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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
17 September 2014
The Manager
Company Notices Section
ASX Limited
20 Bridge Street
SYDNEY
NSW 2000
Dear Sir/Madam
2014 Annual Report, Corporate Governance Statement and Appendix 4G
In accordance with Listing Rule 4.7, please find attached, for release to the market, the Ardent Leisure
Group Annual Report 2014, the Corporate Governance Statement and Appendix 4G.
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 owns and operates Dreamworld, WhiteWater World, SkyPoint, SkyPoint Climb, d’Albora Marinas, Hypoxi Body
Contouring, Goodlife health clubs, AMF and Kingpin bowling centres across Australia and New Zealand. The Group also operates
Main Event Entertainment, the fastest growing family entertainment chain 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 | Hypoxi
Kingpin Bowling | Main Event Entertainment | SkyPoint | SkyPoint Climb | WhiteWater World
For personal use only
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.
Summary of significant accounting policies
Ardent Leisure Trust and Ardent Leisure Limited formation
Revenue from operating activities
Borrowing costs
Property expenses
Net (loss)/gain from derivative financial instruments
5.
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
22. Deferred tax assets
23.
Payables
24.
Interest bearing liabilities
25.
Provisions
26. Other liabilities
27. Deferred tax liabilities
28. Contributed equity
29.
Security-based payments
Reserves
Retained profits/(accumulated losses)
Business combinations
Cash and cash equivalents
Cash flow information
Net tangible assets
Related party disclosures
Segment information
Fair value measurement
38. Capital and financial risk management
39.
40. Contingent liabilities
41. Capital and lease commitments
42. Deed of Cross Guarantee
43.
Parent entity financial information
44.
Events occurring after reporting date
Directors’ declaration to stapled security holders
Independent auditor’s report to stapled security holders
Investor Analysis
Investor Relations
Corporate Directory
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Ardent Leisure Group | Annual Report 2014 1
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
2014.
The financial report of the Group comprises of Ardent Leisure Trust (Trust) and its controlled entities including Ardent Leisure Limited
(ALL or Company) and its controlled entities. The financial report of the ALL Group 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 are 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 (Chair);
Roger Davis;
Anne Keating;
Don Morris AO;
Greg Shaw;
Deborah Thomas (appointed 1 December 2013); and
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 2014 will be 13.0 cents (2013: 12.0 cents) per stapled security which will be paid
by the Trust. An interim distribution of 6.8 cents (2013: 6.6 cents) per stapled security was paid in February 2014. A final distribution for
the year ended 30 June 2014 of 6.2 cents (2013: 5.4 cents) per stapled security will be paid in August 2014. A provision has not been
recognised in the financial statements at 30 June 2014 as this distribution had not been declared at the reporting date. During the
year, a subsidiary of ALL paid to the Trust $3.9 million (2013: $3.6 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 2014.
4.
Operating and financial review
Overview
The Group’s strategy is to focus primarily on domestic leisure segments with mass market appeal. The Group‘s operations are
diversified through its 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 sites or make “bolt-on”
acquisitions as conditions permit.
During the year, the Group purchased two health clubs at Camberwell and Port Melbourne in Victoria for $3.9 million and $1.4 million
respectively. It also acquired the Australian and New Zealand distribution rights for Hypoxi, a targeted weight loss solutions business
for $3.8 million. The Group also acquired an amusement arcade in central Sydney for $2.9 million. Refer to Note 32 to the financial
statements.
2 Ardent Leisure Group | Annual Report 2014
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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
Pre-opening expenses, straight lining of fixed rent increases, IFRS
depreciation and intangible asset amortisation not included in divisional
EBIT
Valuation gains - investment properties
Valuation gains - property, plant and equipment
Loss on closure of bowling centre
(Loss)/gain on disposal of assets
Gain on acquisition
Gain on sale and leaseback of family entertainment centre
Net (loss)/gain from derivative financial instruments
Interest income
Corporate costs
Business acquisition costs
Borrowing costs
Net tax expense
Profit
Segment
revenues
2014
$’000
164,070
98,121
100,139
23,466
113,889
18
499,703
Segment
revenues
2013
$’000
140,689
72,695
97,086
23,141
115,230
62
448,903
Segment
EBITDA*
2014
$’000
33,990
24,714
32,799
10,396
13,765
(1)
115,663
(27,148)
88,515
(19,020)
-
8,590
(1,579)
(453)
-
379
(613)
211
(12,545)
(277)
(11,330)
(2,876)
49,002
Segment
EBITDA*
2013
$’000
30,329
17,541
30,450
10,687
12,773
(7)
101,773
(22,644)
79,129
(18,497)
90
-
-
313
2,613
-
602
228
(11,192)
(1,507)
(12,288)
(3,874)
35,617
Core earnings (Note 11 to the financial statements)
58,153
50,257
*
Segment earnings before interest, tax, depreciation and amortisation (EBITDA) excludes pre-opening expenses, straight lining of fixed rent increases, IFRS depreciation and
amortisation of 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 $13.4 million, or 37.6%, to $49.0 million, mainly due to the following factors:
Revenue from operating activities increased by $50.8 million, or 11.3%, to $499.7 million and divisional EBITDA increased by $13.9
million, or 13.6%, to $115.7 million. Further commentary on divisional results is set out separately below;
There were $8.6 million of valuation gains on property, plant and equipment in the current year compared to a $0.1 million
valuation gain on investment properties in the prior year; and
Business acquisition costs of $0.3 million were lower than the prior year costs of $1.5 million.
This was partly offset by the following factors:
There was a $2.6 million gain on acquisition of health clubs in the prior year, with no gain in the current year;
There was a net loss of $0.6 million from derivative financial instruments in the current year compared to a net gain of $0.6 million
in the prior year;
There was a loss on closure of a bowling centre in the current year of $1.6 million; and
Corporate costs increased by $1.4 million to $12.5 million.
Ardent Leisure Group | Annual Report 2014 3
For personal use only
Directors’ report to stapled
security holders
4.
Operating and financial review (continued)
Group results (continued)
The above factors also delivered an increase in core earnings of $7.9 million, or 15.7%, to $58.2 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 and unrealised valuation gains and losses on investment property and property, plant and equipment),
straight lining of fixed rent increases, IFRS depreciation, amortisation of intangible assets and one off realised items.
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
2014
$'000
164,070
70,249
42.8%
(36,259)
33,990
2013
$'000
140,689
60,032
42.7%
(29,703)
30,329
Change
%
16.6
17.0
22.1
12.1
The division showed strong performance across its portfolio during the year, with an increase in revenues of 16.6% to $164.1 million
and growth in EBITDA of 12.1% to $34.0 million. This was driven predominantly by acquisitions and developments, accompanied by
improved constant club trading as set out below:
Constant clubs
Clubs closed
New clubs/acquisitions
Corporate and regional office
expenses/sales and marketing
Total
Revenue
2014
$'000
100,291
1
62,840
Revenue
2013
$'000
97,563
615
42,352
938
164,070
159
140,689
Change
%
2.8
(99.8)
48.4
489.9
16.6
EBRITDA
2014
$'000
50,859
(11)
32,150
EBRITDA
2013
$'000
48,341
98
22,052
(12,749)
70,249
(10,459)
60,032
Change
%
5.2
(111.2)
45.8
21.9
17.0
Health club acquisitions at Camberwell and Port Melbourne together with the acquisition of the Hypoxi business have contributed
towards continued growth in the current year. The Fenix and Fitness First health clubs acquired in the prior year have contributed a
full year’s earnings in the current year, being acquired early in the second quarter of the prior financial year.
The impact of acquisitions has been supported by 5.2% EBRITDA growth in constant clubs, with increased penetration in the personal
trainer model ensuring the operating margin was maintained at 42.8% for the year. Increased investment in remodelling clubs to
increase training zones resulted in an immediate trading uplift with low capital investment. Further cost effective investment in club
refits are expected to allow further member growth through increased personal training, small group training and new class offerings.
Increased portfolio scale is now delivering benefit through improved equipment purchasing and better procurement opportunities.
Technology enhancements in the first half will enable fully digital member on-boarding and are expected to positively impact
member yields, experience and engagement. Functional training refits are planned for 17 clubs in FY15.
Hypoxi will continue to be rolled out in selected clubs and this is expected to increase revenue streams with three new in-club Hypoxi
studios planned to complement the existing five in-club studios.
The health club division strategy will be to continue to grow revenue and earnings through new developments, acquisitions and
organic constant club growth.
4 Ardent Leisure Group | Annual Report 2014
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Directors’ report to stapled
security holders
4.
Operating and financial review (continued)
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
2014
US$'000
89,254
33,513
37.5%
(11,112)
22,401
2013
US$'000
73,543
27,213
37.0%
(9,513)
17,700
Change
%
21.4
23.2
16.8
26.6
During the year, total US dollar revenue grew by 21.4%, driving EBITDA growth of 26.6%. This was due to new developments and
growth in constant centre revenue and earnings, further analysis of which is set out below:
Constant centres
New centres
Corporate and regional office
expenses/sales and marketing
Total
Revenue
2014
US$'000
70,148
19,106
-
89,254
Revenue
2013
US$'000
67,149
6,394
-
73,543
Change
%
4.5
198.8
-
21.4
EBRITDA
2014
US$'000
31,828
8,467
EBRITDA
2013
US$'000
29,031
2,759
(6,782)
33,513
(4,577)
27,213
Change
%
9.6
206.9
48.2
23.2
Constant centre revenue grew by 4.5%, driven by increased guest spend from value-based promotions and growth in corporate,
group and social league events. There have also been continued improvements in food and beverage offerings and amusement
games. Continued focus on guest experiences have increased guest satisfaction results.
The newest centres in Katy, Stafford and Tempe continue to deliver revenue and earnings above the portfolio average. Further centres
opened in Alpharetta, Georgia in late June 2014 and Pharr, Texas in early August, and five sites are currently under construction, with
the division on track to achieve the target of 20 centres by the end of FY15. Negotiations are advanced for seven new sites in FY16 and
preliminary investigations are also underway on eight new sites in FY17.
The family entertainment centres division strategy will be to continue to grow revenue and earnings through new centre
developments and constant centre growth.
Theme parks
The performance of the theme parks is summarised as follows:
Total revenue
EBRITDA
Operating margin
Property costs
EBITDA
Attendance
Per capita spend ($)
2014
$'000
100,139
33,867
33.8%
(1,068)
32,799
2013
$'000
97,086
32,211
33.2%
(1,761)
30,450
2,042,164
49.04
1,874,951
51.78
Change
%
3.1
5.1
(39.4)
7.7
8.9
(5.3)
Ardent Leisure Group | Annual Report 2014 5
For personal use only
Directors’ report to stapled
security holders
4.
Operating and financial review (continued)
Theme parks (continued)
Revenue growth of 3.1% in the year was driven by the Theme Park Capital campaign creating strong brand awareness in interstate
and NZ markets and supported the Happiness brand campaign, delivering 7.8% growth in the second half. There is a continued shift
to online and digital sales channels while maintaining focus on trade and industry relationships. Online sales now represent over 30%
of total revenue.
Dreamworld Corroboree furthered appeal in the group, education and international markets and provides a unique point of
difference, which won the Queensland Premier’s award for Reconciliation initiatives. Dreamworld Corroboree is an interactive walk-
through experience celebrating Aboriginal and Torres Strait Islander culture, wildlife and stories. It has one of the largest native wildlife
parks in South East Queensland with hundreds of native animals including the second largest koala population and the only non-
government Queensland Bilby breeding program in the world
SkyPoint continued to perform well, with increased attendances boosted by inclusion in the Unlimited Worldpass offer and growth in
events and climb revenue.
Earnings continued to grow in the current year with a 7.7% lift in EBITDA, resulting from the flow through of increased revenue and
operating margin improvements from efficiencies in energy and water usage.
A new Tailspin thrill ride and Triple Vortex waterslide are expected to be ready for the September school holiday period. The
implementation of a new food and beverage strategy, including three new outlets, in the first half of FY15 is expected to
fundamentally change the theme park product offering and encourage repeat visitation.
The division’s continued investment in digital, social and e-commerce platforms and direct sales strategy will cost effectively target
new business and assist in improving yield.
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.
Marinas
The performance of marinas is summarised as follows:
Total revenue
EBRITDA
Operating margin
Property costs
EBITDA
2014
$'000
23,466
12,944
55.2%
(2,548)
10,396
2013
$'000
23,141
13,034
56.3%
(2,347)
10,687
Change
%
1.4
(0.7)
8.6
(2.7)
Revenue from marinas grew by 1.4%, to $23.5 million, although EBITDA fell slightly by 2.7% to $10.4 million. Marina revenue
principally comprises the following:
Berthing
Land
Fuel and other
Total
2014
$'000
12,812
5,375
5,279
23,466
2013
$'000
12,891
5,459
4,791
23,141
Change
%
(0.6)
(1.5)
10.2
1.4
Revenues increased by $0.3 million, or 1.4%, due to an increase in fuel and other revenue of $0.5 million following favourable weather
conditions and an increase in the commercial customer base. Land revenues are largely in line with prior year, with the land portfolio
close to full occupancy. Berthing occupancies have increased from 83.5% to 84.2% compared to the prior year, with a slight decrease
in average berthing rates.
Increased property costs for land tax and head lease rents offset the revenue increase above, resulting in EBITDA decreasing by $0.3
million, or 2.7%.
The marina division strategy is focused on growing revenue by increasing occupancy at each of its marinas.
6 Ardent Leisure Group | Annual Report 2014
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Directors’ report to stapled
security holders
4.
Operating and financial review (continued)
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
2014
$'000
113,889
38,907
34.2%
(25,142)
13,765
2013
$'000
115,230
36,381
31.6%
(23,608)
12,773
Change
%
(1.2)
6.9
6.5
7.8
The division recorded total revenues of $113.9 million, being a decrease of 1.2% compared to the prior year, with EBITDA growth of
7.8%. The performance of bowling centres is summarised as follows:
Constant centres
Centres closed
New centres /acquisitions
Corporate and regional office
expenses/sales and marketing
Total
Revenue
2014
$'000
107,858
297
5,704
Revenue
2013
$'000
109,944
1,099
3,991
30
113,889
196
115,230
Change
%
(1.9)
(73.0)
42.9
(84.7)
(1.2)
EBRITDA
2014
$'000
50,249
32
2,825
(14,199)
38,907
EBRITDA
2013
$'000
49,798
332
1,575
(15,324)
36,381
Change
%
0.9
(90.4)
79.4
(7.3)
6.9
Constant revenue fell by 1.9% for the year but trends improved in the second half. Effective control over costs resulted in constant
centre EBRITDA growing 0.9%.
A strategy of portfolio segmentation is underway to create stronger and separate identities in three key segments, being bowling,
family entertainment and amusement games. The acquisition of City Amusements, an amusement game arcade in Sydney, supports
this segmentation strategy. This acquisition has had a positive impact on earnings and is expected to deliver strong profits to the
division in FY15. New centres in Darwin and Revesby are scheduled to open in FY15.
The business is undertaking a review of its food and beverage offering with new sites planned to incorporate contemporary offers to
drive social traffic. Additional investment in technologies, including an improved online booking capability, and planned
refurbishments are expected to enhance customer satisfaction.
Strategic focus
Overall, the Group benefits from the diversity of its five core operating divisions. Each of the divisions has a growth strategy for FY15
with a common theme of offering the customer high quality product, a consistently high level of customer service and value.
Future earnings growth will be driven by four key operational strategies:
Customer
People
Volume
Efficiency
Improved understanding of the customer by greater segmentation of customers by type, spending, usage and
frequency patterns – enabling more relevant and more tailored product to meet customers’ individual needs.
Enhanced customer service and customer satisfaction through “Noticeably better people and culture” by providing
our staff with superior training, development, reward and recognition.
Driving increased volume through enhanced value by utilising unused capacity without impacting margin.
Driving greater operational and process efficiencies through leveraging group volume and greater investment in
automated IT solutions for customers and staff.
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.
Ardent Leisure Group | Annual Report 2014 7
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Directors’ report to stapled
security holders
6.
Value of assets
Consolidated
Group
2014
$’000
Consolidated
Group
2013
$’000
ALL Group
2014
$’000
ALL Group
2013
$’000
Value of total assets
Value of net assets
853,007
505,502
799,742
487,290
366,403
84,476
323,793
82,148
The value of the Group’s and the 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:
Consolidated
Group
2014
Consolidated
Group
2013
397,803,987
5,295,345
-
-
1,956,376
334,209,401
5,647,860
39,062,500
17,363,566
1,520,660
405,055,708 397,803,987
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
8.
Information on current Directors
Neil Balnaves AO
Chair
Appointed:
Ardent Leisure Management Limited – 26 October 2001.
Ardent Leisure Limited – 28 April 2003.
Age: 70.
Neil Balnaves was appointed as Chair of the Group in 2001. Neil has worked in the entertainment and media industries for over 50
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 Director of the Sydney Orthopaedic
Research Institute and 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 Board member of the Art Gallery of South Australia, 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 Chair of the Group and a member of both the Remuneration and Nomination Committee and the Audit and Risk
Committee.
Former listed directorships in last three years:
None.
Interest in stapled securities:
2,439,062.
8 Ardent Leisure Group | Annual Report 2014
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Directors’ report to stapled
security holders
8.
Information on current Directors (continued)
Roger Davis
Director
Appointed:
Ardent Leisure Management Limited – 1 September 2009.
Ardent Leisure Limited – 28 May 2008.
Age: 62.
Roger Davis was appointed a Director of the Company in 2008. Roger brings to the Board over 34 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 non-executive directorships at Argo Investments Limited, Aristocrat Leisure 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.
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), The Trust Company Limited, TIO Limited 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 Chair 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 Limited (resigned 30 April 2012); and
The Trust Company Limited (resigned 30 November 2013).
Interest in stapled securities:
150,275.
Anne Keating
Director
Appointed:
Ardent Leisure Management Limited – 30 March 1998.
Ardent Leisure Limited – 28 April 2003.
Age: 60.
Anne Keating was appointed a Director of Ardent Leisure Management Limited in 1998. Anne is currently a Director of REVA Medical
Inc., Goodman Group Limited 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 & 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 the Chair of the Group’s Remuneration and Nomination Committee and is also a member of the Audit and Risk Committee.
Former listed directorships in last three years:
ClearView Wealth Limited (resigned 23 October 2012).
Interest in stapled securities:
74,461.
Ardent Leisure Group | Annual Report 2014 9
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Directors’ report to stapled
security holders
8.
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. He is a former director of Mojo MDA Group Limited, 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, Sport, and Hotel Management at Griffith University in 2012.
In 2013, he received an Honorary Degree of Doctor of the University, and was appointed Chair of the Advisory Board of the Griffith
Institute for Tourism (GIFT).
Don is a member of the Remuneration and Nomination Committee.
Former listed directorships in the last three years:
None.
Interest in stapled securities:
Nil.
Greg Shaw
Managing 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 of both the Company and the Manager in September 2009 following the completion of the
internalisation project. Greg is the Managing Director and Chief Executive Officer 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:
1,545,950.
10 Ardent Leisure Group | Annual Report 2014
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security holders
8.
Information on current Directors (continued)
Deborah Thomas
Director
Appointed:
Ardent Leisure Management Limited – 1 December 2013.
Ardent Leisure Limited – 1 December 2013.
Age: 58.
Deborah Thomas was appointed a Director of both the Company and the Manager in December 2013. One of Australia’s most
successful and respected publishing executives, Deborah brings to the Board over 27 years of experience in the media across print,
television, radio, online, mobile and social. She has a deep understanding of advertising, marketing, PR, promotions and
communications.
Deborah is a former Editor-in-Chief of one of Australia's biggest selling magazines, The Australian Women's Weekly, a position she held
for almost a decade. During the course of her career, she edited and managed some of Australia’s most popular women's magazines
before moving to a corporate role within ACP Magazines, now Bauer Media.
Currently Director of Media, Public Affairs and Brand Development across Bauer Media's portfolio of 60-plus titles and magazine
websites, Deborah is responsible for media, corporate marketing, PR, public affairs, sponsorships and events, plus the development of
new revenue streams. These initiatives include licensed products for major magazine brands in partnership with leading retail chains
across Australia and New Zealand. Deborah is also responsible for the company’s licensed international titles and is a Director on the
Board of Post ACP, the company's joint venture between Bauer Media and the Bangkok Post (Thailand).
