Ardent Leisure Group Limited
Annual Financial Report
for the year ended 30 June 2020
The financial report was authorised for issue by the Directors of Ardent Leisure Group Limited (ABN 51 628 881 603)
on 26 August 2020. The Directors have the power to amend and reissue the financial report.
Message from the Chairman
Dear Shareholders,
I am pleased to present Ardent Leisure Group Limited’s Annual Report for the year ended 30 June 2020.
The year presented Ardent with the unexpected challenge of responding to the COVID-19 pandemic. While we were very
pleased to see strong progress and positive signs of recovery during the first half of the year at Main Event and Theme
Parks, the onset of the pandemic in the second half has significantly impacted the Group. Following governmental
restrictions on non-essential and mass gatherings, the Board made the difficult decision to temporarily close our Main
Event centres in the United States and Dreamworld, Whitewater World and SkyPoint in Australia.
Cash preservation and refinancing became a priority resulting in the Board and management taking immediate steps to
reduce spend across our businesses. All non-essential capital and operating expenditures ceased, discussions
commenced with suppliers and landlords for payment relief or deferrals, covenant waivers were obtained from our
lenders, directors waived their fees, and senior management voluntarily agreed to salary reductions. As a result of the
closures a majority of our team members were temporarily furloughed while a small number of team members continued
to work from our sites to perform essential tasks.
In June 2020 we announced a partnership between RedBird Capital Partners and Main Event Entertainment. The
partnership comprises an initial investment by RedBird of US$80 million in exchange for a 24.2% interest in Main Event,
with an option to acquire an additional 26.8% at a future date. This was a remarkable achievement during the
challenging economic times and not only demonstrates the capabilities of the team at Main Event, but also the
confidence that RedBird has in the future potential of the business.
The calibre and credentials of the RedBird team are impressive, and we look forward to working with them to accelerate
the growth of Main Event and drive value for shareholders.
Turning to our Theme Parks business, we were pleased to announce in early August 2020 that we secured financial
assistance from the Queensland Government under their COVID-19 Industry Support Package and Queensland Tourism
Icons Program 2020. The financial assistance package totals $69.9 million and comprises a secured loan which includes
interest and fees, and a grant.
We are most grateful to the Queensland Government for their support and recognition of the important role that the
theme park industry plays in the economic development of Queensland and the broader tourism industry in Australia.
This financial assistance will enable us to re-open Dreamworld and Whitewater World and continue to employ (directly
and indirectly) hundreds of people.
Immediately following the funding announcement, we set an opening date of 16 September 2020 for both Dreamworld
and WhiteWater World and began to plan for the commencement of construction of our new world-class rollercoaster
which will create over 200 local construction jobs.
The Coronial Inquest into the Dreamworld tragedy concluded with the Coroner’s Report being handed down in February.
Subsequently, Ardent has pleaded guilty to three charges brought against it under the workplace health and safety laws.
The Coroner’s Report does not mark the beginning of change at Dreamworld, but rather represents a very important
milestone in a continuous improvement journey for safety at Dreamworld that remains ongoing. Work is well advanced
with the implementation of the new government legislated Safety Case and licensing regime, with the transformation in
Dreamworld’s approach to safety management being led by the new Theme Parks leadership team. We reaffirm our
commitment to learn from the tragedy and strive for safety standards reflecting global best practice in theme park
operations.
Message from the Chairman
It is difficult to predict what the future holds for many businesses impacted by the COVID-19 pandemic. While it has
presented us with challenges rarely experienced before, we have also used this time as an opportunity to examine our
operations to ensure we can emerge as a stronger and more cost-effective business. With funding now in place for Main
Event and Theme Parks, and with great management teams in both businesses, Ardent is well-positioned for future
growth once market conditions begin to improve.
On behalf of the Board, I would like to thank our team members for their efforts this year. Their determination and
resilience to respond to the COVID-19 pandemic is commendable and a testament to the leadership and culture that has
been created within the Group.
Dr Gary Weiss AM
Chairman
Ardent Leisure Group Limited
Annual Financial Report
Directors’ Report
Income Statement
Statement of Comprehensive Income
Balance Sheet
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Basis of preparation
Segment information
Revenue from operating activities
Other income
Other expenses
Finance costs
Taxation
Cash flow information
Losses per share
Overview
1.
Performance
2.
3.
4.
5.
6.
7.
8.
9.
10. Dividends paid and payable
Working capital
11.
12.
13. Construction in progress
14. Other assets
15.
Payables
Long term assets
16.
17.
Property, plant and equipment
Intangible assets
Receivables
Inventories
2
27
28
29
30
31
32
32
32
34
34
37
37
37
38
38
43
45
45
45
45
46
46
47
48
48
48
52
Fair value measurement
Interest bearing liabilities
Leases
Debt and equity
18. Contributed equity
19. Other equity
20.
Reserves
21. Accumulated losses
22.
23.
Financial risk management
24. Derivative financial instruments
25. Capital and financial risk management
26.
Unrecognised items
27. Contingent liabilities
28. Capital commitments
29.
Other
30.
Investment held at fair value
31.
Provisions
32. Net tangible assets
33. Deed of Cross Guarantee
34.
Remuneration of auditor
35.
Equity-based payments
36.
Related party disclosures
37.
Parent entity financial information
Directors’ declaration to shareholders
Events occurring after reporting date
Independent auditor’s report to shareholders
Investor Analysis
Investor Relations and Corporate Directory
54
54
54
55
56
56
57
61
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Ardent Leisure Group Limited | Annual Report 2020
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Directors’ Report
Directors’ Report
The Directors of Ardent Leisure Group Limited (Company) present their report together with the consolidated financial report
of the Company and its controlled entities (collectively, the Group) for the year ended 30 June 2020 (FY20).
Ardent Leisure Group Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business are Level 8, 60 Miller Street, North Sydney NSW 2060.
1.
Directors
The following persons have held office as Directors of the Company during the period and up to the date of this report unless
otherwise stated:
Gary Weiss AM;
David Haslingden;
Randy Garfield;
Brad Richmond; and
Antonia Korsanos (resigned 30 June 2020).
2.
Principal activities
The Group’s principal activity is to invest in and operate leisure and entertainment businesses in Australia and the United
States of America. There were no significant changes in the nature of the activities of the Group during the year.
3.
Dividends and distributions
No dividend was paid or declared for the half year ended 31 December 2019 (25 December 2018: $Nil) or has been paid or
declared for the year ended 30 June 2020 (25 June 2019: $Nil).
4.
Operating and financial review
Overview
The Group’s strategy is to focus primarily on leisure and entertainment segments within its geographical areas of operation
with mass market appeal. During the year, two businesses contributed to the overall result: Main Event and Theme Parks.
Main Event partnership transaction
On 15 June 2020, the Group announced that it had entered into a partnership transaction with a US-based private investment
firm, RedBird Capital Partners (RedBird) under which RedBird has invested US$80.0 million via preferred shares into Main
Event’s US parent entity, Ardent Leisure US Holding Inc (ALUSH), to acquire an initial 24.2% interest in Main Event. In
conjunction with the transaction, RedBird has been granted an option to acquire additional equity in ALUSH which would
enable it to move to a 51% controlling interest, exercisable between 30 June 2022 and 30 June 2024.
This transaction will enhance Main Event’s liquidity and capacity to invest in future growth while also bringing additional
expertise and opportunities to Main Event.
Theme Parks funding
On 7 August 2020, the Group announced that it has received financial assistance for its Theme Parks business under the
Queensland Government’s COVID-19 Industry Support Package and Queensland Tourism Icons Program 2020.
The financial assistance package is for a three-year term totalling $69.9 million comprising a secured loan of $66.9 million (which
includes capitalised interest and fees) and a grant of $3.0 million which can be used to fund working capital and approved capital
expenditure. The loan is mutually exclusive from the debt facility in place for the Group’s US Main Event business.
Queensland Work Health and Safety prosecution
The Coronial Inquest into the Thunder River Rapids ride incident which occurred in October 2016 concluded in December 2018.
The Coroner’s findings and recommendations were handed down on 24 February 2020. The Coroner did not make any formal
finding of guilt on the part of Ardent Leisure Limited (ALL) or any other person or entity and did not impose any pecuniary fine or
penalty. In his Report, the Coroner referred the matter back to the Queensland Work Health and Safety Prosecutor to consider
“whether there is sufficient evidence to proceed to prosecution against ALL”.
On 21 July 2020 the Queensland Work Health and Safety Prosecutor filed three charges against a subsidiary of the Company,
Ardent Leisure Limited (ALL), pursuant to section 32 of the Work Health and Safety Act 2011 (Qld) in relation to the Thunder River
Rapids ride incident which occurred in October 2016. Each charge carries a maximum penalty of $1.5 million and ALL pleaded
guilty to all three charges on 29 July 2020. The matter has been set down for sentencing on 28 September 2020.
2
Ardent Leisure Group | Annual Report 2020
Directors’ Report
4.
Operating and financial review (continued)
Shareholder class action
On 18 June 2020, the Company was served with a representative shareholder class action arising from the 2016 Dreamworld
tragedy. The claim alleges contraventions of the Corporations Act 2001 (Cth). The claim has not been quantified by the plaintiff and
is not fully particularised, therefore the Company cannot provide any meaningful or indicative estimate of the quantum of any
potential liability (if any). The Company has indicated that it believes the proceedings to be without merit and it will vigorously
defend them.
The Company maintains appropriate insurances to respond to litigation and regulatory action and the majority of associated costs.
Group results
The performance of the Group, as represented by the aggregated results of its operations for the period from 26 June 2019 to
30 June 2020 (371 days), was as follows:
Main Event
$’000
343,807
55,268
(55,315)
(28,282)
(28,329)
Theme
Parks
$’000
54,508
(23,950)
(9,828)
(96)
(33,874)
26 June 2019 to 30 June 2020
Segment revenue
Segment EBITDA
Depreciation and amortisation
Amortisation of lease assets
Segment EBIT
Borrowing costs
Lease liability interest expense
Interest benefit
Net loss before tax
Income tax expense
Net loss after tax
Corporate
$’000
Continuing
operations
$’000
Discontinued
operations
$’000
-
(5,602)
(497)
(124)
(6,223)
398,315
25,716
(65,640)
(28,502)
(68,426)
(27,614)
(36,568)
680
(131,928)
(4,701)
(136,629)
-
(10,366)
-
(10,366)
The segment EBITDA above has been impacted by the following specific items:
Valuation loss on property, plant and
equipment
Valuation gain on investment held at fair
value
Impairment of property, plant and
equipment and lease right-of-use assets
Early termination of leases
Pre-opening expenses
Dreamworld incident costs, net of insurance
recoveries
Restructuring and other non-recurring items
Reduction in rent due to adoption of new
lease accounting standard, AASB 16 Leases
Net gain/(loss) on disposal of assets
(5,041)
-
-
(2,015)
(2,758)
(4,175)
-
(5,920)
2,827
(779)
-
-
390
-
-
-
48,258
2,535
35,925
107
(2,942)
(16,194)
-
(253)
128
-
265
The net loss after tax above has also been impacted by the following specific items:
Incremental lease asset amortisation and
lease interest expense on adoption of AASB
16 Leases
Tax impact of specific items listed above
Tax deductible temporary differences for
which deferred tax asset derecognised
Tax losses for which deferred tax asset
derecognised or not recognised
(64,837)
6,072
(101)
4,889
(9,823)
(132)
(40)
-
-
(7,951)
(66,716)
(2,639)
(7,674)
(17,186)
(17,358)
390
(7,056)
(2,758)
(4,175)
2,827
(6,952)
48,493
(407)
19,996
(65,070)
10,921
(9,823)
(27,776)
(91,748)
Total
$’000
398,315
25,720
(65,640)
(28,502)
(68,422)
(27,614)
(36,568)
680
(131,924)
(4,701)
(136,625)
(10,366)
390
(7,056)
(2,758)
(4,175)
2,827
(6,952)
48,493
(407)
19,996
(65,070)
10,921
(9,823)
(27,776)
(91,748)
-
4
-
-
4
-
-
-
4
-
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Ardent Leisure Group Limited | Annual Report 2020
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Directors’ Report
4.
Operating and financial review (continued)
Group results (continued)
The performance of the Group, as represented by the aggregated results of its operations for the prior period from 27 June 2018
to 25 June 2019 (364 days), was as follows:
27 June 2018 to 25 June 2019
Segment revenue
Segment EBITDA
Depreciation and amortisation
Segment EBIT
Finance costs
Interest income
Net loss before tax
Income tax expense
Net loss after tax
The segment EBITDA above has been
impacted by the following specific items:
Impairment of property, plant and
equipment
Pre-opening expenses
Dreamworld incident costs, net of insurance
recoveries
Provision for onerous lease contract
Restructuring and other non-recurring items
Selling costs associated with discontinued
operations
Net gain/(loss) on disposal of assets
The net loss after tax above has also been
impacted by the following specific items:
Tax impact of specific items listed above
Tax impact of destapling and corporatisation
Tax losses for which deferred tax assets have
been derecognised
Estimated tax payable in respect of prior years
Main Event
$’000
416,164
47,278
(42,293)
4,985
Theme
Parks
$’000
67,133
(19,834)
(9,226)
(29,060)
Corporate
$’000
4
(15,137)
(837)
(15,974)
Continuing
operations
$’000
Discontinued
operations
$’000
483,301
12,307
(52,356)
(40,049)
(8,262)
339
(47,972)
(12,293)
(60,265)
-
(612)
-
(612)
-
-
(612)
-
(612)
Total
$’000
483,301
11,695
(52,356)
(40,661)
(8,262)
339
(48,584)
(12,293)
(60,877)
(17,567)
(2,791)
-
(3,072)
(5,180)
-
1,695
(26,915)
5,652
-
-
-
5,652
-
-
(5,407)
-
(3,048)
-
(1,410)
(9,865)
3,203
-
-
-
3,203
-
-
(17,567)
(2,791)
-
-
(4,767)
-
(334)
(5,101)
(5,407)
(3,072)
(12,995)
-
(49)
(41,881)
-
-
-
-
-
(17,567)
(2,791)
(5,407)
(3,072)
(12,995)
(612)
-
(612)
(612)
(49)
(42,493)
1,530
3,865
10,385
3,865
(12,376)
(15,919)
(22,900)
(12,376)
(15,919)
(14,045)
-
-
-
-
-
10,385
3,865
(12,376)
(15,919)
(14,045)
The Group reported a net loss after tax of $136.6 million
for the year ended 30 June 2020 (comprising 53 weeks),
compared to a net loss of $60.9 million in the prior year
(comprising 52 weeks).
The current year has been significantly impacted by the
COVID-19 pandemic which resulted in temporary closure
of Main Event centres on 17 March 2020 and Theme Parks
on 23 March 2020.
In addition to having an additional week in the current
year and operational disruption due to COVID-19, the year
on year comparison of the Group’s results is also impacted
by non-cash valuation and impairment losses on the
Dreamworld and SkyPoint properties, impairment charges
at several US entertainment centres, derecognition of
4
Ardent Leisure Group Limited | Annual Report 2020
deferred tax assets and the adoption of a new lease
accounting standard AASB 16 Leases.
Under the new lease standard, a significant part of lease
costs are now reported below EBITDA as “amortisation of
lease assets” and “lease interest expense” and these costs
are higher due to a different recognition profile compared
to the previous lease accounting standard.
The current year also continued to be impacted by
Dreamworld incident costs, with the Coronial Inquest
findings being handed down in February 2020, as well as
restructuring and other non-recurring items, some of
which are directly attributable to COVID-19.
Directors’ Report
4.
Operating and financial review (continued)
Group results (continued)
Total segment revenue of $398.3 million for the Group
declined by $85.0 million compared to the prior year due to
temporary closure of Main Event centres and Theme Parks
in response to government imposed social distancing and
other measures to stop the spread of COVID-19. This is
partially offset by incremental revenue from new Main
Event centres that opened in the year, as well as
encouraging signs of recovery in Theme Park’s attendance
and revenue growth achieved prior to the emergence of
COVID-19.
Total EBITDA increased by $14.0 million from $11.7 million
in FY19 to $25.7 million in FY20 mainly due to a change in
lease accounting standard, which resulted in approximately
$48.5 million lower rent being reported as part of EBITDA in
the current year. When including the rent expense to
enable like-for-like comparison, total EBITDA declined by
$34.5 million from $11.7 million in FY19 to a loss of $22.8
million in FY20, with performance of the businesses being
impacted by:
Reduced revenue and EBITDA due to COVID-19, with
travel restrictions and business closures severely
impacting trading performance. All Main Event centres
and Theme Parks were closed from mid/late March
2020. Although Main Event has gradually reopened
some locations, with 38 reopened as of 30 June 2020,
the trading performances post reopening have been
soft as consumers remain cautious of congregating in
public places. Prior to COVID-19 being declared a
pandemic, the Group reported revenue of $362.3
million and EBITDA of $68.2 million for the eight
months ended 3 March 2020;
$10.4 million valuation loss and $5.0 million impairment
loss on property, plant and equipment in Theme Parks
predominantly as a consequence of the impact of
COVID-19 on trading performance and near term
outlook. These include a $2.0 million valuation loss
associated with a decommissioned ride in the first half;
Non-cash impairments of property, plant and
equipment and lease right-of-use assets in certain Main
Event centres, amounting to $0.4 million and $1.6
million respectively in the current year, compared to
$17.6 million of impairment of property, plant and
equipment in the prior year. In addition, the current
year was also impacted by $2.8 million costs associated
with the early termination of Main Event’s leases of the
Pittsburgh and Indianapolis centres; whilst the prior
year included a $3.1 million onerous lease expense
associated with Pittsburgh centre;
A $1.4 million increase in pre-opening expenses due to
more Main Event centre openings in the current year;
$0.4 million higher net losses on disposal of assets in
the current year, partially offset by gain on sale of part
of Dreamworld’s excess land as well as $2.5 million gain
on disposal of assets associated with the permanent
closure of Main Event’s Indianapolis centre;
A $19.4 million increase in finance costs as a result of a
larger debt facility and margins following the
completion of the US debt refinancing in April 2019.
The current year was also impacted by costs associated
with a reduction in Main Event’s Delayed Draw Term
Loan Facility, covenant waivers and the RedBird
transaction.
These were partly offset by:
A $8.2 million decrease in costs relating to the
Dreamworld incident, net of insurance recoveries, from
an expense of $5.4 million in FY19 to an income of $2.8
million in FY20;
A $6.0 million reduction in restructuring and other non-
recurring items due to the Group being impacted by
several one-off expenses as a result of restructuring
activity in the prior year, including the destapling and
corporatisation of the Group, consulting costs,
employee related costs, as well as new site exploration
costs incurred;
The receipt of $6.0 million funds by the Australian
business under the government support initiatives,
primarily the Australian Federal Government’s
JobKeeper programme which was introduced to
support employment for businesses significantly
affected by COVID-19; and
A $4.7 million tax expense in the current year
compared to a $12.3 million tax expense in the prior
year which includes the following:
- A tax benefit of $32.9 million due to losses
suffered in the current year; offset by
- An expense of $37.6 million (2019: $12.4 million)
in respect of Australian and US tax losses and
Australian deductible temporary differences for
which deferred tax assets have not been
recognised or have been derecognised. The
recoverability of these losses and temporary
differences against future taxable income is not
considered probable under AASB 112 Income
Taxes.
The prior year included a tax expense of $15.9
million in relation to further tax payable under a
settlement with the Australian Taxation Office in
respect of prior financial years.
Ardent Leisure Group Limited | Annual Report 2020
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Directors’ Report
4.
Operating and financial review (continued)
Main Event
The performance of Main Event, in US dollars, is summarised as follows:
Total revenue
EBRITDA
Property costs
EBITDA
Depreciation and amortisation
EBIT
Constant centres
Non-constant centres
New centres opened in FY20
Centres closed in FY20
Corporate and regional office
expenses/sales and marketing
Other specific items
Total
2020
2019
Change
US$'000
US$'000
%
232,756
51,352
(13,716)
37,636
(56,153)
(18,517)
EBRITDA
2020
US$'000
79,720
7,366
3,579
834
(33,696)
(6,451)
51,352
297,347
77,547
(43,400)
34,147
(30,207)
3,940
EBRITDA
2019
US$'000
120,627
11,030
-
1,634
(39,080)
(16,664)
77,547
(21.7)
(33.8)
(68.4)
10.2
85.9
(570.0)
Change
%
(33.9)
(33.2)
(49.0)
(14.0)
(61.3)
(33.8)
Revenue
2020
US$'000
198,014
20,740
8,531
5,471
Revenue
2019
US$'000
261,419
27,705
-
8,223
Change
%
(24.3)
(25.1)
(33.5)
232,756
297,347
(21.7)
During the year, total US dollar revenue declined by 21.7%
due to all Main Event centres being temporarily closed
from 17 March 2020 due to COVID-19. Main Event has
progressively reopened centres in May and June, with 38
centres reopened as at 30 June 2020. However, post
reopening trading results have been soft as consumers
remain cautious of the pandemic.
The full year results reflect the impact of COVID-19, partially
offset by revenue growth in constant centres and
contributions from newly opened centres during the pre-
COVID-19 period, with Main Event reporting revenue and
EBITDA of US$211.4 million and US$52.9 million,
respectively for the eight months ended 3 March 2020.
Three centres were opened during the year, one of which
was located in a new market at Baton Rouge, Louisiana.
Pittsburgh and Indianapolis were permanently closed in
January 2020 and June 2020 respectively due to
underperformance of these centres. This brings the
number of centres to 43 across 16 states as at 30 June 2020
(2019: 42 centres across 17 states). Pre-opening expenses of
US$2.8 million has increased by US$0.8 million compared
to prior year as a result of more centre openings in the
current year.
Property costs have declined due to a change in lease
accounting standard, under which most of the lease costs
are now reflected below EBITDA in "amortisation of lease
assets" and "lease interest expense" as compared to
“property costs” in the prior year.
6
Ardent Leisure Group Limited | Annual Report 2020
EBITDA in current and prior year continued to be impacted
by non-recurring restructuring expenses and non-cash
impairment charges. In addition, the current year result was
impacted by costs associated with early termination of the
Pittsburgh and Indianapolis leases while the prior year was
impacted by an onerous lease provision associated with
Pittsburgh centre. This is partially offset by gain on disposal
of assets relating to the permanent closure of the
Pittsburgh and Indianapolis sites.
Management will continue to monitor, on a market-by-
market basis, the easing of Government-mandated shelter-
in-place orders and will make the decision to re-open its
remaining centres as soon as practicable ensuring the
utmost safety of employees and guests.
In June 2020, the Group announced a partnership
transaction under which US-based private investment firm,
RedBird Capital Partners, has invested US$80.0 million into
Main Event’s US parent entity. Main Event has also
obtained significant support from its lenders through a
number of amendments to its Credit Agreement, including
obtaining a waiver of its total net leverage covenant
through to and covering the March 2021 quarter. These
initiatives will significantly improve Main Event’s liquidity,
enabling it to recover from the impacts of COVID-19,
enhance its financial flexibility and position the business for
future growth.
Directors’ Report
4.
Operating and financial review (continued)
Theme Parks
The performance of the Theme Parks is summarised as follows:
Total revenue
EBRITDA
Property costs
EBITDA
Depreciation and amortisation
EBIT
Attendance
Per capita spend ($)
The Theme Parks business, consisting of Dreamworld,
WhiteWater World and SkyPoint, reported trading revenue
of $54.5 million for the year, down 18.8% on prior year due
mainly to the impacts of COVID-19 and resultant closure of
the businesses from 23 March 2020.
Prior to COVID-19 being declared a pandemic, Theme Parks
reported revenue of $51.4 million and EBITDA loss of $5.0
million, respectively for the eight months ended 3 March
2020. During this period, total attendances had grown
compared to prior corresponding period, despite the
Theme Parks being impacted by adverse weather and the
release of Coroner’s Report on 24 February 2020.
