performance incentives
Performance incentives may take the form of either Short Term Incentive (STI), Deferred Short Term Incentive (DSTI) or Long
Term Incentive Plan (LTIP).
104 Ardent Leisure Group Annual Report 2013
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For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
37 Key management personnel (continued)
ii) Executive pay (continued)
STI
The STI or bonus program is designed to reward executives
for achievement of a number of key performance indicators
(KPIs). These KPIs are split into financial and personal
categories with the financial measures representing 50%
of an executive’s STI entitlement and personal measures
representing the remaining 50%.
KPI
Earnings and revenue-based
financial measures
Personal & Board discretionary
Total
Maximum STI
Entitlement
50%
50%
100%
For executives who act in Group-wide roles, the financial KPIs
are based on Group earnings related measures. In contrast,
divisional earnings measures are used for those executives
who occupy divisional roles.
Personal KPIs for executives are not financial in nature and
are set around execution of improvements and initiatives in
such functions as risk management, compliance, relationship
management, customer satisfaction, employee engagement
and other strategic initiatives. Examples of personal KPIs are
set out in the table below:
Example of personal KPIs
Develop a dynamic capital adequacy plan to address
the following criteria:
• Competitive cost of capital;
• Innovative funding flexibility;
• Distribution/dividend policy; and
• Future balance sheet and cash flow capacity to
meet the strategic needs of the Group.
Review and present the Group’s five year strategic
vision and plan.
Drive improvements across the Group in employee
workers compensation claims with a view to creating
a long term reduction in lost time injury frequency rate.
The extent to which an executive achieves their personal
and financial KPIs is assessed by the Remuneration and
Nomination Committee based upon recommendations
from the Managing Director. The resulting cash bonuses are
traditionally payable in cash by 30 September each year.
Using a profit target ensures variable award is only available
when value has been created for investors and when profit is
consistent with the Group’s business plan.
Maximum achievable awards to key management personnel
(KMP) under the STI range between 25% and 50% of an
executive’s base salary (including superannuation) dependent
upon the executive’s position.
DSTI
The DSTI program was established by the Directors on 1 July
2010 to provide a retention incentive for key employees. The
DSTI plan is linked to the actual achievement of KPIs under
the STI plan with a percentage of the actual STI paid to an
executive being matched in performance rights to acquire
fully paid Group stapled securities for nil exercise price. The
performance rights issued under the DSTI vest in two equal
tranches in 12 months and 24 months.
It should be noted that KMP are required to forego a
component of their LTIP entitlement in order to participate
in the DSTI. In this way, a component of the LTIP was simply
moved into the DSTI and overall remuneration packages
remained broadly unchanged.
LTIP
The Long Term Incentive Plan (LTIP) was established by
the Board of Directors in 2009 to replace the Executive
Securities Plan (ESP) and to take into account changes to
the Australian taxation regime in relation to employee
share plans. Awards of performance rights under the LTIP
range between 10% and 50% of an executive’s base salary
(including superannuation) dependent upon the executive’s
role. Further details of the LTIP are set out in Note 29(b) and
section (iii) below.
iii) Alignment with investor interests
The Directors are committed to the alignment of executives’
remuneration with investors’ interests and seek to achieve
this through the most appropriate mix of base pay and short
term and long term incentives.
In the 2013 financial year, key management personnel KPIs
were set to drive divisional and Group earnings with targets
set within the Group’s budgetary framework. In this way, the
KPIs used to determine performance under the STI are used
to align KMP remuneration with sustainable earnings growth
and other operational long term goals. The DSTI plan is
aligned to these KPIs and acts as a two year retention tool to
ensure that earnings targets are not achieved at the expense
of long term profitability and growth.
The LTIP plan further aligns executives’ remuneration with
long term investor returns through the total shareholder
return performance hurdle. In this way, the LTIP provides a
direct link between executive reward and investor return and
offers no benefit to individual executives unless the Group’s
performance exceeds the 50th percentile of the benchmark
ASX Small Industrials index.
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105
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
37 Key management personnel (continued)
c) Details of remuneration – key management personnel
iii) Alignment with investor interests (continued)
Key management personnel are defined in AASB 124 Related Party Disclosures as those having authority and responsibility
for planning, directing and controlling the activities of the Group. In December 2012, the Directors reviewed the list of those
executives previously assessed as being KMP to take into account the growing diversity of the Group’s earnings streams. Based
upon divisional earnings materiality to the Group, and in addition to the Group’s Non-Executive Directors, KMP for the year
ended 30 June 2013 were considered to comprise the following:
Position
Name
Chief Executive Officer
Greg Shaw
Chief Financial Officier Richard Johnson
Lee Chadwick
CEO – Bowling
Todd Coates
CEO – Theme parks
Charlie Keegan
CEO – Main Event
Greg Oliver
CEO – Health clubs
Details of the remuneration of KMP of the Group for 2013 and 2012 are set out in the table on the following pages. The table
set out the total cash benefits paid to the KMP in the relevant period and, under the heading “Security-based payments”, shows
a component of the fair value of the performance rights. The fair value of the performance rights at grant date is recognised
over the vesting period as an employee benefit expense. Further details of the fair value calculations are set out in Notes 29(a)
and 29(b).
106 Ardent Leisure Group Annual Report 2013
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For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
37 Key management personnel (continued)
Short‑term
benefits
Post‑employment
benefits
Other long‑term
benefits
Cash
Super‑
bonus annuation Retirement Retention
$
$
$
$
Security‑
based
Other Termination payment payments
$
Total cash
$
$
$
Security‑
based
Total payment
$ % of total
Salary
Year $
2013 181,098
2012 181, 725
2013 128,440
2012 128,440
2013 121,560
2012 121,560
2013 121,560
2012 58,198
2013 133,027
2012 133,027
—
—
—
—
—
—
—
—
—
—
16,402
15,775
11,560
11,560
10,940
10,940
10,940
5,238
11,973
11,973
2013 733,530
2012 734,225
281,250
345,000
16,470
15,775
2013 383,530 160,000
2012 384,225 185,080
16,470
15,775
2013 268,107
2012 N/A
40,192
N/A
14,084
N/A
2013 333,530
2012 241,037
12,500
37,115
16,470
11,831
2013 318,440
2012 288,628
97,737
92,602
—
—
2013 387,966
2012 344,225
99,360
98,100
16,470
15,775
2013 N/A
2012 189,055
N/A
33,812
N/A
13,322
2013 N/A
2012 345,075
N/A
145,242
N/A
15,775
2013 N/A
2012 275,318
N/A
51,012
N/A
15,775
Independent Directors
Neil Balnaves, AO
Chairman
Roger Davis
Anne Keating
Donald Morris, AO (1)
George Venardos
Executive Directors
Greg Shaw
Chief Executive Officer
Other key management
personnel
Current Executives
Richard Johnson
Chief Financial Officer
Lee Chadwick (2)
CEO – Bowling
Todd Coates (3)
CEO - Theme parks
Charlie Keegan
CEO – Main Event
Greg Oliver
CEO – Health Clubs
Past Executives
Marcus Anketell (4)
CEO – Marinas
Roy Menachemson (5)
CEO – Development
Jordan Rodgers (6)
Ex CEO – Bowling
Noel Dempsey (7)
Ex CEO – Marinas
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
N/A
—
—
—
—
5,564
—
N/A
—
N/A
—
N/A
—
—
—
—
—
—
—
—
—
—
—
197,500
197,500
140,000
140,000
132,500
132,500
132,500
63,436
145,000
145,000
—
—
—
—
—
—
—
—
—
—
197,500
197,500
140,000
140,000
132,500
132,500
132,500
63,436
145,000
145,000
—
—
—
—
—
—
—
—
—
—
— 1,031,250
— 1,095,000
469,616 1,500,866
506,179 1,601,179
31.3%
31.6%
—
—
560,000 254,042
585,080 272,578
814,042
857,658
31.2%
31.8%
—
N/A
322,383
N/A
—
N/A
322,383
N/A
362,500
289,983
—
—
362,500
289,983
—
N/A
—
—
416,177
381,230
290,982
158,779
707,159
540,009
41.1%
29.4%
509,360
458,100
139,044
114,339
648,404
572,439
21.4%
20.0%
—
—
—
—
—
—
N/A
—
N/A
236,189
N/A
18,680
N/A
254,869
N/A
7.3%
N/A
—
N/A
506,092
N/A
107,135
N/A
613,227
N/A
17.5%
N/A
39,074
N/A
381,179
N/A
(45,909)
N/A
335,270
N/A
(13.7%)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
N/A
—
—
—
—
—
—
N/A
—
N/A
—
N/A
—
N/A
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
N/A
—
—
—
—
—
—
N/A
—
N/A
—
N/A
—
N/A
—
—
—
2013 N/A
2012 55,363
N/A
—
N/A
1,315
N/A
—
N/A
243,349
N/A
300,027
N/A
9,020
N/A
309,047
N/A
2.9%
Total 2013
3,110,788 691,039 141,779
Total 2012
3,480,101 987,963 160,829
—
5,564
— 3,949,170 1,153,684 5,102,854
22.6%
—
— 282,423 4,911,361 1,140,801 6,052,116 18.8%
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107
Don Morris AO was appointed a Non-Executive Director of the Group effective 1 January 2012 and is considered KMP from this date.
Lee Chadwick was appointed CEO of the Bowling division on 10 September 2012 and is considered KMP from this date.