Deborah is Deputy Chair of the National Library of Australia, a Director of the Royal Hospital for Women Foundation, and a Director of
Father Chris Riley's Youth Off The Streets. She is a founding patron of the Taronga Conservation Foundation.
In 2012, Deborah was elected to local government as a Councillor for Woollahra.
Deborah is a member of the Remuneration and Nomination Committee.
Former listed directorships in the last three years:
None.
Interest in stapled securities:
6,000.
Ardent Leisure Group | Annual Report 2014 11
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Directors’ report to stapled
security holders
8.
Information on current Directors (continued)
George Venardos
Director
Appointed:
Ardent Leisure Management Limited – 22 September 2009.
Ardent Leisure Limited – 22 September 2009.
Age: 56.
George Venardos was appointed a Director of both the Company and the Manager in September 2009. George is a Chartered
Accountant with more than 32 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 and
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 the Governance Institute of Australia.
George’s other ASX listed non-executive director positions include IOOF Holdings Limited and BluGlass Limited.
George is Chair of the Audit and Risk Committee and is also a member of both the Safety, Sustainability and Environment Committee
and the Remuneration and Nomination Committee.
Former listed directorships in the last three years:
Miclyn Express Offshore Limited (resigned 21 June 2013).
Interest in stapled securities:
112,636.
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
attend
7
7
7
7
7
4
7
Attended
6
6
6
7
7
4
6
Eligible to
attend
4
4
4
2
N/A
N/A
4
Attended
3
3
4
2
N/A
N/A
4
Eligible to
attend
4
4
4
4
N/A
3
4
Attended
4
3
4
4
N/A
3
4
Eligible to
attend
N/A
4
N/A
N/A
4
N/A
4
Attended
N/A
4
N/A
N/A
4
N/A
4
Neil Balnaves AO
Roger Davis
Anne Keating
Don Morris AO
Greg Shaw
Deborah Thomas
George Venardos
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 16 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.
12 Ardent Leisure Group | Annual Report 2014
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security holders
11.
Remuneration report
The Manager and the Directors of ALL present the remuneration report for the Group for the year ended 30 June 2014.
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);
Long Term Incentive Plan (LTIP); and
(f)
(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 August 2013, the Board commissioned an independent remuneration review by Aon Hewitt which benchmarked the remuneration
packages and structure of the Chief Executive Officer and the Chief Financial Officer. Following the presentation of this review, the
Board resolved that the remuneration packages for the Chief Executive Officer and Chief Financial Officer would remain unchanged
for the 2014 financial year.
The Remuneration and Nomination Committee also requested further advice on current market practice and the broad structure of
the Group’s remuneration framework. In February 2014, upon the Committee’s recommendation, the Board adopted a revised
remuneration structure for the Chief Executive Officer and other executive key management personnel (KMP), which took effect from
1 July 2014. The revised remuneration structure aims to provide consistency of reward structure across the Group’s KMP and also re-
weight the long term proportions of remuneration considered “at risk”.
Although these reports did not constitute “remuneration recommendations” under the Corporations Act 2001, as a matter of good
governance they were prepared independently and presented directly to the Remuneration and Nomination Committee. As a result,
the Directors are satisfied that the reports were prepared in a manner free from undue influence by the Group’s KMP.
Throughout this process, the Remuneration and Nomination Committee has sought to maintain the alignment of key executives with
investors through the adoption of a total shareholder return performance measure and the introduction of a second performance
measure for the LTIP based upon an internal compound earnings per security (EPS) growth target. This dual performance measure is
designed to drive sustainable growth and provide meaningful security holdings for executive KMP and thus extend the Group’s long
term approach to executive remuneration.
The components of the remuneration package of the Chief Executive Officer and other executive KMP for the financial year are set out
in the table below:
Position
Chief Executive Officer
Chief Financial Officer
CEO – Bowling centres
CEO – Health clubs
CEO – Main Event
CEO – Theme parks
Name
Greg Shaw
Richard Johnson
Nicole Noye2
Greg Oliver
Charlie Keegan
Craig Davidson3
Annual base
salary
$751,305
$401,305
$360,000
$420,000
US$360,000
$325,000
STI1
Cash
50%
50%
35%
35%
35%
30%
Deferred equity
25%
25%
35%
35%
35%
30%
LTIP1
37.50%
37.50%
15.00%
12.50%
10.00%
12.50%
Total annual
target
remuneration
$1,596,523
$852,773
$666,000
$766,500
US$648,000
$593,125
(1) Target STI and LTIP remuneration components are expressed as percentages of the annual base salary.
(2) Appointed 16 June 2014.
(3) Appointed 2 September 2013.
The Board has approved an increase in target LTIP for Greg Shaw to 40% of base salary to take effect in the 2015 financial year. It
should be noted that the base salary is considered secure and the STI and LTIP figures set out above are considered “at risk” and will
only be paid if performance targets have been achieved.
Ardent Leisure Group | Annual Report 2014 13
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security holders
11.
(b)
Remuneration report (continued)
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 value and 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.
In order to ensure that non-executive director fees remain appropriate, the Board reviewed the fee structure and, in December 2013,
adopted minor changes to take effect from 1 January 2014. The new fee structure, which remains within the constitutional cap of
$940,000 per annum (inclusive of superannuation), is as follows:
Position
Board Chair
Other Non-Executive Director
Audit and Risk Committee
Other Committee
Other Committee
(ii)
Executive pay
- Chair
- Member
- Chair
- Member
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.
Current
annual fee
$205,000
$120,000
$20,000
$15,000
$12,500
$7,500
Previous
annual fee
$175,000
$110,000
$20,000
$15,000
$7,500
$7,500
Base pay
Cash
Equity
STI
Performance incentives
LTIP
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.
The STI is a performance bonus set against pre-
determined financial and personal key performance
indicators. The STI paid is split into a cash bonus
payment and a deferred equity component. The equity
based deferral of a component of the STI awarded is
deferred over a period of one and two years.
Equity incentives that vest in three
tranches over a four year testing
period and aligned to both
targeted compound earnings per
share growth and total
shareholder return.
SECURE
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.
14 Ardent Leisure Group | Annual Report 2014
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11.
(b)
(ii)
Remuneration report (continued)
Remuneration framework and strategy (continued)
Executive pay (continued)
Performance incentives
Performance incentives may be granted under the terms of both the STI and LTIP plans.
The relative proportions of fixed remuneration and performance incentives for executives KMP are set out below:
Position
Chief Executive Officer
Chief Financial Officer
CEO – Bowling centres
CEO – Health clubs
CEO – Main Event
CEO – Theme parks
* Appointed 16 June 2014.
** Appointed 2 September 2013.
Name
Greg Shaw
Richard Johnson
Nicole Noye*
Greg Oliver
Charlie Keegan
Craig Davidson**
Base salary
47.1%
47.1%
54.1%
54.8%
55.6%
54.8%
Cash
23.5%
23.5%
18.9%
19.2%
19.4%
19.2%
STI
Deferred
equity
11.8%
11.8%
18.9%
19.2%
19.4%
19.2%
LTIP
17.6%
17.6%
8.1%
6.8%
5.6%
6.8%
It should be noted that none of the Non-Executive Directors participates in the Group’s performance incentive plans.
STI
Cash
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 based around earnings and revenue targets
representing between 40% and 60% of an executive’s STI entitlement and personal measures representing the remainder. The
percentage split between financial and personal measures varies between executives depending upon the outcomes and behaviours
being driven.
For executives who act in Group-wide roles, the financial KPIs are based on Group earnings and revenue related measures. In contrast,
divisional earnings and revenue 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. Hypothetical examples of personal KPIs which may be used are set out in the table below:
Customer
People
Volume
Efficiency
Increase customer segmentation analytics and implement timely and automated customer feedback.
Undertake staff climate and pulse surveys to identify areas for improvement and build cultural alignment
across the business with the Group’s core values.
Develop and execute business strategies to increase customer visitation during off-peak periods.
Execute on agreed opportunities to improve the Group’s digital IT capacity to realise operational
efficiencies.
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 Chief Executive Officer. The resulting cash bonuses are traditionally payable in
cash by 30 September each year. Using a combination of revenue and earnings targets ensures that STI payments are only available
when sustainable value has been created for investors and profit is consistent with the Group’s business plan.
Maximum achievable awards to KMP under the STI range between 60% and 75% of an executive’s base salary (including
superannuation) dependent upon the executive’s position.
Ardent Leisure Group | Annual Report 2014 15
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security holders
11.
Remuneration report (continued)
(b)
(ii)
Remuneration framework and strategy (continued)
Executive pay (continued)
STI (continued)
Deferred equity
A percentage of the actual STI paid to an executive may be deferred and settled in performance rights to acquire fully paid Group
stapled securities for $nil exercise price. These performance rights are issued under the terms of the Group’s Deferred Short Term
Incentive plan rules and vest in two equal tranches in 12 months and 24 months.
LTIP
The LTIP awards performance rights ranging between 10% and 37.5% 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 and long term incentives.
In the 2014 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 deferral of a component of the STI into equity 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. From 1 July 2014, the LTIP will also be subject to a dual measure by including an internal EPS measure. 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 and a
minimum compound EPS growth in the performance period.
(c)
Details of remuneration – 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. For the year ended 30 June 2014, the KMP for the Group comprise the Independent Directors
and the following:
Position
Chief Executive Officer
Chief Financial Officer
CEO – Bowling centres
CEO – Theme parks
CEO – Main Event
CEO – Health clubs
Name
Greg Shaw
Richard Johnson
Lee Chadwick (resigned 16 June 2014)
Nicole Noye (appointed 16 June 2014)
Todd Coates (resigned 31 July 2013)
Craig Davidson (appointed 2 September 2013)
Charlie Keegan
Greg Oliver
Details of the remuneration of KMP of the Group for 2014 and 2013 are set out in the tables on the following pages. The tables 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 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.
16 Ardent Leisure Group | Annual Report 2014
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Short term benefits
Post-employment
benefits
Other long term
benefits
Cash
bonus
Annual
leave
Super-
annuation Retirement Other Termination
Total cash
payment
Security-
based
payments
Directors’ report to stapled
security holders
11.
(c)
Remuneration report (continued)
Details of remuneration – key management personnel (continued)
Independent Directors
Neil Balnaves AO
Chair
Roger Davis
Salary
$
2014 195,459
2013 181,098
2014 135,158
2013 128,440
Anne Keating
Don Morris AO
2014 128,287
2013 121,560
2014 119,132
2013 121,560
67,353
Deborah Thomas (Note 1) 2014
N/A
2013
2014 137,452
2013 133,027
George Venardos
$
-
-
-
-
-
-
-
-
-
N/A
-
-
$
-
-
-
-
-
-
-
-
-
N/A
-
-
2014 677,105 334,500
2013 677,105 281,250
56,425
56,425
Executive Director
Greg Shaw
Chief Executive Officer
Other key management
personnel
Current
$
17,268
16,402
12,502
11,560
11,867
10,940
11,020
10,940
6,230
N/A
12,714
11,973
17,775
16,470
Craig Davidson (Note 2) 2014
236,327
-
19,694
15,699
CEO – Theme parks
2013
N/A
N/A
N/A
Richard Johnson
2014
354,028 184,000
29,502
Chief Financial Officer
2013
354,028 160,000
29,502
Charlie Keegan
2014
364,669 122,331
30,389
CEO – Main Event
2013
293,945
97,737
24,495
Nicole Noye (Note 3)
2014
13,788
-
1,149
CEO – Bowling centres
2013
N/A
N/A
N/A
Greg Oliver
2014
371,285 119,310
30,940
CEO – Health clubs
2013
358,122
99,360
29,844
Past
Lee Chadwick (Note 4)
2014
Ex CEO – Bowling Centres 2013
316,532
247,483
49,333 26,378
20,624
40,192
Todd Coates (Note 5)
2014
31,820
-
2,652
Ex CEO – Theme parks
2013
307,874
12,500
25,656
N/A
17,775
16,470
-
-
1,382
N/A
17,775
16,470
17,775
14,084
2,452
16,470
2014 3,148,395 809,474 197,129
162,234
2013 2,924,242 691,039 186,546
141,779
$
-
-
-
-
-
-
-
-
-
N/A
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
N/A
-
-
-
-
-
-
5,564
-
-
-
-
-
-
-
-
-
-
-
-
-
Security-
based
payment
% of
total
Total
$
212,727
197,500
147,660
140,000
140,154
132,500
130,152
132,500
73,583
N/A
150,166
145,000
-
-
-
-
-
-
-
-
-
N/A
-
-
$
-
-
-
-
-
-
-
-
-
N/A
-
-
$
212,727
197,500
147,660
140,000
140,154
132,500
130,152
132,500
73,583
N/A
150,166
145,000
$
-
-
-
-
-
-
-
-
-
N/A
-
-
- 1,085,805
- 1,031,250
452,810 1,538,615
469,616 1,500,866
29.43%
31.29%
N/A
N/A
N/A
N/A
N/A
N/A
-
271,720
-
271,720
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
585,305
244,915
830,220
29.50%
560,000
254,042
814,042
31.21%
517,389
373,768
891,157
41.94%
416,177
290,982
707,159
41.15%
16,319
-
16,319
N/A
N/A
N/A
N/A
N/A
N/A
539,310
161,725
701,035
23.07%
509,360
139,044
648,404
21.44%
-
-
-
-
-
-
410,018
322,383
-
-
410,018
322,383
36,924
(38,285)
(1,361)
362,500
-
362,500
- 4,317,232 1,194,933 5,512,165
5,564
- 3,949,170 1,153,684 5,102,854
-
N/A
-
N/A
-
-
-
-
21.7%
22.6%
(1) Deborah Thomas was appointed a Non-Executive Director of the Group effective 1 December 2013 and is considered KMP from this date.
(2) Craig Davidson was appointed CEO of Theme parks on 2 September 2013 and is considered KMP from this date.
(3) Nicole Noye was appointed CEO of Bowling on 16 June 2014 and is considered KMP from this date.
(4) Lee Chadwick resigned from the Group effective 16 June 2014.
(5) Todd Coates resigned from the Group effective 31 July 2013.
Ardent Leisure Group | Annual Report 2014 17
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Directors’ report to stapled
security holders
11.
(c)
Remuneration report (continued)
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, 722,192 plan securities were issued to Australian employees under the deferred equity component of the STI
(2013: 795,504). 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 $3,110,202 to $4,305,134 (2013:
increased by $1,900,016 to $3,053,700).
(d)
Service 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:
Executive
Greg Shaw
Richard Johnson
Craig Davidson
Charlie Keegan
Nicole Noye
Greg Oliver
Position
Term
Base annual
salary
Termination
Chief Executive
Officer
Chief Financial
Officer
CEO – Theme parks
CEO – Main Event
CEO – Bowling centres CEO – Health clubs
No fixed term.
No fixed term.
No fixed term.
No fixed term.
Contract to 14
February 2015
with automatic
renewal on a year
by year basis
thereafter.
No fixed term,
however may not
be terminated
earlier than
September 2015
unless certain early
termination
conditions are
triggered.
$751,305 for the
year ended 30
June 2014.
$401,305 for the
year ended 30
June 2014.
$325,000 for the
year ended 30
June 2014.
US$360,000 for
the year ended 30
June 2014.
$360,000 for the
year ended 30 June
2014.
$420,000 for the
year ended 30 June
2014.
Employment shall
continue with the
Group unless
either party gives
three months’
notice in writing.
Employment shall
continue with the
Group unless either
party gives three
months’ notice in
writing.
Employment shall
continue with the
Group unless
either party gives
six months’ notice
in writing.
Employment shall
continue with the
Group unless
either party gives
three months’
notice in writing.
Employment shall
continue with the
Group unless the
executive gives
the Group six
months’ notice in
writing, or the
Group gives the
executive 12
months’ notice in
writing.
During the
contract term,
employment shall
continue with the
Group unless the
executive gives
three months’
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.
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.
18 Ardent Leisure Group | Annual Report 2014
For personal use only
Directors’ report to stapled
security holders
11.
Remuneration report (continued)
(e)
Deferred Short Term Incentive Plan (DSTI)
Plan name
Who can participate?
Types of securities issued
Treatment of non-Australian residents
DSTI
All employees are eligible for participation at the discretion of the Board.
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.
For employees who are not Australian residents, the DSTI historically granted
cash awards to those executives. Administrative arrangements have now been
made to issue equity awards and not cash awards to non-resident executives. All
awards, whether equity or cash, are subject to the same tenure hurdles.
What restrictions are there on the securities?
Performance rights are non-transferable.
When can the securities vest?
What are the vesting conditions?
The plan contemplates that the performance rights will vest equally one year and
two years following the grant date.
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 857,282 performance rights vested.
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 722,192 performance
rights vested on 23 August 2013 and 11 November 2013 and a corresponding number of stapled securities were issued to Australian
employees under the terms of the DSTI (2013: 795,504).
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 performance rights 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 2014 19
For personal use only
Directors’ report to stapled
security holders
11.
(e)
Remuneration report (continued)
Deferred Short Term Incentive Plan (DSTI) (continued)
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 135,090 cash settled
performance rights vested on 23 August 2013 to US employees under the terms of the DSTI (2013: 115,049).
Arrangements have now been made to allow for the issue of equity to US resident employees and future grants of performance rights
for equity will be issued instead of cash awards.
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 recognised in 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 the performance rights outstanding at 30 June 2014, 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 2014:
Grant
Grant date
Vesting date – 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
2012
24 August 2012
23 August 2013
31 August 2014
2.80% per annum
35.0% per annum
9.1% per annum
$1.29
$1.15
2013
23 August 2013
31 August 2014
31 August 2015
2.60% per annum
30.9% per annum
6.6% per annum
$1.82
$1.66
The table below shows the fair value of the performance rights in each grant as at 30 June 2014 as well as the factors used to value the
performance rights as at 30 June 2014. This valuation is used to value the performance rights granted to US employees at 30 June
2014:
Grant
Grant date
Vesting date – year 1
Vesting date – year 2
Average risk free rate
Expected price volatility
Expected distribution yield
Stapled security price at year end
Valuation per performance right at year end
2012
24 August 2012
23 August 2013
31 August 2014
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
$2.71
2013
23 August 2013
31 August 2014
31 August 2015
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
$2.64
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.
20 Ardent Leisure Group | Annual Report 2014
For personal use only
Directors’ report to stapled
security holders
11.
(e)
Remuneration report (continued)
Deferred Short Term Incentive Plan (DSTI) (continued)
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.
Performance rights
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
Opening
balance
-
121,143
-
-
141,107
218,410
480,660
134,575
134,575
-
55,422
72,993
-
71,873
100,753
301,041
-
(86,277)
-
-
(97,803)
(157,122)
(341,202)
-
-
(92,921)
(92,921)
-
-
-
-
-
-
-
-
-
-
90,288
72,993
-
115,177
162,041
440,499
41,654
41,654
30 June 2014
Current executives
Craig Davidson
Richard Johnson
Charlie Keegan
Nicole Noye
Greg Oliver
Greg Shaw
Equity settled
Charlie Keegan
Cash settled
Past executives
Lee Chadwick
Todd Coates
-
-
48,911
-
-
-
(48,911)
-
-
-
Total performance rights
615,235
349,952
(434,123)
(48,911)
482,153
-
-
-
-
-
-
-
-
-
-
-
-
-
90,288
72,993
-
115,177
162,041
440,499
41,654
41,654
-
-
482,153
Ardent Leisure Group | Annual Report 2014 21
For personal use only
Directors’ report to stapled
security holders
11.
Remuneration report (continued)
(f)
Long Term Incentive Plan (LTIP)
Plan name
Who can participate?
Types of securities issued
Treatment of non-Australian residents
LTIP
All employees are eligible for participation at the discretion of the Board.
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.
For employees who are not Australian residents, the LTIP historically granted cash
awards to those executives. Administrative arrangements have now been made
to issue equity awards and not cash awards to non-resident executives. All
awards, whether equity or cash, are subject to the same performance hurdles.
What restrictions are there on the securities?
Performance rights are non-transferable.
When can the securities vest?
What are the vesting conditions?
What does total shareholder return include?
What is the earnings per security hurdle?
The plan contemplates that the performance rights will vest equally two, three
and four years following the grant date, subject to meeting the total shareholder
return (TSR) performance hurdle.
From 1 July 2014, the LTIP will also be subject to a dual measure by including an
internal compound EPS measure. The weighting between the two hurdles will be
then be split as follows:
TSR – 50%; and
EPS – 50%.