The division recorded an EBITDA loss of $24.0 million,
compared to an EBITDA loss of $19.8 million in the prior
year. The decline is largely driven by reduced revenue as a
result of COVID-19, non-cash valuation and impairment
losses relating to the Dreamworld and SkyPoint properties,
as well as losses on disposal and write off of assets during
the year.
The COVID-19 impact was partially offset by the division
benefitting from receipt of $5.9 million government
support, primarily under the Australian Federal
Government’s JobKeeper subsidy. Dreamworld incident
costs, net of insurance recoveries has also reduced by $8.2
million in the current year.
The current year includes $0.8 million of non-recurring
costs due to COVID-19. The prior year was impacted by $3.0
million of non-recurring restructuring costs, which largely
relates to consulting costs and employee related costs.
Strategic focus
The common theme across the Group’s assets is the
provision of leisure and entertainment experiences.
However, each business has its own unique strategic
position and objectives, and is at different stages of
evolution with discrete opportunities for growth and
unlocking value.
2020
$'000
54,508
(23,296)
(654)
(23,950)
(9,924)
(33,874)
2019
$'000
67,133
(18,360)
(1,474)
(19,834)
(19,942)
(39,776)
1,153,296
47.26
1,459,621
45.99
Change
%
(18.8)
26.9
(55.6)
20.8
(50.2)
(14.8)
(21.0)
2.8
(i)
Main Event
Main Event’s strategic goal is to become a leading
customer experience-driven leisure and entertainment
brand in the US. This business has expanded its number of
centres rapidly over the last few years and management is
focused on ensuring there is the appropriate balance
between growth of existing business as well as new centre
development through a disciplined real estate selection
process.
The spread of COVID-19 and resulting business closures has
had a significant impact on the liquidity of the business and
this slowed new centre developments in the second half of
the year. However, the announced partnership transaction
with US-based private investment firm, RedBird Capital
Partners, which saw US$80.0 million invested into Main
Event’s US parent entity, will enhance the financial
flexibility of Main Event and position the business for future
growth.
The availability of quality sites in trade areas that the
business wants to expand into, along with the long
development process to construct a Main Event family
entertainment centre, can cause variations in the number
of centres opened in a given year. In conjunction with the
business’ new strategic partner, RedBird, management will
continue to look at strategic growth opportunities in
existing markets as well as new trade areas. Furthermore,
the business will explore ground-up developments as well
as second-generation retail opportunities, including mall
locations.
(ii)
Theme Parks
The key focus is on driving attendance back to historic
levels through a combination of “smart” capital investment,
an event pipeline, developing new and unique attractions
and food, retail and events products all of which provide
opportunities to promote and target revisitation.
Investments will be targeted to drive visitation and will be
economically responsible. This includes plans to install
major new attractions at Dreamworld to increase visitations
to the Theme Parks and drive average per capita spend.
Ardent Leisure Group Limited | Annual Report 2020
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Directors’ Report
4.
Operating and financial review (continued)
Strategic focus (continued)
(ii)
Theme Parks (continued)
The wellbeing of Dreamworld’s staff has also remained a key focus of management, with a number of wellness and support
programs in place to assist individual team members with resilience and coping with challenging environments.
As previously communicated, the Group is committed to implementing all key recommendations arising from the Coronial
Inquest.
The excess land that sits around the Dreamworld site is potentially of value. The park occupies just over 50% of the land that is
owned and a process of determining the best use of this land is in progress. This may include a build out of tourist related
adjacencies around the park itself. The plan may also involve an element of other commercial and residential uses.
5.
Significant changes in the state of affairs
As noted in Section 4 above, in June 2020, the Group entered into a partnership transaction under which RedBird acquired a
24.2% interest in Main Event via an investment in preferred shares of Main Event’s US parent, ALUSH. In conjunction with this
transaction, RedBird was granted an option to increase its interest to 51%, exercisable between 30 June 2022 and 30 June
2024.
In the opinion of the Directors, there were no significant changes in the state of affairs of the Group that occurred during the
year not otherwise disclosed in this report or the financial statements.
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Interests in the Group
The movement in shares/securities of the Group during the year is set out below:
Shares/securities on issue at the beginning of the year
Securities issued under Dividend/Distribution Reinvestment Plan
Shares on issue at the end of the year
2020
2019
479,706,016
-
471,344,533
8,361,483
479,706,016 479,706,016
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Ardent Leisure Group Limited | Annual Report 2020
Directors’ Report
7.
Information on Directors
Gary Weiss AM
Chair
Appointed:
David Haslingden
Director
Appointed:
Ardent Leisure Group Limited – 18 September 2018
Ardent Leisure Group Limited – 18 September 2018
Age: 67
Age: 59
David Haslingden brings to the Board considerable
international business experience, particularly in North
America and Europe.
David is a director and major shareholder of Blue Ant Media
Inc, a Canadian company that owns and operates
production companies and cable networks in Canada and
around the world. He is also Chairman of the Australian
Geographic Society.
Previously, David was Chairman and a non-executive
director of Nine Entertainment Co. Holdings Limited,
President and Chief Operating Officer of Fox Networks
Group and Chief Executive of Fox International Channels.
David holds a Bachelor of Arts and Bachelor of Laws from
The University of Sydney and a Master of Law from the
University of Cambridge.
David is Chair of the Remuneration & Nomination
Committee and is a member of the Safety & Risk Review
Committee and the Dreamworld Committee. He is also
Chair of the Dreamworld Wildlife Foundation. David was
appointed Lead Independent Director in May 2018.
Former listed directorships in the last three years:
None
Interest in shares:
523,980
Dr Weiss is currently the Executive Director of Ariadne
Australia Limited. He is Chairman of Ridley Corporation
Limited and Estia Health Limited and a Non-Executive
Director of Thorney Opportunities Limited and The Straits
Trading Company Limited.
Dr Weiss was appointed a Member (AM) of the Order of
Australia in 2019 and is also a Commissioner of the
Australian Rugby League Commission.
He was formerly Chairman of ClearView Wealth Limited
and Coats Plc, a former executive director of Whitlam,
Turnbull & Co and Guinness Peat Group plc and sat on the
board of Westfield Holdings Limited, Premier Investments
Ltd, Pro-Pac Packaging Limited and a number of other
public companies. Dr Weiss has also been involved in
managing large businesses with operations in many
regions including Europe, China and India and is familiar
with investments across a wide range of industries,
corporate finance and private equity type deals.
Dr Weiss holds an LLB (Hons) and LLM from Victoria
University of Wellington and a Doctor of the Science of Law
(JSD) from Cornell University. He was admitted as a
Barrister and Solicitor of the Supreme Court of New
Zealand, a Barrister and Solicitor of the Supreme Court of
Victoria and as a Solicitor of the Supreme Court of New
South Wales.
Gary is Chair of the Safety & Risk Review Committee, Chair
of the Dreamworld Committee and a member of the Audit
& Risk Committee and Main Event Committee.
Former listed directorships in the last three years:
Tag Pacific Limited (from 1 October 1998 to 31 August
2017)
Pro-Pac Packaging Limited (from 28 May 2012 to 27
November 2017)
Premier Investments Limited (from 11 March 1994 to 28
July 2018)
Interest in shares:
45,344,317
Ardent Leisure Group Limited | Annual Report 2020
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Directors’ Report
7.
Information on Directors (continued)
Randy Garfield
Director
Appointed:
Brad Richmond
Director
Appointed:
Ardent Leisure Group Limited – 18 September 2018
Ardent Leisure Group Limited – 18 September 2018
Age: 68
Age: 61
Brad is a Certified Public Accountant with 37 years’
experience in finance, operations and strategic planning in
the full-service restaurant industry in North America. Brad
recently held the position of Senior Vice President and
Chief Financial Officer of Darden Restaurants Inc., the
world’s largest full-service restaurant company operating
multiple brands including Olive Garden, LongHorn
Steakhouse, Season’s 52, The Capital Grille, Eddie V’s, Yard
House and Bahama Breeze. Prior to this position, Brad held
a number of other roles at Darden including Senior Vice
President and Corporate Controller and Senior Vice
President, Brand Financial Leader at various Darden brands.
Before joining Darden, Brad was a senior auditor with Price
Waterhouse & Co.
Brad holds a Bachelor of Sciences/Bachelor of Arts degree
from the University of Missouri.
Brad is Chair of the Main Event Committee, a member of
the Remuneration & Nomination Committee and a
member of the Audit & Risk Committee.
Former listed directorships in the last three years:
None
Interest in shares:
310,000
During his 50 year travel industry career, Mr Garfield spent
over 30 years working in senior executive roles specialising
in global marketing and sales, sponsorship development
and sales operations.
As Executive Vice President of Worldwide Sales & Travel
Operations at Walt Disney Parks & Resorts, he led the
worldwide sales, convention services, resort contact
centres and distribution marketing efforts for the
Disneyland Resort, Walt Disney World Resort, Disneyland
Paris, Hong Kong Disneyland Resort, Shanghai Disney
Resort, Disney Cruise Line, Disney Vacation Club,
Adventures by Disney, Aulani-a Disney Resort & Spa in
Hawaii and Golden Oak. Throughout his 20+ year Disney
career, he also served as President of Walt Disney Travel
Company, one of the largest tour operators in the USA.
Prior to joining Disney, Randy also served as Vice President
of Sales for Universal Studios Hollywood starting in 1986
where he helped generate record attendance and trail
blazed the launch of Universal Studios Florida by crafting
their pre-opening sales plan. He moved to Orlando in
summer 1989 as Executive Vice President of Marketing and
Sales/Chief Marketing Officer and led the business through
its pre-opening launch and for the following three years
during which he also served in a key role on the team
which formulated the expansion plan including a second
theme park as well as hotels and a massive retail, dining
and entertainment complex.
Randy’s current directorships include Rocky Mountaineer,
US Travel Association and Destination Canada.
Previous board roles include the US Travel Association
(Chairman), Brand USA, Visit California, Visit Florida and Visit
Orlando where he served as the longest tenured Chair.
Randy is an inductee into the US Travel Hall of Leaders, and
has been recognised three times as one of the most
extraordinary sales and marketing minds by Hospitality
Sales & Marketing Association International.
Randy is a member of the Safety & Risk Review Committee,
Dreamworld Committee and Main Event Committee.
Former listed directorships in the last three years:
None
Interest in shares:
30,000
10
Ardent Leisure Group Limited | Annual Report 2020
Directors’ Report
7.
Information on Directors (continued)
8.
Company Secretary
The Group’s Company Secretary is Bronwyn Weir. Prior to
being appointed Company Secretary, Bronwyn was the
Assistant Company Secretary for the Group from 21
November 2014. Before joining the Group, Bronwyn was
Assistant Company Secretary at the Royal Australasian
College of Physicians.
Bronwyn holds a Bachelor of Commerce and Graduate
Certificate in Commercial Law from Deakin University and a
Certificate in Governance Practice and a Graduate Diploma
of Applied Corporate Governance from the Governance
Institute of Australia.
Antonia Korsanos
Former Director
Appointed:
Ardent Leisure Group Limited – 18 September 2018
(resigned 30 June 2020)
Age: 51
Antonia has more than 20 years’ senior executive
experience in financial and general management, strategy,
mergers and acquisitions, communications, technology
and risk management. Antonia was the Chief Financial
Officer (2009 to 2018) and Company Secretary (2011 to
2018) of Aristocrat Leisure Limited. Prior to working at
Aristocrat, Antonia held a number of finance and business
development positions at Kellogg’s Australia and New
Zealand, Goodman Fielder Limited and Coopers & Lybrand
in Sydney.
Antonia has a Bachelor of Economics (Accounting &
Finance) from Macquarie University and is a member of
Chartered Accountants Australia and New Zealand. Antonia
is also a member of Chief Executive Women and a non-
executive director of Crown Resorts Limited, Webjet
Limited and Treasury Wine Estates Limited.
Antonia is Chair of the Audit & Risk Committee and is a
member of the Remuneration & Nomination Committee.
Former listed directorships in the last three years:
None
Interest in shares:
Nil
9. Meetings of Directors
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The attendance at meetings of Directors of the Group during the year is set out in the following table:
Full meetings
of Directors
Audit and Risk
Meetings of Committees
Remuneration &
Nomination
Safety & Risk Review
E1
20
20
20
20
20
A2
20
20
20
20
19
E1
4
**
**
4
4
A2
4
**
**
4
4
E1
**
2
**
2
2
A2
**
2
**
2
2
E1
4
4
4
**
**
A2
4
4
4
**
**
Gary Weiss AM
David Haslingden
Randy Garfield
Brad Richmond
Antonia Korsanos
(1) Eligible to attend.
(2) Attended.
** Not a member of the relevant committee.
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Directors’ Report
10. Remuneration report
Introduction from the Chair of the Remuneration &
Nomination Committee
The Directors of Ardent Leisure Group Limited present
shareholders with the FY20 Remuneration Report. This report
outlines the Group’s approach to remuneration for its
Directors and Executive Key Management Personnel (KMP)
for FY20.
FY20 has been an extraordinary year which has challenged all
of us like never before. Ardent started the year with
optimism. We began to see positive signs of solid recovery in
both businesses and were looking forward to building on that
momentum. The onset of COVID-19 in March has caused
significant disruption not only for our businesses, but the
travel, tourism, family entertainment and theme parks
industries more broadly.
On 17 March 2020, the Board made the difficult decision to
close all Main Event Entertainment centres in the United
States and shortly thereafter to close Dreamworld,
Whitewater World and SkyPoint in Australia.
Following the closure of Main Event and our Theme Park
businesses, the Board and management’s priority quickly
turned to cash preservation. Regrettably, this meant that
most of our team members, more than 4,000 across both
businesses, were temporarily stood down. During this time
concerted efforts were made to support team members by
offering flexible leave entitlement options and access to
counselling services. Communication during this time was
critical and regular updates and information was provided to
all team members. For our Australian employees, the
Company was eligible to access the Federal Government’s
JobKeeper wage subsidy scheme.
As part of the Group’s cash management and cost control
measures associated with the need to close our venues due
to the COVID-19 pandemic, the Directors agreed to waive
their fees from April 2020 until 30 June 2020. Salary
reductions were taken across the broader employee base,
including Executive KMP and several of their direct reports.
There are no planned increases to Non-Executive Directors
fees or Executive KMP remuneration for FY21.
Remuneration outcomes for FY20
The Board acknowledge that determining the remuneration
outcomes for Executive KMP for FY20 is difficult. There is a
need to balance many factors such as the expectations of
shareholders, the financial performance of the Company prior
to COVID-19 and upon reopening (in the case of Main Event),
and the achievement of non-financial targets for employee
engagement, customer satisfaction and safety.
In recognition of the performance of Main Event prior to
closure and the time and effort involved in securing the
RedBird partnership, the Board have agreed to bonus
payments to each of Mr Morris and Mr Harper.
12
Ardent Leisure Group Limited | Annual Report 2020
In terms of long term incentive outcomes, as outlined in last
year’s Remuneration Report, the Company has introduced a
one-time, cash-based long term incentive plan for its
Executive KMP and other key team members. This plan was
specifically designed to drive performance over the longer
term and will only vest five years from the 2019 grant date.
The challenges we have faced through the COVID-19 crisis
will of course make the value accretion required to trigger
awards harder to achieve.
Board and Committee changes
On 15 June 2020, the Board announced a new partnership
with RedBird Capital Partners for Main Event Entertainment.
As a result of this investment, we have welcomed two new
directors, Andrew Lauch and Dan Swift, to the board of the
Group’s US-based subsidiary company, Ardent Leisure US
Holding Inc (ALUSH). We look forward to working with
Andrew and Dan and the broader team at RedBird to
leverage their skills and expertise and continue to build Main
Event to be a premier family and social entertainment brand
in the United States.
In June 2020 Ms Korsanos retired as a Non-Executive Director.
With the newly constituted ALUSH board which comprises
Gary Weiss, Brad Richmond, Andrew Lauck, Dan Swift and
Chris Morris, the Board does not intend to appoint any new
directors for the time being.
Further, with the new ALUSH board and highly experienced
leadership team now in place at Theme Parks, the Board
agreed there is no longer a need for the Main Event and
Dreamworld Committees.
Looking towards the future
The impact of the COVID-19 pandemic on our businesses has
been and will continue to be very significant, and we
recognise the economic, social and workplace consequences
are likely to be felt for many years to come.
Looking ahead to FY21, there remains great uncertainty
regarding the COVID-19 pandemic; how it will end and over
what timeframe. The Board remains cognisant of the need to
ensure the remuneration mix for Executive KMP is
appropriate to the current environment and will endeavour
to set realistic incentive targets which reflect this uncertainty.
On behalf of the Board, I’d like to thank our team members for
their hard work and commitment during this challenging
time. Many have made considerable sacrifices and all have
demonstrated admirable resilience. The Board has no doubt
that they will continue to do so through FY21 and are
enormously grateful for and appreciative of their efforts.
The Board is confident that we can emerge from this
pandemic a stronger and more efficient organisation that will
continue to provide our team members with a safe working
environment and our guests with safe and memorable family
entertainment experiences.
David Haslingden
Chair, Remuneration & Nomination Committee
Directors’ Report
10.
Remuneration report (continued)
The remuneration report for the Group for the year ended 30 June 2020 is set out as follows:
Contents
(a) Who is covered by this report
(b) Remuneration governance
(c) Remuneration framework
(d) Remuneration outcomes for executives
(e) Service agreements of Key Management Personnel
(f) Non-Executive Director fees
(g) Additional statutory disclosures
Page No.
13
14
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17
20
20
21
The information provided in the remuneration report has been audited as required by Section 308 (3C) of the Corporations Act
2001.
(a)
Who is covered by this report
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 2020, the KMP for the Group
comprise the following:
Position
Executive KMP
President and CEO – Main Event
Group Chief Financial Officer
CEO – Theme Parks
Non-Executive Directors
Chairman
Lead Independent director
Independent director
Independent director
Independent director
Name
Chris Morris
Darin Harper
John Osborne
Gary Weiss AM
David Haslingden
Randy Garfield
Brad Richmond
Primary location of
employment
US-based
US-based
Australian-based
Australian-based
Australian-based
US-based
US-based
Antonia Korsanos (resigned 30 June 2020)
Australian-based
(i)
Changes to KMP effective after the end of the reporting period
Ms Korsanos resigned from the Board effective 30 June 2020. There were no other changes to KMP after the end of the
reporting period.
Ardent Leisure Group Limited | Annual Report 2020
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Directors’ Report
10.
Remuneration report (continued)
(b)
Remuneration governance
The Remuneration & Nomination Committee’s purpose is to review, evaluate and make recommendations to the Board in
relation to, the following key remuneration areas:
Remuneration policies for remuneration programs appropriate to the Group;
The remuneration framework for Directors and executives;
Review of the performance of KMP to pre-determined criteria on an annual basis;
Recruitment, retention and termination policies and procedures for executives;
The appointment of any remuneration consultants providing advice to the Group on the scale and components of
remuneration packages of KMP; and
Reporting on executive remuneration.
Ernst & Young did not provide any remuneration recommendations in relation to any of the above services during the year.
(c)
(i)
Remuneration framework
Remuneration structure
The executive remuneration framework in place during the year ended 30 June 2020 has three components:
Annual base salary
KMP and executives receive a mix of cash
salary, employer superannuation contributions
(Australian employees only) and other non-
financial benefits
Total fixed remuneration (TFR) reflects the executive’s role, duties
and responsibilities, their level of performance and the complexities
of their role and divisions.
Base salaries are reviewed annually to ensure that pay is competitive
with the external market. No Executive KMP is entitled to a
guaranteed pay increase.
Short term incentive
One-year performance period award paid in
cash for individual and division performance
The STI is an annual performance bonus set against financial and
personal key performance indicators (KPIs).
Long term incentive
One-time cash award for long term
performance of the divisions
The LTI for Executive KMP is a one-time cash reward granted in 2019
and linked to the future appreciation in the enterprise value of Main
Event or Dreamworld, over and above a threshold amount and is
designed to drive profitable business growth and deliver strong
return on capital invested. Vesting occurs on a pro-rata basis over a
period of five years for Main Event and four years for Theme Parks.
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Ardent Leisure Group Limited | Annual Report 2020
Directors’ Report
10.
Remuneration report (continued)
(c)
(ii)
Remuneration framework (continued)
Remuneration mix – FY20
Executive KMP
Chris Morris
President and CEO –
Main Event
Annual base
salary
US$600,000
STI
LTI opportunity
Target 100% of TFR
Stretch 200% of TFR
Weighted:
100% financial KPIs
The LTI opportunity for Executive KMP is a one-time
grant, subject to the achievement of appreciation in
the Enterprise Value of Main Event or Dreamworld
(as applicable to the Executive KMP) over the
threshold amount with payment on the occurrence
of a future realisation event. Further details on the
LTI opportunity can be found in Section 10(c)(iii).
LTI award percentages are as follows:
Chris Morris
Darin Harper
John Osborne
2.00%
0.75%
2.00%
Mr Harper remains a participant in the Group’s
legacy equity LTIP Plan however no further grants
have been made to Mr Harper under this plan since
2017.
Darin Harper
Group CFO
US$420,000
Cash
Target 50% of TFR
Stretch 100% of TFR
Weighted:
100% financial KPIs
As part of his
base salary
above, Mr Harper
receives a
payment of
US$5,000 per
month for
performing the
role of Group CFO
John Osborne
CEO Theme Parks
$550,000
(incl. super)
Target 100% of TFR
Weighted:
70% financial KPIs
30% personal KPIs
Due to the significant impact of COVID-19 on their respective businesses, and in an effort to preserve liquidity during these
challenging and uncertain times, all executive KMP agreed to voluntary salary reductions of between 40%-60% which came
into effect from April 2020.
Amendments to Theme Parks CEO arrangements
Mr Osborne assumed responsibility for the Group Corporate Office function at the start of FY20 and as a result, the Board have
increased his TFR to $550,000. Further, while no STI award was given to Mr Osborne in FY19, the Board awarded Mr Osborne in
FY20 a one-off equity grant equal to $100,000 in recognition of the progress made with the Theme Parks turnaround plan and
the significant cost reductions, improved attendance and excellent guest satisfaction scores achieved prior to the closure of
the parks in late March 2020 due to COVID-19.
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Directors’ Report
10.
Remuneration report (continued)
(c)
(ii)
Remuneration framework (continued)
Remuneration mix – FY20 (continued)
Short-term incentive
Who can participate?
When is the STI paid?
What performance measures
are used?
Executive KMP are able to participate in the STI; however, participation and payment of
any STI remain at the Board’s discretion.
If performance is sufficient, STI awards are payable in cash following the release of the
Group’s audited annual financial results.
Key performance indicators are split into financial and personal measure categories. The
actual split for each participant may vary and is generally more weighted to the financial
KPI.
Financial KPIs are linked to earnings and revenue targets including, but not limited to,
EBITDA and constant centre sales (Main Event).
Personal KPIs are not financial in nature and are set to support execution of
improvements and initiatives in such functions as health and safety, employee and
guest engagement, compliance, business development and strategic initiatives.
(iii)
Long term incentive arrangements
The material terms of the long term incentive arrangements for Main Event and Theme Parks are set out in the respective plan
documents and apply to all grants made, including those to Mr Morris and Mr Osborne.
Details in relation to the LTI Plan are outlined below:
What is the LTI Plan?
What is the Threshold Hurdle?
What is the Hurdle Rate?
How does the LTI Plan drive
performance?
Who can participate in the LTI Plan?
The LTI Plan is an incentive plan designed to attract, motivate and retain key
employees. It provides employees with a one-time grant in 2019 to earn a cash
incentive based on the future appreciation in the Enterprise Value of Main Event or
Dreamworld, as the case may be, above the Threshold Hurdle.
The Threshold Hurdle is the cumulative and annually compounded application of the
Hurdle Rate to a grant date valuation of Main Event and Dreamworld.
8.0% per annum.