Todd Coates was appointed CEO of the Theme Parks division on 3 October 2011 and is considered KMP from this date. Todd Coates resigned from the Group effective 31 July 2013.
(1)
(2)
(3)
(4) Marcus Anketell has not met the definition of KMP for the financial year ended 30 June 2013.
(5)
(6)
(7)
Roy Menachemson has not met the definition of KMP for the financial year ended 30 June 2013.
Jordan Rodgers resigned from the Group effective 20 April 2012.
Noel Dempsey resigned from the Group effective 31 July 2011.
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
37 Key management personnel (continued)
c) Details of remuneration – key management personnel
(continued)
No termination benefits were paid to KMP during the current
financial year. There are no cash bonuses or options forfeited
with respect to specified executives not previously disclosed.
No payments were made to KMP by the Group before they
became employees.
Security-based payments included in the tables above
reflect the amounts in the Income Statements of the Group.
For Australian KMP, this amount is based on the fair value of
the equity instruments at the date of the grant rather than
at vesting or reporting date for those instruments not yet
vested. For US KMP, this amount is based on the fair value
of the equity instruments at the reporting date. During the
year, 795,504 securities were issued to employees under the
terms of the DSTI (2012: 420,125). If the fair value recorded
in the Income Statement was based on the movement in the
fair value of the instruments between reporting dates, the
amount included in KMP compensation would be increased
by $1,900,016 to $3,053,700 (2012: increased by $503,000 to
$1,644,000).
d) Services agreements of key management personnel
Remuneration and other terms of employment for KMP are
formalised in service agreements. Each of these agreements
provides for the payment of performance related cash
bonuses and participation in the Group’s long term incentive
plans. Other major provisions of the agreements relating to
remuneration are set out below:
Greg Shaw
chief executive officer
Term
No fixed term.
Base salary
$750,000 for the year ended 30 June 2013.
Termination
Employment shall continue with the Group unless the
executive gives the Group six month’s notice in writing,
or the Group gives the executive twelve month’s notice in
writing.
Richard Johnson
chief financial officer
Term
No fixed term.
Base salary
$400,000 for the year ended 30 June 2013.
Termination
Employment shall continue with the Group unless either
party gives six month’s notice in writing.
Lee Chadwick
ceo – Bowling
Term
No fixed term.
Base salary
$350,000 for the year ended 30 June 2013.
Termination
Employment shall continue with the Group unless either
party gives three month’s notice in writing.
Todd Coates
ceo – theme Parks
Term
No fixed term.
Base salary
$350,000 for the year ended 30 June 2013.
Termination
Employment shall continue with the Group unless either
party gives three month’s notice in writing.
Charlie Keegan
ceo – Main event
Term
Contract to 14 February 2015 with automatic renewal on a
year by year basis thereafter.
Base salary
USD$325,000 for the year ended 30 June 2013.
Termination
Employment shall continue with the Group unless the
executive gives three month’s notice in writing. An early
termination payment equal to one year’s salary is payable to
the executive if the Group terminates the executive during
the contract, other than for gross misconduct.
Greg Oliver
ceo – health clubs
Term
No fixed term, however
may not be terminated earlier than September 2015 unless
certain early termination conditions are triggered.
Base salary
$410,000 for the year ended 30 June 2013.
Termination
Employment shall continue with the Group unless either
party gives three month’s notice in writing.
All base salary amounts are inclusive of any superannuation
payment and will be reviewed annually. With the exception of
the terms noted above, there are no contracted termination
benefits payable to any KMP.
108 Ardent Leisure Group Annual Report 2013
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For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
37 Key management personnel (continued)
e) Directors and KMP equity holdings
The number of stapled securities held directly, indirectly or beneficially by the Directors and KMP or their related entities is:
Stapled Stapled Stapled
securities held Acquisitions Disposals securities held Acquisitions Disposals securities held
2011 2012 2012 2012 2013 2013 2013
298,105
50,857
62,743
N/A
84,581
870,957
—
—
—
—
—
—
—
—
—
1,169,062
50,857
62,743
—
84,581
1,270,000
79,418
11,718
—
27,011
—
—
—
—
—
2,439,062
130,275
74,461
—
111,592
159,277
109,494
—
268,771
499,598
—
768,369
N/A
N/A
—
—
—
N/A
N/A
39,939
—
26,532
N/A
N/A
—
—
—
—
—
39,939
—
26,532
—
—
257,948
—
110,158
—
—
(70,000)
—
—
Past Executives
Marcus Anketell (1)
N/A
Roy Menachemson(1),(2) 38,398 24,676 — 63,074 N/A N/A
1,911
1,726
N/A
185
—
—
—
227,887
—
136,690
N/A
N/A
Independent Directors
Neil Balnaves, AO
Roger Davis
Anne Keating
Don Morris, AO
George Venardos
Executive Directors
Greg Shaw
Key management personnel
Current Executives
Lee Chadwick
Todd Coates
Richard Johnson
Charlie Keegan
Greg Oliver
(1) Executive no longer considered KMP for the year ended at 30 June 2013.
(2) Stapled securities held include securities held under the ESP.
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109
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
37 Key management personnel (continued)
f) Loans to KMP
There were no loans to KMP during the financial year or prior corresponding period.
g) Other transactions with KMP
During the year, the Group entered into commercial arm’s length agreements with companies of interest to Roger Davis by
virtue of his position as Non-Executive Director of those companies or their subsidiaries. The Directors fully disclose their
interest in accordance with section 195(1) of the Corporations Act 2001.
All agreements have been entered into on normal commercial bases. The above fees and transactions were all based on normal
commercial terms and conditions. Related party balances above are on interest free terms.
Apart from the details disclosed in these financial statements, no Director has entered into a material contract with the Group
and there were no material contracts involving Directors’ interests existing at year end not previously disclosed.
h) Deferred Short Term Incentive Plan
The DSTI is a incentive scheme awarded to executives of the Group from 1 July 2010. Details of how the DSTI operated and the
valuation inputs are disclosed in Note 29(a).
The number of performance rights on issue and granted to the Group’s KMP is set out below:
Granted
Exercised
Lapsed
Closing
balance
Vested and
exercisable
Unvested
30 June 2013
Current Executives
Lee Chadwick
Todd Coates
Richard Johnson
Greg Oliver
Greg Shaw
Opening
balance
—
—
142,761
133,924
260,836
—
34,169
69,732
86,607
122,576
—
—
(91,350)
(79,424)
(165,002)
—
(34,169)
—
—
—
—
—
121,143
141,107
218,410
Equity‑settled
537,521
313,084
(335,776)
(34,169)
480,660
Charlie Keegan
Cash‑settled
Past Executives
Marcus Anketell
Roy Menachemson
128,892
83,307
(77,624)
128,892
83,307
(77,624)
21,991
65,021
N/A
N/A
N/A
N/A
—
—
N/A
N/A
134,575
134,575
N/A
N/A
N/A
N/A
N/A
N/A
—
—
—
—
—
—
—
—
—
—
121,143
141,107
218,410
480,660
134,575
134,575
Total performance rights
753,425
396,391
(413,400)
(34,169)
615,235
—
615,235
Performance rights granted to executives vest over varying periods of one and two years, provided the vesting conditions are
met. No performance rights will vest if the conditions are not satisfied, hence, the minimum value of the plan securities and
performance rights yet to vest is $nil.
Under the terms of the initial 2010 grant, performance rights under the DSTI were allocated on the basis of a valuation dated 23
August 2010. A valuation difference of $0.13 per performance right between the allocation date and the grant date was caused
by an increase in the Group’s security price between these dates and a shorter vesting period.
Under the terms of the 2011 grant, performance rights were allocated on the basis of a valuation dated 12 September 2011 and
there was no valuation difference.
Under the terms of the 2012 grant, performance rights were allocated on the basis of a valuation dated 24 August 2012 and
there was no valuation difference.
110 Ardent Leisure Group Annual Report 2013
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For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
37 Key management personnel (continued)
i) Long term incentive plan
The LTIP is the long term incentive scheme awarded to executives of the Group from 1 July 2009. Details of how the LTIP operated and
the valuation inputs are disclosed in Note 29(b).
The number of performance rights on issue and granted to the Group’s KMP is set out below:
Granted
Exercised
Lapsed
Closing
balance
Vested and
exercisable
Unvested
30 June 2013
Current Executives
Lee Chadwick
Todd Coates
Richard Johnson
Greg Oliver
Greg Shaw
Opening
balance
—
—
879,065
191,928
1,648,245
—
71,815
246,225
84,127
461,671
—
—
(166,598)
(29,619)
(312,372)
—
(71,815)
(46,804)
—
(87,757)
—
—
911,888
246,436
1,709,787
Equity‑settled
2,719,238
863,838
(508,589)
(206,376) 2,868,111
172,966
51,115
(32,756)
(11,560)
179,765
172,966
51,115
(32,756)
(11,560)
179,765
—
—
—
—
—
—
—
—
—
—
911,888
246,436
1,709,787
2,868,111
179,765
179,765
45,809
314,938
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Charlie Keegan
Cash‑settled
Past Executives
Marcus Anketell
Roy Menachemson
Total performance rights 3,252,951
914,953
(541,345)
(217,936) 3,047,876
—
3,047,876
Performance rights granted to executives vest over varying periods of two, three and four years, provided the vesting
conditions are met. No performance rights will vest if the conditions are not satisfied, hence, the minimum value of the plan
securities and performance rights yet to vest is $nil.