From 1 July 2014, in order for any or all of the performance rights to vest one or
both of the following hurdles must be met:
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;
and
EPS performance hurdle - the Group's compound EPS growth for the
performance period must exceed 5%. A sliding scale of vesting applies above
the 5% threshold.
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.
The EPS hurdle refers to the annual growth of earnings per security over the total
vesting periods of two, three and four years from the grant date.
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 1,303,244 performance rights reached vesting
following an independent third party assessment of the Group’s TSR performance
compared to the benchmark.
22 Ardent Leisure Group | Annual Report 2014
For personal use only
Directors’ report to stapled
security holders
11.
Remuneration report (continued)
(f)
Long Term Incentive Plan (LTIP) (continued)
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.
During the year, the relative TSR performance of the Group was tested in accordance with the LTIP for tranches issued in 2009, 2010
and 2011 with the following results:
Tranche
T3-2009
T2-2010
T1-2011
TSR percentile
67.05
83.16
71.13
Vesting percentage
84.1%
100.0%
92.3%
A total of 1,234,184 performance rights vested on 23 August 2013 and a corresponding number of stapled securities were issued to
Australian employees under the terms of the LTIP (2013: 695,682).
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 performance rights 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 69,060 cash settled performance rights vested on 23
August 2013 to US employees under the terms of the LTIP (2013: 38,401).
Arrangements have now been made to allow for the issue of equity to US resident employees and future grants of performance rights
for equity will be issued instead of cash awards.
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 recognised in 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.
Ardent Leisure Group | Annual Report 2014 23
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 2014, 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 2014:
Grant
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
2010
2011
16 December 2010 12 September 2011
23 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
23 August 2013
31 August 2014
5.10% per annum
45% per annum
10.0% per annum
$1.065
$0.52
2012
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
2013
23 August 2013
31 August 2015
31 August 2016
31 August 2017
2.60% per annum
32% per annum
6.6% per annum
$1.815
$0.76
The table below shows the fair value of the performance rights for each grant as at 30 June 2014 as well as the factors used to value
the performance rights at 30 June 2014. This valuation is used to value the performance rights granted to US employees at 30 June
2014:
Grant
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 year end
2010
2011
16 December 2010 12 September 2011
23 August 2013
31 August 2014
31 August 2015
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
24 August 2012
23 August 2013
31 August 2014
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
2012
24 August 2012
31 August 2014
31 August 2015
31 August 2016
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
2013
23 August 2013
31 August 2015
31 August 2016
31 August 2017
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
Valuation per performance right on issue
$2.71
$2.64
$2.55
$2.33
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 and/or (for grants made after 1 July 2014) the
EPS performance hurdle must be met.
TSR
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 to TSRs of comparators
Below 51st percentile
51st percentile
Between 51st percentile and 75th percentile
75th percentile or higher
Proportion of performance rights vesting
0%
50%
Straight-line vesting between 50% and 100%
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 reinvested at the distribution date and any franking credits (or similar) are ignored.
24 Ardent Leisure Group | Annual Report 2014
For personal use only
Directors’ report to stapled
security holders
11.
(f)
Remuneration report (continued)
Long Term Incentive Plan (LTIP) (continued)
Performance hurdles (continued)
EPS
The Group’s compound EPS growth for the performance period must exceed 5%. A sliding scale of vesting applies above 5%
threshold.
Compound EPS growth in the period
Below 5%
5%
Between 5% and 10%
10% or higher
The weighting between the two performance measures is split as follows:
Proportion of performance rights vesting
0%
50%
Straight-line vesting between 50% and 100%
100%
TSR – 50%; and
EPS – 50%.
Performance rights
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 2014
Current executives
Craig Davidson
Richard Johnson
Charlie Keegan
Nicole Noye
Greg Oliver
Greg Shaw
Opening
balance
-
911,888
-
-
246,436
1,709,787
-
197,368
51,487
-
69,079
370,066
-
(302,458)
-
-
(61,331)
(567,108)
-
(25,466)
-
-
(2,645)
(47,748)
-
781,332
51,487
-
251,539
1,464,997
Equity settled
2,868,111
688,000
(930,897)
(75,859)
2,549,355
Charlie Keegan
Cash settled
Past executives
Lee Chadwick
Todd Coates
179,765
179,765
-
-
(60,474)
(60,474)
(5,802)
(5,802)
113,489
113,489
-
-
59,211
-
-
-
(59,211)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
781,332
51,487
-
251,539
1,464,997
2,549,355
113,489
113,489
-
-
Total performance rights
3,047,876
747,211
(991,371)
(140,872)
2,662,844
-
2,662,844
Ardent Leisure Group | Annual Report 2014 25
For personal use only
Directors’ report to stapled
security holders
11.
(g)
Remuneration report (continued)
Additional information
Performance of the Group
Over the past five years, core earnings per security of the Group have increased by 26.2% and the market capitalisation of the
Group has increased by 258.7%. In 2010, following the internalisation of the Manager, the definition of KMP extended to include
executives of both the Manager and ALL. The table below compares the Group’s core earnings per security with total KMP
remuneration over the past five years.
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)
Core earnings per security (cents)
Total KMP remuneration
Investor value of a $5,000 investment as at 30 June 2009
(Based upon an initial security price of $1.42)
Details of remuneration: cash bonuses and options
2014
$2.710
$0.068
N/A
$0.062
$2.6378
405,055,708
$1,097.7
14.40
$5,512,164
2013
$1.715
$0.066
N/A
$0.054
$1.6841
397,803,987
$682.2
13.14
$5,102,854
2012
$1.275
$0.065
$1.0073
$0.052
$1.2373
2011
$1.275
$0.065
$0.9872
$0.050
$1.2496
334,209,401 318,147,978
$405.6
12.54
$4,988,292
$426.1
12.91
$6,052,116
2010
$0.990
$0.065
$1.6826
$0.043
$0.9915
309,109,468
$306.0
11.41
$4,154,853
$13,749
$8,608
$5,978
$5,391
$3,777
All service and performance criteria were met by executives eligible for a bonus with respect to their performance in the 30 June 2013
financial year. These bonuses were paid during the year and the percentages forfeited are set out below. No part of the bonuses is
payable in future years. Bonuses with respect to performance within the 30 June 2014 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 2012 grant, performance rights were allocated on the basis of a valuation dated 24 August 2012 and there was
no valuation difference. Under the terms of the 2013 grant, performance rights were allocated on the basis of a valuation dated 23
August 2013 and there was no valuation difference.
LTIP
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.
Under the terms of the 2013 grant, performance rights were allocated on the basis of a valuation dated 23 August 2013 and there was
no valuation difference.
26 Ardent Leisure Group | Annual Report 2014
For personal use only
Directors’ report to stapled
security holders
11.
(g)
Remuneration report (continued)
Additional information (continued)
The table below sets out the number of performance rights that were granted, lapsed and 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.
Year
granted Tranche
Financial years in
which performance
rights may vest
Year
Number
Value of
performance
rights at
grant
Number
lapsed
Value of
performance
rights at
lapse
Value of
performance
rights at
vesting
Maximum
value yet
to vest
Number
vested
Cash STI (%)
$
-
-
$
-
-
-
-
2014
104,707
91,095 16,648
30,216
88,059
2014
108,696
2015
108,696
57,609
56,522
-
-
- 108,696
-
-
$
-
159,827
197,283
$
Awarded
Forfeited
-
92.0
-
8.0
-
-
-
-
56,522
2014
114,521
50,389
8,818
16,005 105,703
191,851
Current executives
Equity settled
Craig Davidson
-
Richard Johnson LTIP
2009
2010
2011
2012
2013
DSTI 2011
2012
2013
Nicole Noye
-
Greg Oliver
LTIP
2010
2011
2012
2013
DSTI 2011
2012
2013
-
T3
T2
T3
T1
T2
T3
T1
T2
T3
T1
T2
T3
T2
T1
T2
T1
T2
-
T2
T3
T1
T2
T3
T1
T2
T3
T1
T2
T3
T2
T1
T2
T1
T2
-
50,389
49,244
50,328
50,181
49,491
51,678
51,388
47,579
-
-
-
15,117
14,774
17,195
17,145
16,910
18,088
17,986
16,652
-
-
2015
114,521
2016
114,522
2015
2016
2017
2016
2017
2018
2014
2014
2015
2015
2016
82,075
82,075
82,075
65,790
65,789
65,789
51,411
34,866
34,866
27,711
27,711
50,389
49,244
50,328
50,181
49,491
51,678
51,388
47,579
43,699
41,818
38,182
47,541
44,498
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51,411
34,866
93,311
63,282
-
-
-
-
-
-
38,182
47,541
44,498
1,285,821
871,631 25,466
46,221 388,735
705,554 587,021
-
2014
2015
2014
2015
2016
2015
2016
2017
2016
2017
2018
2014
2014
2015
2015
2016
-
29,620
29,620
34,356
34,356
34,357
28,042
28,042
28,043
23,027
23,026
23,026
54,500
43,303
43,304
35,937
35,936
-
15,699
15,402
-
-
-
-
-
-
-
-
29,620
53,760
-
-
-
97.0
-
3.0
-
-
15,402
15,117
2,645
4,801
31,711
57,555
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54,500
43,303
98,918
78,595
15,117
14,774
17,195
17,145
16,910
18,088
17,986
16,652
46,325
51,938
47,422
61,654
57,706
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,422
61,654
57,706
528,495
445,130 2,645
4,801 159,134
288,828 316,051
Ardent Leisure Group | Annual Report 2014 27
For personal use only
Directors’ report to stapled
security holders
11.
(g)
Remuneration report (continued)
Additional information (continued)
Year
granted Tranche
Financial years in
which performance
rights may vest
Value of
performance
rights at
grant
Number
lapsed
Value of
performance
rights at
lapse
Number
vested
Value of
performance
rights at
vesting
Maximum
value yet to
vest
Cash STI (%)
89.2
10.8
Greg Shaw
LTIP 2009
2010
2011
2012
2013
DSTI 2011
2012
2013
Charlie Keegan LTIP 2013
DSTI 2013
Cash settled
Charlie Keegan LTIP 2009
2010
2011
2012
DSTI 2011
2012
Past executives
Lee Chadwick
LTIP 2013
DSTI 2013
Todd Coates
-
T3
T2
T3
T1
T2
T3
T1
T2
T3
T1
T2
T3
T2
T1
T2
T1
T2
T1
T2
T3
T1
T2
T3
T2
T3
T1
T2
T3
T1
T2
T3
T2
T1
T2
T1
T2
T3
T1
T2
-
2014
2014
2015
2014
2015
2016
2015
2016
2017
2016
2017
2018
2014
2014
2015
2015
2016
196,325
203,804
203,805
214,727
214,727
214,728
153,890
153,890
153,891
123,356
123,355
123,355
95,834
61,288
61,288
50,377
50,376
170,803
31,215
56,655 165,110
108,016
105,979
-
-
- 203,804
-
-
299,675
369,904
-
-
-
105,979
94,480
16,533
30,007 198,194
359,722
-
94,480
92,333
94,365
94,088
92,796
96,896
96,353
89,210
81,459
73,509
67,116
86,427
80,894
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
95,834
61,288
173,939
111,238
94,480
92,333
94,365
94,088
92,796
96,896
96,353
89,210
-
-
-
-
-
-
-
-
67,116
86,427
80,894
2,399,016 1,619,204 47,748
86,662 724,230
1,314,478 1,090,937
2016
2017
2018
2015
2016
2014
2014
2015
2014
2015
2016
2015
2016
2017
2014
2014
2015
2016
2017
2018
2015
2016
17,163
17,162
17,162
36,497
36,496
25,863
18,453
18,454
21,960
21,960
21,960
17,038
17,038
17,039
51,268
41,653
41,654
13,482
13,405
12,412
62,614
58,605
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,501
4,112
7,463
21,751
-
-
-
-
18,453
-
98.0
2.0
-
-
-
-
-
13,482
13,405
12,412
62,614
58,605
39,478
33,492
-
-
-
9,596
9,780
9,596
9,662
9,662
9,443
10,448
10,417
10,275
43,578
49,959
45,615
1,690
3,067
20,270
36,790
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51,268
41,653
-
-
-
-
-
-
93,051
75,600
9,662
9,443
10,448
10,417
10,275
-
-
-
45,615
438,820
401,454
5,802
10,530 153,395
278,411 265,974
19,737
19,737
19,737
24,456
24,455
15,000
19,737
15,000
19,737
15,000
19,737
40,597
24,456
40,595
24,455
35,823
35,823
35,822
44,388
44,386
108,122
126,192 108,122
196,242
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
96.0
4.0
-
100.0
28 Ardent Leisure Group | Annual Report 2014
For personal use only
Directors’ report to stapled
security holders
11.
Remuneration report (continued)
(g)
Additional information (continued)
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
Deborah Thomas
George Venardos
Opening balance
Acquired
2,439,062
130,275
74,461
-
768,369
-
111,592
-
20,000
-
-
53,351
6,000
1,044
Acquired under
the Group's
equity plans
-
-
-
-
724,230
-
-
3,523,759
80,395
724,230
Disposed
Closing balance
-
-
-
-
-
-
-
-
2,439,062
150,275
74,461
-
1,545,950
6,000
112,636
4,328,384
KMP interests in securities
Changes to the interests of other KMP in stapled securities during the period are set out below:
Lee Chadwick
Todd Coates
Craig Davidson
Richard Johnson
Charlie Keegan
Nicole Noye
Greg Oliver
Opening balance
Acquired
-
-
-
227,887
-
-
135,575
363,462
-
-
-
-
-
-
-
-
Acquired under
the Group's
equity plans
-
-
-
388,735
-
-
159,134
547,869
Disposed
Closing balance
-
-
-
(100,000)
-
-
-
(100,000)
-
-
-
516,622
-
-
294,709
811,331
Loans and other transactions with KMP
There were no loans made to KMP during the financial year, as disclosed in Note 36(e) to the financial statements. Refer to Note 36(f)
to the financial statements for details of other transactions with KMP during the financial year.
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 2013, the following votes were cast on the adoption of the 2013 Remuneration Report:
Adoption of the Remuneration Report
Votes for
97.3%
Votes against
2.0%
Votes abstain
0.7%
Ardent Leisure Group | Annual Report 2014 29
For personal use only
Directors’ report to stapled
security holders
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 34.
14.
Events occurring after reporting date
Subsequent to 30 June 2014, a distribution of 6.2 cents per stapled security has been declared by the Board of Directors. The total
distribution amount of $25.1 million will be paid on or before 29 August 2014 in respect of the half year ended 30 June 2014.
On 16 July 2014, a conditional purchase agreement was entered into for the acquisition of eight health clubs from Fitness First in
Western Australia for a total consideration of $32.5 million, of which $2.0 million will be deferred for 12 months. The agreement was
subject to the completion of satisfactory due diligence, valid assignment of the property leases, Board approval and the Group
securing finance. On the 6 August 2013, following the completion of the majority of the above conditions precedent, the Group
announced the acquisition and undertook an institutional placement of $50 million, proceeds of which will be used to fund the above
acquisition and the acceleration of the Main Event development pipeline.
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 2014.
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.
30 Ardent Leisure Group | Annual Report 2014
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. Disclosure of the premiums paid for the insurance policy is
prohibited under the terms of the insurance policy.
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 2014 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 program was rolled out throughout the organisation. A mobile phone recycling program
continued throughout the park as well as other local organisations. Proceeds from the program have also been raised to improve
wildlife protection in parts of Africa where mobile phone components are sourced from. A range of existing recycling programs
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
programs aimed at the humane treatment of pests, removal of noxious weeds and other sustainability initiatives. These initiatives
were additionally integrated into existing staff training programs to further strengthen environmental culture within the organisation.
Dreamworld’s noise conservation program 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.
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 licences 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.
Ardent Leisure Group | Annual Report 2014 31
For personal use only
Directors’ report to stapled
security holders
18.
(c)
Environmental regulations (continued)
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.
(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.
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 program 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.
32 Ardent Leisure Group | Annual Report 2014
For personal use only
Directors’ report to stapled
security holders
18.
(g)
Environmental regulations (continued)
Greenhouse gas and energy data reporting requirements (continued)
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 2012/2013 emissions report under the Act in October 2013.
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
15 August 2014
Ardent Leisure Group | Annual Report 2014 33
For personal use only
Auditor’s Independence Declaration
As lead auditor for the audit of Ardent Leisure Group for the year ended 30 June 2014, 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
15 August 2014
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 Professional Standards Legislation.
For personal use only Income Statements
for the year ended 30 June 2014
Income Statements
Income
Revenue from operating activities
Management fee income
Valuation gains - investment properties
Valuation gains - property, plant and equipment
Net gain from derivative financial instruments
Interest income
Gain on acquisition
Gain on sale of assets
Total income
Expenses
Purchases of finished goods
Salary and employee benefits
Borrowing costs
Property expenses
Depreciation and amortisation
Loss on closure of bowling centre
Loss on disposal of assets
Advertising and promotions
Repairs and maintenance
Pre-opening expenses
Business acquisition costs
Net loss from derivative financial instruments
Other expenses
Total expenses
Profit before tax expense
Withholding tax expense
US State tax expense
Income tax expense
Profit
Attributable to:
Stapled security holders
Profit
Note
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
2013
$’000
2014
$’000
2013
$’000
3
7(b)
6
4
5
6
8
10
499,703
-
-
8,590
-
211
-
-
448,903
-
90
-
602
228
2,613
313
499,703
1,200
-
-
-
99
-
-
448,903
1,200
-
-
-
185
2,613
293
508,504
452,749
501,002
453,194
46,550
185,191
11,330
79,539
42,043
1,579
74
18,997
22,222
2,579
277
613
45,632
42,051
167,469
12,288
68,749
37,303
-
-
17,575
20,711
2,527
1,507
-
43,078
46,550
189,397
8,766
138,302
21,007
-
81
18,997
22,222
2,579
277
-
45,141
42,051
169,621
7,531
120,241
18,141
-
-
17,575
20,711
2,438
1,607
-
42,544
456,626
413,258
493,319
442,460
51,878
39,491
7,683
10,734
159
724
1,993
186
540
3,148
-
724
1,903
-
540
3,101
49,002
35,617
5,056
7,093
49,002
49,002
35,617
35,617
5,056
5,056
7,093
7,093
The above Income Statements should be read in conjunction with the accompanying notes.
Basic earnings per security/share (cents)
Diluted earnings per security/share (cents)
Distribution in respect of the year ended 30 June
Distribution per security in respect of the year ended 30
June (cents)
11
11
12
12
12.13
12.05
9.32
9.24
52,657
47,734
13.00
12.00
1.25
1.24
-
-
1.86
1.84
-
-
Ardent Leisure Group | Annual Report 2014 35
For personal use only
Statements of Comprehensive Income
for the year ended 30 June 2014
Statements of Comprehensive Income
Note
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
Profit
Other comprehensive income
Items that may be reclassified to profit and loss
Cash flow hedges
Foreign exchange translation difference
Income tax relating to these items
Items that will not be reclassified to profit and loss
Gain on revaluation of property, plant and equipment
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
2014
$’000
2013
$’000
2014
$’000
49,002
35,617
5,056
434
391
11
1,529
(636)
-
6,866
7,702
56,704
9,103
9,996
45,613
(30)
(942)
11
-
(961)
4,095
56,704
56,704
45,613
45,613
4,095
4,095
2013
$’000
7,093
-
2,472
-
-
2,472
9,565
9,565
9,565
The above Statements of Comprehensive Income should be read in conjunction with the accompanying notes.
36 Ardent Leisure Group | Annual Report 2014
For personal use only
Balance Sheets
as at 30 June 2014
Balance Sheets
Current assets
Cash and cash equivalents
Receivables
Derivative financial instruments
Inventories
Property held for sale
Other
Total current assets
Non-current assets
Investment properties
Property, plant and equipment
Livestock
Intangible assets
Deferred tax assets
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
Equity
Contributed equity
Reserves
Retained profits/(accumulated losses)
Total equity attributable to stapled security holders
Non-controlling interests
Total equity
Note
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
33
13
14
15
16
17
18
19
20
21
22
23
14
24
25
26
14
24
25
27
28
30
31
2014
$’000
7,079
7,416
-
9,378
10,650
8,937
2013
$’000
2014
$’000
12,953
7,049
575
9,780
4,210
9,402
6,197
7,762
-
9,378
10,650
5,438
2013
$’000
12,481
9,290
-
9,780
4,210
5,956
43,460
43,969
39,425
41,717
95,870
510,162
300
201,237
1,978
809,547
853,007
69,065
459
61
376
3,272
2,155
95,232
461,915
305
196,788
1,533
755,773
799,742
63,977
584
238
2,617
2,990
2,101
-
123,463
300
201,237
1,978
326,978
366,403
60,287
-
61
376
3,272
2,155
-
83,450
305
196,788
1,533
282,076
323,793
54,343
-
238
2,617
2,990
2,101
75,388
72,507
66,151
62,289
1,004
260,211
1,625
9,277
272,117
347,505
505,502
513,912
(45,918)
37,508
505,502
-
505,502
1,307
227,628
2,011
8,999
239,945
312,452
487,290
501,416
(45,817)
31,691
487,290
-
487,290
48
204,826
1,625
9,277
215,776
281,927
84,476
16,309
(1,537)
(1,655)
13,117
71,359
84,476
-
168,346
2,011
8,999
179,356
241,645
82,148
14,202
(576)
(2,837)
10,789
71,359
82,148
The above Balance Sheets should be read in conjunction with the accompanying notes.