The plan is designed to align key employees’ incentive structure with shareholders by
encouraging and promoting desired behaviours that focus on creating sustainable
value over the long term.
Employees of Main Event and Dreamworld who are determined to be instrumental in
driving the long term growth of the business are eligible for participate at the discretion
of management and the Board. Each employee is granted an LTI award percentage with
a total LTI pool cap of 7.5% and 6.0% for Main Event and Dreamworld respectively.
How is the LTI Plan delivered?
The LTI award is delivered in cash.
What are the vesting conditions?
What is a Realisation Event?
The vested entitlement for the Main Event LTI Plan accumulates over a period of five
years, in four annual increments of 25% commencing from the second anniversary of
grant date. The vested entitlement for the Theme Parks LTI Plan accumulates evenly
over a period of four years. LTI awards will immediately vest in full upon the occurrence
of a Realisation Event.
A Realisation Event broadly refers to the earlier of:
(a) an acquisition of more than 75% of Main Event or Dreamworld as the case may
be; or
(b) the IPO of Dreamworld; or
(c) the seventh anniversary of LTI award grant date of Main Event or Dreamworld as
the case may be.
16
Ardent Leisure Group Limited | Annual Report 2020
Directors’ Report
10.
(c)
(iii)
Remuneration report (continued)
Remuneration framework (continued)
Long term incentive arrangements (continued)
New Long Term Incentive Plan (LTI Plan) (continued)
What are the payment conditions?
What happens if an employee leaves?
The LTI award is paid out as follows:
If the participant remains employed, vested portion of the LTI award will be paid out
upon a change of control, an IPO (Dreamworld) or seventh anniversary of the LTI award
grant date (Main Event and Dreamworld).
In the event of a participant’s employment being terminated as a result of an
Approved Separation, the participant shall be eligible to receive a pro-rata portion of
the LTI award representing the amount that has vested at the time of separation. An
‘Approved Separation’ means a participant’s termination of employment with Main
Event for any reason other than for cause. A resignation by an employee is not an
Approved Separation. In the case of the Dreamworld plan, if an employee leaves and
the Realisation Event occurs more than two years after an Approved Separation, all
awards will lapse without payment.
(d)
Remuneration outcomes for executives
This section sets out the actual remuneration outcomes realised by Executive KMP and the statutory remuneration disclosures
for FY20 and FY19.
(i)
STI outcomes in respect of FY20 performance
In respect of FY20 and FY19 performance, the percentage of STI that was awarded to the executives and the percentage that
was forfeited are set out below. Actual payments are made to individuals following the release of audited results.
Name
Chris Morris
Darin Harper
John Osborne
Financial year
FY20
FY19
FY20
FY19
FY20
FY19
STI awarded
33%
28%
29%
28%
0%
0%
STI forfeited
66%
72%
71%
72%
100%
100%
STI outcome
US$200,000
US$167,700
US$60,000
US$58,695
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Amounts included in the table are different to the cash bonuses presented in Section 10(d)(v) below, which reflects cash amounts
received in the year in respect of prior years’ performance.
During the year, the Board awarded to John Osborne a one-off grant of $100,000 of shares in Ardent Leisure Group Limited,
based on the share price as at the close of trading on 1 July 2019, in recognition of the progress made with the Theme Parks
turnaround plan and the significant cost reductions, improved attendance and excellent guest satisfaction scores achieved to
prior to the closure of the parks in late March 2020 due to COVID-19.
In recognition of the performance of Main Event prior to closure, the Board have awarded discretionary payments of US$200,000
to Mr Morris and US$60,000 to Mr Harper. Furthermore, in recognition of the time and effort involved in finalising the RedBird
partnership, the Board have agreed to pay a transaction bonus of US$125,000 to each of Mr Morris and Mr Harper.
(ii)
Legacy equity LTI Plan
As stated above, performance rights granted under the Group’s previous equity LTI plan that are due to vest in August 2020 have
been tested against their gateway and performance hurdles.
The gateway and performance hurdles for the tranches issued in FY16, FY17 and FY18 were not achieved and therefore none of
the LTI performance rights have vested.
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Directors’ Report
10.
(d)
(iii)
Remuneration report (continued)
Remuneration outcomes for executives (continued)
Severance payments Executive KMP
There were no severance payments to Executive KMP in the year.
(iv)
Actual remuneration outcomes
The table below sets out the total realised pay (take home pay) in respect of the years ended 30 June 2020 and 25 June 2019.
The deferred equity and LTIP vested elements of realised pay relate to both the individual and the Group’s performance up to
30 June 2020. The information below is different to the information in Section 10(d)(v) below, which includes the accounting
value of equity expensed in the year, rather than the actual benefit received as shown in the table below:
STI on an accrued basis
Name
Chris Morris(4)
Darin Harper(4)
John Osborne(2)(3)
Financial
year
FY20
FY19
FY20
FY19
FY20
FY19
Base salary
(incl super)
US$520,385
US$600,000
US$367,385
US$439,761
$497,463
$331,412
Cash
US$325,000
US$167,700
US$185,000
US$58,695
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-
Deferred
equity
vested(1)
-
-
-
US$48,204
-
-
LTIP vested (1)
-
-
-
-
-
-
Total realised
pay in respect of
the financial year
US$845,385
US$767,700
US$552,385
US$546,660
$597,463
$331,412
Equity grant
-
-
-
-
$100,000
-
(1) The vesting of deferred equity and LTIP performance rights into fully paid shares/securities reflects previous performance of executives and of the Group up
to 30 June 2020. Shares to be issued in respect of the financial year are valued at $0.39 per share, representing the closing price at 30 June 2020 (2019: $1.00
per security, representing the closing price at 25 June 2019). Amounts expressed in US dollars are converted from Australian dollars at an exchange rate of
0.6863 representing the closing rate at 30 June 2020 (2019: 0.6958, representing the closing rate at 25 June 2019).
(2) Commenced employment and became KMP on 5 November 2018.
(3) During the year, the Board awarded to John Osborne a one-off grant of $100,000 of shares in Ardent Leisure Group Limited, based on the share price as at the
(4)
close of trading on 1 July 2019.
In recognition of the performance of Main Event prior to closure, the Board have awarded discretionary payments of US$200,000 to Mr Morris and US$60,000
to Mr Harper. Furthermore, in recognition of the time and effort involved in finalising the RedBird partnership, the Board have agreed to pay a transaction
bonus of US$125,000 to each of Mr Morris and Mr Harper.
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Ardent Leisure Group Limited | Annual Report 2020
Directors’ Report
10.
(d)
(v)
Remuneration report (continued)
Remuneration outcomes for executives (continued)
Details of remuneration – Executive Key Management Personnel
Details of the remuneration of Executive KMP of the Group for FY20 are set out in the table below. The table sets out the total
cash benefits paid to the executives in the relevant period and, under the heading “Equity-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.
Short term benefits
Post-
employ-
ment
benefits
Salary
Cash
bonus
Annual
leave (1)
Super-
annuation
Total
remuneration
excl. equity
based
payments
Termin-
ation
payment
Equity-
based
payments
Total
remuner-
ation
$
$
$
$
$
$
$
$
Equity-
based
payment
% of
total
Chris Morris (2)(3)(4)
CEO – Main Event
Darin Harper (2)(4)
Group Chief Financial Officer
John Osborne (5)(6)
CEO – Theme Parks
Craig Davidson (7)
Former CEO – Theme Parks
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
774,315
837,098
546,656
613,539
476,460
316,013
-
-
249,532
313,912
87,336
161,058
-
-
-
-
13,736
573
2,747
2,405
9,497
22,465
-
1,639
-
-
-
-
21,003
15,399
-
5,133
-
-
-
-
-
-
-
88,067
1,037,583
1,151,583
636,739
777,002
506,960
353,877
-
94,839
- 1,037,583
- 1,151,583
662,772
884,093
606,960
353,877
467
47,360
26,033
107,091
100,000
-
467
(47,479)
-
-
3.93%
12.11%
16.48%
-
100%
-
FY20 1,797,431 336,868
FY19 1,766,650 474,970
25,980
27,082
21,003
20,532
-
88,067
2,181,282 126,500 2,307,782
59,612 2,436,913
2,377,301
5.48%
2.45%
(1) Annual leave amounts represent the increase/(decrease) in the liability for accumulated annual leave during the year.
(2) Remuneration is converted from US dollars to Australian dollars at the average exchange rate of 0.6721 (2019: 0.7168) and includes both cash settled and
equity settled awards.
(3) FY19 cash bonus includes a US$225,000 deferred sign-on bonus paid on 30 June 2019.
(4) FY19 cash bonus received in respect of FY18 performance of Main Event prior to Mr Harper’s appointment as Group Chief Financial Officer and him becoming
KMP of the Group.
(5) Commenced employment and became KMP on 5 November 2018.
(6) During the year, the Board awarded to John Osborne a one-off grant of $100,000 of shares in Ardent Leisure Group Limited, based on the share price as at the
close of trading on 1 July 2019.
(7) FY19 termination payment amounts comprise a retention payment of $100,000 and payment on exit of the Group of $165,067, of which an estimate of
$177,000 was disclosed as part of FY18 remuneration and $88,067 was disclosed as part of FY19 remuneration.
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Cash bonus payments included in the table above reflects amounts received in the current year for prior performance periods
and do not include bonus payments in respect of FY20 performance which are included in Section 10(d)(i) and 10(d)(iv) above.
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Equity-based payments included in the table above reflects the amounts in the Income Statements of the Group. For
performance rights issued to executives, the 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. 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 executive
compensation would be decreased by $37,352 to ($10,853) (2019: decreased by $59,868 to ($256)).
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Directors’ Report
10.
Remuneration report (continued)
(e)
Service agreements of Key Management Personnel
Remuneration and other terms of employment for KMP are formalised in service agreements. The major provisions of the
agreements relating to remuneration are set out below:
Executive
Term
Termination
Chris Morris
President and CEO –
Main Event
No fixed term.
Employment shall continue with the Group unless the executive gives
the Group 90 days’ notice in writing. The Group may terminate Mr Morris’
employment at any time, subject to a requirement to provide 30 days’
notice where the Group intends to terminate Mr Morris’ employment for
certain ‘cause’ reasons.
In certain circumstances, on termination of employment, Mr Morris is
entitled to continued payment of total fixed remuneration for 12 months
plus any owed but unpaid incentive amounts.
Darin Harper
Group Chief Financial Officer
No fixed term.
Employment shall continue as Group Chief Financial Officer with the
Group unless either party provides notice in writing.
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John Osborne
CEO – Theme Parks
No fixed term.
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Employment shall continue with the Group unless the executive gives
the Group 90 days’ notice in writing. The Group may terminate Mr
Osborne’s employment at any time, subject to a requirement to
provide 30 days’ notice where the Group intends to terminate Mr
Osborne’s employment for certain ‘cause’ reasons.
In certain circumstances, on termination of employment, Mr Osborne is
entitled to continued payment of total fixed remuneration for 12 months
plus any owed but unpaid incentive amounts.
Other than as set out above, there are no contracted termination benefits payable to any KMP.
(f)
Non-Executive Director fees
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 & Nomination Committee.
Non-Executive Directors are paid solely by the way of Directors’ fees and Non-Executive Directors do not participate in equity
nor cash-based incentive 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 total aggregate level of Directors’ fees payable by the
Group is $1,200,000 per annum and there is no proposal to increase the aggregate fee cap in FY21.
Board fees payable to Non-Executive Directors are as follows:
Position
Board Chair
Other Non-Executive Director
- Australian-based
Audit and Risk Committee
Other Committee
Dreamworld Committee
Main Event Committee
- US-based
- Chair
- Member
- Chair
- Member
- Chair
- Member
- Chair
- Member
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Ardent Leisure Group Limited | Annual Report 2020
Non-Executive
Director fees
$205,000
$120,000
$136,000
$20,000
$15,000
$12,500
$7,500
$12,500
$7,500
$12,500
$7,500
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Directors’ Report
10.
Remuneration report (continued)
(f)
Non-Executive Director fees (continued)
Details of the actual fees delivered to Non-Executive Directors of the Company for FY20 and FY19 are set out below:
Gary Weiss AM
David Haslingden
Randy Garfield
Brad Richmond
Antonia Korsanos
Don Morris AO
Roger Davis
Salary
$
Superannuation
$
172,945
192,161
101,027
134,703
116,812
157,886
127,137
167,361
101,027
132,718
n/a
104,725
n/a
17,570
618,948
907,124
16,430
18,255
9,598
12,797
2,063
2,788
1,113
1,465
9,598
12,608
n/a
9,949
n/a
1,669
38,802
59,531
Total
$
189,375
210,416
110,625
147,500
118,875
160,674
128,250
168,826
110,625
145,326
n/a
114,674
n/a
19,239
657,750
966,655
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
Due to the significant impact of COVID-19, and in an effort to preserve liquidity during this challenging and uncertain time, all
Non-Executive Directors agreed to voluntarily waive their Director fees from April 2020 to 30 June 2020.
(g)
(i)
Additional statutory disclosures
Directors’ interests in shares/securities
Changes to Directors’ interests in shares/securities during the period are set out below:
Gary Weiss AM
David Haslingden
Brad Richmond
Randy Garfield
Opening
balance
70,549,826
331,673
310,000
-
71,191,499
On joining
the Group
-
-
-
-
-
Acquired
-
192,307
-
30,000
222,307
Disposed
(25,205,509)(1)
-
-
-
(25,205,509)
Closing
balance
45,344,317
523,980
310,000
30,000
46,208,297
(1) Disposal relates to the ceased association with Viburnum Funds Pty Ltd. Refer to Notice of Change of Interests of Substantial Holder lodged with the ASX on
15 November 2019.
(ii)
Minimum share holdings
Non-Executive Directors are expected to hold the minimum value of shareholdings within four years of appointment and
thereafter increase holdings over their tenure; specifically, the minimum values are equivalent to the Chairman base fee and
Non-Executive Director base fee.
(iii)
Other KMP interests in shares/securities
Changes to the interests of other KMP in shares/securities during the period are set out below:
Darin Harper
John Osborne
Opening
balance
69,279
-
69,279
Acquired
69,279
92,593
161,872
Disposed
-
-
-
Closing
balance
138,558
92,593
231,151
Ardent Leisure Group Limited | Annual Report 2020
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Directors’ Report
10.
Remuneration report (continued)
(g)
Additional statutory disclosures (continued)
(iv)
Valuation inputs
For performance rights outstanding at 30 June 2020, the tables below show 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. Under AASB 2 Share Based Payment, this
valuation is used to value the performance rights granted to employees at 30 June 2020:
DSTI grant
Grant date
Vesting date – year 1
Vesting date – year 2
Average risk-free rate
Expected price volatility
Expected distribution yield
Security/share price at grant date
Valuation per performance right on issue
LTIP 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
Security price at grant date
Valuation per performance right on issue
US employees
Australian employees
2018
24 June 2019
29 August 2019
31 August 2020
1.50% per annum
32.0% per annum
2.5% per annum
$1.03
$0.98
2016
23 August 2016
24 August 2018
29 August 2019
31 August 2020
1.40% per annum
40.0% per annum
5.0% per annum
$2.50
2017
29 September 2017
29 August 2019
31 August 2020
31 August 2021
2.00% per annum
42.0% per annum
1.6% per annum
$1.82
2019
22 August 2019
31 August 2020
31 August 2021
0.74% per annum
33.0% per annum
2.0% per annum
$1.18
$1.14
2018
27 June 2019
31 August 2020
31 August 2021
31 August 2022
1.00% per annum
32.0% per annum
2.0% per annum
$1.08
$1.51
$1.51
$0.65
$0.19
$nil
$nil
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.
(v)
Details of equity grant movements
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:
Year
granted Tranche
Financial years
in which
performance
rights may vest
Value of
performance
rights at
grant
Year Number
$
Number
lapsed
Value of
performance
rights at
lapse
$
Value of
performance
rights at
vesting
Maximum
value yet
to vest
Number
vested
$
$
Current Executive
Equity settled
Darin Harper
LTIP
DSTI
Total
Former Executives
Craig Davidson LTIP
Total
2017
2017
2015
2016
2017
T1
T2
T3
T2
T3
T2
T3
T1
T2
T3
2020
2021
2022
2020
2020
2020
2021
2020
2021
2022
35,677
35,677
35,678
69,279
176,311
16,741
15,314
15,314
36,948
36,949
36,949
158,215
20,925
26,458
30,308
121,896
199,587
16,776
21,178
15,798
-
9,163
15,701
78,616
35,677
-
-
-
35,677
16,741
15,314
-
36,948
-
-
69,003
34,250
-
-
-
34,250
17,160
15,697
-
37,872
-
-
70,729
-
-
-
69,279
69,279
-
-
-
66,508
66,508
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,458
30,308
-
56,766
-
-
15,798
-
9,163
15,701
40,662
22
Ardent Leisure Group Limited | Annual Report 2020
Directors’ Report
10.
Remuneration report (continued)
(g)
(v)
Additional statutory disclosures (continued)
Details of equity grant movements (continued)
Year
granted Tranche
2015
2016
T3
T2
T3
Financial years
in which
performance
rights may vest
Value of
performance
rights at
grant
Year Number
65,994
2020
32,719
2020
32,719
2021
131,432
465,958
$
66,133
45,247
33,753
145,133
423,336
Number
lapsed
65,994
32,719
-
98,713
203,393
Value of
performance
rights at
lapse
Number
vested
Value of
performance
rights at
vesting
$
67,644
33,537
-
101,181
206,160
-
-
-
-
69,279
$
-
-
-
-
66,508
Maximum
value yet
to vest
$
-
-
33,753
33,753
131,181
Richard
Johnson
Total
LTIP
Total
(vi)
LTIP performance rights
The number of performance rights on issue and granted to the Group’s current and former executive KMP under the LTIP is set
out below:
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Opening
balance
Granted as
compensation
Exercised
Lapsed
Closing
balance
Vested and
exercisable
Darin Harper
Craig Davidson
Richard Johnson
Equity settled
(vii) DSTI rights
107,032
158,215
131,432
396,679
-
-
-
-
-
-
-
-
(35,677)
(69,003)
(98,713)
(203,393)
71,355
89,212
32,719
193,286
-
-
-
-
Unvested
71,355
89,212
32,719
193,286
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The number of rights on issue and granted to the Group’s executive KMP under the DSTI is set out below:
Opening
balance
Granted as
compensation
Exercised
Forfeited
Closing
balance
Vested and
exercisable
Unvested
Darin Harper
Equity settled
69,279
69,279
-
-
(69,279)
(69,279)
-
-
-
-
-
-
-
-
(viii) 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.
11. 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 (Ernst & Young)
for audit and non-audit services provided during the year
are disclosed in Note 34 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.
Ardent Leisure Group Limited | Annual Report 2020
23
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Directors’ Report
11.
Non-audit services (continued)
The Directors are satisfied that the provision of non-audit
services by the auditor, as set out in Note 34 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 undermines 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.
12. 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 26.
13.
Events occurring after reporting date
On 21 July 2020, the Queensland Work Health and Safety
Prosecutor filed three charges against a subsidiary of the
Company, ALL, pursuant to section 32 of the Work Health
and Safety Act 2011 (Qld) in relation to the Thunder River
Rapids ride incident which occurred in October 2016. Each
charge carries a maximum penalty of $1.5 million and ALL
pleaded guilty to all three charges on 29 July 2020. The
matter has been set down for sentencing on 28 September
2020.
On 7 August 2020, the Group announced that it has received
financial assistance for its Theme Parks business under the
Queensland Government’s COVID-19 Industry Support
Package and Queensland Tourism Icons Program 2020.
The financial assistance package is for a three-year term
totalling $69.9 million comprising a secured loan of $66.9
million (which includes capitalised interest and fees) and a
grant of $3.0 million which can be used to fund working
capital and approved capital expenditure. The loan is
mutually exclusive from the debt facility in place for the
Group’s US Main Event business.
Since the end of the financial year, the Directors of the
Company are not aware of any matters or circumstances
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 2020.
24
Ardent Leisure Group Limited | Annual Report 2020
14.
Likely developments and expected results of
operations
The threats posed by the outbreak and rapid spread of the
COVID-19 pandemic have been far reaching, with most
countries imposing severe travel restrictions and social
distancing measures. For Ardent, the economic impact has
been significant, with Main Event closing its centres on 17
March 2020 and Dreamworld and SkyPoint closing their
sites approximately one week later.
There is uncertainty regarding the severity and duration of
the virus and associated trading, travel and social
distancing restrictions. Refer to Note 1(f) for further details
on how this has impacted the Group’s going concern
assessment.
The financial statements have been prepared on the basis
of the current known market conditions. The extent to
which any potential 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.
15.
Indemnification and insurance of officers and
auditor
Under the Company’s Constitution, the Company
indemnifies:
All past and present officers of the Company, and
persons concerned in or taking part in the management
of the Company, against all liabilities incurred by them in
their respective capacities in successfully defending
proceedings against them; and
All past and present officers of the Company against
liabilities incurred by them, in their respective capacities
as an officer of the Company, to other persons (other
than the Company or its related parties), unless the
liability arises out of conduct involving a lack of good
faith.
During the reporting period, the Company 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 the Company.
Disclosure of the premiums paid for the insurance policy is
prohibited under the terms of the insurance policy.
Directors’ Report
16.
Environmental regulations
During the financial year, the Group’s major businesses
were subject to environmental legislation in respect of their
operating activities as set out below:
(a)
Theme Parks – Australia
The Dreamworld and WhiteWater World theme parks are
subject to various legislative requirements in respect of
environmental impacts of their operating activities. The
Environmental Protection Act 1994 (Qld) regulates all
activities where a contaminant may be released into the
environment and/or there is a potential for environmental
harm or nuisance. Dreamworld holds licences or approvals
for the operation of a motor vehicle workshop and train-
shed and the storage and use of flammable/combustible
goods. During the year, Dreamworld and WhiteWater
World complied with all requirements of the Act.
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
Biosecurity Act 2015 (Cth) and maintains an exhibition
permit under the Exhibited Animals Act 2015 (Qld). 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)
Main Event – 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 compliance with city and State planning
and zoning requirements. A building permit, depending
on locality, may require soils reports, site line studies, storm
water and irrigation regulation compliance, asbestos
testing etc. In addition a certificate of occupancy or
equivalent certification is issued upon completion of
construction and may require refuse and grease storage
permits, health and food safety permits, and compliance
with Occupational Safety and Health Administration
(OSHA) regulations prior to issuance.
With respect to operating activities at Main Event, the
OSHA requires that Safety Data Sheets (SDS) be available to
all employees for explaining potentially harmful chemical
substances handled in the workplace under the hazard
communication regulation. The SDS 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.
17. Rounding of amounts to the nearest thousand
dollars
The amounts contained in this report and in the financial
report have been rounded to the nearest thousand dollars
(unless otherwise stated) under the option available to the
Company under ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191. The
Company is an entity to which the legislative instrument
applies.
This report is made in accordance with a resolution of the
Boards of Directors of Ardent Leisure Group Limited.
Gary Weiss AM
Chairman
Sydney
26 August 2020
Brad Richmond
Director
Ardent Leisure Group Limited | Annual Report 2020
25
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Income Statement
for the year ended 30 June 2020
Income Statement
Income
Revenue from operating activities
Valuation gain - investment held at fair value
Interest income
Other income
Total income
Expenses
Purchases of finished goods
Salary and employee benefits
Finance costs
Property expenses
Depreciation and amortisation
Loss on disposal of assets
Advertising and promotions
Repairs and maintenance
Pre-opening expenses
Impairment of property, plant and equipment
Impairment of right-of-use assets
Valuation loss - property, plant and equipment
Dreamworld incident costs
Net loss from derivative financial instruments
Other expenses
Total expenses
Loss before tax expense
Income tax expense
Loss from continuing operations
Profit/(loss) from discontinued operations
Loss for the year
Attributable to:
Ordinary share/security holders
Note
3
4
6
5
7(b)
2020
$’000
398,315
390
680
11,154
410,539
55,680
179,816
64,182
20,496
94,142
407
23,852
27,427
4,175
5,436
1,620
10,366
2,097
38
52,733
542,467
(131,928)
4,701
(136,629)
4
(136,625)
2019
$’000
483,301
-
339
9,199
492,839
67,086
198,552
8,262
62,792
52,356
2,070
24,137
30,478
2,791
17,567
-
-
12,486
1,376
60,858
540,811
(47,972)
12,293
(60,265)
(612)
(60,877)
(136,625)
(60,877)
The above Income Statement should be read in conjunction with the accompanying notes.