Under the terms of the initial 2009 grant, performance rights under the LTIP were allocated on the basis of a valuation dated 11
November 2009. A valuation difference of $0.2033 per performance right between the allocation date and the grant date was
caused by an increase in the Group’s security price between these dates.
Under the terms of the 2010 grant, performance rights were allocated on the basis of a valuation dated 23 August 2010 being
the date 24 hours after the release of the 2010 financial year results. A valuation difference of $0.06 per performance right
between the allocation date and the grant date was caused by an increase in the Group’s security price between these dates.
Under the terms of the 2011 grant, performance rights were allocated on the basis of a valuation dated 12 September 2011 and
there was no valuation difference.
Under the terms of the 2012 grant, performance rights were allocated on the basis of a valuation dated 24 August 2012 and
there was no valuation difference.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
111
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
37 Key management personnel (continued)
i) Long term incentive plan (continued)
The table below sets out maximum number of performance rights that vested during the financial year and that are yet to vest.
The percentage of cash STI (as listed in Note 37(c)) that was awarded to the Group’s KMP and the percentage that was forfeited
because the executive did not meet the performance criteria is also set out below. No part of any cash STI is payable in future years.
granted Tranche performance rights may vest
Lapsed
Vested
Year Financial years in which
Cash STI
awarded
Cash STI
forteited
Current executives
Equity settled
Year Number
Number
Number
%
%
—
—
32.0
68.0
80.0
20.0
92.0
8.0
Lee Chadwick — — —
—
—
—
Todd Coates LTIP 2012 T1
T2
T3
DSTI 2012 T1
T2
Richard Johnson LTIP 2009 T2
T3
2010 T1
T2
T3
2011 T1
T2
T3
2012 T1
T2
T3
DSTI 2010 T2
2011 T1
T2
2012 T1
T2
Greg Oliver LTIP 2010 T1
T2
T3
2011 T1
T2
T3
2012 T1
T2
T3
DSTI 2010 T2
2011 T1
T2
2012 T1
T2
2015
2016
2017
2014
2015
2013
2014
2013
2014
2015
2014
2015
2016
2015
2016
2017
2013
2013
2014
2014
2015
2013
2014
2015
2014
2015
2016
2015
2016
2017
2013
2013
2014
2014
2015
23,938
23,938
23,939
17,084
17,085
104,707
104,707
108,695
108,696
108,696
114,521
114,521
114,522
82,075
82,075
82,075
39,939
51,411
51,411
34,866
34,866
29,619
29,620
29,620
34,356
34,356
34,357
28,042
28,042
28,043
24,924
54,500
54,500
43,303
43,304
23,938
23,938
23,939
17,084
17,085
46,804
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
57,903
—
108,695
—
—
—
—
—
—
—
—
39,939
51,411
—
—
—
29,619
—
—
—
—
—
—
—
—
24,924
54,500
—
—
—
112 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2012
37 Key management personnel (continued)
i) Long term incentive plan (continued)
granted Tranche performance rights may vest
Lapsed
Vested
Year Financial years in which
Cash STI
awarded
Cash STI
forteited
Year Number
Number
Number
%
%
25.0
75.0
Curent executives (continued)
Equity settled (continued)
Greg Shaw LTIP 2009 T2
T3
2010 T1
T2
T3
2011 T1
T2
T3
2012 T1
T2
T3
DSTI 2010 T2
2011 T1
T2
2012 T1
T2
Cash Settled
Charlie Keegan LTIP 2009 T2
T3
2010 T1
T2
T3
2011 T1
T2
T3
2012 T1
T2
T3
DSTI 2010 T2
2011 T1
T2
2012 T1
T2
2013
2014
2013
2014
2015
2014
2015
2016
2015
2016
2017
2013
2013
2014
2014
2015
2013
2014
2013
2014
2015
2014
2015
2016
2015
2016
2017
2013
2013
2014
2014
2015
196,325
196,325
203,804
203,804
203,805
214,727
214,727
214,728
153,890
153,890
153,891
69,169
95,833
95,834
61,288
61,288
25,863
25,863
18,453
18,453
18,454
21,960
21,960
21,960
17,038
17,038
17,039
26,357
51,267
51,268
41,653
41,654
87,757
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
11,560
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
108,568
—
203,804
—
—
—
—
—
—
—
—
69,169
95,833
—
—
—
14,303
—
18,453
—
—
—
—
—
—
—
—
26,357
51,267
—
—
—
95.0
5.0
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
113
38 Segment information
Business segments
The Group is organised on a global basis into the following divisions by product and service type:
Theme Parks
This segment comprises Dreamworld and WhiteWater World in Coomera, Queensland and the Sky Point observation deck and
climb in Surfers Paradise, Queensland.
Marinas
This segment comprises seven d’Albora Marina properties, located in New South Wales and Victoria.
Bowling centres
This segment comprises fifty centres located in Australia and New Zealand.
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
38 Segment information (continued)
Business segments (continued)
Family entertainment centres
This segment comprises of twelve Main Event sites in Texas, United States of America.
Health clubs
This comprises sixty six centres in Queensland, New South Wales, Victoria, South Australia and Western Australia.
Other
In the past, this segment has included commission revenue received for Australian Tour Desk, a fractional boat ownership
business in Sydney, New South Wales and consultancy fees earned from the Adventure World theme park in Perth, Western
Australia.
The main income statement items used by management to assess each of the divisions are divisional revenue and divisional
EBITDA before property costs and after property costs. In addition, depreciation and amortisation are analysed by division.
Each of these income statement items is looked at after adjusting for pre-opening expenses, straight lining of fixed rent
increases, IFRS depreciation and amortisation of Goodlife intangible assets. As shown in Note 11, these items are excluded
from management’s definition of core earnings.
The Group’s principal activity is to invest in and operate leisure and entertainment businesses in Australia, New Zealand and the
United States of America.
Business segment 2013
Consolidated Group
Family
Health entertainment
centres
clubs
$’000
$’000
Theme
parks
$’000
Marinas
$’000
Bowling
centres
$’000
Other
$’000
Total
$’000
Revenue from operating activities 140,689 72,695
97,086 23,141
115,230
62 448,903
Divisional EBITDA before property costs (1) 60,032 26,381
Divisional EBITDA (2) 30,329 17,001
Depreciation and amortisation (3) (5,064) (4,601)
32,211
30,450
(5,172)
13,034
10,687
(762)
36,381
12,773
(6,762)
(7) 168,032
(7) 101,233
(22,644)
(283)
Divisional EBIT (4) 25,265 12,400 25,278
9,925
6,011
(290) 78,589
Pre-opening expenses, straight lining of fixed rent increases, IFRS depreciation
and Goodlife intangible asset amortisation not included in divisional EBIT.
Property valuation gains
Gain on acquisition
Net gain from derivative financial instruments
Corporate costs including gains on sale of assets, interest income
and foreign exchange gains and losses
Borrowing costs
Net tax expense
Profit
(18,496)
90
2,613
602
(12,159)
(12,288)
(3,334)
35,617
Total assets 200,261 102,401
Acquisitions of property, plant
and equipment, investment
properties and intangible assets 87,487 24,679
249,000 101,446
134,184
12,450 799,742
6,964
2,372
15,458
1,509
138,469
(1) Excludes pre-opening expenses of $2,527,000.
(2) Excludes straight lining of fixed rent increases of $1,311,000 and pre-opening expenses of $2,527,000.
(3) Excludes IFRS depreciation of $6,920,000 and amortisation of Goodlife intangible assets totalling $7,739,000.
(4) Comprises of pre-opening expenses of $2,527,000, straight lining of fixed rent increases of $1,311,000, IFRS depreciation of $6,920,000 and amortisation of
Goodlife intangible assets of $7,739,000.
114 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
38 Segment information (continued)
Business segment 2012
Consolidated Group
Family
Health entertainment
clubs
centres
$’000
$’000
Theme
parks
$’000
Marinas
$’000
Bowling
centres
$’000
Other
$’000
Total
$’000
Revenue from operating activities 102,577 55,236
93,707
23,672
114,241
641 390,074
Divisional EBITDA before property costs (1) 40,224 19,336
Divisional EBITDA (2) 19,959 12,312
Depreciation and amortisation (3) (3,607) (4,171)
30,485
28,904
(5,469)
13,256
10,669
(733)
36,718
14,825
(6,363)
177 140,196
86,846
177
(20,468)
(125)
Divisional EBIT (4) 16,352 8,141
23,435
9,936
8,462
52
66,378
Pre-opening expenses, straight lining of fixed rent increases, IFRS depreciation
and Goodlife intangible asset amortisation not included in divisional EBIT.
Property valuation losses
Net loss from derivative financial instruments
Corporate costs including gains on sale of assets, interest income
and foreign exchange gains and losses
Borrowing costs
Net tax expense
Profit
(13,013)
(15,507)
(392)
(9,365)
(12,914)
(2,560)
12,627
Total assets 123,527 69,099
Acquisitions of property, plant
and equipment, investment
properties and intangible assets 14,809 11,041
241,199
99,744
119,018
23,323 675,910
15,575
2,204
14,425
1,884
59,938
(1) Excludes pre-opening expenses of $1,064,000.
(2) Excludes straight lining of fixed rent increases of $2,199,000 and pre-opening expenses of $1,064,000.
(3) Excludes IFRS depreciation of $6,570,000 and amortisation of Goodlife intangible assets totalling $3,180,000.