Ardent Leisure Group | Annual Report 2014 37
For personal use only
Statements of Changes in Equity
for the year ended 30 June 2014
Statements of Changes in Equity
Note
Contributed
equity
Reserves
Retained
profits/
(accumulated
losses)
Non-
controlling
interests
$’000
$’000
$’000
$’000
Consolidated Group
Total equity at 1 July 2012
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Security-based payments
Contributions of equity, net of issue costs
Security-based payments - securities/shares issued
Distributions paid and payable
Reserve transfers
Total equity at 30 June 2013
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Security-based payments
Contributions of equity, net of issue costs
Security-based payments - securities/shares issued
Distributions paid and payable
Reserve transfers
421,900
(45,504)
-
-
-
-
9,996
9,996
30
28
28
31
30, 31
-
77,585
1,931
-
-
501,416
-
-
-
-
8,915
3,581
-
-
30
28
28
31
30, 31
(862)
-
-
-
(9,447)
(45,817)
-
7,702
7,702
(1,963)
-
-
-
(5,840)
Total equity at 30 June 2014
513,912
(45,918)
30,259
35,617
-
35,617
-
-
-
(43,632)
9,447
31,691
49,002
-
49,002
-
-
-
(49,025)
5,840
37,508
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ALL Group
Total equity at 1 July 2012
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of issue costs
Security-based payments - securities/shares issued
Issue of convertible notes
Dividends paid and payable
Total equity at 30 June 2013
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of issue costs
Security-based payments - securities/shares issued
Dividends paid and payable
28
28
31
28
28
31
11,960
(3,048)
(6,310)
33,024
-
-
-
2,185
57
-
-
14,202
-
-
-
1,503
604
-
-
2,472
2,472
-
-
-
-
(576)
-
(961)
(961)
-
-
-
7,093
-
7,093
-
-
-
(3,620)
(2,837)
5,056
-
5,056
-
-
(3,874)
-
-
-
-
-
38,335
-
71,359
-
-
-
-
-
-
Total equity at 30 June 2014
16,309
(1,537)
(1,655)
71,359
The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.
Total
$’000
406,655
35,617
9,996
45,613
(862)
77,585
1,931
(43,632)
-
487,290
49,002
7,702
56,704
(1,963)
8,915
3,581
(49,025)
-
505,502
35,626
7,093
2,472
9,565
2,185
57
38,335
(3,620)
82,148
5,056
(961)
4,095
1,503
604
(3,874)
84,476
38 Ardent Leisure Group | Annual Report 2014
For personal use only
Statements of Cash Flows
for the year ended 30 June 2014
Statements of Cash Flows
Note
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
2013
$’000
2014
$’000
2013
$’000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Property expenses paid
Realised gains 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
Net cash flows from operating activities
Cash flows from investing activities
Payments 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
Payments for purchase of businesses net of cash acquired
Net cash flows from investing activities
34(a)
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 on finance leases
Proceeds from convertible notes
Distributions paid to stapled security holders
Net cash flows from financing activities
Net (decrease)/increase 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
Cash at the end of the year
33
549,659
(367,238)
(79,704)
-
211
-
-
(143)
(5,317)
97,468
(86,337)
-
-
226
10,278
(11,736)
(87,569)
1,925,688
(1,890,351)
(10,870)
-
(3)
-
-
-
(249)
-
(40,107)
(15,892)
(5,993)
12,953
119
7,079
492,258
(338,753)
(69,945)
264
228
-
-
(214)
(1,469)
82,369
(62,780)
-
-
543
-
(67,510)
(129,747)
2,601,809
(2,575,014)
(11,810)
72,225
(1,628)
-
-
-
(249)
-
(36,644)
48,689
1,311
11,693
(51)
12,953
550,257
(369,765)
(76,501)
-
99
(111,296)
50,464
-
(5,317)
37,941
(72,317)
(14,516)
16,100
102
10,278
(10,145)
(70,498)
726,852
(699,738)
(8,600)
-
(1)
(3,874)
94,288
(82,520)
(249)
-
-
26,158
(6,399)
12,481
115
6,197
494,486
(336,526)
(67,868)
-
185
(102,808)
48,912
-
(1,469)
34,912
(34,128)
(29,499)
33,821
502
-
(67,510)
(96,814)
55,159
-
(7,475)
2,034
(45)
(3,620)
108,332
(126,592)
(249)
38,336
-
65,880
3,978
8,554
(51)
12,481
The above Statements of Cash Flows should be read in conjunction with the accompanying notes.
Ardent Leisure Group | Annual Report 2014 39
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Notes to the financial statements
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 2014 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.
These consolidated financial statements have been presented in accordance with ASIC Class Order 13/1050 as amended by ASIC Class
Order 13/1644. These Class Orders allow the presentation of consolidated financial statements covering all the entities in a stapled
group following the introduction of new accounting standard AASB 10 Consolidated Financial Statements. There are no non-
controlling interests that are attributable to the stapled security holders.
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.
New and amended standards adopted by the Group
The Group has applied the following standards and amendments for first time for the annual reporting period commencing 1 July
2013:
AASB 10 Consolidated Financial Statements;
AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13;
AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian Accounting Standards arising from
AASB 119 (September 2011);
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure
Requirements; and
AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle.
The adoption of AASB 13 Fair Value Measurement resulted in additional disclosures and considerations regarding fair value of certain
assets and liabilities, as discussed in Note 1 (ab). AASB 13 aims to improve consistency and reduce complexity by providing a precise
definition of fair value and a single source of fair value measurement and disclosure requirements for use across Australian Accounting
Standards. The other standards only affected the disclosures in the notes to the financial statements.
40 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(a)
Summary of significant accounting policies (continued)
Basis of preparation (continued)
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(j), Note 1(m), Note 1(p), Note 1(s)(v), Note 1(s)(vi), Note 1(ab)
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.
Deficiency of current assets
As at 30 June 2014, the Group and ALL Group had deficiencies of current assets of $31.9 million (2013: $28.5 million) and $26.7 million
(2013: $20.6 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 2014. The Group has $65.7 million (2013: $102.2 million) of unused loan capacity at 30 June 2014 which can be drawn on as
required. The ALL Group has $256.8 million (2013: $300.3 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.
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.
Ardent Leisure Group | Annual Report 2014 41
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(b)
Summary of significant accounting policies (continued)
Principles of consolidation (continued)
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 entities 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.
(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 obtained, the valuer considers the valuation under both the discounted cash flow (DCF) method
and the income capitalisation method, with the adopted value generally being a mid-point of the valuations determined under these
methods.
Under the DCF method, a property’s fair value is estimated using the explicit assumptions regarding the benefits and liabilities of
ownership over the asset’s life. The DCF method involves the projection of a series of cash flows on the property. To this projected
cash flow series, an appropriate, market-derived discount rate is applied to establish the present value of the income stream
associated with the property.
Under the income capitalisation method, the total income receivable from the property is assessed and this is capitalised in perpetuity
to derive a capital value, with allowances for capital expenditure required.
42 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(f)
Summary of significant accounting policies (continued)
Investment properties (continued)
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.
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 are 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 the asset revaluation reserve 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.
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.
Ardent Leisure Group | Annual Report 2014 43
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(g)
Summary of significant accounting policies (continued)
Property, plant and equipment (continued)
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:
Buildings
Leasehold improvements
Major rides and attractions
Plant and equipment
Furniture, fittings and equipment
Motor vehicles
2014
40 years
Over life of lease
20 - 40 years
4 - 25 years
4 - 13 years
8 years
2013
40 years
Over 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.
(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.
44 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(k)
Summary of significant accounting policies (continued)
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 (2013: 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
between 10 - 13 years (2013: 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 (2013: four years). The amortisation charge is weighted towards the first year of ownership where the majority of economic
benefits arise.
Other intangible assets
Liquor licences are amortised over the length of the licences which are between 10 - 16 years (2013: 10 - 16 years), depending on the
length of the licence. Software is amortised on a straight-line basis over the period during which the benefits are expected to be
received, which is between 5 - 7 years (2013: nil).
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 37).
(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.
(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 fair value and subsequently
measured at amortised cost using the effective interest rate method.
Ardent Leisure Group | Annual Report 2014 45
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(o)
Summary of significant accounting policies (continued)
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.
46 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(q)
Summary of significant accounting policies (continued)
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.
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 4.37% per annum (2013:
5.05% per annum) for Australian dollar debt and 1.51% per annum (2013: 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 can be reliably estimated.
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)
(i)
Employee benefits
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.
Ardent Leisure Group | Annual Report 2014 47
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(s)
(v)
Summary of significant accounting policies (continued)
Employee benefits (continued)
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 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 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, 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.
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 performance rights 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 Plan (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.
48 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(s)
Summary of significant accounting policies (continued)
Employee benefits (continued)
(vi)
Deferred Short Term Incentive Plan (DSTI) (continued)
Australian employees (continued)
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 performance rights 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 performance rights 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.
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.
Ardent Leisure Group | Annual Report 2014 49
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(t)
Summary of significant accounting policies (continued)
Tax (continued)
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 tax is also recognised in other comprehensive income or directly in equity respectively.
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.
50 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(x)
(ii)
Summary of significant accounting policies (continued)
Revenue (continued)
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 investment 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)
(i)
Foreign currency translation
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 2014, the spot rate used was A$1.00 = NZ$1.0762 (2013:
A$1.00 = NZ$1.1800) and A$1.00 = US$0.9430 (2013: A$1.00 = US$0.9127). The average spot rate during the year ended 30 June 2014
was A$1.00 = NZ$1.1021 (2013: A$1.00 = NZ$1.2454) and A$1.00 = US$0.9113 (2013: A$1.00 = US$1.0207).
(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 intangible assets and other non-recurring realised items. As shown in Note 11, these items are excluded from
management’s definition of core earnings.
Ardent Leisure Group | Annual Report 2014 51
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
Summary of significant accounting policies (continued)
(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 Group measures financial instruments, such as derivatives, and non-financial assets such as investment properties, at fair value at
each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either:
In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or liability is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by
using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best
use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure
fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
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.
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.
52 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(ac)
Summary of significant accounting policies (continued)
Business combinations (continued)
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.
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.
Ardent Leisure Group | Annual Report 2014 53
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
1.
(af)
(iii)
Summary of significant accounting policies (continued)
Parent entity financial information (continued)
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, amendments 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 2014 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, amendments 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 2018)
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 2018 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 2019.
Early adoption of standards
The Group has elected to adopt AASB 2013-3 Amendments to AASB 136 Recoverable Amount Disclosures for Non-Financial Assets. This
standard removes a requirement to disclose the recoverable amount of all cash generating units that contain goodwill or identifiable
assets with indefinite lives, regardless of impairment. This requirement was introduced by AASB 13 and would otherwise have become
applicable from 1 January 2013.
The Group has not elected to apply any other pronouncements before their operative date in the annual reporting period beginning 1
July 2014.
(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.
54 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
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.
Revenue from operating activities
Revenue from services
Revenue from sale of goods
Revenue from rentals
Other revenue
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
365,085
102,070
32,108
440
2013
$’000
328,958
92,487
26,896
562
2014
$’000
365,085
102,070
32,108
440
2013
$’000
328,958
92,487
26,896
562
Revenue from operating activities
499,703
448,903
499,703
448,903
Borrowing costs
Borrowing costs paid or payable
Less: Capitalised borrowing costs
Borrowing costs expensed
For details of the fair value of borrowings, refer to Note 39 (c).
5.
Property expenses
Landlord rent and outgoings
Insurance
Rates
Land tax
Other
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
11,674
(344)
11,330
2013
$’000
12,765
(477)
12,288
2014
$’000
8,985
(219)
8,766
2013
$’000
7,531
-
7,531
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
74,870
607
2,541
899
622
2013
$’000
64,474
699
2,755
730
91
2014
$’000
138,302
-
-
-
-
2013
$’000
120,241
-
-
-
-
79,539
68,749
138,302
120,241
Ardent Leisure Group | Annual Report 2014 55
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Net (loss)/gain from derivative financial instruments
(Loss)/gain on derivatives - unrealised
Gain on derivatives - realised
Management fees
The Manager of the Trust is Ardent Leisure Management Limited.
Consolidated
Group
Consolidated
Group
2014
$’000
(613)
-
(613)
2013
$’000
339
263
602
ALL Group
ALL Group
2014
$’000
2013
$’000
-
-
-
-
-
-
The Manager’s registered office and principal place of business are Level 16, 61 Lavender Street, Milsons Point, NSW 2061.
(a)
Base management fee
The management fee 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 earned by the Manager during the year is detailed as follows:
Base management fee
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
-
-
2013
$’000
-
-
2014
$’000
1,200
1,200
2013
$’000
1,200
1,200
56 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
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
Stock exchange costs
Taxation fees
Telephone
Training
Travel costs
Valuation fees
Other
Remuneration of auditor
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
585
878
2,612
109
14,325
71
1,076
2,424
382
8,210
1,048
4,528
2,643
163
167
114
210
1,872
1,395
1,808
114
898
2013
$’000
552
528
2,737
113
13,978
-
1,158
2,367
388
7,102
1,130
4,216
2,691
125
256
83
98
1,692
1,176
1,949
51
688
2014
$’000
397
878
2,612
-
14,325
25
1,076
2,424
368
8,210
1,048
4,492
2,643
163
167
114
187
1,872
1,395
1,808
-
937
2013
$’000
360
528
2,737
-
13,978
-
1,158
2,367
357
7,102
1,130
4,216
2,691
160
268
79
76
1,692
1,176
1,949
-
520
45,632
43,078
45,141
42,544
During the financial year, the auditor of the Group, PricewaterhouseCoopers (PwC), earned the following remuneration:
Audit and other assurance services - PwC Australia
Audit and other assurance services - related practices of PwC Australia
Taxation services - PwC Australia
Taxation services - related practices of PwC Australia
Other services - PwC Australia
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$
2013
$
2014
$
2013
$
506,360
78,477
23,192
186,923
1,500
796,452
501,000
51,496
22,372
75,937
8,100
658,905
317,777
78,477
-
186,923
1,500
584,677
308,940
51,496
-
75,937
8,100
444,473
Ardent Leisure Group | Annual Report 2014 57
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Income tax expense
(a)
Income tax expense
Current tax
Deferred tax
Over provided in prior year
Note
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
2013
$’000
2014
$’000
2013
$’000
4,290
(1,532)
(765)
1,993
1,408
1,778
(38)
3,148
4,200
(1,532)
(765)
1,903
1,361
1,778
(38)
3,101
Income tax expense is attributable to:
Profit from continuing operations
1,993
3,148
1,903
3,101
Deferred income tax (benefit)/expense included in
income tax expense comprises:
Decrease/(increase) in deferred tax assets
(Decrease)/increase in deferred tax liabilities
22
27
328
(1,860)
(1,532)
(2,434)
4,212
1,778
328
(1,860)
(1,532)
(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
Prima facie profit
Tax at the Australian tax rate of 30% (2013: 30%)
Tax effects of amounts which are not deductible/(taxable) in
calculating taxable income:
Entertainment
Non-deductible depreciation and amortisation
Sundry items
Employee security plans
Business acquisition costs
Gain on acquisition
Foreign exchange conversion differences
US State taxes
Withholding tax and Research & Development credit
Difference in overseas tax rates
Over provided in prior year
Income tax expense
51,878
(48,330)
3,548
39,491
(33,444)
6,047
1,064
1,814
54
2,569
(1,311)
181
78
-
(53)
(246)
(63)
485
(765)
1,993
48
2,076
(566)
-
482
(784)
(60)
(162)
-
338
(38)
3,148
7,683
-
7,683
2,305
54
-
(77)
181
78
-
(53)
(246)
(63)
489
(765)
1,903
(2,434)
4,212
1,778
10,734
-
10,734
3,220
48
-
54
-
482
(784)
(60)
(162)
-
341
(38)
3,101
(c)
Income tax benefit relating to items of other comprehensive income
Unrealised loss on derivative financial instruments
recognised in the cash flow hedge reserve
30
(11)
(11)
-
-
(11)
(11)
-
-
58 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
10.
(d)
Income tax expense (continued)
Unrecognised temporary differences
There are no unrecognised temporary differences as at 30 June 2014 (30 June 2013: nil).
(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.
Earnings per security/share
Basic earnings per security/share (cents)
Diluted earnings per security/share (cents)
Core earnings per security (cents)
Diluted core earnings per security (cents)
Earnings used in the calculation of basic and diluted
earnings per security/share ($'000)
Earnings used in the calculation of core earnings per
security (refer to calculation in table below) ($'000)
Weighted average number of stapled securities on issue
used in the calculation of basic and core earnings per
security/share ('000)
Weighted average number of stapled securities held by
ALL employees under employee share plans (refer to Note
29) ('000)
Weighted average number of stapled securities on issue
used in the calculation of diluted earnings per
security/share ('000)
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
12.13
12.05
14.40
14.30
2013
9.32
9.24
13.14
13.04
2014
1.25
1.24
N/A
N/A
2013
1.86
1.84
N/A
N/A
49,002
35,617
5,056
7,093
58,153
50,257
N/A
N/A
403,868
382,334
403,868
382,334
2,848
3,192
2,848
3,192
406,716
385,526
406,716
385,526
Ardent Leisure Group | Annual Report 2014 59
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
11.
Earnings per security/share (continued)
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.
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 stapled security
Unrealised items
- Unrealised loss/(gain) on derivative financial instruments
- Valuation gains - investment properties
- Valuation gains - property, plant and equipment
Non-cash items
- Straight lining of fixed rent increases
- IFRS depreciation(1)
- Amortisation of intangible assets
One off realised items
- Pre-opening expenses
- Business acquisition costs
- Gain on acquisition
- Gain on sale and leaseback of family entertainment centre
- Loss on closure of bowling centre
Tax impact of above adjustments
Core earnings
Consolidated
Group
Consolidated
Group
2014
$’000
2013
$’000
49,002
35,617
613
-
(8,590)
1,546
8,562
6,333
2,579
277
-
(379)
1,579
(3,369)
58,153
(339)
(90)
-
1,311
6,920
7,739
2,527
1,507
(2,613)
-
-
(2,322)
50,257
(1) 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.
60 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Distributions and dividends paid and payable
(a)
Consolidated Group
The following distributions were paid and payable by the Trust:
2014 distributions for the half year ended:
31 December 2013
30 June 2014*
2013 distributions for the half year ended:
31 December 2012
30 June 2013**
Distribution
cents per
stapled
security
6.80
6.20
13.00
6.60
5.40
12.00
Total
amount
$’000
27,544
25,113
52,657
26,253
21,481
47,734
CGT
Tax
deferred
concession
amount
Taxable
%
%
%
35.17
68.70
-
-
64.83
31.30
* The distribution of 6.20 cents per stapled security for the half year ended 30 June 2014 was not declared prior to 30 June 2014. Refer to Note 44.
** 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.
(b)
ALL Group
During the year, a subsidiary of ALL paid to the Trust $3.9 million (2013: $3.6 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.
(c)
Franking credits
The tax consolidated group has franking credits of $6,709,050 (2013: $4,640,856). 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.
Receivables
Trade receivables
Receivable from the Trust
Provision for doubtful debts
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
7,938
-
(522)
7,416
2013
$’000
7,658
-
(609)
7,049
2014
$’000
7,938
346
(522)
7,762
2013
$’000
7,658
2,241
(609)
9,290
The Group has recognised an expense of $121,948 in respect of bad and doubtful trade receivables during the year ended 30 June
2014 (2013: $46,000). The expense has been included in other expenses in the Income Statement.