Total basic losses per share (cents)
Basic losses per share (cents) from continuing operations
Total diluted losses per share (cents)
Diluted losses per share (cents) from continuing operations
9
9
9
9
(28.48)
(28.48)
(28.48)
(28.48)
(12.74)
(12.61)
(12.74)
(12.61)
Ardent Leisure Group Limited | Annual Report 2020
27
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Statement of Comprehensive Income
for the year ended 30 June 2020
Statement of Comprehensive Income
Loss for the year
Other comprehensive income/(loss) for the year
Items that may be reclassified to profit and loss:
Foreign exchange translation difference
Items that will not be reclassified to profit and loss:
Loss on revaluation of property, plant and equipment
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year, net of tax
Attributable to:
Ordinary shareholders
Total comprehensive loss for the year, net of tax
Total comprehensive loss for the year, net of tax attributable to share/security
holders, arises from:
Continuing operations
Discontinued operations
Total comprehensive loss for the year, net of tax
Note
2020
$’000
2019
$’000
(136,625)
(60,877)
20
20
4,738
17,501
(2,141)
-
2,597
(134,028)
17,501
(43,376)
(134,028)
(134,028)
(43,376)
(43,376)
(134,032)
4
(134,028)
(42,764)
(612)
(43,376)
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
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28
Ardent Leisure Group Limited | Annual Report 2020
Balance Sheet
as at 30 June 2020
Balance Sheet
Current assets
Cash and cash equivalents
Receivables
Derivative financial instruments
Inventories
Construction in progress inventories
Other
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Investment held at fair value
Derivative financial instruments
Livestock
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Payables
Construction in progress deposits
Derivative financial instruments
Interest bearing liabilities
Current tax liabilities
Provisions
Other
Total current liabilities
Non-current liabilities
Payables
Derivative financial instruments
Interest bearing liabilities
Provisions
Non-current tax liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Other equity
Reserves
Accumulated losses
Total equity
Minority interest
Total equity
Note
8(c)
11
24
12
13(a)
14
16
23(d)
30
24
17
7(f)
15
13(b)
24
22
31(b)
15
24
22
31(b)
7(h)
18
19
20
21
22(c)
2020
$’000
2019
$’000
161,617
4,760
-
7,858
11,877
3,154
189,266
473,805
327,058
3,201
29
204
80,098
4,185
888,580
1,077,846
63,699
11,413
609
28,903
1,065
2,061
1,781
109,531
-
1,931
662,253
3,101
10,629
453
678,367
787,898
289,948
777,124
-
(89,505)
(436,861)
250,758
39,190
289,948
92,332
12,524
13
7,782
578
8,427
121,656
478,641
-
2,811
177
220
78,973
22,845
583,667
705,323
69,195
-
-
1,796
6,415
1,512
4,294
83,212
37,603
505
167,633
5,962
10,000
15,306
237,009
320,221
385,102
777,124
(148)
(92,039)
(299,835)
385,102
-
385,102
The above Balance Sheet should be read in conjunction with the accompanying notes.
Ardent Leisure Group Limited | Annual Report 2020
29
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Total
equity
$’000
444,118
(1,401)
442,717
(60,877)
17,501
(43,376)
(1,203)
16,302
(25)
1,282
(30,595)
-
385,102
(352)
384,750
(136,625)
2,597
(134,028)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Statement of Changes in Equity
for the year ended 30 June 2020
Statement of Changes in Equity
Contributed
Note
equity Other equity
Reserves
Accumulated
losses
Minority
interest
$’000
$’000
$’000
$’000
$’000
Total equity at 27 June 2018
Impact of change in accounting
standard, AASB 15
666,731
(1,405)
(14,246)
(206,962)
21
-
-
-
(1,401)
Total restated equity at 27 June 2018
Loss for the year
Other comprehensive income for the year
Total comprehensive
income/(loss) for the year
Transactions with owners in their
capacity as owners:
Equity-based payments
20
Contributions of equity, net of issue costs 18
19
Acquisition of treasury shares
19
Issuance of treasury shares
21
Distributions paid and payable
18,20
Impact of corporate restructure
Total equity at 25 June 2019
21,23(a)
Impact of change in accounting
standard, AASB 16
Total restated equity at 25 June 2019
Loss for the year
Other comprehensive income for the year
Total comprehensive
income/(loss) for the year
Transactions with owners in their
capacity as owners:
Equity-based payments
Issuance of treasury shares
Acquisition of treasury shares
Issuance of RedBird preferred shares
Transfer from reserve
20
19
19
22(c)
21
666,731
-
-
-
(1,405)
-
-
-
(14,246)
-
17,501
17,501
(208,363)
(60,877)
-
(60,877)
(1,203)
-
-
-
-
(94,091)
(92,039)
-
-
-
-
(30,595)
-
(299,835)
-
(92,039)
-
2,597
2,597
(352)
(300,187)
(136,625)
-
(136,625)
-
16,302
-
-
-
94,091
777,124
-
777,124
-
-
-
-
-
-
-
-
-
-
(25)
1,282
-
-
(148)
-
(148)
-
-
-
-
285
(137)
-
-
(112)
-
-
-
49
-
-
-
-
(49)
-
-
-
39,190
-
(112)
285
(137)
39,190
-
Total equity at 30 June 2020
777,124
-
(89,505)
(436,861)
39,190
289,948
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
30
Ardent Leisure Group Limited | Annual Report 2020
Statement of Cash Flows
for the year ended 30 June 2020
Statement of Cash Flows
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Property expenses paid
Early termination of forward rate contracts
Interest received
Government grants received
Payments for construction in progress inventories
Deposits received for construction in progress
US withholding tax paid
Insurance recoveries
Income tax paid
Net cash flows from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Proceeds from sale of plant and equipment
Proceeds from sale of land and buildings
Proceeds from the sale of Bowling & Entertainment, net of cash disposed
Insurance recoveries relating to damaged assets
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from loans
Repayments of loans
Proceeds from issuance of RedBird preferred shares, net of transaction costs
Payment of principal portion of lease liabilities
Lease interest paid
Loan interest paid
Acquisition of treasury shares
Costs of issue of shares
Distributions paid to shareholders
Net cash flows from financing activities
Net 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 and cash equivalents at the end of the year
Note
2020
$’000
2019
$’000
8(a)
22(c)
447,260
(380,546)
(20,472)
267
680
4,035
(20,882)
20,771
-
7,607
(6,002)
52,718
(79,447)
(6,491)
1,446
2,500
-
-
(81,992)
87,095
(23,794)
99,900
(12,049)
(28,676)
(23,384)
(137)
-
-
98,955
69,681
92,332
(396)
161,617
537,785
(448,047)
(59,729)
-
339
-
(11,345)
7,154
(305)
7,492
(847)
32,497
(68,298)
(7,797)
159
-
2,665
2,021
(71,250)
869,563
(721,161)
-
-
-
(18,700)
-
(30)
(14,263)
115,409
76,656
16,548
(872)
92,332
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
Ardent Leisure Group Limited | Annual Report 2020
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Notes to the Financial Statements
for the year ended 30 June 2020
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Notes to the Financial Statements
Overview
1.
Basis of preparation
Ardent Leisure Group Limited is a limited company,
incorporated and domiciled in Australia, whose shares are
publicly traded on the Australian Securities Exchange.
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Ardent Leisure Group Limited is a for-profit entity for the
purposes of preparing financial statements.
The significant policies which have been adopted in the
preparation of these consolidated financial statements for
the year ended 30 June 2020 are set out in the
accompanying notes. These policies have been
consistently applied to the years presented, unless
otherwise stated.
These general purpose financial statements have been
prepared in accordance with the requirements of the
Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board
(AASB), and the Corporations Act 2001.
(a)
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,
investments held at fair value and derivative financial
instruments held at fair value.
(b)
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.
(c)
Principles of consolidation
Subsidiaries are entities over which the Group has control.
The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns
through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are
deconsolidated from the date that control ceases.
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.
32
Ardent Leisure Group Limited | Annual Report 2020
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(d)
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 presentation currency.
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.
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 2020, the spot rate
used was A$1.00 = US$0.6863 (2019: A$1.00 = US$0.6958)
and A$1.00 = NZ$1.0703 (2019: A$1.00 = NZ$1.0482). The
average spot rate during the year ended 30 June 2020 was
A$1.00 = US$0.6721 (2019: A$1.00 = US$0.7147) and
A$1.00 = NZ$1.0565 (2019: A$1.00 = NZ$1.0630).
(e)
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 Notes 16, 17, 24, 26, 30, 31and 35
and assumptions related to deferred tax assets and
liabilities, impairment testing of goodwill, valuations for
some property, plant and equipment and determination of
lease periods and incremental borrowing rates, 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.
Notes to the Financial Statements
for the year ended 30 June 2020
1.
(f)
Basis of preparation (continued)
Going concern
The impact of COVID-19 on Ardent’s cashflows has been
significant. With the Main Event and Theme Parks
businesses closed from 17 March 2020 and 23 March 2020
respectively, funding has been limited for much of the
closure period to cash on hand with minimal income being
received and relatively high levels of cash utilisation.
Management of both businesses have worked hard to
preserve liquidity, standing down the majority of
employees with reduced or no pay, aggressively
eliminating all discretionary expenditure (both operating
and capital) and actively engaging with local, state and
federal governments and external advisors to identify
additional sources of funding and/or financial support.
On 15 June 2020, the Group announced that it had entered
into a partnership transaction in respect of the Main Event
business, under which a US-based private investment firm,
RedBird Capital Partners (RedBird) has invested US$80.0
million in preferred shares of Main Event’s US parent entity.
This transaction will provide liquidity for Main Event to
recover from the impact of COVID-19 and capacity to invest
in future growth. Funds invested by RedBird will be used
exclusively to support Main Event.
On 7 August 2020, the Group announced that it has received
financial assistance for its Theme Parks business under the
Queensland Government’s COVID-19 Industry Support
Package and Queensland Tourism Icons Program 2020.
The financial assistance package is for a three-year term
totalling $69.9 million comprising a secured loan of $66.9
million (which includes capitalised interest and fees) and a
grant of $3.0 million which can be used to fund working
capital and approved capital expenditure. The loan is
mutually exclusive from the debt facility in place for the
Group’s US Main Event business.
There remains continuing uncertainty regarding the
severity and duration of the COVID-19 virus and associated
trading, travel and social distancing restrictions. There is
also uncertainty regarding customers’ propensity to return
to the businesses when these restrictions are lifted.
Notwithstanding, management’s forecasts, together with
available cash reserves and borrowing facilities, continue to
support the going concern assumption.
(g)
New accounting standards, amendments and
interpretations not yet adopted by the Group
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 2020 but which the Group has
not yet adopted. The Group’s assessment of the impact of
those new standards, amendments and interpretations
which may have an impact is set out below:
Interest Rate Benchmark Reform - Amendments to
IFRS 9, IAS 39 and IFRS 7
In September 2019, the IASB issued amendments to IFRS 9
Financial Instruments, IAS 39 Financial Instruments:
Recognition and Measurement and IFRS 7 Financial
Instruments: Disclosures, which concludes phase one of its
work to respond to the effects of Interbank Offered Rates
(IBOR) reform on financial reporting.
The amendments include a number of reliefs, which apply
to all hedging relationships that are directly affected by
the interest rate benchmark reform. A hedging
relationship is affected if the reform gives rise to
uncertainties about the timing and/or amount of
benchmark-based cash flows of the hedged item or the
hedging instrument.
The Group will conduct a detailed assessment of the
amendments and the impact, if any, on its hedging
portfolio.
Definition of Material - Amendments to AASB 1 and
AASB 8
In October 2018, the AASB issued amendments to AASB 1
Presentation of Financial Statements and AASB 8 Operating
Segments to align the definition of ‘material’ across the
standards and to clarify certain aspects of the definition.
The new definition states that, ’Information is material if
omitting, misstating or obscuring it could reasonably be
expected to influence decisions that the primary users of
general purpose financial statements make on the basis of
those financial statements, which provide financial
information about a specific reporting entity.’
The amendments clarify that materiality will depend on
the nature or magnitude of information, or both. The
amendments will require the Group to assess whether the
information, either individually or in combination with
other information, is material in the context of the financial
statements.
Early adoption of standards
The Group has not elected to apply any pronouncements
before their operative date.
Ardent Leisure Group Limited | Annual Report 2020
33
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Notes to the Financial Statements
for the year ended 30 June 2020
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Performance
1.
(h)
Basis of preparation (continued)
New and amended standards adopted by the Group
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The new or amended accounting standards and interpretations which became effective for the reporting period commencing
on 26 June 2019 are set out below:
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AASB 16 Leases and relevant amending standards;
AASB Interpretation 23 Uncertainty Over Income Tax Treatment with Customers and relevant amending standards;
AASB 2017-6 Amendments to Australian Accounting Standards – Prepayment Features with Negative Compensation; and
AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015-2017 Cycle.
Except as disclosed in Note 23, the adoption of new and amended standards and interpretations has not resulted in a material
change to the financial performance or position of the Company.
(i)
Rounding
The Group has relied on the relief provided by ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 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
Instrument, unless otherwise indicated.
2.
Segment information
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.
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), property, plant and equipment, lease right-of-use assets
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, divisional
EBITDA and divisional EBIT.
Business segments
The Group is organised on a global basis into the following divisions by product and service type:
(i) Main Event
This segment operates solely in the United States of America and comprises 43 Main Event sites in Texas, Arizona, Georgia,
Illinois, Kentucky, Missouri, New Mexico, Ohio, Oklahoma, Kansas, Florida, Tennessee, Maryland, Delaware, Colorado and
Louisiana.
(ii)
Theme Parks
This segment comprises Dreamworld and WhiteWater World in Coomera, Queensland and the SkyPoint observation deck and
climb in Surfers Paradise, Queensland.
(iii) Bowling & Entertainment
This segment was sold in FY18 on 30 April 2018.
(iv) Marinas
This segment was sold in FY18 on 14 August 2017.
(v) Health Clubs
This segment was sold in FY17 on 25 October 2016.
34
Ardent Leisure Group Limited | Annual Report 2020
Notes to the Financial Statements
for the year ended 30 June 2020
2.
Segment information (continued)
26 June 2019 to 30 June 2020
Segment revenue
Segment EBITDA
Depreciation and amortisation
Amortisation of lease assets
Segment EBIT
Borrowing costs
Lease liability interest expense
Interest benefit
Net loss before tax
Income tax expense
Net loss after tax
The segment EBITDA above has been impacted by the following specific items:
Valuation loss on property, plant and equipment
Valuation gain on investment held at fair value
Impairment of property, plant and equipment and lease right-of-use assets
Early termination of leases
Pre-opening expenses
Dreamworld incident costs, net of insurance recoveries
Restructuring and other non-recurring items
Reduction in rent due to adoption of new lease accounting standard AASB
16 Leases
Net gain/(loss) on disposal of assets
The net loss after tax above has also been impacted by the following specific items:
Incremental lease asset amortisation and lease interest expense on adoption
of AASB 16 Leases
Tax impact of specific items listed above
Tax deductible temporary differences for which deferred tax asset derecognised
Tax losses for which deferred tax asset derecognised or not recognised
Total assets
Acquisitions of property, plant and equipment and intangible assets
35
Ardent Leisure Group Limited | Annual Report 2020
Main Event Theme Parks
$’000
54,508
(23,950)
(9,828)
(96)
(33,874)
$’000
343,807
55,268
(55,315)
(28,282)
(28,329)
Corporate
$’000
-
(5,602)
(497)
(124)
(6,223)
Bowling &
Continuing
operations Entertainment
$’000
-
18
-
-
18
$’000
398,315
25,716
(65,640)
(28,502)
(68,426)
(27,614)
(36,568)
680
(131,928)
(4,701)
(136,629)
Marinas Health Clubs
$’000
-
(14)
-
-
(14)
$’000
-
-
-
-
-
Discontinued
operations
$’000
-
4
-
-
4
-
-
-
4
-
4
-
-
(2,015)
(2,758)
(4,175)
-
(5,920)
48,258
2,535
35,925
(64,837)
6,072
-
(7,951)
(66,716)
909,724
58,545
(10,366)
-
(5,041)
-
-
2,827
(779)
107
(2,942)
(16,194)
(101)
4,889
(9,823)
(2,639)
(7,674)
123,000
22,824
-
390
-
-
-
-
(253)
128
-
265
(10,366)
390
(7,056)
(2,758)
(4,175)
2,827
(6,952)
48,493
(407)
19,996
(132)
(40)
-
(17,186)
(17,358)
45,122
5
(65,070)
10,921
(9,823)
(27,776)
(91,748)
1,077,846
81,374
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$’000
398,315
25,720
(65,640)
(28,502)
(68,422)
(27,614)
(36,568)
680
(131,924)
(4,701)
(136,625)
(10,366)
390
(7,056)
(2,758)
(4,175)
2,827
(6,952)
48,493
(407)
19,996
(65,070)
10,921
(9,823)
(27,776)
(91,748)
1,077,846
81,374
Notes to the Financial Statements
for the year ended 30 June 2020
2.
Segment information (continued)
27 June 2018 to 25 June 2019
Segment revenue
Segment EBITDA
Depreciation and amortisation
Segment EBIT
Finance costs
Interest income
Net loss before tax
Income tax expense
Net loss after tax
Main Event
$’000
Theme Parks
$’000
Corporate
$’000
416,164
47,278
(42,293)
4,985
67,133
(19,834)
(9,226)
(29,060)
4
(15,137)
(837)
(15,974)
The segment EBITDA above has been impacted by the following specific items:
Impairment of property, plant and equipment
Pre-opening expenses
Dreamworld incident costs, net of insurance recoveries
Provision for onerous lease contract
Restructuring and other non-recurring items
Selling costs associated with discontinued operations
Net gain/(loss) on disposal of assets
(17,567)
(2,791)
-
(3,072)
(5,180)
-
1,695
(26,915)
The net loss after tax above has also been impacted by the following specific items:
Tax impact of specific items listed above
Impact of destapling and corporatisation of the Group
Tax losses for which deferred tax asset derecognised
Estimated tax payable in respect of prior periods
5,652
-
-
-
5,652
-
-
(5,407)
-
(3,048)
-
(1,410)
(9,865)
3,203
-
-
-
-
-
-
-
(4,767)
-
(334)
(5,101)
1,530
3,865
(12,376)
(15,919)
483,301
12,307
(52,356)
(40,049)
(8,262)
339
(47,972)
(12,293)
(60,265)
(17,567)
(2,791)
(5,407)
(3,072)
(12,995)
-
(49)
(41,881)
10,385
3,865
(12,376)
(15,919)
Total assets
Acquisitions of property, plant and equipment and intangible assets
472,104
48,031
146,857
29,033
86,362
9
705,323
77,073
36
Ardent Leisure Group Limited | Annual Report 2020
3,203
(22,900)
(14,045)
Continuing
operations
$’000
Bowling &
Entertainment
$’000
Marinas Health Clubs
$’000
$’000
Discontinued
operations
$’000
-
(528)
-
(528)
-
-
-
-
-
(528)
-
(528)
-
-
-
-
-
-
-
-
(7)
-
(7)
-
-
-
-
-
(7)
-
(7)
-
-
-
-
-
-
-
-
(77)
-
(77)
-
-
-
-
-
(77)
-
(77)
-
-
-
-
-
-
-
-
(612)
-
(612)
-
-
(612)
-
(612)
-
-
-
-
-
(612)
-
(612)
-
-
-
-
-
-
-
Total
$’000
483,301
11,695
(52,356)
(40,661)
(8,262)
339
(48,584)
(12,293)
(60,877)
(17,567)
(2,791)
(5,407)
(3,072)
(12,995)
(612)
(49)
(42,493)
10,385
3,865
(12,376)
(15,919)
(14,045)
705,323
77,073
Notes to the Financial Statements
for the year ended 30 June 2020
3.
Revenue from operating activities
Revenue by type
Revenue from services
Revenue from sale of goods
Other revenue
Revenue from operating
activities
Revenue by geographical market
Australia
United States
2020
$’000
2019
$’000
247,943
150,372
-
303,957
179,340
4
398,315 483,301
2019
2020
$’000
$’000
67,137
54,508
416,164
343,807
398,315 483,301
(a)
Accounting policy
Revenue is measured at the fair value of the consideration
received or receivable. Revenue is recognised for the major
business activities as follows:
Rendering of services
Revenue from rendering of services is recognised when
performance obligations to the customers have been
satisfied.
In the case of Theme Parks, the performance obligation is
satisfied by the provision of entry to Dreamworld,
WhiteWater World and SkyPoint during the validity period
of the entry pass/ticket.
Revenue relating to theme park annual/season passes is
recognised on a straight-line basis over the period that the
pass allows access to the parks. The closure of the parks
during the current year due to COVID-19 resulted in pass
holders being unable to access the parks from 23 March
2020. Accordingly, pass revenue has not been recognised
during the closure period and will be recognised over the
remaining validity period of the passes post reopening.
In the case of Main Event, the performance obligation is
satisfied by provision of a bowling, amusement or other
game/activity which has been paid for by a customer.
Sale of goods
Revenue from sale of goods including merchandise and
food and beverage items is recognised when control of the
goods has passed to the buyer, generally on delivery of the
goods at the time of sale.
(b)
Performance obligations
The transaction price allocated to the remaining
performance obligations (unsatisfied or partially
unsatisfied) as at end of year is as follows:
Within one year
More than one year
2020
$’000
16,761
43
16,804
2019
$’000
21,744
78
21,822
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Set out below is the amount of revenue recognised from:
Amounts included in deferred
revenue at the beginning of the year
Performance obligations recognised
in previous years
4.
Other income
Government subsidies & grants
Insurance recoveries
2020
$’000
2019
$’000
11,273 10,783
-
-
2020
$’000
5,997
5,157
11,154
2019
$’000
-
9,199
9,199
(a)
Accounting policy
Government subsidies and grants are recognised where
there is reasonable assurance that the subsidy or grant will
be received, and all attached conditions will be complied
with. When the subsidy or grant relates to an expense
item, it is recognised as income on a systematic basis over
the periods that the related costs, for which it is intended
to compensate, are expensed. When the subsidy or grant
relates to an asset, it reduces the carrying amount of the
asset. The subsidy or grant is then recognised in profit and
loss over the useful life of the depreciable asset by way of a
reduced depreciable charge.
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When the Group receives grants of non-monetary assets,
the asset and the grant are recorded at nominal amounts
and released to profit or loss over the expected useful life
of the asset, based on the pattern of consumption of the
benefits of the underlying asset by equal annual
instalments.
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Insurance recoveries income is recognised when receipt of
proceeds is considered virtually certain.
5.
Other expenses
Audit fees
Consulting fees
Consumables
Electricity
Insurance
Legal fees
Merchant fees
Printing, stationery and postage
Taxation fees
Telecommunications
Travel costs
Other administrative costs
Destapling costs
Other
2020
$’000
931
2,096
2,154
9,650
7,545
1,124
8,268
1,727
103
3,641
2,177
4,132
403
8,782
52,733
2019
$’000
688
4,777
2,737
12,345
5,600
1,831
7,817
2,463
546
3,517
3,882
3,979
3,878
6,798
60,858
Ardent Leisure Group Limited | Annual Report 2020
37
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Notes to the Financial Statements
for the year ended 30 June 2020
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6.