(4) Comprises of pre-opening expenses of $1,064,000, straight lining of fixed rent increases of $2,199,000, IFRS depreciation of $6,570,000 and amortisation of
Goodlife intangible assets of $3,180,000.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
115
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
38 Segment information (continued)
Business segment 2013
ALL Group
Family
Health entertainment
clubs
centres
$’000
$’000
Theme
parks
$’000
Marinas
$’000
Bowling
centres
$’000
Other
$’000
Total
$’000
Revenue from operating activities 140,689 72,695
97,086
23,141
115,230
62
448,903
Divisional EBITDA before rent to Trust (1) 51,621
17,001
Divisional EBITDA after rent to Trust (1) 22,088 17,001
Depreciation and amortisation (2) (5,021)
(4,601)
32,211
2,716
(151)
13,034
956
—
36,381
5,676
(347)
(7)
(7)
(283)
150,241
48,430
(10,403)
Divisional EBIT (3) 17,067 12,400
2,565
956
5,329
(290)
38,027
Pre-opening expenses and Goodlife intangible asset amortisation
not included in divisional EBIT (3)
Corporate costs including head office costs,
foreign exchange gains and loss and losses on disposal of assets
Borrowing costs
Net tax expense
Profit
(10,177)
(10,125)
(7,531)
(3,101)
7,093
Total assets 161,592 102,599
Acquisitions of property, plant
and equipment, investment
properties and intangible assets 83,272 24,679
15,535
1,268
29,816
12,983
323,793
18
—
277
1,512
109,758
(1) Excludes pre-opening expenses of $2,438,000.
(2) Excludes amortisation of Goodlife intangible assets of $7,739,000.
(3) Excludes pre-opening expenses of $2,438,000 and amortisation of Goodlife intangible assets of $7,739,000.
116 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
38 Segment information (continued)
Business segment 2012
ALL Group
Family
Health entertainment
clubs
centres
$’000
$’000
Theme
parks
$’000
Marinas
$’000
Bowling
centres
$’000
Other
$’000
Total
$’000
Revenue from operating activities 102,577 55,236 93,707 23,672
114,242
640
390,074
Divisional EBITDA before rent to Trust (1) 40,224 12,312
Divisional EBITDA after rent to Trust (1) 12,524
12,312
Depreciation and amortisation (2) (3,508)
(4,171)
30,485
2,604
(195)
13,256
973
—
36,717
5,580
(327)
177
177
(125)
133,171
34,170
(8,326)
Divisional EBIT (3) 9,016 8,141
2,409
973
5,253
52
25,844
Pre-opening expenses and Goodlife intangible asset amortisation
not included in divisional EBIT
Corporate expenses including head office costs,
foreign exchange gains and loss and losses on disposal of assets
Borrowing costs
Net tax expense
Profit
(9,372)
(3,344)
(7,501)
(2,383)
3,244
Total assets 88,270
Acquisitions of property, plant
and equipment, investment
properties and intangible assets 9,922 10,999
69,143
14,749
1,590
26,460
20,947
221,159
—
—
475
1,238
22,634
(1) Excludes pre-opening expenses of $1,064,000.
(2) Excludes amortisation of Goodlife intangible assets of $3,180,000.
(3) Excludes pre-opening expenses of $1,064,000 and amortisation of Goodlife intangible assets of $3,180,000.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
117
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
39 Capital and financial risk management
a) Capital risk management
The Group’s objectives when managing capital is to
optimise stapled security holder value through the mix of
available capital sources whilst complying with statutory
and constitutional capital and distribution requirements,
maintaining gearing, interest cover and debt serviceability
ratios within approved limits and continuing to operate as
a going concern.
The Group assesses its capital management approach as a
key part of the Group’s overall strategy and it is continuously
reviewed by management and the Board.
The Group is able to alter its capital mix by issuing new
stapled securities, activating the DRP, electing to have the
DRP underwritten, adjusting the amount of distributions
paid, activating a stapled security buy-back program or
selling assets to reduce borrowings.
The Group has a target gearing ratio of 30% to 35% of debt
to debt plus equity. At 30 June 2013, gearing was 32.0%
(2012: 32.3%) compared to Group’s banking covenant of 40%
and the Group has complied with the financial covenants of
its borrowing facilities in the current and previous financial
years.
Protection of the Group’s equity in foreign denominated
assets was achieved through borrowing in the local
functional currency to provide a natural hedge
supplemented by the use of foreign exchange forward
contracts to provide additional hedge protection. The Group
has a target equity hedge of 50% to 100% of the asset value
by foreign currency.
The Trust also protects its equity in assets by taking out
insurance with creditworthy insurers.
b) Financial risk management
The Group’s principal financial instruments comprise
cash, receivables, payables, interest bearing liabilities and
derivative financial instruments.
The Group’s activities expose it to a variety of financial
risks: market risk (including currency risk and interest rate
risk), liquidity risk and credit risk.
The Group manages its exposure to these financial risks in
accordance with the Group’s Financial Risk Management
(FRM) policy as approved by the Board.
The FRM policy sets out the Group’s approach to managing
financial risks, the policies and controls utilised to minimise
the potential impact of these risks on its performance
and the roles and responsibilities of those involved in the
management of these financial risks.
The Group uses various measures to manage exposures
to these types of risks. The main methods include foreign
exchange and interest rate sensitivity analysis, ageing analysis
and counterparty credit assessment and the use of future
rolling cash flow forecasts.
The Group uses derivative financial instruments such as
forward foreign exchange contracts, interest rate swaps and
cross currency swaps to manage its financial risk as permitted
under the FRM policy. Such instruments are used exclusively
for hedging purposes i.e. not for trading or speculative
purposes.
c) Market risk
Foreign exchange risk
Foreign exchange risk is the risk that changes in foreign
exchange rates will change the Australian dollar value of the
Group’s net assets or its Australian dollar earnings.
Foreign exchange risk arises when future commercial
transactions and recognised assets and liabilities are
denominated in a currency that is not the Group’s functional
currency.
The Group is exposed to foreign exchange risk through
investing in overseas businesses and deriving operating
income from those businesses. The Group manages this
exposure on a consolidated basis.
The majority of derivatives utilised to manage this
consolidated exposure are held by the Trust. Therefore,
the information provided below is only meaningful for the
Group.
Foreign investment
The Group aims to minimise the impact of fluctuations in
foreign currency exchange rates on its net investments
overseas by funding such investments by borrowing in the
local overseas currency or by taking out forward foreign
exchange contracts. The Group’s policy is to hedge 50% to
100% of overseas investments in this way.
118 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only Notes to the Financial Statements
For the year ended 30 June 2013
39 Capital and financial risk management (continued)
c) Market risk (continued)
Foreign exchange risk (continued)
Foreign investment (continued)
The table below sets out the Group’s overseas investments, by currency, and how, through the use of forward foreign exchange
contracts, this exposure is reduced. All figures in the table below are shown in Australian dollars with foreign currency balances
translated at the year-end spot rate:
Consolidated Group
Australian dollars
New Zealand dollars
US dollars
2013
$’000
2012
$’000
2013
$’000
2012
$’000
2013
$’000
2012
$’000
Assets
Cash and cash equivalents
Receivables and other current assets
Derivative financial instruments
Properties held for sale
Investment properties
Property, plant and equipment
Intangible assets
Other non-current assets
8,983
21,926
575
4,210
95,232
408,534
150,186
1,814
8,447
20,714
270
—
94,915
375,266
98,202
4,864
529
432
—
—
—
2,075
3,279
24
562
337
—
—
—
1,600
3,028
33
3,441
3,873
—
—
—
51,306
43,323
—
2,685
3,387
—
—
—
25,543
38,607
341
Total assets
691,460
602,678
6,339
5,560
101,943
70,563
Liabilities
Payables and other current liabilities
Derivative financial instruments
Interest bearing liabilities
Other non-current liabilities
58,305
1,891
152,081
2,011
57,568
3,451
154,399
4,182
544
—
—
—
518
—
—
—
12,836
—
75,785
8,999
8,172
—
39,055
4,804
Total liabilities
Net assets
214,288
219,600
544
518
97,620
52,031
477,172
383,078
5,795
5,042
4,323
18,532
Notional value of derivatives to
hedge foreign exchange exposure
Net exposure to foreign
exchange movements
—
—
— — 5,752 4,970
477,172
383,078
5,795
5,042
10,075
23,502
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
119
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
39 Capital and financial risk management (continued)
c) Market risk (continued)
Foreign exchange risk (continued)
Foreign investment (continued)
ALL Group
Australian dollars
New Zealand dollars
US dollars
2013
$’000
2012
$’000
2013
$’000
2012
$’000
2013
$’000
2012
$’000
Assets
Cash and cash equivalents
8,902
Receivables and other current assets 21,016
4,210
Properties held for sale
Property, plant and equipment
32,144
150,186
Intangible assets
1,814
Other non-current assets
5,953
24,415
—
17,058
98,103
4,864
281
137
—
—
3,279
24
330
116
—
—
3,028
33
3,298
3,873
—
51,306
43,323
—
2,271
3,387
—
25,543
38,607
341
Total assets
218,272
150,393
3,721
3,507
101,800
70,149
Liabilities
Payables and other current liabilities 49,157
113,411
Interest bearing liabilities
2,011
Other non-current liabilities
46,260
83,562
4,182
61
—
—
297
—
—
12,833
55,173
8,999
8,108
41,211
4,804
Total liabilities
Net assets
Net exposure to foreign
exchange movements
164,579
134,004
61
297
77,005
54,123
53,693
16,389
3,660
3,210
24,795
16,026
53,693
16,389
3,660
3,210
24,795
16,026
The table below demonstrates the sensitivity to reasonably possible changes in foreign exchange rates, with all other variables
held constant. A negative amount in the table reflects a potential net reduction in the profit, core earnings or equity, while a
positive amount reflects a potential net increase.