Ardent Leisure Group | Annual Report 2014 61
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Derivative financial instruments
Current assets
Forward foreign exchange contracts
Current liabilities
Forward foreign exchange contracts
Interest rate swaps
Non-current liabilities
Forward foreign exchange contracts
Interest rate swaps
Forward foreign exchange contracts
Consolidated
Group
2014
$’000
Consolidated
Group
2013
$’000
ALL Group
2014
$’000
ALL Group
2013
$’000
-
-
11
448
459
9
995
1,004
575
575
-
584
584
-
1,307
1,307
-
-
-
-
-
-
48
48
-
-
-
-
-
-
-
-
The Group has entered into forward foreign exchange contracts to buy US dollars and sell Australian dollars. These contracts total
A$4.6 million (2013: A$5.2 million).
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.
Interest rate swaps
The Group has entered into interest rate swap agreements totalling A$100.0 million (2013: $120.0 million) and US$30.0 million (2013:
$nil) 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 $40.0 million (2013: $60.0 million) with start
date of September 2015 and end date of June 2017.
With the exception of one $40.0 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. 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 and the ALL Group.
The table below shows the maturity profile of the interest rate swaps:
Consolidated
Group
2014
$’000
Consolidated
Group
2013
$’000
ALL Group
2014
$’000
ALL Group
2013
$’000
60,000
40,000
71,813
-
-
-
80,000
60,000
40,000
-
-
-
-
-
31,813
-
-
-
171,813
180,000
31,813
-
-
-
-
-
-
-
Less than 1 year
1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
More than 5 years
62 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Inventories
Goods held for resale
Provision for diminution
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
9,398
(20)
9,378
2013
$’000
9,800
(20)
9,780
2014
$’000
9,398
(20)
9,378
2013
$’000
9,800
(20)
9,780
There was no reversal of write-downs of inventories recognised as a benefit during the year ended 30 June 2014 (2013: $nil).
Property held for sale
Family entertainment centres
Opening balance
Transfer from property, plant and equipment
Additions
Foreign exchange movements
Disposals
Closing balance
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
10,650
10,650
2013
$’000
4,210
4,210
2014
$’000
10,650
10,650
2013
$’000
4,210
4,210
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
4,210
9,741
6,725
(168)
(9,858)
10,650
2013
$’000
-
4,210
-
-
-
4,210
2014
$’000
4,210
9,741
6,725
(168)
(9,858)
10,650
2013
$’000
-
4,210
-
-
-
4,210
During the year, the Group disposed of a family entertainment centre at Tempe, Arizona, being previously held for sale. Tempe was
disposed of through a sale and leaseback transaction. During the year, the Group also reclassified property, plant and equipment
relating to family entertainment centres under construction in San Antonio, Texas and Oklahoma City, Oklahoma, as the carrying
amount will be recovered principally through sale and leaseback transactions rather than continuing use, and their sale is considered
highly probable. These assets are not depreciated and are held at the lower of cost or fair value.
Other assets
Prepayments
Accrued revenue
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
6,685
2,252
8,937
2013
$’000
8,097
1,305
9,402
2014
$’000
3,186
2,252
5,438
2013
$’000
4,651
1,305
5,956
Ardent Leisure Group | Annual Report 2014 63
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Investment properties
Consolidated Group
Property
Note
Valuer
Excess land at Dreamworld
Marinas
Total
(a)
(b)
(1)
(2)
Cumulative
revaluation
(decrements)/
increments
2014
$’000
(462)
19,820
19,358
Consolidated
book
value
2014
$’000
2,412
93,458
95,870
Cost
2014
$’000
2,874
73,638
76,512
Cumulative
revaluation
(decrements)/
increments
2013
$’000
(462)
19,820
19,358
Consolidated
book
value
2013
$’000
2,412
92,820
95,232
Cost
2013
$’000
2,874
73,000
75,874
(a) The remaining excess land has been valued by Directors at $2.4 million (2013: $2.4 million).
(b) The total carrying value of d’Albora Marinas (including plant and equipment of $7.8 million (2013: $6.6 million)) is $101.3 million (2013: $99.4 million). The
fair value was assessed to be $101.3 million (2013: $99.4 million).
(1) Peter Bouwmeester, CBRE Valuations Pty Limited, independently valued the property at 31 January 2012.
(2) Adam Ellis, LandMark White (Sydney) Pty Limited, independently valued the properties at 30 June 2014.
Refer to Note 39(b) for information on the valuation techniques used to derive the fair value of the investment properties.
A reconciliation of the carrying amount of investment properties at the beginning and end of the current year is set out below:
Carrying amount at the beginning of the year
Additions
Revaluation increments
Carrying amount at the end of the year
Consolidated
Group
Consolidated
Group
2014
$’000
95,232
638
-
95,870
2013
$’000
94,915
227
90
95,232
Amounts recognised in the Income Statement for investment properties:
Revenue from investment properties
Property expenses incurred on investment properties
18,186
(2,548)
18,350
(2,347)
ALL Group
ALL Group
2014
$’000
2013
$’000
-
-
-
-
-
-
-
-
-
-
-
-
At 30 June 2014, the Group had receivables from third parties totalling $648,709 (2013: $566,478) relating to leases on its investment
properties.
64 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Property, plant and equipment
Consolidated Group
Property
Theme parks
Marinas
Bowling centres
Family entertainment centres
Health clubs
Other
Total
Cost less
accumulated
depreciation
2014
$’000
Cumulative
revaluation
increments/
(decrements)
2014
$’000
212,603
7,806
97,335
78,446
74,605
2,742
34,811
-
1,900
(86)
-
-
Consolidated
book
value
2014
$’000
247,414
7,806
99,235
78,360
74,605
2,742
Note
(1) (2)
(3)
(4)
(5)
(6)
(7)
Cost less
accumulated
depreciation
2013
$’000
Cumulative
revaluation
increments/
(decrements)
2013
$’000
Consolidated
book value
2013
$’000
208,581
6,574
101,967
46,984
70,122
3,257
22,616
-
1,900
(86)
-
-
231,197
6,574
103,867
46,898
70,122
3,257
473,537
36,625
510,162
437,485
24,430
461,915
(1) The book value of Dreamworld and WhiteWater World land & buildings and major rides and attractions (including intangible assets of $0.8 million (2013:
$0.8 million)) is $227.0 million (2013: $216.5 million). In an independent valuation performed at 30 June 2014 by Jones Lang LaSalle, the fair value for these
assets was assessed to be $227.0 million (2013: $216.5 million). The Directors have valued other property, plant & equipment of Dreamworld & WhiteWater
World at 30 June 2014 at $2.3 million (2013: 0.1 million).
(2) The book value of SkyPoint (including intangible assets of $3.6 million (2013: $3.6 million)) is $22.5 million (2013: $19.0 million). In an independent valuation
performed at 30 June 2014, the fair value for SkyPoint was assessed to be $22.5 million (2013: $19.0 million).
(3) The Directors have valued the property, plant and equipment of d’Albora Marinas at $7.8 million (2013: $6.6 million).
(4) The one remaining freehold building was independently valued at 30 June 2010 at $1.9 million. At 30 June 2014, the Directors assessed the fair value of the
freehold building to be $1.9 million (2013: $1.9 million) and the remaining property, plant and equipment to be $97.3 million (2013: $102.0 million).
(5) At 30 June 2014, the Directors assessed the fair value of the property, plant and equipment in its family entertainment centres to be $70.7 million (2013:
$47.0 million).
(6) The Directors have valued the property, plant and equipment of Goodlife at 30 June 2014 at $74.6 million (2013: $70.1 million).
(7) The fair value of other property, plant and equipment was assessed by the Directors to be $2.7 million at 30 June 2014 (2013: $3.3 million).
Refer to Note 39(b) for information on the valuation techniques used to derive the fair value of the land and buildings and major rides
and attractions.
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:
Land and
buildings
$’000
Major
rides and
attractions
$’000
Plant and
equipment
$’000
Plant and
equipment
under
finance
lease
$’000
Furniture,
fittings and
equipment
$’000
Motor
vehicles
$’000
248,679
39,629
1,591
(9,741)
(815)
(10,473)
(1,279)
15,456
64,994
1,524
-
-
(829)
(2,110)
-
-
133,646
31,399
1,368
-
(470)
(20,236)
(799)
-
582
-
-
-
-
(90)
-
-
13,630
6,660
208
-
(68)
(2,574)
6
-
384
25
-
-
(30)
(105)
-
-
Total
$’000
461,915
79,237
3,167
(9,741)
(2,212)
(35,588)
(2,072)
15,456
283,047
63,579
144,908
492
17,862
274
510,162
Consolidated Group - 2014
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
Carrying amount at the end of
the year
Ardent Leisure Group | Annual Report 2014 65
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
19.
Property, plant and equipment (continued)
Land and
buildings
$’000
Major rides
and
attractions
$’000
Plant and
equipment
$’000
Plant and
equipment
under
finance
lease
$’000
Furniture,
fittings and
equipment
$’000
Motor
vehicles
$’000
216,813
21,791
11,374
(4,210)
-
(8,177)
1,985
9,103
65,279
1,971
-
-
(3)
(2,253)
-
-
110,084
32,784
3,866
-
(227)
(16,712)
3,851
-
673
-
-
-
-
(91)
-
-
9,232
5,929
495
-
-
(2,029)
3
-
328
137
55
-
-
(136)
-
-
Total
$’000
402,409
62,612
15,790
(4,210)
(230)
(29,398)
5,839
9,103
248,679
64,994
133,646
582
13,630
384
461,915
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
Carrying amount at the end of
the year
Plant and
equipment
under finance
lease
Plant and
equipment
$’000
$’000
54,812
30,433
1,576
-
(514)
(12,821)
(952)
72,534
582
-
-
-
-
(90)
-
492
Land and
buildings
$’000
28,056
35,079
-
(9,741)
(2)
(1,641)
(1,314)
50,437
Land and
buildings
$’000
Plant and
equipment
$’000
Plant and
equipment
under finance
lease
$’000
5,823
14,133
11,374
(4,210)
-
(1,017)
1,953
28,056
36,105
19,995
4,416
-
(209)
(9,227)
3,732
54,812
673
-
-
-
-
(91)
-
582
Total
$’000
83,450
65,512
1,576
(9,741)
(516)
(14,552)
(2,266)
123,463
Total
$’000
42,601
34,128
15,790
(4,210)
(209)
(10,335)
5,685
83,450
ALL Group - 2014
Carrying amount at the beginning of the year
Additions
Acquired through business combinations
Transfer to property held for sale
Disposals
Depreciation
Foreign exchange movements
Carrying amount at the end of the year
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
Carrying amount at the end of the year
66 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Livestock
Livestock comprises wildlife animals housed at the Dreamworld site.
At 1 July
Cost
Accumulated depreciation
Net book amount
Year ended 30 June
Opening net book amount
Additions
Disposals
Depreciation
Closing net book amount
At 30 June
Cost
Accumulated depreciation
Net book amount
Intangible assets
Customer relationships at cost
Accumulated amortisation
Brands at cost
Accumulated amortisation
Other intangible assets at cost
Accumulated amortisation
Goodwill at cost
Accumulated impairment charge
Total intangible assets
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
828
(523)
305
305
81
(46)
(40)
300
863
(563)
300
2013
$’000
828
(475)
353
353
-
-
(48)
305
828
(523)
305
2014
$’000
828
(523)
305
305
81
(46)
(40)
300
863
(563)
300
2013
$’000
828
(475)
353
353
-
-
(48)
305
828
(523)
305
Consolidated
Group
2014
Consolidated
Group
2013
$’000
$’000
ALL Group
2014
$’000
29,812
(24,697)
5,115
10,850
(4,454)
6,396
3,448
(1,960)
1,488
28,652
(19,058)
9,594
6,539
(3,760)
2,779
2,080
(1,878)
202
29,812
(24,697)
5,115
10,850
(4,454)
6,396
2,020
(532)
1,488
199,795
(11,557)
188,238
201,237
195,770
(11,557)
184,213
199,795
(11,557)
188,238
196,788
201,237
ALL Group
2013
$’000
28,652
(19,058)
9,594
6,539
(3,760)
2,779
652
(450)
202
195,770
(11,557)
184,213
196,788
Ardent Leisure Group | Annual Report 2014 67
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
21.
Intangible assets (continued)
Customer relationships
Opening net book amount
Additions
Amortisation
Closing net book amount
Brands
Opening net book amount
Additions
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
Customer relationships
Consolidated
Group
2014
$’000
Consolidated
Group
2013
$’000
ALL Group
2014
$’000
ALL Group
2013
$’000
9,594
1,160
(5,639)
5,115
2,779
4,311
(694)
6,396
202
1,368
(82)
1,488
3,389
13,290
(7,085)
9,594
3,433
-
(654)
2,779
320
-
(118)
202
9,594
1,160
(5,639)
5,115
2,779
4,311
(694)
6,396
202
1,368
(82)
1,488
3,389
13,290
(7,085)
9,594
3,433
-
(654)
2,779
221
-
(19)
202
184,213
5,087
(1,062)
188,238
201,237
132,696
46,550
4,967
184,213
196,788
184,213
5,087
(1,062)
188,238
201,237
132,696
46,550
4,967
184,213
196,788
Customer relationships relate to the relationships with health club members which were acquired as part of the various acquisitions of
health clubs.
Brands
The brands relate to the Goodlife brand acquired in September 2007 along with the distribution agreement for the use of the Hypoxi
brand in March 2014 (refer to Note 32).
Other intangible assets
Other intangible assets represent registered trademarks associated with Dreamworld operations, intellectual property associated with
Australian Tour Desk, liquor licences held by the bowling centres and software.
Goodwill
Goodwill represents goodwill acquired by the Group as part of various acquisitions. The movement in goodwill at cost in the period is
due to the acquisition of two health clubs and an amusement arcade (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.
68 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
21.
Intangible assets (continued)
Goodwill (continued)
A segment level summary of the goodwill allocation is presented below:
Consolidated Group and ALL Group
2014
Theme parks
Bowling centres
Family entertainment centres
Health clubs
2013
Theme parks
Bowling centres
Family entertainment centres
Health clubs
Impairment tests for goodwill
Australia United States New Zealand
$’000
$’000
$’000
Total
$’000
4,366
18,080
-
117,080
139,526
-
-
45,066
-
45,066
-
3,646
-
-
3,646
4,366
21,726
45,066
117,080
188,238
Australia United States New Zealand
$’000
$’000
$’000
Total
$’000
4,366
16,822
-
113,251
134,439
-
-
46,445
-
46,445
-
3,329
-
-
3,329
4,366
20,151
46,445
113,251
184,213
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:
Theme parks(3)
Bowling centres
Family entertainment centres
Health clubs
Growth rate(1)
Discount rate(2)
2014
% per
annum
N/A
2.00
3.00
2.00
2013
% per
annum
N/A
2.00
3.00
2.00
2014
% per
annum
N/A
8.98
7.50
8.98
2013
% per
annum
N/A
9.44
7.92
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 2014 and were independently valued by Jones Lang LaSalle (refer
to Note 19). As a result, no impairment testing is required at 30 June 2014.
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 2015 financial year budget. Cash flows beyond the budget 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.
Ardent Leisure Group | Annual Report 2014 69
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
21.
Intangible assets (continued)
Impairment tests for goodwill (continued)
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 that
would cause the CGUs’ carrying amount to exceed their recoverable amount to be reasonably possible.
22.
Deferred tax assets
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
2013
$’000
2014
$’000
2013
$’000
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Doubtful debts
Employee benefits
Provisions and accruals
Depreciation of property, plant and equipment
Inventory diminution
Deferred income
Unrealised foreign exchange losses
Lease incentives
Other
Deferred tax assets
Set-off of deferred tax balances pursuant to set-off provisions
Australia
United States
Net deferred tax assets
Movements
Balance at the beginning of the year
(Charged)/credited to the Income Statement
(refer to Note 10)
Credited to cash flow hedge reserve (refer to Note 30)
Acquired through business combinations (refer to Note 32)
Balance at the end of the year
Deferred tax assets to be recovered within 12 months
Deferred tax assets to be recovered after more than 12 months
70 Ardent Leisure Group | Annual Report 2014
216
4,757
1,167
153
6
76
4
1,563
179
100
5,710
496
-
19
184
-
1,649
-
216
4,757
1,167
153
6
76
4
1,563
179
100
5,710
496
-
19
184
-
1,649
-
8,121
8,158
8,121
8,158
(3,986)
(2,157)
1,978
(4,263)
(2,362)
1,533
(3,986)
(2,157)
1,978
(4,263)
(2,362)
1,533
8,158
4,885
8,158
4,885
(328)
11
280
8,121
5,849
2,272
8,121
2,434
-
839
8,158
5,922
2,236
8,158
(328)
11
280
8,121
5,849
2,272
8,121
2,434
-
839
8,158
5,922
2,236
8,158
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
23.
Payables
Current
Custodian fee
Interest payable
GST payable
Trade creditors
Property expenses payable
Employee share plan
Straight-line rent liability
Employee benefits
Deferred income
Other creditors and accruals
Total payables
24.
Interest bearing liabilities
Current
Finance leases
Total current
Non-current
Finance leases
Bank loan - term debt
Less: Amortised costs - bank loan
Loans from the Trust*
Consolidated
Group
2014
$’000
Consolidated
Group
2013
$’000
ALL Group
2014
$’000
ALL Group
2013
$’000
52
442
1,570
17,677
1,048
361
13,971
13,361
9,131
11,452
69,065
50
82
1,867
16,316
1,083
356
12,425
12,102
7,625
12,071
63,977
-
35
847
17,677
-
6,675
1,704
13,361
9,131
10,857
60,287
-
7
1,528
16,316
-
4,426
825
12,102
7,625
11,514
54,343
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
61
61
2013
$’000
238
238
2014
$’000
61
61
2013
$’000
238
238
-
261,551
(1,340)
-
61
229,253
(1,686)
-
-
79,851
(390)
125,365
61
55,159
(473)
113,599
Total non-current
260,211
227,628
204,826
168,346
Total interest bearing liabilities
260,272
227,866
204,887
168,584
* Further information relating to these loans is included in Note 36(g).
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:
Gearing ratio, being the ratio of total debt to total debt plus equity, must not exceed 40%;
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
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 2014 71
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
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:
Current
Floating charge
Cash and cash equivalents
Receivables
Derivative financial instruments
Inventories
Property held for sale
Other
Total current assets
Non-current
Mortgage
Investment properties
Land and buildings
Floating charge
Property, plant and equipment
Livestock
Intangible assets
Finance lease
Plant and equipment
Total non-current assets
Total assets
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
2013
$’000
2014
$’000
2013
$’000
7,079
7,416
-
9,378
10,650
16,579
12,953
7,049
575
9,780
4,210
9,402
6,197
7,762
-
9,378
10,650
13,080
12,481
9,290
-
9,780
4,210
5,956
51,102
43,969
47,067
41,717
95,870
275,405
95,232
248,679
-
42,795
-
28,056
371,275
343,911
42,795
28,056
226,623
300
12,999
212,654
305
12,575
72,534
300
12,999
54,812
305
12,575
239,922
225,534
85,833
67,692
492
582
492
582
611,689
570,027
129,120
96,330
662,791
613,996
176,187
138,047
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor in
the event of default.
72 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
24.
Interest bearing liabilities (continued)
Credit facilities
As at 30 June 2014, the Group had unrestricted access to the following credit facilities:
A$ syndicated facilities
Amount used
Amount unused
US$ syndicated facilities
Amount used
Amount unused
Trust facilities
Amount used
Amount unused
Total facilities
Total amount used
Total amount unused
Consolidated Group
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
200,000
(163,400)
36,600
127,253
(98,151)
29,102
-
-
-
2013
$’000
200,000
(152,995)
47,005
131,478
(76,258)
55,220
-
-
-
327,253
(261,551)
65,702
331,478
(229,253)
102,225
2014
$’000
-
-
-
106,045
(79,851)
26,194
355,975
(125,365)
230,610
462,020
(205,216)
256,804
2013
$’000
-
-
-
109,565
(55,159)
54,406
359,495
(113,599)
245,896
469,060
(168,758)
300,302
The Group has access to A$200.0 million (2013: A$200.0 million) syndicated facilities and a US$120.0 million (2013: US$120.0 million)
syndicated facilities. A$100.0 million of the AUD facilities will mature on 1 July 2016 and A$100.0 million will mature on 1 July 2017.