Finance costs
Interest on loans
Interest on leases
Interest on tax liabilities
Preferred dividends payable
(a)
Accounting policy
2020
$’000
26,506
36,568
629
479
64,182
2019
$’000
8,262
-
-
-
8,262
Finance costs are recognised as expenses using the effective interest rate method, except where they are included in the costs
of qualifying assets.
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Finance costs include interest on short term and long term borrowings, amortisation of ancillary costs incurred in connection
with the arrangement of borrowings, the interest expense on lease liabilities and preferred dividends payable by a subsidiary
where the underlying preferred shares are classified as debt under AASB 132 Financial Instruments.
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Finance costs associated with the acquisition or construction of a qualifying asset are capitalised as part of the cost of that
asset. Finance costs not associated with qualifying assets, are expensed in the Income Statement.
The capitalisation rate used to determine the amount of finance 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 nil per annum
(2019: 4.08% per annum) for Australian dollar debt and nil per annum (2019: Nil per annum) for US dollar debt.
7.
(a)
Taxation
Income tax (benefit)/expense
Current tax
Deferred tax
Over provided in prior year
Income tax expense is attributable to:
Loss from continuing operations
Profit from discontinued operations
Deferred income tax benefit included in
income tax expense/(benefit) comprises:
Increase in deferred tax assets
Decrease/(increase) in deferred tax liabilities
Note
7(f)
7(h)
2020
$’000
(104)
4,313
492
4,701
4,701
-
4,701
(9,222)
13,535
4,313
2019
$’000
17,122
(5,137)
308
12,293
12,293
-
12,293
(1,079)
(4,058)
(5,137)
38
Ardent Leisure Group Limited | Annual Report 2020
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Notes to the Financial Statements
for the year ended 30 June 2020
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7.
(b)
Taxation (continued)
Numerical reconciliation of income tax (benefit)/expense to prima facie tax benefit
Loss from continuing operations before income tax benefit
Profit/(loss) from discontinued operations before income tax benefit
Prima facie loss
Tax at the Australian tax rate of 30% (2019: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable
income:
Entertainment
Non-deductible depreciation and amortisation
Sundry items
Employee benefits
Tax deductible temporary differences for which deferred tax asset derecognised
Tax losses for which deferred tax asset derecognised or not recognised
Restructuring costs
Impact of destapling and corporatisation
Foreign exchange conversion differences
US State taxes
Withholding tax
Research and development and other credits
Difference in overseas tax rates
Estimated tax payable in respect of prior periods
Over provided in prior year
Income tax expense
(c)
Income tax benefit relating to items of other comprehensive income
Unrealised loss on property, plant and equipment recognised in the asset
revaluation reserve
Note
20
(d)
Unrecognised temporary differences
Australian deductible temporary differences for which no deferred tax asset has been
recognised:
Property, plant and equipment
Total temporary differences
Potential Australian tax benefit at 30%
(e)
Tax consolidation legislation
2020
$’000
(131,928)
4
(131,924)
(39,577)
55
-
832
28
9,823
27,776
-
-
232
(4,009)
-
(708)
9,757
-
492
4,701
2020
$’000
(918)
(918)
2020
$’000
32,744
32,744
9,823
The Company and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation and
entered into tax sharing and tax funding agreements with the entities in the tax consolidated group. The tax sharing agreement
limits the joint and several liability of the wholly-owned entities in the case of a default by the head entity, Ardent Leisure Group
Limited.
Ardent Leisure Group Limited | Annual Report 2020
39
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2019
$’000
(47,972)
(612)
(48,584)
(14,575)
85
386
(802)
(54)
-
12,376
303
(3,355)
33
197
401
(18)
1,089
15,919
308
12,293
2019
$’000
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2019
$’000
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Notes to the Financial Statements
for the year ended 30 June 2020
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7.
Taxation (continued)
(e)
Tax consolidation legislation (continued)
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Under the tax funding agreement, the wholly-owned entities fully compensate the Company for any current tax payable
assumed and are compensated by the Company for any current tax receivable and deferred tax assets relating to unused tax
losses or unused tax credits that are transferred to the Company 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 non-current inter-entity payables.
(f)
Deferred tax assets
The balance comprises temporary differences attributable to:
Allowance for expected credit losses - trade receivables
Employee benefits
Provisions and accruals
Property, plant and equipment
Inventory diminution
Deferred revenue
Lease incentives
Lease liabilities
Tax losses
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
Adjustment for new lease accounting standard, AASB 16 Leases
Restated opening balance
Foreign exchange differences
Credited to asset revaluation reserve (refer to Note 20)
Credited to the Income Statement (refer to Note 7(a))
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
(g)
Tax losses
Unused Australian capital tax losses for which no deferred tax asset has been recognised
Unused US revenue tax losses for which no deferred tax asset has been recognised
Unused Australian revenue tax losses for which no deferred tax asset has been recognised
Total losses
Potential US tax benefit at 21%
Potential Australian tax benefit at 30%
Potential tax benefit
40
Ardent Leisure Group Limited | Annual Report 2020
2020
$’000
14
2,286
10,724
-
147
2,295
-
89,891
25,298
298
130,953
(113)
(126,655)
4,185
46,822
74,238
121,060
(247)
918
9,222
130,953
4,113
126,840
130,953
2020
$’000
-
37,862
66,083
103,945
7,951
19,825
27,776
2019
$’000
7
2,535
2,763
3,228
180
2,517
7,252
-
28,044
296
46,822
526
(24,503)
22,845
44,329
-
-
1,414
-
1,079
46,822
5,460
41,362
46,822
2019
$’000
9,261
-
-
9,261
-
2,778
2,778
Notes to the Financial Statements
for the year ended 30 June 2020
7.
(h)
Taxation (continued)
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Prepayments
Accrued revenue and other
Property, plant and equipment
Right-of-use assets
Other
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
Adjustment for new lease accounting standard, AASB 16 Leases
Restated opening balance
Foreign exchange differences
Debited/(credited) to the Income Statement (refer to Note 7(a))
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
2020
$’000
2019
$’000
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248
-
48,181
78,792
-
127,221
(113)
(126,655)
453
39,283
74,119
113,402
284
13,535
127,221
36
127,185
127,221
457
399
38,383
-
44
39,283
526
(24,503)
15,306
40,654
-
-
2,687
(4,058)
39,283
1,271
38,012
39,283
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(i)
Review of prior period taxation arrangements
As noted in the June 2019 annual report, the Group was in discussions with the Australian Taxation Office (ATO) regarding the
tax treatment of intragroup leases by the previous stapled group in prior years. In October 2019, a settlement was reached with
the ATO under which the Group will be required to make further tax payments totalling $15.9 million. Of this, $5.9 million was
paid during the period with the remainder being payable on deferred settlement terms. The full liability was recognised in the
June 2019 financial statements and there has been no further financial impact in the current period. Under the deferred
settlement terms, the ATO has taken security over the freehold and business assets of SkyPoint until such time as the tax liability
is fully repaid.
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Ardent Leisure Group Limited | Annual Report 2020
41
Notes to the Financial Statements
for the year ended 30 June 2020
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Taxation (continued)
Accounting policy
7.
(j)
Tax
The income tax expense or benefit for the period is the tax
payable on the current period's taxable income based on
the applicable income tax rate for each jurisdiction
adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax
losses.
The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of
the reporting period in the countries where the
Company's subsidiaries and associates operate and
generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate
on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the consolidated financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not
accounted for if it arises from initial recognition of an asset
or liability in a transaction other than a business
combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates (and laws) that
have been enacted or substantially enacted by the end of
the reporting period and are expected to apply when the
related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and
tax bases of investments in foreign operations where the
Company is able to control the timing of the reversal of the
temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
42
Ardent Leisure Group Limited | Annual Report 2020
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 Group Limited and its wholly-owned
Australian controlled entities have implemented the tax
consolidation legislation. 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.
Entities within the Group may be entitled to claim special
tax deductions for investments in qualifying assets
(investment allowances). The Group accounts for such
investment 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.
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.
Notes to the Financial Statements
for the year ended 30 June 2020
8.
(a)
Cash flow information
Reconciliation of loss for the year to net cash flows from operating activities
s
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o
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v
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2020
$’000
2019
$’000
t
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p
e
R
Loss for the year
Non-cash items
Depreciation of property, plant and equipment
Amortisation
Impairment of goodwill
Impairment of property, plant and equipment
Impairment of right-of-use assets
Equity-based payments
Write-off of doubtful debts
Inventory provision (decrease)/increase
Provision for onerous lease contract
Loss on sale of property, plant and equipment
Valuation loss on property, plant and equipment
Valuation gain on investment held at fair value
Classified as financing activities
Finance costs
RedBird preferred share issue costs
Classified as investing activities
Unrealised net loss on derivative financial instruments
Insurance recovery for damaged Main Event centres
Changes in asset and liabilities:
Decrease/(increase) in assets:
Receivables
Inventories
Deferred tax assets
Construction in progress inventories
Other assets
Increase/(decrease) in liabilities:
Payables and other liabilities
Provisions
Construction in progress deposits
Current tax liabilities
Non-current tax liabilities
Deferred tax liabilities
Net cash flows from operating activities
(b)
Non-cash investing and financing activities
(136,625)
(60,877)
60,718
33,424
-
5,436
1,620
25
559
(43)
-
407
10,366
(390)
64,182
2,326
305
10,870
(33)
19,578
(11,680)
5,273
(1,633)
(2,585)
11,500
(6,019)
629
(15,492)
52,718
48,567
3,789
-
17,567
-
166
649
19
3,072
2,418
-
-
8,262
-
1,376
(2,021)
(72)
(389)
(2,079)
1,805
(1,469)
246
(300)
(1,358)
6,008
10,000
(2,882)
32,497
The following item is not reflected in the Statements of Cash Flows:
Distributions by the Group satisfied during the year by the issue of shares
under the DRP
31(a)
-
16,332
Note
2020
$’000
2019
$’000
Ardent Leisure Group Limited | Annual Report 2020
43
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Notes to the Financial Statements
for the year ended 30 June 2020
i
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C
8.
Cash flow information (continued)
(c)
Cash and cash equivalents
Cash and cash equivalents at 30 June 2020 comprise the following:
t
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R
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D
Cash at banks and on hand
Short term deposits
Restricted cash
2020
$’000
152,323
6,189
3,105
161,617
2019
$’000
23,719
63,233
5,380
92,332
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m
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t
a
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S
l
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n
a
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F
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t
a
d
i
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o
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s
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N
s
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A
Cash at banks earn interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying periods
of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the
respective short term deposit rates. Restricted cash includes deposits held as security for ancillary merchant, hedging and bank
guarantee facilities.
Under the terms of the Group’s financing facilities, cash and debt held by the Australian and US businesses are subject to ‘ring
fencing’ provisions whereby each business cannot access cash or debt facilities held by the other. The cash available to the
respective businesses at 30 June 2020 is as follows:
Theme Parks and Corporate Office (Australian business)
Main Event (US business)
2020
$’000
32,601
129,016
161,617
2019
$’000
68,792
23,540
92,332
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) Accounting policy
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.
(e)
Changes in interest bearing liabilities arising from financing activities
Interest bearing liabilities
Opening interest bearing liabilities
Adoption of new lease accounting standard
Restated opening interest bearing liabilities
Changes from financing cash flows
Effect of changes in foreign currency rates
Changes in lease liabilities
Other
Closing interest bearing liabilities
Derivative financial instruments
Opening derivatives liability/(asset)
Changes from financing cash flows
Changes in fair value
Closing derivatives liability
Total financial liabilities
44
Ardent Leisure Group Limited | Annual Report 2020
2020
$’000
2019
$’000
169,429
357,630
527,059
80,911
1,882
75,037
6,267
691,156
315
1,931
265
2,511
693,667
27,849
-
27,849
137,345
3,295
-
940
169,429
(720)
-
1,035
315
169,744
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Notes to the Financial Statements
for the year ended 30 June 2020
9.
Losses per share
Basic losses per share (cents) from continuing operations
Basic losses per share (cents) from discontinued operations
Total basic losses per share (cents)
Diluted losses per share (cents) from continuing operations
Diluted losses per share (cents) from discontinued operations
Total diluted losses per share (cents)
2020
2019
(28.48)
-
(28.48)
(28.48)
-
(28.48)
(12.61)
(0.13)
(12.74)
(12.61)
(0.13)
(12.74)
Losses used in the calculation of basic and diluted earnings per share ($'000)
(136,625)
(60,877)
Weighted average number of shares on issue used in the calculation of basic losses per
share ('000)
Weighted average number of shares held by employees under employee equity plans
(refer to Note 35) ('000)
Weighted average number of shares on issue used in the calculation of diluted earnings
per share ('000)
479,661
477,999
141
334
479,661
477,999
Basic earnings per share are determined by dividing profit by the weighted average number of ordinary shares on issue
during the period.
Diluted earnings per share are determined by dividing the profit by the weighted average number of ordinary shares and
dilutive potential ordinary shares on issue during the period.
10. Dividends paid and payable
Dividends
No interim or final dividend has been paid or declared for the year ended 30 June 2020 (2019: Nil).
(a)
Franking credits
The tax consolidated group has franking credits of $1,501,307 (2019: $1,501,307).
Working capital
11. Receivables
Trade receivables
Allowance for expected credit losses
Other receivables
s
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t
o
N
2020
$’000
4,210
(47)
597
4,760
2019
$’000
6,840
(23)
5,707
12,524
The Group has recognised an expense of $558,643 in respect of expected credit losses (ECLs) during the year ended 30 June
2020 (2019: $649,365). The expense has been included in other expenses in the Income Statement.
Refer to Note 25(e) for information on the Group’s management of, and exposure to, credit risk.
Ardent Leisure Group Limited | Annual Report 2020
45
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Notes to the Financial Statements
for the year ended 30 June 2020
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11. Receivables (continued)
(b)
Accounting policy
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Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest rate method less allowances for ECLs. 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 are written off when there is no reasonable expectation of
recovering the contractual cash flows.
The Group applies a provision matrix in calculating ECLs for trade receivables. The provision rates are based on days past due
for groupings of customers that have similar loss patterns and are based on the Group’s historically observed default rates and
adjusted with forward-looking information at each reporting date where applicable.
Assessment of the relationship between historical observed default rates, forecast economic conditions and ECLs requires
judgement. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s
historical credit loss experience and forecast of economic conditions may not be representative of actual default rates in the
future.
s
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The amount of any provision for ECLs 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.
12.
Inventories
Goods held for resale
Provision for diminution
2020
$’000
8,034
(176)
7,858
2019
$’000
7,915
(133)
7,782
The expense relating to the write-downs of inventories during the year ended 30 June 2020 was $60,029 (2019: $Nil).
(a)
Accounting policy
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.
13. Construction in progress
Construction in progress inventories relates to a centre that is under construction by Main Event under agreements that Main
Event has entered into with a third party. Once the Group has satisfied the requirements of the agreements and acceptance of
the centre by the third party has occurred, the risks and rewards pass to the third party. The costs funded by the third party
during the course of construction are recorded as a current liability, construction in progress deposits, and upon acceptance
of the centre by the third party this liability and related construction in progress inventories are settled. Any net realisable
value adjustment is recorded in the Income Statement as a gain/loss on sale of the construction in progress inventories.
At 30 June 2020, construction of the centre was substantially complete, with the centre subsequently opened on 17 July 2020.
46
Ardent Leisure Group Limited | Annual Report 2020
Notes to the Financial Statements
for the year ended 30 June 2020
13.
Construction in progress (continued)
(a) Construction in progress inventories
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C
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A reconciliation of the carrying amount of the construction in progress inventories at the beginning and end of the current
period is set out below:
t
r
o
p
e
R
Carrying amount at the beginning of the year
Additions
Disposals
Foreign exchange movements
Carrying amount at the end of the year
(b)
Construction in progress deposits
2020
$’000
578
20,882
(9,202)
(381)
11,877
2019
$’000
772
11,345
(13,149)
1,610
578
A reconciliation of the carrying amount of the construction in progress deposits liability at the beginning and end of the
current period is set out below
Carrying amount at the beginning of the year
Additions
Disposals
Foreign exchange movements
Carrying amount at the end of the year
(c)
Accounting policy
2020
$’000
-
20,771
(9,271)
(87)
11,413
2019
$’000
-
7,154
(8,512)
1,358
-
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Construction in progress inventories are valued at the lower of cost and net realisable value. Cost of construction in progress
comprises the purchase price and other costs, including labour costs which are allocated in accordance with the terms of the
agreements.
14. Other assets
Prepayments
Accrued revenue
2020
$’000
3,044
110
3,154
2019
$’000
5,654
2,773
8,427
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Ardent Leisure Group Limited | Annual Report 2020
47
Notes to the Financial Statements
for the year ended 30 June 2020
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O
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15. Payables
e
c
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Current
Interest payable
GST payable
Trade creditors
Property expenses payable
Employee benefits
Deferred revenue
Straight-line rent liabilities
Lease incentive liabilities
Property tax payable
Capital expenditure including construction in progress inventories payable
Other payables
Total current payables
Non-current
Lease incentive liabilities
Straight-line rent liabilities
Total non-current payables
Total payables
(a)
Accounting policy
Payables
2020
$’000
99
224
16,684
1,727
12,257
13,841
-
-
6,121
858
11,888
63,699
-
-
-
63,699
2019
$’000
1,954
97
9,297
427
17,577
11,273
97
3,984
5,332
5,165
13,992
69,195
33,782
3,821
37,603
106,798
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 to 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.
Employee benefits
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.
Long term assets
s
e
t
o
N
16. Property, plant and equipment
Segment
Note
(1) (2) (3)
Theme Parks
Main Event
Other
Total
Cost less
accumulated
depreciation &
impairments
2020
$’000
Cumulative
revaluation
(decrements)/
increments
2020
$’000
Consolidated
book
value
2020
$’000
Cost less
accumulated
depreciation &
impairments
2019
$’000
Cumulative
revaluation
(decrements)/
increments
2019
$’000
249,015
354,270
705
603,990
(130,185)
-
-
(130,185)
118,830
354,270
705
473,805
243,448
346,752
1,115
591,315
(112,674)
-
-
(112,674)
Consolidated
book value
2019
$’000
130,774
346,752
1,115
478,641
s
e
c
i
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n
e
p
p
A
(1) The book value of Dreamworld and WhiteWater World land and buildings, major rides and attractions and other plant and equipment (including
construction work in progress of $21.9 million (2019: $28.8 million), intangible assets of $2.5 million (2019: $2.9 million) and livestock of $0.2 million
(2019: $0.2 million) is $87.5 million (2019: $96.1 million). Having regard to an independent valuation at 30 June 2020 by Jones Lang LaSalle, the
Directors have assessed the fair value of land and buildings and major rides and attractions to be $28.1 million (2019: $50.6 million). All other plant
and equipment are carried at depreciated historic cost of $59.4 million (2019: $45.5 million). Refer to additional Theme Parks valuation information
below.
(2) Having regard to an independent valuation performed at 30 June 2020 by Jones Lang LaSalle, the Directors have assessed the fair value of the
excess land adjacent to Dreamworld to be $5.8 million (2019: $5.2 million).
(3) Having regard to an independent valuation performed at 30 June 2020 by Jones Lang LaSalle, the Directors have assessed the fair value of SkyPoint
to be $28.2 million (2019: $32.6 million).
48
Ardent Leisure Group Limited | Annual Report 2020
Notes to the Financial Statements
for the year ended 30 June 2020
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16.
Property, plant and equipment (continued)
Refer to Note 26(b) for information on the valuation techniques used to derive the fair value of the Theme Parks.
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:
t
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o
p
e
R
Land and
buildings
$’000
Major rides
and
attractions
$’000
Plant and
equipment
$’000
Furniture,
fittings and
equipment
$’000
Motor
vehicles
$’000
Construction
in progress
$’000
Total
$’000
191,144
28,479
10,493
-
(4,224)
(9,005)
(13,425)
1,844
(5,372)
66,454
-
174,882
15,873
11,376
-
(2,056)
(1,307)
-
17,343
(50)
2,331
(49,375)
-
-
-
2,260
(64)
4,001
25
1,700
-
(121)
(955)
-
-
-
318
-
19
-
-
(60)
-
-
-
41,842
30,463
478,641
74,840
(40,931)
(4)
(1,723)
-
-
-
(54)
(5,793)
(60,702)
(13,425)
1,630
-
5,734
(5,436)
199,934
74,467
163,200
4,650
277
31,277
473,805
Land and
buildings
$’000
Major rides
and
attractions
$’000
Plant and
equipment
$’000
Furniture,
fittings and
equipment
$’000
Motor
vehicles
$’000
Construction
in progress
$’000
Total
$’000
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183,244
11,325
903
-
-
(363)
(7,583)
10,815
(7,197)
65,612
40
2,902
-
-
(1,234)
(866)
187,271
20,924
5,004
767
-
(564)
(39,037)
-
-
10,887
(10,370)
4,128
29
896
-
-
(42)
(1,010)
-
-
341
32
-
-
-
-
(55)
-
-
15,072
36,926
(9,705)
-
(712)
-
-
455,668
69,276
-
767
(712)
(2,203)
(48,551)
261
-
21,963
(17,567)
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191,144
66,454
174,882
4,001
318
41,842
478,641
2020
Carrying amount at the
beginning of the year
Additions
Transfer from construction
in progress
Transfer to intangible assets
Disposals
Depreciation
Revaluation
Foreign exchange
movements
Impairment
Carrying amount at the
end of the year
2019
Carrying amount at the
beginning of the year
Additions
Transfer from construction
in progress
Transfer from inventories
Transfer to intangible assets
Disposals
Depreciation
Foreign exchange
movements
Impairment
Carrying amount at the
end of the year
(a)
Theme Parks valuation
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F
i
The tragic incident which occurred on the Thunder River Rapids ride at Dreamworld in October 2016 and subsequent Coronial
Inquest continues to negatively impact attendance and revenues in the current period, with recovery being slower than
expected. In the prior three years, the Group has recognised revaluation decrements to the property, plant and equipment of
Dreamworld and WhiteWater World of $167.7 million and a further impairment provision of $1.0 million.
In the current year, the COVID-19 pandemic has had a significant impact on the Theme Parks business, with the parks being
closed from 23 March 2020. There remains continuing uncertainty regarding the severity and duration of the virus and
associated trading, travel and social distancing restrictions. There is also uncertainty over the recovery period and propensity
of customers to return once the site reopens. This has had a significant impact on the property valuation at 30 June 2020, with
the valuation of Dreamworld and WhiteWater World being subject to further revaluation decrements of $10.4 million and
impairment charges of $5.0 million.
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Ardent Leisure Group Limited | Annual Report 2020
49
Notes to the Financial Statements
for the year ended 30 June 2020
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16. Property, plant and equipment (continued)
(a)
Theme Parks valuation (continued)
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At 30 June 2020, the valuation of Dreamworld and WhiteWater World has been determined in accordance with AASB 13 Fair
Value Measurement, which defines fair value as the price that would be received to sell an asset in an orderly transaction
between market participants. This Standard requires that the valuation take account of the benefits attainable under the
highest and best use, provided that any alternate uses are physically possible, legally permissible and financially feasible.
Under the Standard, uses that are legally permissible take into account any legal restrictions on the use of the asset that
market participants would take into account when pricing the asset (e.g. the zoning restrictions applicable to a property). This
has resulted in the fair value of land, buildings and major rides and attractions being assessed at $28.1 million (2019: $50.6
million). Together with other assets carried at historic cost of $59.4 million (2019: $45.5 million), the book value of Dreamworld
and WhiteWater World is $87.5 million at 30 June 2020.