Consolidated Group
AUD:NZD – increase 10%
AUD:NZD – decrease 10%
AUD:USD – increase 10%
AUD:USD – decrease 10%
ALL Group
AUD:NZD – increase 10%
AUD:NZD – decrease 10%
AUD:USD – increase 10%
AUD:USD – decrease 10%
Profit movement
Core earnings movement
Total equity movement
2013
$’000
(527)
644
(949)
1,160
2012
$’000
(458)
560
(2,136)
2,611
2013
$’000
—
—
—
—
2012
$’000
—
—
—
—
2013
$’000
(527)
644
(949)
1,160
2012
$’000
(458)
560
(2,136)
2,611
Profit movement
Total equity movement
2013
$’000
(333)
407
(2,254)
2,755
2012
$’000
(292)
357
(1,457)
1,781
2013
$’000
(333)
407
(2,254)
2,755
2012
$’000
(292)
357
(1,457)
1,781
120 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
39 Capital and financial risk management (continued)
c) Market risk (continued)
Foreign exchange risk (continued)
Foreign income
Through investing in overseas assets, the Group earns foreign denominated income. Net operating income derived is naturally
offset by local currency denominated expenses including interest and tax.
From time to time, the Group uses forward foreign exchange contracts to convert this net foreign denominated currency
exposure back to Australian dollars at pre-determined rates out into the future. At reporting date, the Group has no hedging
in place over USD or NZD income.
Interest rate risk
Interest rate risk is the risk that changes in market interest rates will impact the earnings of the Group.
The Group is exposed to interest rate risk predominantly through borrowings. The Group manages this exposure on a
consolidated basis. The Group applies benchmark hedging bands across its differing interest rate exposures and utilises interest
rate swaps, to exchange floating interest rates to fixed interest rates, to manage its exposure between these bands. Compliance
with the policy is reviewed regularly by management and is reported to the Board each meeting.
The Group has exposures to interest rate risk on its monetary assets and liabilities, mitigated by the use of interest rate swaps,
as shown in the table below. The table also demonstrates the sensitivity to reasonably possible changes in interest rates, with
all other variables held constant. A negative amount in the table reflects a potential net reduction in the profit, core earnings or
equity, while a positive amount reflects a potential net increase.
Consolidated Group
Fixed rates
Interest bearing liabilities
Floating rates
Cash and cash equivalents
Interest bearing liabilities
Interest rate swaps
Net interest rate exposure
Refer to Note 14 for further details on the interest rate swaps.
ALL Group
Fixed rates
Interest bearing liabilities
Floating rates
Cash and cash equivalents
Interest bearing liabilities
Australian interest
US interest
2013
$’000
(299)
(299)
2012
$’000
(516)
(516)
2013
$’000
—
—
2012
$’000
—
—
9,512
(152,995)
9,008
(154,675)
3,441
2,685
(76,258) (39,055)
(143,483)
(145,667)
(72,817) (36,370)
120,000
80,000
—
—
(23,483)
(65,667)
(72,817) (36,370)
Australian interest
US interest
2013
$’000
(299)
(299)
2012
$’000
(516)
(516)
2013
$’000
—
—
2012
$’000
—
—
9,183
(113,112)
6,283
(83,046)
3,298
2,271
(55,646) (41,211)
(103,929)
(76,763)
(52,348) (38,940)
Net interest rate exposure
(103,929)
(76,763)
(52,348) (38,940)
Ardent Leisure Group Annual Report 2013
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121
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
39 Capital and financial risk management (continued)
c) Market risk (continued)
Interest rate risk (continued)
Sensitivity
Consolidated Group
1% increase in USD rates
1% decrease in USD rates
1% increase in AUD rates
1% decrease in AUD rates
ALL Group
1% increase in USD rates
1% decrease in USD rates
1% increase in AUD rates
1% decrease in AUD rates
Profit movement
Core earnings movement
Total equity movement
2013
$’000
(475)
475
(223)
223
2012
$’000
(140)
140
(652)
652
2013
$’000
(475)
475
(235)
235
2012
$’000
(140)
140
(657)
657
2013
$’000
(475)
475
1,179
(1,179)
2012
$’000
(140)
140
854
(854)
Profit movement
Total equity movement
2013
$’000
(522)
522
(1,039)
1,039
2012
$’000
(254)
254
(768)
768
2013
$’000
(522)
522
(1,039)
1,039
2012
$’000
(254)
254
(768)
768
At reporting date, the Group has fixed 52.4% (2012: 41.5%) of its net floating interest exposure.
d) Liquidity risk
Liquidity risk arises if the Group has insufficient liquid assets to meet its short term obligations. Liquidity risk is managed
by maintaining sufficient cash balances and adequate committed credit facilities. Prudent liquidity management implies
maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed
credit facilities and the ability to close out market positions. The instruments entered into by the Group were selected to ensure
sufficient funds would be available to meet the ongoing cash requirements of the Group.
The following tables provide the contractual maturity of the Group’s and ALL Group’s fixed and floating rate financial liabilities
and derivatives as at 30 June 2013. The amounts presented represent the future contractual undiscounted principal and
interest cash flows and therefore do not equate to the value shown in the Balance Sheet. Repayments which are subject to
notice are treated as if notice were given immediately.
Consolidated Group
2013
Book value
$’000
Less than
1 year
$’000
1 to 2 years
$’000
2 to 3 years
$’000
3 to 4 years
$’000
4 to 5 years Over 5 years
$’000
$’000
Total
$’000
Payables
Finance leases
Term debt
Interest rates swaps
designated as hedges
of the term debt
Foreign exchange swaps
Total undiscounted
financial liabilities
63,977
299
227,567
63,977
238
8,329
—
61
8,329
—
62
8,329
—
—
178,841
—
—
52,995
1,891
575
995
5,187
336
—
8
—
—
—
—
—
—
—
—
—
—
63,977
299
256,823
1,339
5,187
294,309
78,762
8,726
8,337
178,841
52,995
—
327,625
122 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
39 Capital and financial risk management (continued)
d) Liquidity risk (continued)
Consolidated Group
2012
Book value
$’000
Less than
1 year
$’000
1 to 2 years
$’000
2 to 3 years
$’000
3 to 4 years
$’000
4 to 5 years Over 5 years
$’000
$’000
Total
$’000
Payables
Finance leases
Term debt
Interest rates swaps
designated as hedges
of the term debt
Foreign exchange swaps
Total undiscounted
financial liabilities
59,800
516
192,938
59,800
436
8,875
—
249
184,114
—
62
14,256
—
—
—
3,204
517
911
7,035
511
—
183
—
—
—
256,975
77,057
184,874
14,501
—
—
—
—
—
—
—
—
—
—
—
—
59,800
747
207,245
1,605
7,035
—
276,432
ALL Group
2013
Book value
$’000
Less than
1 year
$’000
1 to 2 years
$’000
2 to 3 years
$’000
3 to 4 years
$’000
4 to 5 years Over 5 years
$’000
$’000
Total
$’000
54,343
Payables
299
Finance leases
Term debt
54,686
Loan from the Trust 113,599
54,343
238
865
6,095
—
61
865
6,095
—
—
865
6,095
—
—
55,159
6,095
—
—
—
6,095
—
—
—
115,135
54,343
299
57,754
145,610
Total undiscounted
financial liabilities
222,927
61,541
7,021
6,960
61,254
6,095
115,135
258,006
ALL Group
2012
Book value
$’000
Less than
1 year
$’000
1 to 2 years
$’000
2 to 3 years
$’000
3 to 4 years
$’000
4 to 5 years Over 5 years
$’000
$’000
Total
$’000
Payables
Finance leases
Loan from the Trust
48,234
516
124,257
48,234
436
6,774
—
249
125,408
—
62
—
Total undiscounted
financial liabilities
173,007
55,444
125,657
62
—
—
—
—
—
—
—
—
—
—
—
48,234
747
132,182
—
181,163
e) Credit risk
Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument and cause the Group
to make a financial loss. The Group has exposure to credit risk on all of its financial assets included in the Group’s Balance Sheet.
The Group manages this risk by performing credit reviews of prospective debtors, obtaining collateral where appropriate and
performing detailed reviews on any debtor arrears.
The Group is exposed to credit risk on financial instruments and derivatives. For credit purposes, there is only a credit risk where
the contracting entity is liable to pay the Group in the event of a close out. The Group has policies that limit the amount of
credit exposure to any financial institution. Derivative counterparties and cash transactions are limited to investment grade
counterparties in accordance with the Group’s FRM policy. The Group monitors the public credit rating of its counterparties.
The Group has policies to review the aggregate exposures of debtors and tenancies across its portfolio. The Group has no
significant concentrations of credit risk on its trade receivables. The Group holds collateral in the form of security deposits or
bank guarantees, over some receivables.
Ardent Leisure Group Annual Report 2013
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123
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
39 Capital and financial risk management (continued)
e) Credit risk (continued)
The table below details the concentration of credit exposure of the Group’s assets to significant geographical locations:
Cash and cash equivalents
Receivables – Australasia
Receivables – US
Derivative financial instruments
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
12,953 11,693
5,990 5,083
596
270
1,059
575
12,481
8,231
1,059
—
8,554
10,924
596
—
20,577 17,642
21,771
20,074
All cash, derivative financial instruments and interest bearing receivables are neither past due nor impaired.