US$90.0 million of the USD facilities 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 2014, including the impact of the interest rate swaps,
is 5.15% per annum for AUD denominated debt (2013: 6.23% per annum) and 1.81% per annum for USD denominated debt (2013:
1.59% per annum).
ALL Group
Subject to the Trust loan facilities 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 US$100.0
million facilities with the Trust maturing on 31 August 2018.
The ALL Group has access to US$100.0 million (2013: $100.0 million) syndicated facilities. US$70.0 million of the facilities 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 38.
Ardent Leisure Group | Annual Report 2014 73
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
25.
Provisions
(a)
Distributions to stapled security holders
Opening balance
Distributions/dividends declared
Distributions/dividends paid
Distributions reinvested
Closing balance
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
-
49,025
(40,107)
(8,918)
-
2013
$’000
-
43,632
(36,644)
(6,988)
-
2014
$’000
-
3,874
(3,874)
-
-
2013
$’000
-
3,620
(3,620)
-
-
A provision for the distribution relating to the half year to 30 June 2014 was not recognised as the distribution had not been declared
at the reporting date.
(b)
Other provisions
Current
Employee benefits
Sundry*
Total current
Non-current
Employee benefits
Total non-current
Total provisions
Movements in sundry provisions
Carrying amount at the beginning of the year
Additional provisions recognised
Amounts utilised
Carrying amount at the end of the year
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
2013
$’000
2014
$’000
2013
$’000
2,700
572
3,272
1,625
1,625
2,448
542
2,990
2,011
2,011
2,700
572
3,272
1,625
1,625
2,448
542
2,990
2,011
2,011
4,897
5,001
4,897
5,001
542
718
(688)
572
428
473
(359)
542
542
718
(688)
572
428
473
(359)
542
* Sundry provisions include 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.
74 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
26.
Other liabilities
Security deposits
27.
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Intangible assets
Prepayments
Accrued revenue
Depreciation of property, plant and equipment
Deferred tax liabilities
Set-off deferred tax balances pursuant to set-off provisions
Australia
United States
Net deferred tax liabilities
Movements
Balance at the beginning of the year
(Credited)/charged to the Income Statement (refer to Note 10)
Acquired through business combinations (refer to Note 32)
Balance at the end of the year
Deferred tax liabilities to be settled within 12 months
Deferred tax liabilities to be settled after more than 12 months
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
2,155
2,155
2013
$’000
2,101
2,101
2014
$’000
2,155
2,155
2013
$’000
2,101
2,101
Consolidated
Group
2014
$’000
Consolidated
Group
2013
$’000
ALL Group
ALL Group
2014
$’000
2013
$’000
3,392
481
123
11,424
15,420
3,649
337
16
11,622
15,624
3,392
481
123
11,424
15,420
(3,986)
(2,157)
9,277
(4,263)
(2,362)
8,999
(3,986)
(2,157)
9,277
15,624
(1,860)
1,656
15,420
604
14,816
15,420
7,355
4,212
4,057
15,624
1,113
14,511
15,624
15,624
(1,860)
1,656
15,420
604
14,816
15,420
3,649
337
16
11,622
15,624
(4,263)
(2,362)
8,999
7,355
4,212
4,057
15,624
1,113
14,511
15,624
Ardent Leisure Group | Annual Report 2014 75
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
28.
Contributed equity
No. of
securities/shares Details
Date of
income
entitlement
30 Jun 2012
1 Jul 2012
334,209,401
5,647,860
1,491,186
39,062,500
17,363,566
-
29,474
397,803,987
5,295,345
1,895,088
61,288
-
405,055,708
Securities/shares on issue
DRP issue
1 Jul 2012
1 Jul 2012
1 Jul 2012
Security-based payments -
securities/shares issued
Fenix/Fitness First
placement
Security Purchase Plan
Issue costs paid
Security-based payments -
securities/shares issued
Securities/shares on issue
DRP issue
Security-based payments -
securities/shares issued
Security-based payments -
securities/shares issued
Issue costs paid
Securities/shares on issue 30 Jun 2014
1 Jan 2013
30 Jun 2013
1 Jul 2013
1 Jul 2013
1 Jul 2013
Consolidated
Group
2014
$’000
Consolidated
Group
2013
$’000
Note
ALL Group
2014
$’000
ALL Group
2013
$’000
(i)
(ii)
(iii)
(iii)
(ii)
(i)
(ii)
(ii)
421,900
6,988
1,931
50,000
22,225
(1,628)
-
501,416
501,416
501,416
8,918
3,469
112
(3)
513,912
14,202
1,504
585
19
(1)
16,309
11,960
196
57
1,408
626
(45)
-
14,202
14,202
(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. The DRP will be in operation for the distribution for the half year ended 30 June 2014, although
was not in operation for the half year ended 31 December 2013.
(ii)
Security-based payments
The Group has Deferred Short Term Incentive Plan (DSTI) and Long Term Incentive Plan (LTIP) remuneration arrangements 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)
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 fund the acquisition of Fenix and Fitness First health clubs.
76 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
29.
(a)
Security-based payments
Deferred Short Term Incentive Plan (DSTI)
Plan name
Who can participate?
Types of securities issued
Treatment of non-Australian residents
DSTI
All employees are eligible for participation at the discretion of the Board.
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.
For employees who are not Australian residents, the DSTI historically granted
cash awards to those executives. Administrative arrangements have now been
made to issue equity awards and not cash awards to non-resident executives. All
awards, whether equity or cash, are subject to the same tenure hurdles.
What restrictions are there on the securities?
Performance rights are non-transferable.
When can the securities vest?
What are the vesting conditions?
The plan contemplates that the performance rights will vest equally one year
and two years following the grant date.
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 857,282 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 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 722,192
performance rights vested on 23 August 2013 and 11 November 2013 and a corresponding number of stapled securities were issued
to employees under the terms of the DSTI (2013: 795,504).
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 performance rights 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 2014 77
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
29.
(a)
Security-based payments (continued)
Deferred Short Term Incentive Plan (DSTI) (continued)
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 135,090 cash settled
performance rights vested on 23 August 2013 to US employees under the terms of the DSTI (2013: 115,049).
Arrangements have now been made to allow for the issue of equity to US resident employees and future grants of performance rights
for equity will be issued instead of cash awards.
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 recognised in 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 the performance rights outstanding at 30 June 2014, 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 2014:
Grant
Grant date
Vesting date – 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
2012
2013
24 August 2012
23 August 2013
31 August 2014
2.80% per annum
35.0% per annum
9.1% per annum
$1.29
$1.15
23 August 2013
31 August 2014
31 August 2015
2.60% per annum
30.9% per annum
6.6% per annum
$1.82
$1.66
The table below shows the fair value of the performance rights in each grant as at 30 June 2014 as well as the factors used to value the
performance rights as at 30 June 2014. This valuation is used to value the performance rights granted to US employees at 30 June
2014:
Grant
Grant date
Vesting date – year 1
Vesting date – year 2
Average risk free rate
Expected price volatility
Expected distribution yield
Stapled security price at year end
Valuation per performance right at year end
2012
2013
24 August 2012
23 August 2013
31 August 2014
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
$2.71
23 August 2013
31 August 2014
31 August 2015
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
$2.64
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.
78 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
29.
(a)
Security-based payments (continued)
Deferred Short Term Incentive Plan (DSTI) (continued)
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.
The number of rights outstanding and the grant dates of the rights are shown in the tables below:
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
Rights
2013
Rights
2014
Rights
2013
Rights
Performance rights issued to participating executives:
Performance rights
950,807
1,327,804
950,807
1,327,804
Grant date
Expiry date
Exercise
price
Valuation
per right
Balance at
beginning
of the year
Granted
Exercised
Failed to
vest
12 Sep 2011 31 Aug 2013 nil
90.0 cents
475,531
24 Aug 2012 31 Aug 2014 nil
114.7 cents
852,273
-
-
(459,131)
(398,151)
23 Aug 2013 31 Aug 2015 nil
166.1 cents
- 616,299
-
1,327,804 616,299
(857,282)
-
-
-
-
Balance at
the end of
the year
-
383,419
567,388
Cancelled
(16,400)
(70,703)
(48,911)
(136,014)
950,807
The rights have an average maturity of six months.
(b)
Long Term Incentive Plan (LTIP)
Plan name
Who can participate?
Types of securities issued
Treatment of non-Australian residents
LTIP
All employees are eligible for participation at the discretion of the Board.
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.
For employees who are not Australian residents, the LTIP historically granted
cash awards to those executives. Administrative arrangements have now been
made to issue equity awards and not cash awards to non-resident executives. All
awards, whether equity or cash, are 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 two, three
and four years following the grant date, subject to meeting the total
shareholder return (TSR) performance hurdle.
From 1 July 2014, the LTIP will also be subject to a dual measure by including an
internal earnings per security (EPS) measure. The weighting between the two
hurdles will be then be split as follows:
TSR – 50%; and
EPS – 50%.
Ardent Leisure Group | Annual Report 2014 79
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
29.
(b)
Security-based payments (continued)
Long Term Incentive Plan (LTIP) (continued)
Plan name
What are the vesting conditions?
What does total shareholder return include?
What is the earnings per security hurdle?
LTIP
From 1 July 2014, in order for any or all of the performance rights to vest one or
both of the following hurdles must be met:
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;
and
EPS performance hurdle - the Group's compound EPS growth for the
performance period must exceed 5%. A sliding scale of vesting applies above
the 5% threshold.
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.
The EPS hurdle refers to the annual growth of earnings per security over the
total vesting periods of two, three and four years from the grant date.
What is the benchmark group?
The benchmark group comprises the ASX Small Industrials Index.
Did any of the securities vest?
Australian employees
During the financial year, a total of 1,303,244 performance rights reached
vesting following an independent third party assessment of the Group’s TSR
performance compared to the benchmark.
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.
During the year, the relative TSR performance of the Group was tested in accordance with the LTIP for tranches issued in 2009, 2010
and 2011 with the following results:
Tranche
T3-2009
T2-2010
T1-2011
TSR percentile
67.05
83.16
71.13
Vesting percentage
84.1%
100.0%
92.3%
A total of 1,234,184 performance rights vested on 23 August 2013 and a corresponding number of stapled securities were issued to
Australian employees under the terms of the LTIP (2013: 695,682).
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.
80 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
29.
(b)
Security-based payments (continued)
Long Term Incentive Plan (LTIP) (continued)
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 performance rights 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 69,060 cash settled performance rights vested on 23
August 2013 to US employees under the terms of the LTIP (2013: 38,401).
Arrangements have now been made to allow for the issue of equity to US resident employees and future grants of performance rights
for equity will be issued instead of cash awards.
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 recognised
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 2014, 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 2014:
Grant
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
2010
2011
16 December 2010 12 September 2011
23 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
23 August 2013
31 August 2014
5.10% per annum
45% per annum
10.0% per annum
$1.065
$0.52
2012
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
2013
23 August 2013
31 August 2015
31 August 2016
31 August 2017
2.60% per annum
32% per annum
6.6% per annum
$1.815
$0.76
Ardent Leisure Group | Annual Report 2014 81
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
29.
(b)
Security-based payments (continued)
Long Term Incentive Plan (LTIP) (continued)
Valuation inputs (continued)
The table below shows the fair value of the performance rights for each grant as at 30 June 2014 as well as the factors used to value
the performance rights at 30 June 2014. This valuation is used to value the performance rights granted to US employees at 30 June
2014:
Grant
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 year end
Valuation per performance right on issue
2010
2011
16 December 2010 12 September 2011
23 August 2013
31 August 2014
31 August 2015
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
$2.64
24 August 2012
23 August 2013
31 August 2014
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
$2.71
2012
24 August 2012
31 August 2014
31 August 2015
31 August 2016
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
$2.55
2013
23 August 2013
31 August 2015
31 August 2016
31 August 2017
2.51% per annum
26.8% per annum
4.8% per annum
$2.71
$2.33
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 and/or (for grants made after 1 July 2014) the
EPS hurdle must be met.
TSR
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 to TSRs of comparators
Below 51st percentile
51st percentile
Between 51st percentile and 75th percentile
75th percentile or higher
Proportion of performance rights vesting
0%
50%
Straight-line vesting between 50% and 100%
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 reinvested at the distribution date and any franking credits (or similar) are ignored.
EPS
The Group’s compound EPS growth for the performance period must exceed 5%. A sliding scale of vesting applies above 5%
threshold.
Compound EPS growth in the period
Below 5%
5%
Between 5% and 10%
10% or higher
The weighting between the two performance measures is split as follows:
TSR – 50%; and
EPS – 50%.
Proportion of performance rights vesting
0%
50%
Straight-line vesting between 50% and 100%
100%
82 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
29.
(b)
Security-based payments (continued)
Long Term Incentive Plan (LTIP) (continued)
The number of rights outstanding and the grant dates of the rights are shown in the tables below:
Consolidated
Group
2014
Rights
Consolidated
Group
2013
ALL Group
2014
Rights
Rights
ALL Group
2013
Rights
Performance rights issued to participating executives:
Performance rights
3,147,473
4,027,154
3,147,473
4,027,154
Grant date
Expiry date
Exercise
price
Valuation
per right
Balance at
beginning
of the year
Granted
Exercised Failed to vest
Cancelled
24 Aug 2013 nil
4 Dec 2009
16 Dec 2010 31 Aug 2014 nil
12 Sep 2011 31 Aug 2015 nil
24 Aug 2012 31 Aug 2016 nil
23 Aug 2013 31 Aug 2017 nil
466,444
89.0 cents
52.3 cents
900,471
43.7 cents 1,493,107
60.9 cents 1,167,132
76.3 cents
-
-
-
-
- 876,447
4,027,154 876,447
(393,629)
(450,234)
(459,381)
-
-
(1,303,244)
(74,417)
-
(38,320)
-
-
(112,737)
1,602
(39,223)
(82,650)
(160,665)
(59,211)
(340,147)
Balance at
the end of
the year
-
411,014
912,756
1,006,467
817,236
3,147,473
The rights have an average maturity of one year and two months.
The expense recorded in the Group financial statements in the year in relation to the performance rights was $1,996,226 (2013:
$1,378,478). The expense recorded in the ALL Group financial statements in the year in relation to the performance rights was
$6,202,877 (2013: $3,634,433).
Ardent Leisure Group | Annual Report 2014 83
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Reserves
Asset revaluation reserve
Opening balance
Revaluation - Theme parks
Revaluation - Bowling centres
Revaluation - Health clubs
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
Tax on movement on US 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
84 Ardent Leisure Group | Annual Report 2014
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
2013
$’000
2014
$’000
2,620
6,866
-
-
(3,261)
6,225
(8,439)
(2,579)
(11,018)
(1,569)
434
11
(1,124)
437
5,173
1,349
2,581
(6,920)
2,620
(5,912)
(2,527)
(8,439)
(3,098)
1,529
-
(1,569)
3,416
-
-
-
-
3,416
-
-
-
-
(30)
11
(19)
2013
$’000
3,416
-
-
-
-
3,416
-
-
-
-
-
-
-
(39,159)
391
(38,523)
(636)
(38,768)
(39,159)
(1,682)
(942)
(2,624)
(4,154)
2,472
(1,682)
1,867
(1,963)
(96)
2,729
(862)
1,867
1,132
1,132
1,132
1,132
-
-
-
-
-
-
-
-
-
-
(2,269)
(2,269)
(2,269)
(2,269)
(45,918)
(45,817)
(2,310)
(2,310)
(1,537)
(2,310)
(2,310)
(576)
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
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 were taken to the Income Statement as finance costs in subsequent periods. In a 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.
Retained profits/(accumulated losses)
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
2013
$’000
2014
$’000
Opening balance
Net profit for the year
Available for distribution
Transfer from asset revaluation reserve
Transfer to capital reserve
Distributions and dividends paid and payable
Closing balance
31,691
49,002
80,693
3,261
2,579
(49,025)
37,508
30,259
35,617
65,876
6,920
2,527
(43,632)
31,691
(2,837)
5,056
2,219
-
-
(3,874)
(1,655)
(2,837)
The distribution of 6.2 cents per stapled security for the year ended 30 June 2014 totalling $25.1 million had not been declared at year
end. This will be paid on or before 29 August 2014 as described in Note 44.
Ardent Leisure Group | Annual Report 2014 85
2013
$’000
(6,310)
7,093
783
-
-
(3,620)
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Business combinations
Current period
Camberwell
On 28 February 2014, the Group acquired a health club at Camberwell, Victoria, for $3.9 million. Transaction costs totalling $4,091 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 $1.1 million and a profit before allocation of Group costs and tax of $0.2 million to the
Group for the period from 28 February 2014 to 30 June 2014. If the acquisition had occurred on 1 July 2013, it would have contributed
revenues of $3.2 million and a profit before allocation of Group costs and tax of $0.7 million for the year ended 30 June 2014.
Final 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 net identifiable assets acquired
Goodwill
Consolidated
Group
ALL Group
$’000
$’000
3,918
3,918
1,158
2,760
3,385
3,385
625
2,760
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
Acquiree's
carrying
amount
$’000
Consolidated
Group
Fair value
$’000
ALL Group
Acquiree's
carrying
amount
$’000
ALL Group
Fair value
$’000
20
-
1,048
81
(236)
(44)
(9)
860
20
920
702
(195)
(236)
(44)
(9)
1,158
20
-
338
81
(236)
(44)
(9)
150
20
920
169
(195)
(236)
(44)
(9)
625
Consolidated
Group
$’000
ALL Group
$’000
3,918
3,918
3,385
3,385
Other current assets
Customer relationship intangible assets
Property, plant and equipment
Net deferred tax assets/(liabilities)
Deferred income
Payables
Employee benefits provision
Net identifiable assets acquired
Outflow of cash to acquire business:
Cash consideration
Outflow of cash
86 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
32.
Business combinations (continued)
Current period (continued)
Port Melbourne
On 28 February 2014, the Group acquired a health club at Port Melbourne, Victoria, for $1.4 million. Transaction costs totalling $4,091
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 profit before allocation of Group costs and tax of $0.1 million to the
Group for the period from 28 February 2014 to 30 June 2014. If the acquisition had occurred on 1 July 2013, it would have contributed
revenues of $2.1 million and a profit before allocation of Group costs and tax of $0.2 million for the year ended 30 June 2014.
Final 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 net identifiable assets acquired
Goodwill
Consolidated
Group
$’000
ALL Group
$’000
1,395
1,395
598
797
920
920
123
797
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.
Inventories
Other current assets
Customer relationship intangible assets
Property, plant and equipment
Net deferred tax assets
Deferred income
Payables
Employee benefits provision
Net identifiable assets acquired
Outflow of cash to acquire business:
Cash consideration
Outflow of cash
Consolidated
Group
Acquiree's
carrying
amount
$’000
Consolidated
Group
Fair value
$’000
ALL Group
Acquiree's
carrying
amount
$’000
ALL Group
Fair value
$’000
3
4
-
909
110
(309)
(26)
(36)
655
3
4
240
684
38
(309)
(26)
(36)
598
3
4
-
419
110
(309)
(26)
(36)
165
3
4
240
209
38
(309)
(26)
(36)
123
Consolidated
Group
ALL Group
$’000
$’000
1,395
1,395
920
920
Ardent Leisure Group | Annual Report 2014 87
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
32.
Business combinations (continued)
Current period (continued)
Hypoxi
On 31 March 2014, the Group completed the acquisition of 100% of the shares in Hypoxi Australia Pty Limited and Hypoxi New
Zealand Limited (collectively Hypoxi), a targeted weight loss solutions business, for $3.8 million. Transaction costs totalling $48,342
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 $0.9 million and a profit before allocation of Group costs and tax of $0.2 million to the
Group for the period from 31 March 2014 to 30 June 2014. If the acquisition had occurred on 1 July 2013, it would have contributed
revenues of $2.8 million and a profit before allocation of Group costs and tax of $0.5 million for the year ended 30 June 2014.