At 30 June 2020, the Group obtained independent valuation advice from Jones Lang LaSalle (JLL) to assist in determining a
Directors’ valuation of the property. The valuer has considered the work undertaken in the prior year (as set out in the annual
financial report for the year ended 25 June 2019) and reviewed management’s updated forecasts in light of the park’s
performance and market conditions, including the ongoing impact of COVID-19. In determining a Directors’ valuation at 30
June 2020, the Directors have had regard to the work of JLL in June 2020 as well as updated forecasts for the park in light of
market conditions and management initiatives currently in place to manage current uncertainties and improve its performance.
The significant unobservable inputs associated with the valuation of the Dreamworld and WhiteWater World valuation are as follows:
Capitalisation rate
Discount rate
Terminal yield
10 year average annual EBITDA ($’000)
10 year average annual capital expenditure ($’000)
June
2020
10.00%
12.50% - 13.00%
10.00% - 10.50%
15,521
7,560
June
2019
11.50%
14.00% - 14.50%
11.50% - 12.00%
26,503
15,409
In addition, the valuation has assumed a gradual recovery of attendances over the next 10 years, starting with FY21
attendances estimated to be approximately 48% of FY16 (pre-incident) levels.
The Directors note the material valuation uncertainty which exists both in terms of market disruption (e.g. liquidity) and
availability of inputs (e.g. cash flows, discount rates and capitalisation rates) which could impact the valuation of these assets.
The sensitivity of the fair values of the land and buildings and major rides and attractions in relation to the significant
unobservable inputs is set out in the table below:
Terminal yield
(%)
Fair value measurement sensitivity to 0.5% increase in rate/yield
-$2.5 million
Fair value measurement sensitivity to 0.5% decrease in rate/yield +$1.2 million +$4.1 million +$3.0 million
Fair value measurement sensitivity to 10.0% increase in assumed
attendance levels
Fair value measurement sensitivity to 10.0% decrease in assumed
attendance levels
Capitalisation
rate (%)
-$1.1 million
Discount rate
(%)
-$3.7 million
n/a
n/a
n/a
n/a
n/a
n/a
Attendance
levels
n/a
n/a
+$21.4
million
-$3.4
million
When calculating the income capitalisation approach,
EBITDA has a strong inter-relationship 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.
50
Ardent Leisure Group Limited | Annual Report 2020
(b)
Accounting policy
Revaluation model
The revaluation model of accounting is used for Theme Parks
land, buildings and major rides and attractions. All other
classes of property, plant and equipment (PPE) are carried at
historic cost. Initially, PPE is measured at cost. For assets
carried under the revaluation model, PPE is carried at a
revalued amount, being its fair value at the date of revaluation
less any subsequent accumulated depreciation and
subsequent accumulated impairment losses. Revaluations
are made with sufficient regularity to ensure that the
carrying amount does not differ materially from that which
would be determined using fair value at the reporting date.
Notes to the Financial Statements
for the year ended 30 June 2020
16.
Property, plant and equipment (continued)
(b)
Accounting policy (continued)
Revaluation model (continued)
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 reference to independent valuation reports or through
appropriate valuation techniques adopted by
management. 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 management
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 (DCF) models;
Available sales evidence; and
Comparisons to valuation professionals performing
valuation assignments across the market.
Impairment of property, plant and equipment
Property, plant and equipment is 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.
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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.
In assessing impairment of assets, the Group has
determined that it has the following CGUs:
SkyPoint, including the SkyPoint climb;
Dreamworld/WhiteWater World combined theme park;
Dreamworld excess land; and
Each individual Main Event US entertainment centre.
During the prior year, the Group performed an impairment
assessment of property, plant and equipment and lease
right-of-use assets in accordance with AASB 136
Impairment of assets. This analysis determined that the
carrying value of assets in four Main Event centres
exceeded their recoverable amount by US$12.2 million
(A$17.6 million) and an impairment loss was recognised for
this amount.
In the current year, the changed conditions brought about
by COVID-19 have had a significant adverse impact on the
carrying value of property, plant and equipment and lease
right-of-use assets, which has resulted in an additional
impairment loss of US$2.2 million (A$3.2 million) relating to
further impaired centres.
The recoverable amount of assets has been determined
based on value-in-use calculations, which include the
following key assumptions:
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Pre-tax discount rate
Long term EBITDA growth rate
Depreciation
2020
$’000
13.9%
1.0%
2019
$’000
11.3%
1.0%
Land and construction work in progress are 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
Land improvements
Major rides & attractions
Plant and equipment
Furniture, fittings &
equipment
Motor vehicles
2020
20 - 40 years
n/a
20 - 40 years
5 - 40 years
4 - 25 years
2019
40 years
Lease term
n/a
20 - 40 years
4 - 25 years
3 - 25 years
4 - 10 years
3 - 13 years
8 years
Ardent Leisure Group Limited | Annual Report 2020
51
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Notes to the Financial Statements
for the year ended 30 June 2020
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16. Property, plant and equipment (continued)
(b)
Accounting policy (continued)
Depreciation (continued)
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. 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.
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17.
Intangible assets
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Goodwill at cost
Accumulated impairment
Other intangibles at cost
Accumulated amortisation and impairment
Total intangible assets
Goodwill
Opening net book amount
Foreign exchange movements
Closing net book amount
Other intangibles
Opening net book amount
Additions
Transfer from property, plant and equipment
Disposals
Amortisation
Foreign exchange movements
Closing net book amount
Total intangible assets
(a)
Goodwill
e
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A
Goodwill represents goodwill acquired by the Group as part of various acquisitions. Goodwill is monitored by management at
the operating segment level. Management reviews the business performance based on geography and type of business as
disclosed in Note 2.
A segment level summary of the goodwill allocation is presented below:
United States
Main Event
2020
$’000
60,737
60,737
2019
$’000
59,950
59,950
52
Ardent Leisure Group Limited | Annual Report 2020
2020
$’000
73,617
(12,880)
60,737
35,188
(15,827)
19,361
80,098
2020
$’000
59,950
787
60,737
19,023
6,534
54
(1,525)
(4,922)
197
19,361
80,098
2019
$’000
72,830
(12,880)
59,950
29,928
(10,905)
19,023
78,973
2019
$’000
56,441
3,509
59,950
13,834
7,797
712
(370)
(3,789)
839
19,023
78,973
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Notes to the Financial Statements
for the year ended 30 June 2020
17.
Intangible assets (continued)
(a)
(i)
Goodwill (continued)
Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to business segment and country of
operation.
Key assumptions used for value in use calculations
The table below shows the key assumptions used in the value in use calculations to test for impairment in the business
segments to which a significant amount of goodwill was allocated:
Budget/forecast
period EBITDA growth rate(1)
2019
Long term EBITDA
growth rate(2)
2020
2019
% per annum % per annum % per annum % per annum % per annum % per annum
2020
2020
2019
Post-tax discount rate(3)
Main Event
19.91
3.09
2.00
2.00
12.00
7.50
(1) Compound annual growth rate over the five-year budget/forecast period. The higher growth rate in FY20 reflects recovery from the impacts of
COVID-19 which have significantly reduced current year EBITDA.
(2) Average growth rate used to extrapolate cash flows beyond the budget/forecast period.
(3) In performing the value in use calculation, the Group has applied a post-tax discount rate to discount the forecast future attributable post-tax cash
flows. The pre-tax discount rate is 12.16% (2019: 7.91%) for Main Event centres.
The period over which management has projected the
CGU cash flows is five years. The weighted average
growth rates used are consistent with forecasts included in
industry reports. The discount rates used are post tax and
reflect specific risks relating to the country in which the
CGU operates.
The recoverable amount of a CGU is determined based on
value in use calculations. These calculations use cash flow
projections based on the FY20-FY24 financial year
budgets/forecasts. 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.
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 those changes
to key assumptions can result in recoverable amounts
falling below carrying amounts. In relation to the CGUs
above, the recoverable amounts of Main Event centres are
in excess of their carrying amounts.
The Directors consider that the growth rates are
reasonable, and do not consider a change in any of the key
assumptions would cause the CGUs’ carrying amount to
exceed their recoverable amount to be reasonably
possible.
(b)
Accounting policy
Software
Software is amortised on a straight-line basis over the
period during which the benefits are expected to be
received, which is between 5 – 8 years (2019: 5 – 8 years).
Goodwill
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 CGUs for the purposes of
impairment testing. The allocation is made to those CGUs
or groups of CGUs that are expected to benefit from the
business combination in which the goodwill arose,
identified according to operating segments (refer to
Note 2).
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Ardent Leisure Group Limited | Annual Report 2020
53
Notes to the Financial Statements
for the year ended 30 June 2020
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17.
Intangible assets (continued)
(b)
Accounting policy (continued)
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.
Other intangibles
Other intangibles including the Safety Case and licence to operate for amusement parks are amortised on a straight-line basis
over the period during which the benefits are expected to be received, which is five years.
Debt and equity
18. Contributed equity
No. of
shares/securities
Details
Date of
income
entitlement
Note
2020
$’000
471,344,533
8,361,483
-
-
Securities on issue
DRP issue
Impact of corporate restructure
Issue costs paid
26 Jun 2018
1 Jul 2018
24 Dec 2018
(a)
(b)
(c)
2019
$’000
666,731
16,332
94,091
(30)
479,706,016
Shares on issue
30 Jun 2020
777,124
777,124
Dividend/Distribution Reinvestment Plan (DRP) issues
(a)
The Group has established a DRP under which share/securityholders may elect to have all or part of their dividend/distribution
entitlements satisfied by the issue of new shares/securities rather than being paid in cash. The discount available on
shares/securities issued under the DRP is 2.0% on the market price.
(b)
Impact of corporate restructure
Refer to Note 20.
(c)
Equity
Incremental costs directly attributable to the issue of new shares/securities are recognised directly in equity as a reduction in
the proceeds of shares/securities to which the costs relate. Incremental costs directly attributable to the issue of new
shares/securities for the acquisition of a business are not included in the cost of the acquisition as part of the purchase
consideration.
19. Other equity
Treasury shares
Closing balance
Opening balance
Acquisition of treasury shares
Issuance of treasury shares
Closing balance
54
Ardent Leisure Group Limited | Annual Report 2020
2020
$’000
-
-
2020
148
137
(285)
-
$'000
2019
$’000
148
148
2019
1,405
25
(1,282)
148
No. of shares/securities
2020
2019
142,167
119,421
(261,588)
-
649,958
20,341
(528,132)
142,167
Notes to the Financial Statements
for the year ended 30 June 2020
19. Other equity (continued)
(a)
Accounting policy
Treasury shares/securities are equity investments in Ardent Leisure Group Limited that are held by the Ardent Leisure
Employee Share Trust for the purpose of issuing shares under the Group’s DSTI and LTIP. Shares/securities issued to
employees are recognised on a first-in-first-out basis.
Own equity instruments that are reacquired (treasury shares/securities) are recognised at cost and deducted from equity. No
gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
Any difference between the carrying amount and the consideration, if reissued to employees under the Group’s LTIP and
DSTI, is recognised in the equity-based payments reserve. Performance rights vesting during the reporting period may be
satisfied with treasury shares.
20. Reserves
Asset revaluation reserve
Opening balance
Revaluation - Theme Parks
Tax impact of revaluation
Closing balance
Foreign currency translation reserve
Opening balance
Transfer to accumulated losses for discontinued operation
Translation of foreign operations
Closing balance
Equity-based payment reserve
Opening balance
Option expense
Closing balance
Corporate restructure reserve
Opening balance
Impact of corporate restructure
Closing balance
Total reserves
Asset revaluation reserve
2020
$’000
15,499
(3,059)
918
13,358
(5,355)
49
4,738
(568)
(8,092)
(112)
(8,204)
(94,091)
-
(94,091)
(89,505)
2019
$’000
15,499
-
-
15,499
(22,856)
-
17,501
(5,355)
(6,889)
(1,203)
(8,092)
-
(94,091)
(94,091)
(92,039)
The asset revaluation reserve is used to record increments and decrements on the revaluation of property, plant and
equipment, as set out in Note 16(b).
Foreign currency translation reserve
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.
Equity-based payment reserve
The equity-based payment reserve is used to recognise the fair value of performance rights issued to employees under the
Group’s DSTI and LTIP.
Corporate restructure reserve
Under the corporate restructure in the prior year, Ardent Leisure Group Limited shares were issued to security holders in return
for their stapled securities. Ardent Leisure Group Limited share capital was measured at fair value on the date of the transaction,
being the market capitalisation of the previous stapled Ardent Leisure Group on the date of implementation ($777.1 million).
The difference between the contributed equity of Ardent Leisure Group Limited and the pre-restructure contributed equity of
the stapled Ardent Leisure Group at the date of the transaction was recognised as a corporate restructure reserve.
Ardent Leisure Group Limited | Annual Report 2020
55
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Notes to the Financial Statements
for the year ended 30 June 2020
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21. Accumulated losses
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Opening balance
Loss for the year
Available for distribution
Impact of change in accounting standard
Transfer from foreign currency translation reserve
Distributions paid and payable
Closing balance
22.
Interest bearing liabilities
Note
23(a)
2020
$’000
(299,835)
(136,625)
(436,460)
(352)
(49)
-
(436,861)
2019
$’000
(206,962)
(60,877)
(267,839)
(1,401)
-
(30,595)
(299,835)
2020
$’000
2019
$’000
(a)
Total secured liabilities and assets pledged as
security
Current
US Term debt
Lease liabilities
Total current
Non-current
US Term debt & revolving credit
Less: unamortised loan costs
Lease liabilities
RedBird preferred shares
Less: unamortised borrowing costs
Total non-current
Total interest bearing liabilities
2,040
26,863
28,903
1,796
-
1,796
237,983
(7,445)
370,078
70,322
(8,685)
177,853
(10,220)
-
-
-
662,253 167,633
691,156 169,429
The Group’s wholly-owned US subsidiary, Main Event
Entertainment, Inc. (Main Event) has access to a US$139.7
million (2019: US$200.0 million) term loan facility,
comprising a US$124.8 million (2019: US$125.0 million)
drawn term loan and a US$14.9 million (2019: US$75.0
million) delayed draw term loan, as well as a US$25.0
million (2019: US$25 million) revolving credit facility
(collectively, the Facility). The facility is secured and
guaranteed by Main Event and is non-recourse to the
other assets of the Group.
The term debt facilities require principal repayments equal
to1% of the amounts drawn on these facilities each year.
In April 2020, Main Event’s US debt facility was amended
to remove US$60.0 million undrawn capacity from its
delayed draw term loan (DDTL) facility. This change was
required by the lender in exchange for their consent for
covenant waivers for the four quarters ending March 2021,
due to the impact of the COVID-19 pandemic.
The carrying amounts of Main Event assets pledged as
security for the US borrowings are as follows:
Current assets
Non-current assets
Total assets
(b)
Credit facilities
2020
$’000
56,149
691,115
747,264
2019
$’000
44,146
362,302
406,448
As at 30 June 2020, Main Event had unrestricted access to
the following credit facilities:
Main Event US$ term debt(1)
Amount used
Amount unused
Main Event US$ revolving credit
facility(2)
Amount used
Amount unused
Total facilities
Total amount used
Total amount unused
2020
$’000
2019
$’000
203,596
287,439
(203,596) (179,649)
- 107,790
36,427
(36,427)
-
35,930
-
35,930
240,023
323,369
(240,023) (179,649)
- 143,720
(1) Main Event US$124.8 million term debt and US$14.9 million
(2019: $75.0 million) delayed draw term debt facilities will mature
on 4 April 2025. Any part of the delayed draw term debt facility
remaining undrawn at 4 April 2021 will expire at that date.
(2) Main Event US$25.0 million revolving credit facility will mature on
4 April 2024.
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Notwithstanding the waiver noted above, the terms of the
facility ordinarily impose a net leverage covenant on Main
Event, being the ratio of net debt to EBITDA adjusted for
unrealised and certain non-cash and other one-off items
(adjusted EBITDA) as well as a minimum cash holding
requirement.
56
Ardent Leisure Group Limited | Annual Report 2020
Notes to the Financial Statements
for the year ended 30 June 2020
22.
Interest bearing liabilities (continued)
23.
Leases
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(b)
Credit facilities (continued)
All of the facilities have a variable interest rate. As detailed
in Note 24, the interest rates on the loans are partially fixed
using interest rate swaps and caps. The weighted average
interest rates payable on the loans at 30 June 2020,
including the impact of the interest rate swaps and caps, is
7.98% per annum (2019: 8.77% per annum) for USD
denominated debt.
(c)
RedBird preferred shares
On 15 June 2020, the Group entered into a partnership
transaction with a US-based private investment firm,
RedBird Capital Partners (RedBird) under which RedBird has
invested US$80.0 million via preferred shares into Main
Event’s US parent entity, Ardent Leisure US Holding Inc
(ALUSH).
The preferred shares entitle RedBird to a 10.0% per annum
preferred coupon on the US$80.0 million invested, which
accumulates and compounds semi-annually. RedBird is
also entitled to participate in common stock dividends of
ALUSH and residual net assets in the event of its liquidation
In accordance with the requirements of AASB 132 Financial
Instruments, this investment has been classified as a
compound financial instrument and split into the following
components:
Derivative option liability US$1.3 million ($1.9 million)
Interest bearing liability US$42.3 million ($61.6 million)
Equity (minority interest in the Group) US$26.9 million
($39.2 million)
The Group incurred costs of US$11.4 million ($16.7 million)
as part of the process which lead to securing this funding.
Of this, US$9.8 million ($14.3 million) costs were directly
attributable to the RebBird transaction and have been
proportionally offset against the debt and equity balances
above. The remaining US$1.6 million ($2.3 million) was
immediately expensed in the income statement.
Proceeds net of total transaction costs of US$99.0 million
have been presented in the statement of cash flows.
(d)
Accounting policy
Interest bearing liabilities
Interest bearing liabilities 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.
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
end of the reporting period.
The Australian Accounting Standard Boards has issued a
new standard for leases, AASB 16 Leases, which applies to
accounting periods commencing on or after 1 January
2019 and replaced the previous standard, AASB 117
Leases. The standard sets out the principles for the
recognition, measurement, presentation and disclosure of
leases and requires lessees to account for all leases under a
single on-balance sheet model. This note provides
information for leases where the Group is a lessee. The
Group does not hold any leases as a lessor.
(a)
Implementation of AASB 16 Leases
The Group has applied AASB 16 Leases using the modified
retrospective approach from 26 June 2019. Under this
method, the Standard is applied retrospectively with the
cumulative effect of initially applying the Standard
recognised at the date of initial application. Comparatives
are not restated and the reclassifications and the
adjustments arising from the new standard are recognised
in the opening balance of accumulated losses on 26 June
2019.
(i)
Practical expedients applied on transition
At the initial application of AASB 16 Leases, the Group has
used the following practical expedients permitted by the
Standard:
Application of a single discount rate to a portfolio of
leases with reasonably similar characteristics;
Reliance on previous assessments of whether leases
are onerous immediately before the date of initial
application;
Exclusion of initial direct costs from the measurement
of the right-of-use assets at the date of initial
application; and
Use of hindsight in determining the lease term where
the contract contains options to extend or terminate
the lease.
The Group has also elected not to reassess whether a
contract is, or contains, a lease at the date of initial
application. Instead, for contracts entered into before the
transition date, the Group relied on its assessment made
applying AASB 117 Leases and Interpretation 4
Determining whether an Arrangement contains a Lease.
Ardent Leisure Group Limited | Annual Report 2020
57
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Notes to the Financial Statements
for the year ended 30 June 2020
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(a)
(i)
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Leases (continued)
Implementation of AASB 16 Leases (continued)
Practical expedients applied on transition
(continued)
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On 15 June 2020, the Australian Accounting Standards
Board issued COVID-19-related Rent Concession –
amendment to IFRS 16 Leases. This amendment provides
relief to lessees from applying AASB 16 guidance on lease
modification accounting for rent concessions arising as a
direct consequence of the COVID-19 pandemic. The
practical expedient applies to rent concessions that are
directly related to the COVID-19 pandemic and only if all of
the following conditions are met:
The change in lease payments results in revised
consideration for the lease that is substantially the
same as, or less than, the consideration for the lease
immediately preceding the change;
Any reduction in lease payments affects only payments
originally due on or before 30 June 2021; and
There is no substantive change to the terms and
conditions of the lease.
The Group has obtained rental concessions from most of its
landlords, principally in the form of rent deferrals or
abatements. As a result, the Group has early adopted this
expedient and elected not to account for these COVID-19-
related rent concessions as lease modifications, where all of
the above conditions are met.
Under this expedient, the Group recorded $110,726 rental
concessions as negative variable rent payments in FY20.
(ii)
Adjustments recognised in the balance sheet at 26 June 2019
The adoption of AASB 16 Leases affected the following items in the balance sheet at 26 June 2019:
Increase/(decrease)
Assets
Right-of-use (ROU) assets
Total assets
Liabilities
Payables
Lease liabilities
Provisions
Deferred tax liabilities
Total liabilities
Equity
Accumulated losses
Total equity
Main Event
$’000
Theme Parks
$’000
Corporate
$’000
Total
$’000
311,128
311,128
(42,510)
357,211
(3,067)
(119)
311,515
387
387
160
160
-
179
-
-
179
19
19
240
240
(54)
240
-
-
186
(54)
(54)
311,528
311,528
(42,564)
357,630
(3,067)
(119)
311,880
352
352
(b) Nature of the effect of adoption of AASB 16
The Group leases various real estate properties in the jurisdictions in which it operates. It is customary for lease contracts to
provide for payments to increase each year by inflation or in others to be reset periodically to market rental rates. Property leases
may contain both lease and non-lease components. In accordance with AASB 16, the Group has elected not to separate lease
and non-lease components for property leases. The Group also has leases for equipment and vehicles. These leases comprise
only fixed payments over the lease terms. There have been no sale and leaseback transactions in the current year.
Each lease is either non-cancellable or may only be cancelled by incurring a substantive termination fee. Lease terms are
negotiated on an individual basis and contain different terms and conditions. Extension and termination options are included
in a number of property leases across the Group and majority of these options held are exercisable by the Group.
Prior to adoption of AASB 16, the Group classified each lease at the inception date as either a finance lease or an operating lease. A
lease was classified as a finance lease if it transferred substantially all of the risks and rewards incidental to ownership of the leased
asset to the Group; otherwise it was classified as an operating lease. Finance leases were capitalised at the commencement of the
lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease
payments were apportioned between interest and reduction of the lease liability. For an operating lease, leased property was not
capitalised, and the lease payments were recognised as rent expense in profit or loss on a straight-line basis over the lease term. Any
prepaid rent and accrued rent were recognised under Prepayments and Payables respectively.
58
Ardent Leisure Group Limited | Annual Report 2020
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Notes to the Financial Statements
for the year ended 30 June 2020
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23.
Leases (continued)
(b)
Nature of the effect of adoption of AASB 16 (continued)
Upon adoption of AASB 16, the Group applied a single recognition and measurement approach for all leases. The Standard provides
specific transition requirements and practical expedients, which have been applied by the Group. The Group did not hold any finance
leases at the date of transition. The Group recognised right-of-use assets and lease liabilities for those leases previously classified as
operating leases on the date of initial application. Right-of-use assets were recognised based on the amount equal to the lease
liabilities, adjusted for any related prepaid, accrued lease payments and onerous lease provision previously recognised. Lease
liabilities were measured at the present value of the remaining lease payments due to the lessor over the lease term, discounted
using the applicable incremental borrowing rate at date of initial application. The weighted average lessee’s incremental borrowing
rate applied to lease liabilities on 26 June 2019 was 9.45%.
The following is a reconciliation to total operating lease commitment at 25 June 2019 (as disclosed in the financial statements
to 25 June 2019) to the lease liabilities recognised at 26 June 2019.
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Operating lease commitments disclosed as at 25 June 2019
Discounting using incremental borrowing rate
Discounted operating lease commitments at 25 June 2019
Less: foreign exchange movement
Add: non-lease component included in lease liability
Lease liability recognised as at 26 June 2019
Comprising:
Current lease liabilities
Non-current lease liabilities
(c)
Accounting policy
For new contracts entered on or after 26 June 2019, the
Group considers whether the contract is, or contains a
lease. A lease is a contract, or part of a contract, that
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration. To
determine whether a contract conveys the right to control
the use of an identified asset for a period of time, the Group
assess whether, throughout the period of use, it has both of
the following:
The right to obtain substantially all of the economic
benefits from use of the identified asset; and
The right to direct the use of the identified asset.