The table below shows the ageing analysis of those receivables which are past due or impaired:
Consolidated Group 2013
Receivables – Australasia
Receivables – US
Consolidated Group 2012
Receivables – Australasia
Receivables – US
ALL Group 2013
Receivables – Australasia
Receivables – US
ALL Group 2012
Receivables – Australasia
Receivables – US
Past due but not impaired
Impaired
Total
Less than 30 days
$’000
31 to 60 days
$’000
61 to 90 days
$’000
More than
90 days
$’000
$’000
$’000
1,403
—
613
—
169
—
1,403
613
169
126
—
126
706
—
3,017
—
706
3,017
487
1
409
—
175
—
183
—
862
—
2,116
1
488
409
175
183
862
2,117
1,403
—
613
—
169
—
1,403
613
169
126
—
126
706
—
3,017
—
706
3,017
487
1
409
—
175
—
183
—
862
—
2,116
1
488
409
175
183
862
2,117
Based on a review of receivables by management, a provision of $609,000 (2012: $774,000) has been made against receivables
with a gross balance of $706,000 (2012: $862,000).
The Group holds collateral against the impaired receivables in the form of bank guarantees and security deposits; however,
these are not material.
There are no significant financial assets that have had renegotiated terms that would otherwise have been past due or impaired.
124 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
39 Capital and financial risk management (continued)
f) Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes by level using the following fair value measurement hierarchy:
1) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
2) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices) (level 2); and
3) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The following tables present the Group’s assets and liabilities measured and recognised at fair value at 30 June 2013:
Consolidated Group 2013
Assets
Derivative financial instruments
Total assets
Liabilities
Derivative financial instruments
Total liabilities
Consolidated Group 2012
Assets
Derivative financial instruments
Total assets
Liabilities
Derivative financial instruments
Total liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
—
—
—
—
Level 1
$’000
—
—
—
—
575
575
1,891
1,891
Level 2
$’000
270
270
3,451
3,451
—
—
—
—
Level 3
$’000
—
—
—
—
Total
$’000
575
575
1,891
1,891
Total
$’000
270
270
3,451
3,451
All derivative financial instruments were valued based on valuations received from the counterparty at 30 June 2013. The
ALL Group has no financial assets or liabilities held at fair value. For financial instruments not held at fair value, the carrying
value of these financial instruments approximates to their fair value.
40 Contingent liabilities
Unless otherwise disclosed in the financial statements, there are no material contingent liabilities.
Ardent Leisure Group Annual Report 2013
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125
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
41 Capital and lease commitments
a) Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Property, plant and equipment
Payable:
Within one year
b) Lease commitments
Within one year
Later than one year but not later than five years
Later than five years
Representing:
Cancellable operating leases
Non-cancellable operating leases
Finance leases
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
1,920
1,712 1,920 1,712
1,920
1,712 1,920 1,712
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
63,044
230,150
188,940
46,011 23,160
186,412 98,077
141,588 108,617
9,630
40,667
89,923
482,134 374,011 229,854 140,220
1,473
480,350
311
362 1,473 362
373,089 228,070 139,298
560
560 311
482,134 374,011 229,854 140,220
126 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
41 Capital and lease commitments (continued)
b) Lease commitments (continued)
Operating leases
The majority of non-cancellable operating leases in the Group relate to property leases.
Non-cancellable operating leases in the ALL Group include base rentals payable to the Trust in accordance with the leases
for Dreamworld, d’Albora marinas, bowling centre and health club properties. Further amounts are payable in respect of
these properties; however the additional rental calculations are unable to be determined at reporting date as a result of the
calculations being based upon future profits of the businesses.
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Finance leases
Commitments in relation to finance leases are payable as follows:
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
62,300
229,110
188,940
45,633 22,416
185,868 97,037
9,253
40,122
141,588 108,617 89,923
480,350 373,089 228,070
139,298
Within one year
Later than one year but not later than five years
249
62
249 249
249
311 62 311
Minimum lease payments
Less: Future finance charges
Total lease liabilities
Representing lease liabilities:
Current
Non-current
311 560 311 560
(44)
(44) (12)
(12)
299
516 299 516
238
61
229 238
229
287 61 287
299
516 299 516
The Group leases various plant and equipment with a carrying value of $582,000 (2012: $673,000) under finance leases
which expire within one to five years. The weighted average interest rate implicit in the leases is 5.41% per annum (2012:
5.41% per annum).
Ardent Leisure Group Annual Report 2013
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127
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
42 Deed of cross guarantee
In 2006, ALL, Bowling Centres Australia Pty Limited, Bowl Australia Holdings Pty Limited, Tidebelt Pty Limited and Bowling
Centres Australia Catering Services Pty Limited entered into a deed of cross guarantee under which each company guarantees
the debts of the others. In 2010, Ardent Leisure Health Clubs 1 Pty Limited, Ardent Leisure Health Clubs 2 Pty Limited, Goodlife
Health Clubs Holdings Pty Limited, Goodlife Operations Pty Limited, Ardent Boat Share Pty Limited and Ardent Boat Share
Finance Limited executed an Assumption Deed and became parties to the deed of cross guarantee under which each company
guarantees the debts of the others. On 9 October 2012, Fenix Holdings Pty Limited and its controlled entities executed as
Assumption Deed and became parties to the deed of cross guarantee under which the entities guarantee the debts of the
others.
On 1 July 2012, a Revocation Deed was executed whereby Ardent Boat Share Pty Limited, Ardent Boat Share Finance Limited,
Bowl Australia Holdings Pty Limited, Bowling Centres Australia Catering Services Pty Limited and Tidebelt Pty Limited were
released from the deed of cross guarantee.
By entering into the deeds, Bowling Centres Australia Pty Limited, Goodlife Operations Pty Limited, Ardent Leisure Health
Clubs 1 Pty Limited and Fenix Holdings Pty Limited have been relieved from the requirement to prepare a financial report and
Directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission.
a) Consolidated Income Statement
ALL, Bowling Centres Australia Pty Limited, Ardent Leisure Health Clubs 1 Pty Limited, Ardent Leisure Health Clubs 2 Pty
Limited, Goodlife Health Clubs Holdings Pty Limited and Goodlife Operations Pty Limited represent a ‘Closed Group’ for the
purposes of the Class Order (2012: Closed Group also included Ardent Boat Share Pty Limited and Ardent Boat Share Finance
Limited).
Tidebelt Pty Limited, BowlAustralia Holdings Pty Limited and Bowling Centres Australia Catering Services Pty Limited are also
wholly-owned subsidiaries of ALL and are party to the deed of cross guarantee and therefore represent the ‘Extended Closed
Group’.
Set out below is a consolidated Income Statement for the year ended 30 June 2013 of the Closed Group:
Revenue from operating activities
2013
$’000
2012
$’000
367,834
329,647
Purchases of finished goods (30,451) (29,302)
Salary and employee benefits (143,279) (129,993)
Borrowing costs (10,561) (8,637)
Property expenses (106,510) (95,157)
Depreciation and amortisation (13,563) (7,340)
Advertising and promotions (15,279) (13,958)
Repairs and maintenance (16,859) (13,296)
Pre-opening expenses (1,369) (528)
Other expenses (29,709) (30,432)
Profit before tax benefit
Income tax benefit
Profit
254
1,004
1,575
1,174
1,829
2,178
b) Consolidated Statement of Comprehensive Income Statement
Set out below is a consolidated Statement of Comprehensive Income for the year ended 30 June 2013 of the Closed Group:
Profit
Other comprehensive income for the period
Total comprehensive income for the period
2013
$’000
1,829
—
1,829
2012
$’000
2,178
—
2,178
128 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
42 Deed of cross guarantee (continued)
c) Consolidated Balance Sheet
Set out below is a consolidated Balance Sheet as at 30 June 2012 of the Closed Group:
Current assets
Cash and cash equivalents
Receivables
Inventories
Current tax receivables
Other
Total current assets
Non-current assets
Property, plant and equipment
Livestock
Intangible assets
Deferred tax assets
Investment in controlled entities
total non-current assets
Total assets
Current liabilities
Payables
Interest bearing liabilities
Provisions
Other
Total current liabilities
Non-current liabilities
Payables
Interest bearing liabilities
Provisions
Deferred tax liabilities
total non-current liabilities
total liabilities
Net assets
2013
$’000
8,901
7,582
8,148
1,001
4,671
2012
$’000
5,699
9,549
7,448
1,730
5,928
30,303
30,354
36,382
305
131,303
5,772
49,730
16,774
353
79,220
4,509
49,730
223,492
150,586
253,795
180,940
42,306
238
2,990
1,516
41,021
229
2,735
1,706
47,050
45,691
190,513 124,972
61 —
1,915
2,392
2,011
4,119
196,704 129,279
243,754 174,970
10,041
5,970
Equity
Contributed equity
11,960
Reserves (2,310) (2,310)
Accumulated losses (1,851) (3,680)
14,202
Total equity
10,041
5,970
Ardent Leisure Group Annual Report 2013
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129
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
42 Deed of cross guarantee (continued)
d) Consolidated Statement of Changes in Equity
Set out below is a consolidated Statement of Changes in Equity as at 30 June 2013 of the Closed Group:
Total equity at 30 June 2011
Total comprehensive income
Contributions of equity, net of issue costs
Total equity at 30 June 2012
Total comprehensive income
Contributions of equity, net of issue costs
Share
Capital
$’000
Reserves
$’000
Accumulated
losses
$’000
Total
$’000
10,567
(2,310)
—
—
1,393 —
11,960
—
(2,310)
—
2,242 —
(5,858)
2,178
—
2,399
2,178
1,393
(3,680)
1,829
—
5,970
1,829
2,242
Total equity at 30 June 2013
14,202
(2,310)
(1,851)
10,041
43 Parent entity financial information
a) Summary financial information
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Equity
Contributed equity
Reserves
Accumulated losses
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
14,468
652,062
18,538
192,725
11,888
613,227
25,081
217,695
10,726
181,709
16,383
189,995
14,891
146,057
20,097
144,492
487,213
(3,371)
(24,505)
409,940
(4,900)
(9,833)
14,202
11,960
(2,310) (2,310)
(20,178) (8,085)
459,337 395,207
(8,286)
1,565
Profit/(loss)
28,960
1,087
(12,093)
(2,338)
Total comprehensive income
30,489
(704)
(12,093)
(2,338)
b) Guarantees
In June 2013, Ardent Leisure Trust and Ardent Leisure Limited entered into an agreement to guarantee the obligations of
Ardent Leisure US Holding Inc. (a wholly-owned subsidiary of Ardent Leisure Limited) under the terms of the Group’s extended
syndicated facility arrangements as disclosed in Note 24.