Final details of the fair value of the assets and liabilities acquired and goodwill are as follows:
Consolidated
Group
$’000
ALL Group
$’000
3,813
3,813
3,813
-
3,813
3,813
3,813
-
Consolidated
Group
Acquiree's
carrying
amount
Consolidated
Group
Fair value
ALL Group
Acquiree's
carrying
amount
ALL Group
Fair value
$’000
577
476
125
-
134
(1,214)
(220)
(80)
(291)
(5)
(498)
$’000
577
476
125
4,311
134
(1,214)
(220)
(80)
(291)
(5)
3,813
$’000
577
476
125
-
134
(1,214)
(220)
(80)
(291)
(5)
(498)
$’000
577
476
125
4,311
134
(1,214)
(220)
(80)
(291)
(5)
3,813
Consolidated
Group
ALL Group
$’000
$’000
3,813
(577)
3,236
3,813
(577)
3,236
Purchase consideration:
Cash paid
Total purchase consideration
Fair value of net identifiable assets acquired
Goodwill
Cash and cash equivalents
Receivables
Other current assets
Distribution agreement intangible assets
Property, plant and equipment
Net deferred tax liabilities
Deferred income
Payables
Other current liabilities
Employee benefits provision
Net identifiable (liabilities)/assets acquired
Outflow of cash to acquire business:
Cash consideration
Less: cash balances acquired
Outflow of cash
88 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
32.
Business combinations (continued)
Current period (continued)
City Amusements
On 22 May 2014, the Group acquired City Amusements, an amusement game arcade in Sydney, New South Wales, for $2.9 million.
Transaction costs totalling $169,942 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 $0.3 million and a profit before allocation of Group costs and tax of $0.04 million to the
Group for the period from 22 May 2014 to 30 June 2014. If the acquisition had occurred on 1 July 2013, it would have contributed
revenues of $3.1 million and a profit before allocation of Group costs and tax of $0.9 million for the year ended 30 June 2014.
Final 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 net identifiable assets acquired
Goodwill
Other current assets
Property, plant and equipment
Net deferred tax liabilities
Employee benefits provision
Net identifiable assets acquired
Outflow of cash to acquire business:
Cash consideration
Outflow of cash
Consolidated
Group
$’000
ALL Group
$’000
2,915
2,915
1,657
1,258
2,332
2,332
1,074
1,258
ALL Group
Acquiree's
carrying
amount
$’000
ALL Group
Fair value
$’000
20
1,080
(5)
(5)
1,090
20
1,064
(5)
(5)
1,074
Consolidated
Group
$’000
ALL Group
$’000
2,915
2,915
2,332
2,332
Consolidated
Group
Acquiree's
carrying
amount
$’000
20
1,663
(5)
(5)
1,673
Consolidated
Group
Fair value
$’000
20
1,647
(5)
(5)
1,657
Ardent Leisure Group | Annual Report 2014 89
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
32.
Business combinations (continued)
Prior 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 $63.0 million. Transaction costs totalling $1,121,590 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.
Final 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 net identifiable assets acquired
Goodwill
Consolidated
Group
$’000
ALL Group
$’000
62,985
62,985
62,985
62,985
16,163
46,822
16,163
46,822
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.
Customer relationship intangible assets
Property, plant and equipment
Net deferred tax assets/(liabilities)
Current tax receivable
Payables
Employee benefits provision
Other current assets
Other current liabilities
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
Acquiree's
carrying
amount
$’000
318
12,202
1,776
193
(1,501)
(243)
1,218
(5,562)
Acquiree's
carrying
amount
$’000
318
12,202
1,776
193
(1,501)
(243)
1,218
(5,562)
Fair value
$’000
12,160
8,787
(3,015)
193
(1,501)
(243)
1,218
(1,436)
Fair value
$’000
12,160
8,787
(3,015)
193
(1,501)
(243)
1,218
(1,436)
Net identifiable assets acquired
8,401 16,163 8,401
16,163
Outflow of cash to acquire business:
Cash consideration
Less: cash balances acquired
Outflow of cash
90 Ardent Leisure Group | Annual Report 2014
Consolidated
Group
$’000
ALL Group
$’000
62,985
(796)
62,189
62,985
(796)
62,189
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
Cash and cash equivalents
For the purposes of the Statements of Cash Flows, cash includes only cash at banks and on deposit. Cash as at 30 June 2014 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
Total cash and cash equivalents
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
7,016
63
7,079
2013
$’000
12,890
63
12,953
2014
$’000
6,134
63
6,197
2013
$’000
12,418
63
12,481
Cash on deposit at call in the Group bears an average floating interest rate of 2.44% per annum (2013: 2.69% per annum).
Cash on deposit at call in the ALL Group bears an average floating interest rate of 2.50% per annum (2013: 2.75% per annum).
Cash flow information
(a)
Reconciliation of profit to net cash flows from operating activities
Consolidated
Group
2014
$’000
Consolidated
Group
2013
$’000
ALL Group
2014
$’000
ALL Group
2013
$’000
Profit
49,002
35,617
5,056
7,093
Non-cash items
Depreciation of property, plant and equipment
Amortisation
Depreciation of livestock
Security-based payments
Provision for doubtful debts
Loss/(gain) on sale of property, plant and equipment and livestock
Loss on disposal of bowling centre
Valuation gains on investment property and property, plant and
equipment
Classified as financing activities
Borrowing costs
Classified as investing activities
Unrealised loss/(gain) 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
Net cash flows from operating activities
35,588
6,415
40
1,996
122
74
1,579
29,398
7,857
48
1,378
46
(313)
-
14,552
6,415
40
6,203
122
81
-
10,335
7,758
48
3,634
46
(293)
-
(8,590)
(90)
-
-
11,330
12,288
8,766
7,531
613
-
(339)
(2,613)
-
-
-
(2,613)
(13)
404
(1,818)
(775)
3,440
(386)
-
(2,120)
567
97,468
(1,441)
(963)
1,344
992
(1,462)
380
-
350
(108)
82,369
298
404
(1,818)
(722)
2,343
(386)
(1,860)
(2,120)
567
37,941
(2,138)
(963)
1,344
2,078
4,122
380
(3,692)
350
(108)
34,912
Ardent Leisure Group | Annual Report 2014 91
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
34.
(b)
Cash flow information (continued)
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
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
Related party disclosures
(a)
Directors
Consolidated
Group
2014
$’000
Consolidated
Group
2013
$’000
ALL Group
2014
$’000
ALL Group
2013
$’000
8,918
6,988
1,504
196
Consolidated
Group
Consolidated
Group
2014
$’000
2013
$’000
853,007
(201,237)
(347,505)
304,265
799,742
(196,788)
(312,452)
290,502
405,055,708
397,803,987
$0.75
$0.73
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 (Board Chair);
Roger Davis;
Anne Keating;
Don Morris AO;
Greg Shaw;
Deborah Thomas (appointed 1 December 2013); and
George Venardos.
(b)
Parent entity
The immediate and ultimate parent entity of the Group is Ardent Leisure Trust.
The immediate and ultimate parent entity of the ALL Group is Ardent Leisure Limited.
92 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
36.
(c)
Related party disclosures (continued)
Key controlled entities
These financial statements incorporate the assets, liabilities and results of the following wholly-owned key subsidiaries in accordance
with the accounting policy disclosure as described in Note 1(b):
Entity
Activity
Country of
establishment
Class of equity
securities
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
Main Event Holdings, Inc
Goodlife Operations Pty Limited
Hypoxi Australia Pty Limited
(d)
Transactions with related parties
Key management personnel
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
lessee: Marinas, Bowling centres
Principal
Freehold owner: Theme parks
Principal lessee: Bowling centres
Principal lessee: Health clubs
Australia
New Zealand
Australia
Ordinary
Ordinary
Ordinary
Theme Parks, Marinas
Bowling centres
Bowling centres
Family Entertainment
Health clubs
Targeted weight loss solutions
Australia
Australia
New Zealand
USA
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Consolidated
Group
2014
$
4,154,998
162,234
-
-
1,194,933
5,512,165
Consolidated
Group
2013
$
3,801,827
141,779
5,564
-
1,153,684
5,102,854
ALL Group
2014
$
4,154,998
162,234
-
-
4,305,134
8,622,366
ALL Group
2013
$
3,801,827
141,779
5,564
-
3,053,700
7,002,870
Remuneration of key management personnel (KMP) is shown in the Directors’ report from page 13 to page 29.
(e)
Loans to KMP
There were no loans to KMP during the financial year or prior corresponding period.
(f)
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 a 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 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.
Ardent Leisure Group | Annual Report 2014 93
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
36.
(g)
Related party disclosures (continued)
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
2014
$
Consolidated
Group
2013
$
ALL Group
2014
$
ALL Group
2013
$
(7,438)
(1,919)
(7,438)
(1,919)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(7,287,779)
(6,130,526)
(113,598,779)
(94,287,532)
88,095,545
594
(5,575,220)
(125,365,392)
(124,257,619)
(110,206,569)
133,797,179
(5,726,799)
(7,204,972)
(113,598,780)
Purchases of goods
Reimbursable expenses 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
Segment information
Business segments
The Group is organised on a global basis into the following divisions by product and service type:
Health clubs
This comprises 68 centres in Queensland, New South Wales, Victoria, South Australia and Western Australia and one independent
Hypoxi studio in New South Wales.
Family entertainment centres
This segment comprises of 14 Main Event sites in Texas, Arizona and Georgia, United States of America.
Theme parks
This segment comprises Dreamworld and WhiteWater World in Coomera, Queensland and the SkyPoint 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 50 bowling centres and three amusement arcades located in Australia and New Zealand.
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 intangible assets and impairment of goodwill. 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.
94 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
37.
Segment information (continued)
Business segment 2014
Consolidated Group
Health
clubs
$’000
Family
entertainment
centres
$’000
Theme
parks
$’000
Marinas
$’000
Bowling
centres
$’000
Other
$’000
Total
$’000
Revenue from operating activities
164,070
98,121 100,139
23,466 113,889
18
499,703
Divisional EBITDA before property costs(1)
Divisional EBITDA(2)
Depreciation and amortisation(3)
Divisional EBIT(4)
70,249
33,990
(6,902)
27,088
36,896
24,714
(6,626)
33,867
32,799
(4,982)
12,944
10,396
(858)
38,907
13,765
(7,274)
(1)
(1)
(506)
192,862
115,663
(27,148)
18,088
27,817
9,538
6,491
(507)
88,515
Pre-opening expenses, straight lining of fixed rent increases, IFRS depreciation and
intangible asset amortisation not included in divisional EBIT
Valuation gains - Property, plant and equipment
Loss on closure of bowling centre
Loss on disposal of assets
Gain on sale and leaseback of family
entertainment centre
Net loss from derivative financial instruments
Interest income
Corporate costs
Business acquisition costs
Borrowing costs
Net tax expense
Profit
(19,020)
8,590
(1,579)
(453)
379
(613)
211
(12,545)
(277)
(11,330)
(2,876)
49,002
Total assets
Acquisitions of property, plant and equipment,
investment properties and intangible assets
211,691
138,167
262,225
103,734 131,157
6,033
853,007
24,174
56,871
8,516
2,725
7,598
1,809
101,693
(1) Excludes pre-opening expenses of $2,579,000.
(2) Excludes straight lining of fixed rent increases of $1,546,000 and pre-opening expenses of $2,579,000.
(3) Excludes IFRS depreciation of $8,562,000 and amortisation of intangible assets totalling $6,333,000.
(4) Excludes of pre-opening expenses of $2,579,000, straight lining of fixed rent increases of $1,546,000, IFRS depreciation of $8,562,000 and amortisation of
intangible assets of $6,333,000.
Ardent Leisure Group | Annual Report 2014 95
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
37.
Segment information (continued)
Business segment 2013
Consolidated Group
Health
clubs
$’000
Family
entertainment
centres
$’000
Theme
parks Marinas
$’000
$’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)
Divisional EBITDA(2)
Depreciation and amortisation(3)
60,032
30,329
(5,064)
26,921
17,541
(4,601)
32,211
30,450
(5,172)
13,034
10,687
(762)
36,381
12,773
(6,762)
(7)
(7)
(283)
168,572
101,773
(22,644)
Divisional EBIT(4)
25,265
12,940
25,278
9,925
6,011
(290)
79,129
Pre-opening expenses, straight lining of fixed rent increases, IFRS depreciation and
intangible asset amortisation not included in divisional EBIT
Valuation gains - investment properties
Gain on disposal of assets
Gain on acquisition
Net gain from derivative financial instruments
Interest income
Corporate costs
Business acquisition costs
Borrowing costs
Net tax expense
Profit
(18,497)
90
313
2,613
602
228
(11,192)
(1,507)
(12,288)
(3,874)
35,617
Total assets
Acquisitions of property, plant and equipment,
investment properties and intangible assets
200,261
102,401 249,000 101,446 134,184
12,450
799,742
87,487
24,679
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 intangible assets totalling $7,739,000.
(4) Excludes 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
intangible assets of $7,739,000.
96 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
37.
Segment information (continued)
Business segment 2014
ALL Group
Health
clubs
$’000
Family
entertainment
centres
$’000
Theme
parks
$’000
Marinas
$’000
Bowling
centres
$’000
Other
$’000
Total
$’000
Revenue from operating activities
164,070
98,121 100,139
23,466 113,889
18
499,703
Divisional EBITDA before rent to Trust(1)
Divisional EBITDA after rent to Trust(1)
Depreciation and amortisation(2)
58,545
22,520
(6,830)
24,714
24,714
(6,626)
33,867
2,854
(250)
12,944
956
(5)
38,712
5,192
(456)
(1)
-
(507)
168,781
56,236
(14,674)
Divisional EBIT(3)
15,690
18,088
2,604
951
4,736
(507)
41,562
Pre-opening expenses, straight lining of fixed rent increases and intangible asset
amortisation not included in divisional EBIT
Loss on disposal of assets
Gain on sale and leaseback of family
entertainment centre
Interest income
Foreign exchange loss
Corporate costs
Business acquisition costs
Borrowing costs
Net tax expense
Profit
(9,791)
(460)
379
99
(25)
(15,038)
(277)
(8,766)
(2,627)
5,056
Total assets
Acquisitions of property, plant and equipment,
investment properties and intangible assets
172,903
138,365
14,834
1,753
33,183
5,365
366,403
20,943
56,870
2,464
129
3,524
1,809
85,739
(1) Excludes pre-opening expenses of $2,579,000 and straight lining of fixed rent of $879,000.
(2) Excludes amortisation of intangible assets of $6,333,000.
(3) Excludes pre-opening expenses of $2,579,000, straight lining of fixed rent of $879,000 and amortisation of intangible assets of $6,333,000.
Ardent Leisure Group | Annual Report 2014 97
For personal use only
Notes to the Financial Statements
For the year ended 30 June 2014
37.
Segment information (continued)
Business segment 2013
ALL Group
Family
Health entertainment
centres
$’000
clubs
$’000
Theme
parks Marinas
$’000
$’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)
Divisional EBITDA after rent to Trust(1)
Depreciation and amortisation(2)
51,621
22,088
(5,021)
17,541
17,541
(4,601)
32,211
2,716
(151)
13,034
956
-
36,381
5,676
(347)
(7)
(7)
(283)
150,781
48,970
(10,403)
Divisional EBIT(3)
17,067
12,940
2,565
956
5,329
(290)
38,567
Pre-opening expenses, straight lining of fixed rent increases and intangible asset
amortisation not included in divisional EBIT
Gain on disposal of assets
Gain on acquisition
Interest income
Foreign exchange gain
Corporate expenses
Business acquisition costs
Borrowing costs
Net tax expense
Profit
(11,002)
293
2,613
185
236
(11,020)
(1,607)
(7,531)
(3,641)
7,093
Total assets
161,592
102,599
15,535
1,268
29,816
12,983
323,793
Acquisitions of property, plant and equipment,
investment properties and intangible assets
83,272
24,679
18
-
277
1,512
109,758
(1) Excludes pre-opening expenses of $2,438,000 and straight lining of fixed rent of $825,000.
(2) Excludes amortisation of intangible assets of $7,739,000.
(3) Excludes pre-opening expenses of $2,438,000, straight lining of fixed rent of $825,000 and amortisation of intangible assets of $7,739,000.
98 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
38.
(a)
Capital and financial risk management
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% - 35% of debt to debt plus equity. At 30 June 2014, gearing was 34.1% (2013: 32.0%)
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% - 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 foreign exchange 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.
Ardent Leisure Group | Annual Report 2014 99
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
38.
(c)
Capital and financial risk management (continued)
Market risk (continued)
Foreign exchange risk (continued)
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% - 100% of overseas investments in this way.
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:
Australian dollars
New Zealand dollars
US dollars
Consolidated Group
Assets
Cash and cash equivalents
Receivables and other current assets
Derivative financial instruments
Property held for sale
Investment properties
Property, plant and equipment
Intangible assets
Other non-current assets
Total assets
Liabilities
Payables and other current liabilities
Derivative financial instruments
Interest bearing liabilities
Other non-current liabilities
Total liabilities
2014
$’000
2013
$’000
4,231
15,506
-
-
95,870
437,235
155,710
103
708,655
48,948
1,463
162,569
10,902
223,882
8,983
21,926
575
4,210
95,232
408,534
150,186
1,814
691,460
58,305
1,891
152,081
2,011
214,288
2014
$’000
998
46
-
-
-
2,122
3,596
18
6,780
407
-
-
-
407
2013
$’000
529
432
-
-
-
2,075
3,279
24
6,339
544
-
-
-
544
2014
$’000
2013
$’000
1,850
10,179
-
10,650
-
70,805
41,931
2,157
137,572
25,513
-
97,703
-
123,216
3,441
3,873
-
-
-
51,306
43,323
-
101,943
12,836
-
75,785
8,999
97,620
Net assets
484,773
477,172
6,373
5,795
14,356
4,323
Notional value of derivatives
-
-
-
-
4,477
5,752
Net exposure to foreign exchange
movements
484,773
477,172
6,373
5,795
18,833
10,075
100 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
38.
(c)
Capital and financial risk management (continued)
Market risk (continued)
Foreign exchange risk (continued)
Foreign investment (continued)
ALL Group
Assets
Cash and cash equivalents
Receivables and other current assets
Property held for sale
Property, plant and equipment
Intangible assets
Other non-current assets
Liabilities
Payables and other current liabilities
Interest bearing liabilities
Other non-current liabilities
Total liabilities
Net assets
Net exposure to foreign exchange
movements
Australian dollars
New Zealand dollars
US dollars
2014
$’000
2013
$’000
4,146
12,255
-
52,658
155,710
103
8,902
21,016
4,210
32,144
150,186
1,814
40,247
125,272
10,950
49,157
113,411
2,011
176,469
164,579
2014
$’000
373
144
-
-
3,596
18
4,131
347
-
-
347
2013
$’000
281
137
-
-
3,279
24
2014
$’000
1,678
10,179
10,650
70,805
41,931
2,157
2013
$’000
3,298
3,873
-
51,306
43,323
-
3,721
137,400
101,800
61
-
-
61
25,496
79,615
-
105,111
12,833
55,173
8,999
77,005
48,403
53,693
3,784
3,660
32,289
24,795
48,403
53,693
3,784
3,660
32,289
24,795
Total assets
224,872
218,272
The table below demonstrates the sensitivity of the above net exposures 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
Profit movement
2014
$’000
(1,712)
2,093
(579)
708
2013
$’000
(949)
1,160
(527)
644
AUD:USD - increase 10%
AUD:USD - decrease 10%
AUD:NZD - increase 10%
AUD:NZD - decrease 10%
ALL Group
AUD:USD - increase 10%
AUD:USD - decrease 10%
AUD:NZD - increase 10%
AUD:NZD - decrease 10%
Core earnings
movement
2014
$’000
2013
$’000
-
-
-
-
-
-
-
-
Total equity
movement
2014
$’000
(1,712)
2,093
(579)
708
2013
$’000
(949)
1,160
(527)
644
Profit movement
Total equity
movement
2014
$’000
(2,935)
3,588
(344)
420
2013
$’000
(2,254)
2,755
(333)
407
2014
$’000
(2,935)
3,588
(344)
420
2013
$’000
(2,254)
2,755
(333)
407
Ardent Leisure Group | Annual Report 2014 101
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
38.
(c)
Capital and financial risk management (continued)
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 net monetary 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
Australian interest
US interest
2014
$’000
(61)
(61)
2013
$’000
(299)
(299)
2014
$’000
2013
$’000
-
-
-
-
5,229
(163,400)
(158,171)
9,512
(152,995)
(143,483)
1,850
(98,151)
(96,301)
3,441
(76,258)
(72,817)
Interest rate swaps
100,000
120,000
31,813
-
Net interest rate exposure
(58,171)
(23,483)
(64,488)
(72,817)
Refer to Note 14 for further details on the interest rate swaps.
102 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
38.