The Group recognises a right-of-use asset and a
corresponding lease liability with respect to all identified
lease contracts in which it is a lessee.
(i)
Lease liabilities
At the commencement date of the lease, the Group
recognises a lease liability measured at present value of
lease payments to be made over the lease term.
Lease payments include:
Fixed payments (including reasonably certain
extension options), less any lease incentives
receivable;
Variable lease payments that are based on an index
or a rate, initially measured using the index or rate as
at the commencement date;
The exercise price of a purchase option if the Group
is reasonably certain to exercise that option; and
$’000
624,649
(267,966)
356,683
(1,075)
2,022
357,630
18,656
338,974
357,630
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Payments of penalties for terminating the lease, if
the lease term reflects the Group exercising that
option.
The variable lease payments that do not depend on an index
or a rate are recognised as expenses in the period on which
the event or condition that triggers the payment occurs.
Cash payments for the principal and interest portion of
lease liabilities are classified as financing activities within
the statement of cashflows. Cash payments for variable
lease payments not measured in lease liability are
presented within the operating activities.
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In calculating the present value of lease payments, the
Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the
lease is not readily determinable. Subsequent to initial
measurement, lease liabilities increase to reflect the
accretion of interest on the balance outstanding and are
reduced for lease payments made. The finance cost for
interest on the lease is charged to profit or loss over the
lease period.
The lease liability is remeasured to reflect any
reassessment or modification of lease term or changes in
the in-substance fixed payments. When the lease liability is
remeasured, a corresponding adjustment is reflected in
the right-of-use asset, or profit and loss if the right-of-use
asset is already reduced to zero.
The Group has not elected to apply the short-term lease
and the low-value assets lease practical expedients. These
leases are included in the measurement of lease liability.
Ardent Leisure Group Limited | Annual Report 2020
59
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Notes to the Financial Statements
for the year ended 30 June 2020
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23.
Leases (continued)
(c)
Accounting policy (continued)
(ii)
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is
available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease
incentives received or make good costs to be incurred at the end of the lease. Unless the Group is reasonably certain to obtain
ownership of the leased asset at the end of the lease term, the recognised right-of- use assets are depreciated on a straight-
line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment and,
where required, impairment testing is performed in conjunction with property, plant and equipment (refer to Note 16(b).
(iii)
Significant judgement in determining the lease term of contracts
The Group determines the lease term as the non-cancellable period of the lease, together with any periods covered by
options to extend the lease if the Group is reasonably certain to exercise those options. The Group has the option, under some
of its leases to extend the lease for additional terms of 5-15 years. Management uses its judgement and experience to
determine whether or not an option would be reasonably certain to be exercised on a lease by lease basis. In doing so, it
considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date,
the Group reassess the lease term if there is a significant event or change in circumstances that is within its control and affects
its ability to exercise (or not exercise) the renewal option.
The Main Event business has projected a 20-year operating cycle for each entertainment centre, with further consideration of
specific facts and performance of individual centres in determining the respective lease terms of each of its property leases.
Leases for equipment and vehicles do not generally contain renewal option periods.
(d)
Amounts recognised in the balance sheet
June 2020
Right-of-use assets
At 26 June 2019
Additions
Amortisation
Modifications to lease terms
Leases terminated
Variable lease payment adjustments
Foreign exchange movements
Impairment
At 30 June 2020
June 2020
Lease liabilities
At 26 June 2019
Additions
Interest expenses
Modifications to lease terms
Leases terminated
Variable lease payment adjustments
Lease payments
Foreign exchange movements
At 30 June 2020
Lease liabilities are presented in the balance sheet as follows:
Interest bearing liabilities
Current
Non-current
60
Ardent Leisure Group Limited | Annual Report 2020
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Buildings
$’000
310,560
17,705
(28,126)
30,757
(9,185)
1,595
4,716
(1,620)
326,402
Buildings
$’000
356,662
21,365
36,492
30,757
(15,292)
1,595
(40,321)
4,980
396,238
Equipment
$’000
959
44
(369)
-
-
-
20
-
654
Equipment
$’000
959
44
76
-
-
-
(397)
19
701
Vehicles
$’000
9
-
(7)
-
-
-
-
-
2
Vehicles
$’000
9
-
-
-
-
-
(7)
-
2
Note
22
22
Total
$’000
311,528
17,749
(28,502)
30,757
(9,185)
1,595
4,736
(1,620)
327,058
Total
$’000
357,630
21,409
36,568
30,757
(15,292)
1,595
(40,725)
4,999
396,941
June 2020
$’000
26,863
370,078
396,941
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Notes to the Financial Statements
for the year ended 30 June 2020
23.
(e)
Leases (continued)
Additional profit or loss and cashflow information
The group recognised rent expenses from variable lease
payments of $98,666 for the year ended 30 June 2020.
Cash flows in respect of leases in current period are $40.7
million. For interest expense in relation to leasing
labilities, refer to finance costs (Note 6).
Financial risk management
24. Derivative financial instruments
Current assets
Forward foreign exchange contracts
Non-current assets
Interest rate caps
Current liabilities
Forward foreign exchange contracts
Interest rate swaps
Non-current liabilities
Interest rate swaps
RedBird call option (refer Note 22(c))
2020
$’000
2019
$’000
-
-
29
29
24
585
609
1,931
1,931
13
13
177
177
-
-
-
505
-
505
The Group also has an interest rate cap agreement in place
effective from 3 December 2020 under which it can limit
its interest expense on a notional principal amount of
US$70.0 million. This notional principal amount reduces to
US$55.0 million in April 2021, US$40.0 million in April 2022
and US$20.0 million in April 2023 with the agreement
terminating in April 2024.
The Group has elected not to apply hedge accounting for
its interest rate swap and cap agreements. Accordingly,
changes in fair value of these swaps and caps are recorded
in the Income Statement. Notwithstanding the accounting
outcome, the Company considers that these derivative
contracts are appropriate and effective in offsetting
adverse economic interest rate exposures of the Group.
The table below shows the notional value and maturity
profile of the interest rate swaps and caps:
Less than 1 year
1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
2020
$’000
2019
$’000
123,852
21,856
29,142
29,142
-
-
122,162
21,558
28,744
28,744
203,992 201,208
(a)
Forward foreign exchange contracts
(c)
Accounting policy
The Group has entered into forward foreign exchange
contracts to buy Euro and sell Australian dollars. These
contracts total A$3.0 million (25 June 2019: nil).
In the prior year, the Group entered into forward foreign
exchange contracts to buy US dollars and sell Australian
dollars. These contracts totalled $0.4 million at 25 June 2019.
The Group has elected not to apply hedge accounting for
its forward foreign exchange contracts. Accordingly
changes in fair value of these contracts are recorded in the
Income Statement. Notwithstanding the accounting
outcome, the Group considers that these derivative
contracts are appropriate and effective in offsetting the
economic foreign exchange exposures of the Group.
(b)
Interest rate swaps and interest rate caps
The Group has interest rate swap agreements totalling
US$70.0 million (A$102.0 million) (2019: US$70.0 million
(A$100.6 million)) that entitle it to receive interest, at
monthly/quarterly intervals, at a floating rate on a notional
principal and oblige it to pay interest at a fixed rate. The
interest rate swap agreements allow the Group to
effectively swap a floating rate of interest on the notional
principal amount into a fixed rate.
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 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.
Ardent Leisure Group Limited | Annual Report 2020
61
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Notes to the Financial Statements
for the year ended 30 June 2020
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24. Derivative financial instruments (continued)
(c)
Accounting policy (continued)
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.
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.
25. Capital and financial risk management
(a)
Capital risk management
The Group’s objectives when managing capital is to
optimise shareholder value through the mix of available
capital sources while complying with statutory
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
shares, activating the DRP, electing to have the DRP
underwritten, adjusting the amount of dividends paid,
activating a share buy-back program or selling assets to
reduce borrowings.
The Group has a target gearing ratio of 30% to 35% of net
debt to net debt plus equity. At 30 June 2020, gearing
(including $70.3 million of RedBird funding classified as
debt but excluding lease liabilities now recognised under
AASB 16 Leases) was 32.81% (2019: 17.78%) and the Group
has complied with the financial covenants of its borrowing
facilities in the current and previous financial years.
62
Ardent Leisure Group Limited | Annual Report 2020
Protection of the Group’s equity in foreign denominated
assets was achieved through borrowing in the local
functional currency to provide a natural hedge
supplemented by the use of foreign exchange forward
contracts to provide additional hedge protection. The
Group has a target equity hedge of 50% to 100% of the
asset value by foreign currency.
The Group 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
cash flow forecasts.
The Group uses derivative financial instruments such as
forward foreign exchange contracts, interest rate swaps
and interest rate caps 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)
(i)
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 functional
currency of a Group entity.
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.
Notes to the Financial Statements
for the year ended 30 June 2020
25.
Capital and financial risk management (continued)
(c)
(i)
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% to 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:
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US dollars
2020
$’000
2019
$’000
2020
$’000
2019
$’000
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Assets
Cash and cash equivalents
Receivables, inventories and other current assets
Derivative financial instruments
Construction in progress inventories
Investment held at fair value
Property, plant and equipment
Intangible assets
Right-of-use assets
Other non-current assets
Total assets
Liabilities
Current payables and other current liabilities
Construction in progress deposits
Derivative financial instruments
Interest bearing liabilities
Non-current payables and other non-current liabilities
Total liabilities
Net assets
Notional value of derivatives
Net exposure to foreign exchange movements
32,601
5,707
-
-
3,201
119,535
5,629
182
4,389
171,244
3,273
-
24
11,444
11,383
26,124
63,729
8,705
13
-
2,811
131,889
6,100
-
23,065
236,312
23,994
-
-
1
10,709
34,704
129,016
10,065
29
11,877
-
354,270
74,469
326,876
-
906,602
65,333
11,413
2,516
679,712
2,800
761,774
28,603
20,028
177
578
-
346,752
72,873
-
-
469,011
57,422
-
505
169,428
58,162
285,517
145,120
201,608
144,828
183,494
-
-
-
-
-
359
144,828
183,853
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Ardent Leisure Group Limited | Annual Report 2020
63
Notes to the Financial Statements
for the year ended 30 June 2020
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y
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a
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b
e
D
t
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m
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g
a
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a
M
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a
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F
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25. Capital and financial risk management (continued)
(c) Market risk (continued)
(ii)
Foreign exchange rate sensitivity
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, or
equity, while a positive amount reflects a potential net increase.
AUD:USD - increase 10%
AUD:USD - decrease 10%
AUD:NZD - increase 10%
AUD:NZD - decrease 10%
Foreign income
Profit movement
2020
$’000
-
-
-
-
2019
$’000
(33)
40
-
-
Total equity
movement
2020
$’000
2019
$’000
(13,184)
16,114
-
-
(16,732)
20,450
(1)
2
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 its foreign income.
(iii)
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 and caps, to manage its exposure between these bands. Compliance with the policy is reviewed regularly
by management and is reported to the Board at each meeting.
The Group has exposures to interest rate risk on its net monetary liabilities, mitigated by the use of interest rate swaps and
caps, as shown in the table below:
Floating rates
Cash and cash equivalents
Interest bearing liabilities
Interest rate swaps and interest rate caps
Net interest rate exposure
Refer to Note 24 for further details on the interest rate swaps.
Australian interest
2020
$’000
2019
$’000
US interest
2020
$’000
2019
$’000
32,601
-
32,601
-
63,729
-
63,729
-
32,601
63,729
129,016
(240,023)
(111,007)
101,996
(9,011)
28,603
(179,649)
(151,046)
100,604
(50,442)
64
Ardent Leisure Group Limited | Annual Report 2020
Notes to the Financial Statements
for the year ended 30 June 2020
25.
Capital and financial risk management (continued)
(c)
Market risk (continued)
(iv)
Interest rate sensitivity
The table below 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 or equity, while a positive
amount reflects a potential net increase.
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1% increase in AUD rate
1% decrease in AUD rate
1% increase in USD rate
1% decrease in USD rate
Profit movement
Total equity
movement
2020
$’000
329
(329)
(90)
90
2019
$’000
863
(863)
916
(916)
2020
$’000
329
(329)
(90)
90
2019
$’000
863
(863)
916
(916)
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At reporting date, the Group has fixed 42.49% (2019: 56.0%) of its floating interest exposure.
(d)
Liquidity risk
Liquidity risk arises if the Group has insufficient liquid assets to meet its short-term obligations. Liquidity risk is managed by
maintaining sufficient cash balances and adequate committed credit facilities. Prudent liquidity management implies
maintaining sufficient cash and marketable shares, 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 fixed and floating rate financial liabilities and derivatives
as at 30 June 2020. 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 Sheet. Repayments which are subject to notice are treated as
if notice were given immediately.
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2020
Payables
Lease liabilities
Term debt
Preferred shares of subsidiaries
Current, non-current and deferred
tax liabilities
Interest rate swaps and caps
Forward foreign exchange
contracts
Total undiscounted financial
liabilities
2019
Payables
Term debt and revolving credit
facilities
Current and deferred tax liabilities
Interest rate swaps and caps
Forward foreign exchange
contracts
Total undiscounted financial
liabilities
Book
value
$’000
Less than
1 year
$’000
63,699
396,941
240,023
70,322
63,699
61,855
20,066
-
1 to 2
years
$’000
-
51,041
20,166
-
2 to 3
years
$’000
-
51,281
20,016
-
3 to 4
years
$’000
4 to 5
years
$’000
Over 5
years
$’000
-
-
51,370
55,670 207,377
-
51,085 432,939
-
- 230,795
-
Total
$’000
63,699
699,571
323,295
230,795
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11,694
585
1,065
870
2,500
-
2,500
-
2,500
-
2,500
-
3,219
-
14,284
870
24
3,022
-
-
-
-
-
3,022
783,288 150,577
73,707
73,797 109,540 260,962 666,953 1,335,536
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
Total
$’000
106,798
69,195
3,429
3,482
3,717
3,757
23,218
106,798
179,649
15,919
328
18,345
5,919
(284)
17,871
2,997
(120)
17,708
2,697
-
17,546
2,622
-
17,383 182,659
-
-
2,547
-
271,512
16,782
(404)
-
359
-
-
-
-
-
359
302,694
93,534
24,177
23,887
23,885
23,687 205,877
395,047
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Ardent Leisure Group Limited | Annual Report 2020
65
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i
Notes to the Financial Statements
for the year ended 30 June 2020
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25. Capital and financial risk management (continued)
(e)
Credit risk
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Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument and will 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 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. Similarly, for cash and cash equivalents, there is a credit risk where the contracting entity holds the Group's cash
balances and investments. The Group has policies that limit the amount of credit exposure to any financial institution. Derivative
counterparties and cash investment transactions are limited to investment grade counterparties in accordance with the Group’s
FRM policy. As such, the Group’s exposure to credit losses on derivative financial instruments and cash and cash equivalents is
considered insignificant. The Group monitors the public credit rating of its counterparties.
Credit risk adjustments relating to receivables have been applied in line with the policy set out in Note 10. No fair value
adjustment has been made to derivative financial assets or cash investments, with the impact of credit risk being assessed as
minimal. The Group’s maximum exposure to credit risk is noted in the table below.
Details of the concentration of credit exposure of the Group’s assets are as follows:
Cash and cash equivalents
Receivables - Australia
Receivables - US
Derivative financial instruments
2020
$’000
161,617
2,679
2,081
29
166,406
2019
$’000
92,332
7,382
5,142
190
105,046
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:
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2020
Receivables - Australia
Receivables - US
2019
Receivables - Australia
Receivables - US
Past due but not impaired
Impaired
Total
Less than 30
days
$’000
31 to 60
days
$’000
61 to 90
days
$’000
More than 90
days
$’000
$’000
$’000
2,012
1,995
4,007
205
22
227
30
-
30
199
508
707
3
-
3
27
9
36
38
85
123
310
117
427
47
-
47
23
-
23
2,130
2,080
4,210
764
656
1,420
Based on a review of receivables by management, a provision of $47,157 (2019: $23,389) has been made against receivables
with a gross balance of $47,157 (2019: $23,389).
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.
66
Ardent Leisure Group Limited | Annual Report 2020
Notes to the Financial Statements
for the year ended 30 June 2020
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26.
Fair value measurement
(a)
Fair value hierarchy
The Group measures and recognises the following assets and liabilities at fair value on a recurring basis:
Derivative financial instruments;
Investment held at fair value; and
Theme Parks land, buildings and major rides and attractions.
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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:
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2020
Assets measured at fair value:
Investment held at fair value
Property, plant and equipment(1)
Derivative financial instruments
Liabilities measured at fair value:
Derivative financial instruments
RedBird share purchase option
Liabilities for which fair values are disclosed:
RedBird preferred shares
Interest bearing liabilities (refer to Note 26(c))
2019
Assets measured at fair value:
Investment held at fair value
Property, plant and equipment(1)
Derivative financial instruments
Liabilities measured at fair value:
Derivative financial instruments
Liabilities for which fair values are disclosed:
Interest bearing liabilities (refer to Note 26(c))
(1) Land and buildings and major rides and attractions of the Theme Parks.
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Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
-
-
-
-
-
29
609
-
3,201
118,830
-
3,201
118,830
29
-
1,931
609
1,931
-
240,023
70,322
-
70,322
240,023
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
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-
-
-
-
-
-
-
554
505
179,649
2,811
130,774
-
2,811
130,774
554
-
-
505
179,649
There has been no transfer between level 1, level 2 and level 3 during the year. For changes in level 3 items for the years
ended 30 June 2020 and 25 June 2019, refer to Notes 16 and 30.
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 2020.
Ardent Leisure Group Limited | Annual Report 2020
67
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Notes to the Financial Statements
for the year ended 30 June 2020
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26.
Fair value measurement (continued)
(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 (e.g. 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.
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 and caps 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 date.
All of the resulting fair value estimates are included in level 2 except for unlisted equity shares/securities, where the fair values
have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.
(i)
Fair value measurements using significant unobservable inputs
Property, plant and equipment
The fair value of Theme Parks land, buildings and major rides and attractions is determined in line with the policy set out in
Note 15, 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.
Redbird share purchase option
An equity option gives the holder the right to buy or sell the equity at a predefined strike rate at specified date(s) as stipulated
in the option agreement. The present value of an option equals the sum of its intrinsic value and time value. The intrinsic value
of the option is its current exercise value as determined by its strike price and current spot price. The time value represents the
likelihood of the intrinsic value increasing and is sensitive to the volatility of the price of the underlying asset, risk free interest
rates, and time to expiry of the option.
Management have applied a stochastic approach using a Monte-Carlo simulation model to value the RedBird share purchase
option. On initial recognition, the value was determined to be US$1.3 million ($1.9 million), as set out in Note 24.
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Redbird preferred shares
The initial carrying value of the liability component is determined by discounting the contractual stream of future cash flows
(coupon of 10% and principal of US$80 million) to the present value, at the current rate of interest (18.6%) applicable to
instruments of comparable credit status and within similar industries, with similar terms.
The equity component is measured as the residual after taking account of the option and fair value of debt.
Changes in fair value
For changes in level 3 items for the periods ended 30 June 2020 and 25 June 2019, refer to Notes 16 and 30.
(ii) Valuation inputs and relationships to fair value
The significant unobservable inputs associated with the valuation of the Group’s property, plant and equipment and
investment held at fair value are discussed in Notes 16 and 30.
68
Ardent Leisure Group Limited | Annual Report 2020
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Notes to the Financial Statements
for the year ended 30 June 2020
26.
Fair value measurement (continued)
(c)
Fair values of other financial instruments
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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. Differences were
identified for the following instruments at 30 June 2020:
Interest bearing liabilities
RedBird preferred shares
Carrying
amount
2020
$’000
240,023
70,322
Fair value
2020
$’000
240,297
70,302
Discount
rate
2020
%
7.56
18.62
Carrying
amount
2019
$’000
179,649
-
Fair value
2019
$’000
180,734
-
Discount
rate
2019
%
8.94
-
In determining the fair values above, the principal amounts payable have been discounted at rates which reflect the price that
market participants would use when transferring the financial instruments, 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 the Group’s own credit risk.
(d)
Accounting policy
Fair value estimation
The Group measures financial instruments, such as derivatives and investments held at fair value and non-financial assets
such as land, buildings and major rides and attractions investment properties at fair value at each balance 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.
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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.
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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 and caps 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.
Ardent Leisure Group Limited | Annual Report 2020
69
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Notes to the Financial Statements
for the year ended 30 June 2020
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Unrecognised items
27. Contingent liabilities
On 25 October 2016, an incident occurred on the Thunder
River Rapids ride at Dreamworld resulting in four fatalities at
the Theme Park. The incident was investigated by the
Queensland Police Service and Workplace Health and Safety
Queensland (WHSQ). A Coronial Inquest took place over
several hearings throughout 2018 and concluded in
December 2018. The Coroner’s findings and
recommendations were handed down on 24 February 2020.
The Coroner cannot (and did not) make any formal finding of
guilt on the part of Ardent Leisure Limited (ALL) or any other
person or entity and cannot (and did not) impose any
pecuniary fine or penalty. In his Report, the Coroner referred
the matter back to the WHSQ prosecutor to consider
“whether there is sufficient evidence to proceed to prosecution
[against ALL]”.
On 21 July 2020 the Queensland Work Health and Safety
Prosecutor filed three charges against ALL pursuant to
section 32 of the Work Health and Safety Act 2011 (Qld) in
relation to the incident, with each charge carrying a
maximum penalty of $1.5 million. ALL pleaded guilty to all
three charges on 29 July 2020. The matter has been set
down for sentencing on 28 September 2020.
A number of civil claims by families and other affected
persons have been made against ALL and have either been
settled or are in the process of being dealt with by the
Company’s liability insurer. The statutory time period for
bringing civil claims has now passed.
On 18 June 2020, the Company was served with a
representative shareholder class action arising from the 2016
Dreamworld tragedy. The claim alleges contraventions of
the Corporations Act 2001 (Cth). The claim has not been
quantified by the plaintiff and is not fully particularised,
therefore the Company cannot provide any meaningful or
indicative estimate of the quantum of any potential liability
(if any). The Company has indicated that it believes the
proceedings to be without merit and it will vigorously
defend them.
The Company maintains appropriate insurances to respond
to litigation and regulatory action and the majority of
associated costs.
Unless otherwise disclosed in the financial statements,
Ardent Leisure Group Limited has no other material
contingent liabilities.
28. Capital commitments
(a)
Capital commitments
Capital expenditure contracted for at the reporting date
but not recognised as liabilities is as follows:
Property, plant and equipment
Payable:
Within one year
2020
$’000
2019
$’000
6,335
6,335
995
995
29.
Events occurring after reporting date
On 21 July 2020 the Queensland Work Health and Safety
Prosecutor filed three charges against a subsidiary of the
Company, ALL, pursuant to section 32 of the Work Health
and Safety Act 2011 (Qld) in relation to the Thunder River
Rapids ride incident which occurred in October 2016. Each
charge carries a maximum penalty of $1.5 million and ALL
pleaded guilty to all three charges on 29 July 2020. The
matter has been set down for sentencing on 28 September
2020.
On 7 August 2020, the Group announced that it has received
financial assistance for its Theme Parks business under the
Queensland Government’s COVID-19 Industry Support
Package and Queensland Tourism Icons Program 2020.
The financial assistance package is for a three-year term
totalling $69.9 million comprising a secured loan of $66.9
million (which includes capitalised interest and fees) and a
grant of $3.0 million which can be used to fund working
capital and approved capital expenditure. The loan is
mutually exclusive from the debt facility in place for the
Group’s US Main Event business.