Excluding the above and the deed of cross guarantee (per Note 42), there are no other material guarantees entered into by
Ardent Leisure Limited and Ardent Leisure Trust in relation to the debts of their subsidiaries.
c) Contingent Liabilities
Ardent Leisure Trust and Ardent Leisure Limited did not have any contingent liabilities at 30 June 2013 or 30 June 2012.
130 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2013
43 Parent entity financial information (continued)
d) Contractual commitments for the acquisition of property, property and equipment
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Property, plant and equipment
Payable:
Within one year
Consolidated
Group
2013
$’000
Consolidated
Group
2012
$’000
ALL Group
2013
$’000
ALL Group
2012
$’000
—
—
—
—
1,920
1,920
1,173
1,173
Commitments with respect to the above property, plant and equipment have been incurred by ALL on behalf of the Trust for
the Australian and New Zealand geographic segments totalling $1,920,000 (2012: $1,173,000). Any commitments relating
to the Australian and New Zealand geographic segments will therefore be subsequently reimbursed by the Trust the month
following payment.
44 Events occurring after reporting date
Subsequent to year end, a distribution of 5.4 cents per stapled security has been declared by the Board of Directors. The total
distribution amount of $21.5 million will be paid on or before 30 August 2013 in respect of the half year ended 30 June 2013.
Since the end of the financial year, the Directors of the Manager and ALL are not aware of any other matter or circumstance
not otherwise dealt with in financial report or the Directors’ report that has significantly affected or may significantly affect the
operations of the Group, the results of those operations or the state of affairs of the Group in financial years subsequent to the
year ended 30 June 2013.
Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
131
For personal use only
Directors’ declaration to stapled
security holders.
In the opinion of the Directors of Ardent Leisure Management Limited and Ardent Leisure Limited:
a) the financial statements and notes of Ardent Leisure Trust and its controlled entities, including Ardent Leisure Limited and
its controlled entities (Ardent Leisure Group) and Ardent Leisure Limited and its controlled entities (ALL Group) set out on
pages 50 to 131 are in accordance with the Corporations Act 2001, including:
i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
ii) giving a true and fair view of the Ardent Leisure Group’s and ALL Group’s financial position as at 30 June 2013 and of
their performance, as represented by the results of their operations, their changes in equity and their cash flows, for the
financial year ended on that date;
b) there are reasonable grounds to believe that both the Ardent Leisure Group and ALL Group will be able to pay their debts as
and when they become due and payable;
c) Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by
International Accounting Standards Board; and
d) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group
identified in Note 42 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of
the deed of cross guarantee as described in Note 42.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Boards of Directors.
Neil Balnaves AO
Director
Sydney
21 August 2013
132 Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
For personal use only Ardent Leisure Group Annual Report 2013
Ardent Leisure Group Annual Report 2013
133
For personal use only Independent Auditor’s Report
to the staple security holders of
Ardent Leisure Group and
Ardent Leisure Limited Group
Report on the financial report
We have audited the accompanying financial report which comprises:
• The balance sheet as at 30 June 2013, and the income statement, the statement of comprehensive income, statement
of changes in equity and statement of cash flows for the year ended, a summary of significant accounting policies,
other explanatory notes and the directos’ declaration for Ardent Leisure Group (the consolidated stapled entity). The
consolidated stapled entity, as described in Note 1 to the financial report, comprises the Ardent Leisure Trust (the trust)
and the entities it controlled at the year’s end or from time to time during the financial year.
• The balance sheet as at 30 June 2013, the income statement, and the statement of comprehensive income, statement
of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting
policies, other explanatory notes and the directors’ declaration for Ardent Leisure Limited Group (the ALL Group). The
ALL Group, comprises Ardent Leisure Limited (the company or ALL) and the entities it controlled at the year’s end or
from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of Ardent Leisure Limited and the directors of Ardent Leisure Management Limited, the responsible entity of the Ardent
Leisure Trust (collectively referred to as “the directors”) 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 2001and for such internal control as directors
determine is necessary to enable the preparation of the finacial report that is free from material misstatement, whether due to fraud
or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with
Australian Auditing Standards. Those Auditing Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation and fair presentation of the financial report 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 entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
PricewaterhouseCoopers, ABN 52 780 433 757
Riverside Centre, 123 Eagle Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under the Professional Standards Legislation
134
For personal use only
Independent Auditor’s Report
to the staple security holders of
Ardent Leisure Group and
Ardent Leisure Limited Group
Auditor’s opinion
In our opinion:
a) the financial report of Ardent Leisure Group and Ardent Leisure Limited Group is in accordance with the Corporations Act
2001, including:
i) giving a true and fair view of the consolidated stapled entity’s and consolidated entity’s financial position as at 30 June
2013 and of their performance for the year ended on that date; and
ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the remuneration report included in pages 10 to 27 of the directors’ report for the year ended 30 June 2013.
The directors 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 Accounting Standards.
Auditor’s opinion
In our opinion, the remuneration report of Ardent Leisure Group and Ardent Leisure Limited Group for the year ended 30 June
2013, complies with section 300A of the Corporations Act 2001.
Matters relating to the electronic presentation of the audited financial report
This auditor’s report relates to the financial report and remuneration report of Ardent Leisure Group and Ardent Leisure Limited
Group (the consolidated stapled entity) for the year ended 30 June 2013 included on Ardent Leisure Group and Ardent Leisure
Limited Group’s web site. The directors are responsible for the integrity of Ardent Leisure Group and Ardent Leisure Limited
Group’s web site. We have not been engaged to report on the integrity of this web site. The auditor’s report refers only to the
financial report and remuneration report named above. It does not provide an opinion on any other information which may
have been hyperlinked to/from the financial report or the remuneration report. If users of this report are concerned with the
inherent risks arising from electronic data communications they are advised to refer to the hard copy of the audited financial
report and remuneration report to confirm the information included in the audited financial report and remuneration report
presented on this web site.
PricewaterhouseCoopers
Timothy J Allman
Partner
Liability limited by a scheme approved under the Professional Standards Legislation
Brisbane
21 August 2013
135
For personal use only Investor Analysis
Top 20 Investors as at 30 August 2013
No. of Securities
%
1 National Nominees Limited
2 JP Morgan Nominees Australia Limited
3 HSBC Custody Nominees (Australia) Limited
4 Citicorp Nominees Pty Limited
5 BNP Paribas Noms Pty Ltd
6 Aust Executor Trustees SA Ltd
7 Citicorp Nominees Pty Limited
8 AMP Life Limited
9 JP Morgan Nominees Australia Limited
10 Ragusa Pty Limited
11 Ragusa Pty Limited
12 CS Fourth Nominees Pty Ltd
13 RBC Investor Services Australia Nominees Pty Ltd
14 Balnaves Foundation Pty Ltd
15 HSBC Custody Nominees (Australia) Limited
16 Neweconomy Com Au Nominees Pty Limited
17 Ragusa Pty Ltd
18 BNP Paribas Noms (NZ) Ltd
19 UBS Wealth Management Australia Nominees Pty Ltd
20 Tendword Pty Ltd
Total
Balance of Register
Grand Total
Range Report as at 30 August 2013
Range
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
63,375,073
62,729,600
53,983,205
12,888,860
11,058,090
10,237,055
7,562,898
6,422,380
5,270,648
4,636,660
3,939,754
3,655,551
3,062,219
1,960,019
1,759,850
1,499,697
1,412,675
1,395,453
1,262,918
1,170,000
15.65
15.49
13.33
3.18
2.73
2.53
1.87
1.59
1.30
1.14
0.97
0.90
0.76
0.48
0.43
0.37
0.35
0.35
0.31
0.29
259,282,605
64.02
145,711,815
35.98
404,994,420
100.00
No. of Securities
% No. of Holders
296,596,854
85,919,025
14,141,016
7,664,948
672,577
73.23
21.22
3.49
1.89
0.17
181
3,326
1,870
2,627
1,731
%
1.86
34.17
19.21
26.98
17.78
404,994,420
100.00
9,735
100.00
The total number of investors with an unmarketable parcel of 273 securities as at 30 August 2013 was 774.