(c)
Capital and financial risk management (continued)
Market risk (continued)
Interest rate risk (continued)
ALL Group
Fixed rates
Interest bearing liabilities
Floating rates
Cash and cash equivalents
Interest bearing liabilities
Australian interest
US interest
2014
$’000
(61)
(61)
2013
$’000
(299)
(299)
2014
$’000
-
-
2013
$’000
-
-
4,519
(125,211)
(120,692)
9,183
(113,112)
(103,929)
1,678
(80,005)
(78,327)
3,298
(55,646)
(52,348)
Interest rate swaps
-
-
31,813
-
Net interest rate exposure
(120,692)
(103,929)
(46,514)
(52,348)
Sensitivity
Consolidated Group
1% increase in AUD rate
1% decrease in AUD rate
1% increase in USD rate
1% decrease in USD rate
ALL Group
1% increase in AUD rate
1% decrease in AUD rate
1% increase in USD rate
1% decrease in USD rate
Profit movement
Core earnings
movement
Total equity
movement
2014
$’000
(537)
537
(689)
689
2013
$’000
(223)
223
(475)
475
2014
$’000
(582)
582
(645)
645
2013
$’000
(235)
235
(475)
475
2014
$’000
593
(593)
(66)
66
2013
$’000
1,179
(1,179)
(475)
475
Profit movement
Total equity
movement
2014
$’000
(1,207)
1,207
(509)
509
2013
$’000
(1,039)
1,039
(522)
522
2014
$’000
(1,207)
1,207
113
(113)
2013
$’000
(1,039)
1,039
(522)
522
At reporting date, the Group has fixed 50.4% (2013: 52.4%) of its floating interest exposure.
Ardent Leisure Group | Annual Report 2014 103
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
38.
(d)
Capital and financial risk management (continued)
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 2014. The amounts presented represent the future contractual undiscounted principal and interest cash flows
and therefore do not equate to the values shown in the Balance Sheets. Repayments which are subject to notice are treated as if
notice were given immediately.
Consolidated Group
2014
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
$’000
Over 5
years
$’000
Payables
Finance leases
Term debt
Interest rate swaps designated as hedges
of the term debt
Forward foreign exchange contracts
Total undiscounted financial liabilities
69,065
61
261,551
69,065
61
8,880
-
-
-
-
8,880 195,616
-
-
69,020
1,443
20
332,140
881
4,597
83,484
796
-
817
-
9,676 196,433
-
-
69,020
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated Group
2013
Book
value
$’000
Less than
1 year
$’000
Payables
Finance leases
Term debt
Interest rate swaps designated as hedges
of the term debt
Forward foreign exchange contracts
Total undiscounted financial liabilities
63,977
299
229,253
63,977
238
8,329
1,891
575
295,995
995
5,187
78,726
ALL Group
2014
Payables
Finance leases
Term debt
Loan from the Trust
Interest rate swaps designated as hedges
of the term debt
Total undiscounted financial liabilities
ALL Group
2013
Book
value
$’000
Less than
1 year
$’000
60,287
61
79,851
125,365
60,287
61
1,225
6,547
Book
value
$’000
Less than
1 year
$’000
Payables
Finance leases
Term debt
Loan from the Trust
Total undiscounted financial liabilities
54,343
299
55,159
113,599
223,400
54,343
238
865
6,095
61,541
104 Ardent Leisure Group | Annual Report 2014
1 to 2
years
$’000
-
61
8,329
336
-
8,726
1 to 2
years
$’000
-
-
1,225
6,547
2 to 3
years
$’000
3 to 4
years
$’000
4 to 5
years
$’000
Over 5
years
$’000
-
-
-
-
8,329 178,841
-
-
52,995
8
-
-
-
8,337 178,841
-
-
52,995
-
-
-
-
-
-
2 to 3
years
$’000
-
-
74,329
6,547
3 to 4
years
$’000
4 to 5
years
$’000
Over 5
years
$’000
-
-
-
-
5,620
-
6,547 126,477
-
-
-
-
-
-
1 to 2
years
$’000
-
61
865
6,095
7,021
2 to 3
years
$’000
-
-
865
6,095
6,960
3 to 4
years
$’000
4 to 5
years
$’000
Over 5
years
$’000
-
-
55,159
6,095
61,254
-
-
-
-
-
-
6,095 115,135
6,095 115,135
48
265,612
270
68,390
270
8,042
254
81,130
-
-
12,167 126,477
Total
$’000
69,065
61
282,396
2,494
4,597
358,613
Total
$’000
63,977
299
256,823
1,339
5,187
327,625
Total
$’000
60,287
61
82,399
152,665
794
296,206
Total
$’000
54,343
299
57,754
145,610
258,006
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
38.
Capital and financial risk management (continued)
(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 credit risk on receivables by performing credit reviews of prospective debtors, obtaining collateral where
appropriate and performing detailed reviews on any debtor arrears. The Group has policies to review the aggregate exposures of
receivables 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.
For derivative financial instruments, 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.
No credit risk has been allocated to cash and cash equivalents. Credit risk adjustments relating to receivables have been applied in line
with the accounting policy 1(d). No fair value adjustment has been made to derivative financial assets, with the impact of credit risk
being minimal. The Group’s maximum exposure to credit risk is noted in the table below.
Details the concentration of credit exposure of the Group’s assets is as follows:
Cash and cash equivalents
Receivables - Australasia
Receivables - US
Derivative financial instruments
Consolidated
Group
Consolidated
Group
ALL Group
ALL Group
2014
$’000
7,079
7,157
259
-
2013
$’000
12,953
5,990
1,059
575
2014
$’000
6,197
7,503
259
-
14,495
20,577
13,959
2013
$’000
12,481
8,231
1,059
-
21,771
Ardent Leisure Group | Annual Report 2014 105
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
38.
(e)
Capital and financial risk management (continued)
Credit risk (continued)
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:
Past due but not impaired
Less than 30 days
$’000
31 to 60 days
$’000
61 to 90 days More than 90 days
$’000
$’000
Impaired
$’000
Consolidated Group
2014
Receivables - Australasia
Receivables - US
Consolidated Group
2013
Receivables - Australasia
Receivables - US
ALL Group
2014
Receivables - Australasia
Receivables - US
ALL Group
2013
Receivables - Australasia
Receivables - US
1,771
1
1,772
1,403
-
1,403
1,771
1
1,772
1,403
-
1,403
407
-
407
613
-
613
407
-
407
613
-
613
124
-
124
169
-
169
124
-
124
169
-
169
52
37
89
126
-
126
52
37
89
126
-
126
804
-
804
706
-
706
804
-
804
706
-
706
Total
$’000
3,158
38
3,196
3,017
-
3,017
3,158
38
3,196
3,017
-
3,017
Based on a review of receivables by management, a provision of $522,000 (2013: $609,000) has been made against receivables with a
gross balance of $804,000 (2013: $706,000).
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.
106 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
39.
(a)
Fair value measurement
Fair value hierarchy
The group measures and recognises the following assets and liabilities at fair value on a recurring basis:
Derivative financial information;
Land and buildings; and
Investment properties.
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy:
(a)
(b)
(c)
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or
indirectly (level 2); and
Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities:
Consolidated Group
2014
Assets measured at fair value:
Investment properties
Property, plant and equipment(1)
Property held for sale
Derivative financial assets
Liabilities measured at fair value:
Derivative financial liabilities
Liabilities for which fair values are disclosed:
Interest bearing liabilities (refer to Note 39(c))
2013
Assets measured at fair value:
Investment properties
Property, plant and equipment(1)
Derivative financial assets
Liabilities measured at fair value:
Derivative financial liabilities
(1) Land and buildings and major rides and attractions.
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
-
-
-
-
-
-
-
-
95,870
346,626
10,650
-
1,463
261,612
-
-
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
575
95,232
313,673
-
-
-
-
-
Total
$’000
95,870
346,626
10,650
-
1,463
261,612
Total
$’000
95,232
313,673
575
1,891
-
1,891
There has been no transfer between level 1 and level 2 during the year. For changes in level 3 items for the periods ended 30 June
2014 and 30 June 2013, refer to Notes 16, 18 and 19.
Ardent Leisure Group | Annual Report 2014 107
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
39.
(a)
Fair value measurement (continued)
Fair value hierarchy (continued)
The following table provides the fair value measurement hierarchy of the ALL Group’s assets and liabilities:
ALL Group
2014
Assets measured at fair value:
Property, plant and equipment(1)
Derivative financial assets
Liabilities measured at fair value:
Derivative financial liabilities
Liabilities for which fair values are disclosed:
Interest bearing liabilities (refer to Note 39(c))
2013
Assets measured at fair value:
Property, plant and equipment(1)
Derivative financial assets
Liabilities measured at fair value:
Derivative financial liabilities
(1) Land and buildings and major rides and attractions.
Level 1
$’000
Level 2
$’000
-
-
-
-
Level 1
$’000
-
-
-
-
-
48
205,277
Level 2
$’000
-
-
-
Level 3
$’000
50,437
-
-
-
Level 3
$’000
28,056
-
Total
$’000
50,437
-
48
205,277
Total
$’000
28,056
-
-
-
There has been no transfer between level 1 and level 2 during the year. For changes in level 3 items for the periods ended 30 June
2014 and 30 June 2013, refer to Note 19.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the year.
The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 30 June 2014.
(b)
Valuation techniques used to derive level 2 and level 3 fair values
The fair value of financial instruments that are not traded in an active market (eg, over–the–counter derivatives) is determined using
valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is
included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
This is the case for unlisted equity securities.
Specific valuation techniques used to value financial instruments include:
The use of quoted market prices or dealer quotes for similar instruments;
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on
observable yield curves; and
The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet
date.
All of the resulting fair value estimates are included in level 2. There are no level 3 financial instruments in either the Group or the ALL
Group.
108 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
39.
(b)
Fair value measurement (continued)
Valuation techniques used to derive level 2 and level 3 fair values (continued)
The fair value of investment properties are determined in line with the policy set out in Note 1(f), with all resulting fair value estimates
included in level 3. The current use is considered to be the highest and best use for all investment properties in the Group.
Fair value measurements using significant unobservable inputs
For changes in level 3 items for the period ended 30 June 2014 and 2013 refer to the investment properties and property, plant and
equipment Notes 18 and 19.
Valuation inputs and relationships to fair value
The significant unobservable inputs associated with the valuation of the Group’s investment properties are as follows:
Marinas
Capitalisation rate (%)
8.8 - 11.6
Discount rate (%)
10.8 - 11.8
Annual net property
income ($’000)
445 - 2,603
The fair value of land and buildings and major rides and attractions are determined in line with the policy set out in Note 1(g), with all
resulting fair value estimates included in level 3.
Dreamworld and WhiteWater World
SkyPoint
Capitalisation rate (%)
9.6
13.7
Discount rate (%)
15.0
16.3
Annual net property
income ($’000)
30,482
3,344
The sensitivity of the fair values of the investment properties and land and buildings in relation to the significant unobservable inputs
are set out in the table below:
Fair value measurement sensitivity to significant increase
in input
Fair value measurement sensitivity to significant decrease
in input
Decrease
Increase
Decrease
Increase
Increase
Decrease
Capitalisation rate (%)
Discount rate (%)
Annual net property
income ($’000)
When calculating the income capitalisation approach, the net market rent has a strong interrelationship with the adopted
capitalisation rate given the methodology involves assessing the total income receivable from the property and capitalising this in
perpetuity to derive a capital value. In theory, an increase in the income and an increase (softening) in the adopted capitalisation rate
could potentially offset the impact to the fair value. The same can be said for a decrease in the income and a decrease (tightening) in
the adopted capitalisation rate. A directionally opposite change in the income and the adopted capitalisation rate could potentially
magnify the impact to the fair value.
There are no other significant inter-relationships between unobservable inputs that materially affect the fair value.
Ardent Leisure Group | Annual Report 2014 109
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
39.
(c)
Fair value measurement (continued)
Fair values of other financial instruments
The Group also has a number of financial instruments which are not measured at fair value in the Balance Sheet. For the majority of
these instruments, the fair values are not materially different to their carrying amounts, since the interest receivable/payable is either
close to the current market rates or the instruments are short term in nature. Significant differences were identified for the following
instruments at 30 June 2014:
Consolidated Group
Interest bearing liabilities
ALL Group
Interest bearing liabilities
Carrying
amount
2014
$’000
Fair value Discount rate
2014
$’000
2014
%
Carrying
amount
2013
$’000
261,612
254,831
4.75
229,552
222,601
Fair value Discount rate
2013
$’000
2013
%
4.75
205,277
198,610
4.75
169,057
164,379
4.75
In determining the fair value of the interest bearing liabilities, the principal payable $261,612 has been discounted at a rate of 4.75% to
best reflect the price that market participants would use when transferring the non-current borrowings, assuming that market
participants act in their economic best interest. They are classified as level 3 fair values in the fair value hierarchy due to the use of
unobservable inputs, including own credit risk. Own credit risk has been included for the first time in the current financial year
following the adoption of AASB 13 Fair Value Measurement.
40.
Contingent liabilities
Unless otherwise disclosed in the financial statements, there are no material contingent liabilities.
41.
(a)
Capital and lease commitments
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
Consolidated
Group
2014
Consolidated
Group
2013
ALL Group
2014
$’000
$’000
$’000
ALL Group
2013
$’000
1,204
1,204
1,920
1,920
1,204
1,204
1,920
1,920
110 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
41.
(b)
Capital and lease commitments (continued)
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
2014
$’000
Consolidated
Group
2013
$’000
67,885
228,243
197,222
493,350
451
492,837
62
493,350
63,044
230,150
188,940
482,134
1,473
480,350
311
482,134
ALL Group
2014
$’000
25,418
94,226
128,633
248,277
451
247,764
62
248,277
ALL Group
2013
$’000
23,160
98,077
108,617
229,854
1,473
228,070
311
229,854
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:
Within one year
Later than one year but not later than five years
Minimum lease payments
Less: Future finance charges
Total lease liabilities
Representing lease liabilities:
Current
Non-current
Consolidated
Group
2014
$’000
Consolidated
Group
2013
$’000
ALL Group
2014
$’000
ALL Group
2013
$’000
67,601
228,014
197,222
492,837
62,300
229,110
188,940
480,350
25,134
93,996
128,634
247,764
22,416
97,037
108,617
228,070
62
-
62
(1)
61
61
-
61
249
62
311
(12)
299
238
61
299
62
-
62
(1)
61
61
-
61
249
62
311
(12)
299
238
61
299
The Group leases various plant and equipment with a carrying value of $492,000 (2013: $582,000) under finance leases which expire
within one to five years. The weighted average interest rate implicit in the leases is 5.41% per annum (2013: 5.41% per annum).
Ardent Leisure Group | Annual Report 2014 111
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
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. On 9 October 2012, Fenix Holdings Pty Limited
and its controlled entities executed an Assumption Deed and became parties to the Deed of Cross Guarantee. On 28 April 2014,
Hypoxi Australia Pty Ltd executed an Assumption Deed and became a party to the Deed of Cross Guarantee.
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, Fenix Holdings Pty Limited and Hypoxi Australia Pty Ltd 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, Goodlife Operations Pty Limited and Hypoxi Australia Pty Ltd represent a ‘Closed Group’
for the purposes of the Class Order.
Set out below is a consolidated Income Statement for the year ended 30 June 2014 of the Closed Group:
Revenue from operating activities
Purchases of finished goods
Salary and employee benefits
Borrowing costs
Property expenses
Depreciation and amortisation
Advertising and promotions
Repairs and maintenance
Pre-opening expenses
Other expenses
(Loss)/profit before tax benefit
Income tax benefit
(Loss)/profit
2014
$’000
2013
$’000
404,224
367,834
(32,140)
(156,564)
(11,015)
(124,956)
(14,400)
(15,734)
(17,737)
(407)
(37,053)
(5,782)
3,008
(2,774)
(30,451)
(143,279)
(10,561)
(106,510)
(13,563)
(15,279)
(16,859)
(1,369)
(29,709)
254
1,575
1,829
(b)
Consolidated Statement of Comprehensive Income
Set out below is a consolidated Statement of Comprehensive Income for the year ended 30 June 2014 of the Closed Group:
(Loss)/profit
Other comprehensive income for the year
Total comprehensive income for the year
112 Ardent Leisure Group | Annual Report 2014
2014
$’000
2013
$’000
(2,774)
-
1,829
-
(2,774)
1,829
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
42.
(c)
Deed of cross guarantee (continued)
Consolidated Balance Sheet
Set out below is a consolidated Balance Sheet as at 30 June 2014 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
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
2014
$’000
4,128
7,035
7,566
1,549
4,963
25,241
46,245
300
135,520
2,105
49,730
233,900
259,141
47,432
61
3,272
1,296
52,061
196,081
-
1,625
197,706
249,767
9,374
16,309
(2,310)
(4,625)
9,374
2013
$’000
8,901
7,582
8,148
1,001
4,671
30,303
36,382
305
131,303
1,653
49,730
219,373
249,676
42,306
238
2,990
1,516
47,050
190,513
61
2,011
192,585
239,635
10,041
14,202
(2,310)
(1,851)
10,041
Ardent Leisure Group | Annual Report 2014 113
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
42.
(d)
Deed of cross guarantee (continued)
Consolidated Statement of Changes in Equity
Set out below is a consolidated Statement of Changes in Equity for the year ended 30 June 2014 of the Closed Group:
Total equity at 30 June 2012
Total comprehensive income
Contributions of equity, net of issue costs
Total equity at 30 June 2013
Total comprehensive income
Contributions of equity, net of issue costs
Total equity at 30 June 2014
43.
(a)
Parent entity financial information
Summary financial information
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Equity
Contributed equity
Reserves
(Accumulated losses)/retained profits
Contributed
equity
$’000
Reserves
$’000
Accumulated
losses
$’000
11,960
-
2,242
14,202
-
2,107
(2,310)
-
-
(2,310)
-
-
(3,680)
1,829
-
(1,851)
(2,774)
-
16,309
(2,310)
(4,625)
Total
$’000
5,970
1,829
2,242
10,041
(2,774)
2,107
9,374
Consolidated
Group
2014
$’000
Consolidated
Group
2013
$’000
ALL Group
2014
$’000
ALL Group
2013
$’000
11,129
666,435
17,854
199,559
14,468
652,062
18,538
192,725
7,616
181,702
18,862
164,353
497,603
(2,907)
(27,820)
487,213
(3,371)
(24,505)
16,309
(2,310)
3,350
466,876
459,337
17,349
10,726
181,709
16,383
189,995
14,202
(2,310)
(20,178)
(8,286)
Profit/(loss)
45,710
28,960
23,528
(12,093)
Total comprehensive income
46,174
30,489
23,528
(12,093)
(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 (refer to 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.
114 Ardent Leisure Group | Annual Report 2014
For personal use only
Notes to the Financial Statements
for the year ended 30 June 2014
43.
(c)
Parent entity financial information (continued)
Contingent liabilities
Ardent Leisure Trust and Ardent Leisure Limited did not have any contingent liabilities at 30 June 2014 or 30 June 2013.
(d)
Contractual commitments for the acquisition of property, plant 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
Consolidated
Group
ALL Group
ALL Group
2014
$’000
2013
$’000
2014
$’000
2013
$’000
-
-
-
-
1,167
1,167
1,920
1,920
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 $1,167,000 (2013: $1,920,000). 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 6.2 cents per stapled security has been declared by the Board of Directors. The total
distribution amount of $25.1 million will be paid on or before 29 August 2014 in respect of the half year ended 30 June 2014.
On 16 July 2014, a conditional purchase agreement was entered into for the acquisition of eight health clubs from Fitness First in
Western Australia for a total consideration of $32.5 million, of which $2.0 million will be deferred for 12 months. The agreement was
subject to the completion of satisfactory due diligence, valid assignment of the property leases, Board approval and the Group
securing finance. On the 6 August 2013, following the completion of the majority of the above conditions precedent, the Group
announced the acquisition and undertook an institutional placement of $50 million, proceeds of which will be used to fund the above
acquisition and the acceleration of the Main Event development pipeline.
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
2014.
Ardent Leisure Group | Annual Report 2014 115
For personal use only
Directors’ declaration to stapled
security holders
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 35
to 115 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 2014 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
15 August 2014
116 Ardent Leisure Group | Annual Report 2014
For personal use only
Independent auditor’s report to the stapled 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 2014, 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 Group (the consolidated stapled entity). The consolidated stapled entity, as described
in Note 1 to the financial report, comprises 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 2014, 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 the 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 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial 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 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.
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 Professional Standards Legislation.
For personal use only We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
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 2014 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.
(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 2014. 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 Auditing 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 2014, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Timothy J Allman
Partner
Brisbane
15 August 2014
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