Voting Rights
On a poll, each investor has, in relation to resolutions of the Trust, one vote for each dollar of the value of their total units held in
the Trust and in relation to resolutions of the Company, one vote for each share held in the Company.
On‑Market Buy‑back
There is no current on-market buy-back program in place.
Substantial Holder Notices Received as at 30 August 2013
Investor
BT Investment Management Limited
National Australia Bank Limited
Eley Griffiths Group
No. of Securities
30,749,267
25,510,957
25,225,363
%
7.73
6.41
6.34
Stapling Disclosure
The ASX reserves the right (but without limiting its absolute discretion) to remove the Company or the Trust or both from the
official list if any of the shares and the units cease to be “stapled” together or any equity securities are issued by the Company or
Trust which are not stapled to equivalent securities in the other entity.
136
Ardent Leisure Group Annual Report 2013
For personal use only 10 Year Distribution History
Period ended
Distribution
Taxable amount
Tax deferred amount
CGT concession
DRP
issue Period end
unit price
price
History
Cents/unit
Cents/unit
%
Cents/unit
%
Cents/unit
%
$
$
Ardent Leisure Group (1)
31-Dec-04
30-Jun-05
5.20
6.60
Year to 30 Jun 05
11.80 10.40958
88.22
1.39042
11.78
—
—
31-Dec-05
30-Jun-06
7.00
7.50
Year to 30 Jun 06
14.50
9.48186
65.40
5.01814
34.60
—
—
31-Dec-06
30-Jun-07
8.00
9.10
Year to 30 Jun 07
17.10 13.19952
77.19
3.50226
20.48
0.39822
2.33
31-Dec-07
30-Jun-08
9.60
10.00
Year to 30 Jun 08
19.60 16.72845
85.35
2.09711
10.70
0.77444
3.95
31-Dec-08
30-Jun-09
6.50
7.80
Year to 30 Jun 09
14.30
8.19817
57.33
3.74274
26.24
2.34909
16.43
31-Dec-09
30-Jun-10
6.50
4.25
Year to 30 Jun 10
10.75
8.07288
75.00
1.29887
12.18
1.37825
12.82
31-Dec-10
30-Jun-11
6.50
5.00
Year to 30 Jun 11
11.50
7.31867
63.64
4.18133
36.36
—
—
31-Dec-11
30-Jun-12
6.50
5.20
Year to 30 Jun 12
11.70
4.84820
41.44
6.85180
58.56
—
—
31-Dec-12
30-Jun-13
6.60
5.40
1.6894
1.8481
2.3050
2.4021
2.9213
3.1894
3.4168
1.5235
1.74
1.97
2.48
2.50
2.98
3.30
3.49
1.49
0.9727
1.4048
0.90
1.415
1.6826
0.9915
1.705
0.990
0.9872
1.2496
1.015
1.275
1.0073
1.2373
N/A
1.6841
1.02
1.28
1.43
1.72
Year to 30 Jun 13
12.00
3.7555
31.30
8.2445
68.70
—
—
(1) Trust was restructured effective 1 July 2003 to form a stapled entity consisting of Macquarie Leisure Trust and Macquarie Leisure Operations Limited. Further
details of the Group’s distribution history can be found at www.ardentleisure.com.au.
Ardent Leisure Group Annual Report 2013
137
For personal use only
Investor Relations
Information relating to Ardent Leisure can be found at www.ardentleisure.com.au.
The website is a useful source of information about the Group and its business and property
portfolio. The site contains a variety of investor information, including presentations, webcasts,
newsletters, half year updates, annual reports, distribution history and timetable, security price
information and announcements to the ASX.
Investor benefits program
The investor benefits program aims to
provide investors with an opportunity
to experience and enjoy Ardent Leisure
assets. Investors with a minimum of
2,000 stapled securities, receive an
investor benefits card that provides the
following privileges:
Dreamworld/WhiteWater World
50% discount off all full price 1 Day
entry admission tickets plus a 10%
discount on merchandise, food and
beverages for the investor
and up to three companions
skyPoint
50% discount per visit off the full price
admission for the investor plus up to
three companions
skyPoint climb
50% discount on full price climbs for the
investor plus up to three companions
d’Albora Marinas
Free subscription to d’Albora’s
Docklines newsletter
AMf Bowling
Discounted rate of $9.00 per bowling
game and shoe hire for the investor
plus up to three companions
Kingpin Bowling
Discounted rate of $9.00 per bowling
game and shoe hire for the investor
plus up to three companions
M9 Laser skirmish
Discounted rate of $9.00 per laser game
and shoe hire for the investor plus up to
three companions
Goodlife health clubs
No joining fee for the investor plus up
to 20% discount off the All Clubs Saver
membership rate
The investor benefits program does not
have a material impact on the income
of the Group. Note that the investor
benefits offers are subject to change
and the program terms and conditions.
Distribution payments and annual
taxation statement
Distributions are currently payable
twice a year and received by
investors approximately seven to eight
weeks after each half year end. To
view your 2012/2013 annual taxation
statement online, please visit the
Link Investor Service Centre at
www.linkmarketservices.com.au
Distribution Reinvestment Plan (DRP)
The DRP price for the half year ended
30 June 2013 was $1.6841 per stapled
security. Please note that the terms and
conditions of the DRP may vary from
time to time. Details of any changes
(and whether the DRP continues
to operate or is suspended) will be
announced to the ASX.
Contact details
Security registry
To access information on your holding
or to update/change your details,
contact:
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Telephone
1300 720 560 (within Australia)
+61 2 8280 7604 (outside Australia)
Facsimile
+61 2 9287 0303
Website
www.linkmarketservices.com.au
Email
registrars@linkmarketservices.com.au
Manager
All other enquiries relating to your
Ardent Leisure Group investment can
be directed to:
Telephone
1800 ARDENT (within Australia)
+61 2 9409 3670 (outside Australia)
Email
Investor.relations@ardentleisure.com
Investor complaints
If you have a complaint, please contact
us so that we can assist:
Ardent Leisure Group
Level 16, 61 Lavender Street
Milsons Point NSW 2061
Email
investor.relations@ardentleisure.com
Telephone
1800 ARDENT (within Australia)
Facsimile
+61 2 9409 3679
External dispute resolution
In the event that a complaint cannot
be resolved within a reasonable period
of time (usually 45 days) or you are
not satisfied with our response, you
can seek assistance from Financial
Ombudsman Service Limited (FOS).
FOS provides a free and independent
dispute resolution service to our
investors. FOS’s contact details are
below:
Financial Ombudsman Service
Limited
GPO Box 3
Melbourne VIC 3001
Email
info@fos.org.au
Telephone
1300 780 808 (within Australia)
Facsimile
+61 3 9613 6399
138
Ardent Leisure Group Annual Report 2013For personal use only Corporate Directory
Manager
Ardent Leisure Management Limited
ABN 36 079 630 676
AFSL No. 247010
Company
Ardent Leisure Limited
ABN 22 104 529 106
Registered office
Level 16, 61 Lavender Street
Milsons Point NSW 2061
Directors
Neil Balnaves AO (Chairman)
Roger Davis
Anne Keating
Don Morris AO
Greg Shaw
George Venardos
Managing Director and
Chief Executive Officer
Greg Shaw
Chief Financial Officer
Richard Johnson
Company Secretary
Alan Shedden
Telephone
1800 ARDENT (within Australia)
+61 2 9409 3670 (outside Australia)
Facsimile
(02) 9409 3679 (within Australia)
+61 2 9409 3679 (outside Australia)
Email
Investor.relations@ardentleisure.com
Website
www.ardentleisure.com.au
ASX code
AAD
Custodian
The Trust Company Limited
Level 15, 20 Bond Street
Sydney NSW 2000
Auditor of the Group
PricewaterhouseCoopers
Riverside Centre
123 Eagle Street
Brisbane QLD 4000
Security registry
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Level 12
680 George Street
Sydney NSW 2000
Telephone
1300 720 560 (within Australia)
+61 2 8280 7134 (outside Australia)
Email
registrars@linkmarketservices.com.au
Website
www.linkmarketservices.com.au
To arrange changes of address, or
changes in registration of stapled
securities, please contact the registry at
the address or number listed above.
139
Ardent Leisure Group Annual Report 2013For personal use only
Disclaimer
This is the annual report for the Ardent Leisure Group (the Group), a stapled entity comprising
units in the Ardent Leisure Trust ARSN 093 193 438 (Trust) and shares in Ardent Leisure Limited
ABN 22 104 529 106 (Company).
This information has been prepared by Ardent Leisure Management Limited ABN 36 079 638
676 (Manager), a wholly-owned subsidiary of the Company and the responsible entity of the
Trust for general information purposes only, without taking into account any potential investors’
personal objectives, financial situation or needs. Before investing, you should consider your
own objectives, financial situation or needs or you should obtain financial, legal and/or taxation
advice.
Past performance is not a reliable indicator of future performance. Due care and attention have
been exercised in the preparation of forecast information, however, forecasts, by their very
nature, are subject to uncertainty and contingencies, many of which are outside the control
of the Group. Actual results may vary from any forecasts and any variation may be materially
positive or negative.
Investments in the Group are not deposits with or liabilities of the Company, the Manager
or any other Group entity and are subject to investment risk including possible delays in
repayment and loss of income and principal invested. None of the Company, the Manager or
any other Group entity guarantees the performance of the Group or the repayment of capital
from the Group, or any particular rate of return.
© Ardent Leisure Group
For personal use only www.ardentleisure.com
For personal use only