Since the end of the financial year, the Directors of the
Company are not aware of any other matters or
circumstances not otherwise dealt with in financial report
or the Directors’ report that have 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 2020.
70
Ardent Leisure Group Limited | Annual Report 2020
Notes to the Financial Statements
for the year ended 30 June 2020
Other
30.
Investment held at fair value
Investment in Online Media Holdings Limited
Opening balance
Reversal of impairment
Closing balance
(a)
Accounting policy
The investment held at fair value comprises an investment
in unlisted equity shares. Upon initial recognition, the
Group can elect to classify irrevocably its equity
investments as equity instruments designated at fair value
through other comprehensive income (OCI) when they
meet the definition of equity under AASB 132 Financial
Instruments Presentation and are not held for trading. The
classification is determined on an instrument by instrument
basis.
After initial measurement, financial assets at fair value
through OCI are subsequently measured at fair value with
unrealised gains or losses recognised in OCI.
31. Provisions
(a)
Distributions to shareholders/security holders
Opening balance
Distributions declared
Distributions paid
Distributions reinvested
Closing balance
2020
$’000
3,201
3,201
2020
$’000
2,811
390
3,201
2019
$’000
2,811
2,811
2019
$’000
2,811
-
2,811
Gains and losses on these financial assets are never
recycled to profit or loss. Dividends are recognised as
other income in the Income Statement when the right of
payment has been established except when the Group
benefits from such proceeds as a recovery of part of the
cost of the financial asset, in which case, such gains are
recorded in OCI. Equity instruments designated at fair
value through OCI are not subject to impairment
assessment.
The Group elected to classify irrevocably its non-listed
equity investments under this category
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Note
18
2020
$’000
-
-
-
-
-
2019
$’000
-
30,637
(14,305)
(16,332)
-
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Ardent Leisure Group Limited | Annual Report 2020
71
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.
Notes to the Financial Statements
for the year ended 30 June 2020
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31. Provisions (continued)
(b)
Other provisions
Current
Employee benefits
Sundry(1)
Total current
Non-current
Employee benefits
Property onerous lease contracts
Property make good obligations
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
2020
$’000
1,683
378
2,061
754
-
2,347
3,101
5,162
173
355
(150)
378
2019
$’000
1,339
173
1,512
710
3,072
2,180
5,962
7,474
168
219
(214)
173
(1) 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.
(c)
Accounting policy
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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.
72
Ardent Leisure Group Limited | Annual Report 2020
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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.
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.
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.
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.
Notes to the Financial Statements
for the year ended 30 June 2020
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32. Net tangible assets
Net tangible assets are calculated as follows:
Total assets
Less: intangible assets
Less: right-of-use assets
Less: total liabilities
Add: lease liabilities
Net tangible assets
Total number of shares on issue
Net tangible asset backing per share
Note
2020
$’000
2019
$’000
1,077,846
(80,098)
(327,058)
(787,898)
396,941
279,733
479,706,016
$0.58
705,323
(78,973)
-
(320,221)
-
306,129
479,706,016
$0.64
22
18
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Ardent Leisure Group Limited | Annual Report 2020
73
Notes to the Financial Statements
for the year ended 30 June 2020
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33. Deed of Cross Guarantee
In 2019, Ardent Leisure Group Limited, Ardent Leisure Limited, Ardent Leisure Management Limited, Ardent Leisure
Entertainment Pty Ltd and Main Event Entertainment Pty Ltd entered into a Deed of Cross Guarantee under which each
company guaranteed the debts of the others.
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By entering into the deeds, Ardent Leisure Limited has been relieved from the requirement to prepare a financial report and
Directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
(a)
Consolidated Income Statement
Ardent Leisure Group Limited, Ardent Leisure Limited, Ardent Leisure Management Limited, Ardent Leisure Entertainment Pty
Ltd and Main Event Entertainment 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 2020 of the Closed Group:
2020
$’000
59,360
390
243
461
7,055
67,509
8,802
44,071
677
111
4,841
3,471
5,282
4,703
2,097
12,493
86,548
(19,039)
14,285
(33,324)
4
(33,320)
(33,320)
Income
Revenue from operating activities
Valuation gain – investment held at fair value
Net gain from derivative financial instruments
Interest income
Other income
Total income
Expenses
Purchase of finished goods
Salary and employee benefits
Finance costs
Property expenses
Depreciation and amortisation
Loss on disposal of assets
Advertising and promotions
Repairs and maintenance
Dreamworld incident costs
Other expenses
Total expenses
Loss before tax expense
Income tax expense
Loss from continuing operations
Profit from discontinued operations
Loss for the year
Attributable to:
Ordinary shareholders
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Notes to the Financial Statements
for the year ended 30 June 2020
33.
(b)
Deed of Cross Guarantee (continued)
Consolidated Statement of Comprehensive Income
Set out below is a consolidated Statement of Comprehensive Income for the year ended 30 June 2020 of the Closed Group:
Loss for the year
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year, net of tax
Attributable to:
Ordinary shareholders
Total comprehensive loss for the year, net of tax
Total comprehensive loss for the year, net of tax attributable to share/security holders,
arises from:
Continuing operations
Discontinued operations
Total comprehensive loss for the year, net of tax
2020
$’000
(33,320)
-
(33,320)
(33,320)
(33,320)
(33,324)
4
(33,320)
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Ardent Leisure Group Limited | Annual Report 2020
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Notes to the Financial Statements
for the year ended 30 June 2020
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33. Deed of Cross Guarantee (continued)
(c)
Consolidated Balance Sheet
Set out below is a consolidated Balance Sheet as at 30 June 2020 of the Closed Group:
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Current assets
Cash and cash equivalents
Receivables
Inventories
Other
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Investment held at fair value
Investment in subsidiaries
Livestock
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Payables
Derivative financial instruments
Interest bearing liabilities
Provisions
Other
Total current liabilities
Non-current liabilities
Intercompany payables
Provisions
Non-current tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
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2020
$’000
26,245
2,083
2,835
790
31,953
50,491
182
3,201
597,930
204
2,508
3,995
658,511
690,464
10,882
24
233
1,563
4
12,706
152,907
754
10,629
164,290
176,996
513,468
777,124
(126,950)
(136,706)
513,468
Notes to the Financial Statements
for the year ended 30 June 2020
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33.
(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 2020 of the Closed Group:
Contributed
equity Other equity
Reserves
Accumulated
losses
$’000
$’000
$’000
$’000
Total equity at 25 June 2019
Impact of change in accounting standard, AASB 16
Total restated equity at 25 June 2019
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Total equity at 30 June 2020
777,124
-
777,124
-
-
-
777,124
-
-
-
-
-
-
-
(126,950)
-
(126,950)
-
-
-
(103,421)
35
(103,386)
(33,320)
-
(33,320)
(126,950)
(136,706)
513,468
Total
equity
$’000
546,753
35
546,788
(33,320)
-
(33,320)
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Ardent Leisure Group Limited | Annual Report 2020
77
Notes to the Financial Statements
for the year ended 30 June 2020
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34. Remuneration of auditor
The auditor of the Group in the current year, Ernst & Young (EY), earned the following remuneration:
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Fees to EY Australia
Audit of financial statements of the Group
Assurance services that are required by legislation to be provided by the auditor
Other services:
Tax compliance
Destapling and restructure advice
Other
s
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S
Total fees to EY Australia
Fees to other overseas member firms of EY Australia (US)
Audit of financial statements of the Group and financial statements of Main Event
Other services:
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Tax compliance
Tax advice
Restructure tax advice
US GAAP accounting advice
Total fees to overseas member firms of EY Australia (US)
Total auditors' remuneration
June
2020
$
435,303
-
57,000
-
5,000
497,303
June
2019
$
431,800
25,000
102,655
317,500
4,635
881,590
495,895
231,536
-
192,856
-
73,583
762,334
1,259,637
91,354
-
135,803
-
458,693
1,340,283
35. Equity-based payments
(a)
Deferred Short Term Incentive Plan (DSTI)
Who can participate?
What types of securities are issued?
DSTI
All employees are eligible for participation at the discretion of the Board;
however, Non-Executive Directors do not participate in the DSTI.
Performance rights that can be converted into fully paid shares 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.
s
e
t
o
N
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i
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n
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p
p
A
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.
(i)
Equity settled payments
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.
A total of 168,995 performance rights vested during the
year and a corresponding number of shares/securities
were issued to employees under the terms of the DSTI
(2019: 436,379).
Fair value
The fair value of equity settled 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 shares.
The characteristics of the DSTI indicate that, at the Group
level, it is an equity settled payment under AASB 2 Share-
based Payment as the holders are entitled to receive shares
as long as they meet the DSTI’s service criteria.
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.
78
Ardent Leisure Group Limited | Annual Report 2020
Notes to the Financial Statements
for the year ended 30 June 2020
35.
Equity-based payments (continued)
(a)
(ii)
Deferred Short Term Incentive Plan (DSTI) (continued)
Valuation inputs
For the performance rights outstanding at 30 June 2020, 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. Under AASB 2, this valuation is
used to value the equity settled performance rights granted to employees at 30 June 2020:
Grant
Grant date
Vesting date – year 1
Vesting date – year 2
Average risk-free rate
Expected price volatility
Expected distribution yield
Share/security price at grant date
Valuation per performance right on issue
2018
24 June 2019
29 August 2019
31 August 2020
1.50% per annum
32.0% per annum
2.5% per annum
$1.03
$0.98
2019
22 August 2019
31 August 2020
31 August 2021
0.74% per annum
33.0% per annum
2.0% per annum
$1.18
$1.14
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.
(iii)
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 number of rights outstanding and the grant dates of the rights are shown in the table below:
Grant date
Expiry date
Grant date
Valuation
per right -
ALG
Balance at
the
beginning
of the year
Exercise
price
Granted
Exercised
vest Cancelled
Failed to
29 Sep 2017 29 Aug 2019 $Nil
24 Jun 2019 31 Aug 2020 $Nil
22 Aug 2019 31 Aug 2021 $Nil
177.5 cents
98.3 cents
114.5 cents
142,167
54,331
-
-
-
51,244
(142,167)
(26,828)
-
-
(678)
-
-
(5,340)
-
Balance at
the end of
the year
-
21,485
51,244
The rights have an average maturity of six months.
(b)
Long Term Incentive Plan (LTIP)
196,498
51,244
(168,995)
(678)
(5,340)
72,729
s
e
t
o
N
Who can participate?
All executives are eligible for participation at the discretion of the Board.
What types of securities are issued?
The LTIP is typically granted in the form of performance rights that can be converted
into fully paid shares when and if vested. Performance rights do not carry any voting or
distribution entitlements.
What restrictions are there on the
securities?
Performance rights are non-transferable. Executives may not hedge any portion of their
unvested awards.
Ardent Leisure Group Limited | Annual Report 2020
79
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Notes to the Financial Statements
for the year ended 30 June 2020
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35.
Equity-based payments (continued)
(b)
Long Term Incentive Plan (LTIP) (continued)
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Is there a performance gateway?
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For any rights to vest under the LTIP, an initial gateway performance hurdle must be
met or exceeded. The gateway hurdle is a minimum return on equity target equal to or
greater than 2.5x the 10 year bond yield rate for Australian Government bonds.
When can the performance rights
vest?
The plan contemplates that the performance rights will vest equally two, three and four
years following the grant date, subject to making vesting conditions.
What are the vesting conditions for
Australian employees?
Assuming the performance gateway is achieved, whether the performance rights that
can vest do in fact vest is determined as follows:
50% is subject to a relative total shareholder return (TSR) performance hurdle; and
50% is subject to a compound earnings per share (EPS) performance hurdle.
What are the vesting conditions for
US employees?
Assuming the performance gateway is achieved, whether the performance rights that
can vest do in fact vest is determined as follows:
What is relative TSR and how is it
measured?
1/3rd is subject to a relative TSR performance hurdle;
1/3rd is subject to a compound EPS performance hurdle; and
1/3rd vests automatically provided the executive has remained in continuous
employment since the date of grant.
Relative 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, measured
against the return of an external benchmark. The relative TSR definition takes account
of both capital growth and distributions.
Relative TSR is measured against the S&P/ASX 200 Industrials Index over the
performance period. Relative TSR performance is measured by an independent third
party. The vesting schedule for the portion of the grant subject to the relative TSR
performance condition is as follows:
The vesting scale is as follows:
Relative TSR performance
Below 50th percentile
50th percentile
Between 50th percentile and 75th percentile
75th percentile or higher
Proportion of performance rights vesting
0%
50%
Straight-line vesting
between 50% and 100%
100%
What is EPS and how is EPS
measured?
The EPS hurdle refers to the compound annual growth of earnings (CAGR) per security
over the vesting period.
The vesting schedule for the portion of the grant subject to EPS performance is as
follows:
FY17 grant
Below 5%
5%
Between 5% and 10%
10% or higher
FY18 and FY19 grants
Below 8%
8%
Between 8% and 13%
13% or higher
Proportion of performance rights vesting
0%
50%
Straight-line vesting
between 50% and 100%
100%
0%
50%
Straight-line vesting
between 50% and 100%
100%
80
Ardent Leisure Group Limited | Annual Report 2020
Notes to the Financial Statements
for the year ended 30 June 2020
35.
(b)
(i)
Equity-based payments (continued)
Long Term Incentive Plan (LTIP) (continued)
Equity settled payments
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 which vest in accordance with the terms set out in the
table above. 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 S&P/ASX Small Industrials Index.
During the year, the relative TSR and EPS performance of the Group was tested in accordance with the LTIP for tranches issued
in 2013, 2014 and 2015 with the following results:
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Tranche
T3-2016
T2-2017
T1-2018
ROE
(3.70%)
(6.53%)
(10.63%)
Vesting
percentage
-
-
-
TSR
Percentile
Vesting
percentage
(76.04%)
(76.50%)
(76.52%)
3.43
10.45
7.14
-
-
-
Group CAGR
EPS
n/a(1)
(277.72%)
423.32%(2)
Vesting
percentage
-
-
-
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(1) Mathematically, CAGR cannot be computed when there is a positive EPS in the first year, a negative EPS in the last year and an even number of years over
which it is being measured. However, as EPS has declined over the measurement period, it has by definition failed to meet the minimum vesting hurdle of
5% CAGR EPS growth.
(2) Mathematically, CAGR is positive due to increase in losses over the test period. However, as EPS has declined over the measurement period, it is deemed to
have failed to meet the minimum vesting hurdle.
No LTIP performance rights vested on 29 August 2019 (2019: 78,422).
The characteristics of the LTIP indicate that, at the Group level, it is an equity settled payment under AASB 2 Share-based
Payment as the holders are entitled to the shares/securities as long as they meet the LTIP’s service and performance criteria.
Fair value
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The fair value of the equity settled 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 shares/securities.
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.
(ii)
Valuation inputs
For performance rights outstanding at 30 June 2020, 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. Under AASB 2, this valuation is used
to value the equity settled performance rights granted to employees at 30 June 2020:
s
e
t
o
N
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
US employees
Australian employees
2016
23 August 2016
24 August 2018
29 August 2019
31 August 2020
1.40% per annum
40.0% per annum
5.0% per annum
$2.50
2017
29 September 2017
29 August 2019
31 August 2020
31 August 2021
2.00% per annum
42.0% per annum
1.6% per annum
$1.82
2018
27 June 2019
31 August 2020
31 August 2021
31 August 2022
1.00% per annum
32.0% per annum
2.0% per annum
$1.08
$1.51
$1.51
$0.65
$0.19
$Nil
$Nil
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.
Ardent Leisure Group Limited | Annual Report 2020
81
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Notes to the Financial Statements
for the year ended 30 June 2020
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35.
Equity-based payments (continued)
(b)
Long Term Incentive Plan (LTIP) (continued)
(iii) Performance hurdles
In order for any or all of the performance rights to vest under the LTIP, the Group's Gateway, TSR and/or the EPS performance
hurdles as set out above must be met. The number of rights outstanding and the grant dates of the rights are shown in the table
below:
Grant date
Expiry date
Exercise
price
Grant date
valuation
per right
Balance at the
beginning of
the year
Granted
Exercised
vest Cancelled
Failed to
Balance at
the end of
the year
15 Dec 2015 31 Aug 2019 $Nil
23 Aug 2016 31 Aug 2020 $Nil
29 Sep 2017 31 Aug 2021 $Nil
27 Jun 2019 31 Aug 2022 $Nil
100.2 cents
120.7 cents
47.5 cents
0.0 cents
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182,438
173,530
1,272,181
-
-
-
- 191,394
1,628,149 191,394
-
(182,438)
-
-
(86,765)
-
(214,832)
(424,050)
-
-
-
-
- (693,253) (214,832)
-
86,765
633,299
191,394
911,458
The rights have an average maturity of 10 months.
The expense recorded in the Group financial statements in the year in relation to the DSTI and LTIP performance rights was
$136,771 (2019: $7,255).
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82
Ardent Leisure Group Limited | Annual Report 2020
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Notes to the Financial Statements
for the year ended 30 June 2020
36. Related party disclosures
(a)
Directors
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The following persons have held office as Directors of the Company during the period and up to the date of this report unless
otherwise stated:
t
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R
Gary Weiss AM;
David Haslingden;
Randy Garfield;
Brad Richmond; and
Antonia Korsanos (resigned 30 June 2020).
(b)
Parent entity
The immediate and ultimate parent entity of the Group is Ardent Leisure Group Limited.
(c)
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:
Entity
Activity
Controlled entities of Ardent Leisure Group Limited:
Ardent Leisure Trust
Theme parks
Ardent Leisure Limited
Theme parks, Corporate
Ardent Leisure US Holding, Inc
Family entertainment centres
Country of
establishment
Class of equity
securities
Australia
Australia
USA
Ordinary
Ordinary
Ordinary
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(d)
(i)
Transactions with related parties
Key management personnel
Short term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
2020
$
2,779,227
59,805
-
126,500
2,965,532
2019
$
3,175,826
80,063
88,067
59,612
3,403,568
s
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o
N
Remuneration of key management personnel (KMP) is shown in the Directors’ report from pages 12 to 23.
(e)
Loans to KMP
There were no loans to KMP during the financial year or prior corresponding period.
(f)
Other transactions with KMP
Any agreements entered have been on normal commercial bases and fees and transactions have been based on normal
commercial terms and conditions.
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 Limited | Annual Report 2020
83
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Notes to the Financial Statements
for the year ended 30 June 2020
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36. Related party disclosures (continued)
(g)
Transactions with related parties
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All transactions with related parties 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 6(f). The transactions incurred in the year
with controlled entities were as follows:
Income from sale of services to related parties
Reimbursable expenses paid to related parties
37. Parent entity financial information
2020
$
36,570
(126,104)
2019
$
-
(145,277)
Subsequent to the destapling and corporatisation of the Group, effective 24 December 2018, the parent entity of the Group is
Ardent Leisure Group Limited.
(a)
Summary financial information
Balance sheet
Current assets
Total assets
Equity
Contributed equity
Retained earnings
Total equity
Loss for the period
Total comprehensive loss for the period
2020
$’000
2019
$’000
2,412
249,000
777,124
(528,124)
249,000
(285,617)
(285,617)
1,729
534,617
777,124
(242,507)
534,617
(242,507)
(242,507)
Prior year comparative amounts have been restated to reflect an impairment of $244.2 million in the carrying value of the parent entity’s investment in
subsidiaries, that was not previously recognised in the year ended 25 June 2019.
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(b)
Guarantees
There are no material guarantees entered into by Ardent
Leisure Group Limited in relation to the debts of its
subsidiaries.
(c)
Contingent liabilities
On 25 October 2016, an incident occurred on the Thunder
River Rapids ride at Dreamworld resulting in four fatalities
at the Theme Park. The incident was investigated by the
Queensland Police Service and Workplace Health and
Safety Queensland (WHSQ). A Coronial Inquest took place
over several hearings throughout 2018 and concluded in
December 2018. The Coroner’s findings and
recommendations were handed down on 24 February
2020. The Coroner cannot (and did not) make any formal
finding of guilt on the part of Ardent Leisure Limited (ALL)
or any other person or entity and cannot (and did not)
impose any pecuniary fine or penalty. In his Report, the
Coroner referred the matter back to the WHSQ prosecutor
to consider “whether there is sufficient evidence to proceed to
prosecution [against ALL]”.
84
Ardent Leisure Group Limited | Annual Report 2020
On 21 July 2020 the Queensland Work Health and Safety
Prosecutor filed three charges against ALL pursuant to
section 32 of the Work Health and Safety Act 2011 (Qld) in
relation to the incident, with each charge carrying a
maximum penalty of $1.5 million. ALL pleaded guilty to all
three charges on 29 July 2020. The matter has been set
down for sentencing on 28 September 2020.
A number of civil claims by families and other affected
persons have been made against ALL and have either been
settled or are in the process of being dealt with by the
Company’s liability insurer. The statutory time period for
bringing civil claims has now passed.
On 18 June 2020, the Company was served with a
representative shareholder class action arising from the
2016 Dreamworld tragedy. The claim alleges
contraventions of the Corporations Act 2001 (Cth). The claim
has not been quantified by the plaintiff and is not fully
particularised, therefore the Company cannot provide any
meaningful or indicative estimate of the quantum of any
potential liability (if any). The Company has indicated that
it believes the proceedings to be without merit and that it
will vigorously defend them.
Notes to the Financial Statements
for the year ended 30 June 2020
37.
Parent entity financial information (continued)
(c)
Contingent liabilities (continued)
The Company maintains appropriate insurances to respond
to litigation and regulatory action and the majority of
associated costs.
Unless otherwise disclosed in the financial statements,
Ardent Leisure Group Limited has no other material
contingent liabilities.
(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
2020
$’000
2019
$’000
-
-
-
-
(e)
Accounting policy
The financial information for the parent entity of the Group
(Ardent Leisure Group Limited and, in the prior year, Ardent
Leisure Trust) has been prepared on the same basis as the
consolidated financial statements, except as set out below:
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the
financial statements of the parent entity. Dividends
received from subsidiaries are recognised as income in the
parent entity’s income statement.
Tax consolidation legislation
Ardent Leisure Group Limited and its wholly-owned
Australian controlled entities have implemented the tax
consolidation legislation. The head entity, Ardent Leisure
Group 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 Group 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 also entered into a tax funding agreement,
effective for the year ended 31 March 2020, under which
the wholly-owned entities fully compensate Ardent
Leisure Group Limited for any current tax payable
assumed and are compensated by Ardent Leisure Group
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 Group 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.
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Ardent Leisure Group Limited | Annual Report 2020
85
Directors’ declaration to shareholders
Directors’ declaration to shareholders
In the opinion of the Directors of Ardent Leisure Group Limited:
(a) The financial statements and notes of Ardent Leisure Group Limited set out on pages 27 to 85 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 Ardent Leisure Group Limited’s financial position as at 30 June 2020 and of its
performance, as represented by the results of its operations, its changes in equity and its cash flows, for the financial
year ended on that date;
(b) There are reasonable grounds to believe that Ardent Leisure Group Limited will be able to pay its debts as and when they
become due and payable;
(c) Note 1 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 Closed Group identified
in Note 33 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 33.
The Directors have been given the certifications required by Section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Boards of Directors.
Gary Weiss AM
Chairman
Sydney
26 August 2020
Brad Richmond
Director
86
Ardent Leisure Group Limited | Annual Report 2020
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 2
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 3
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A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 4
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A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 5
(cid:120)
(cid:120)
(cid:120)
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 6
(cid:120)
(cid:120)
(cid:120)
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 7
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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Investor Analysis
Investor Relations
Investor Analysis
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
KAYAAL PTY LTD
PORTFOLIO SERVICES PTY LTD
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
UBS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
NETWEALTH INVESTMENTS LIMITED
RAGUSA PTY LTD
BNP PARIBAS NOMINEES PTY LTD
INVESTEC AUSTRALIA LIMITED
PAYNE MEDIA PTY LTD
RAGUSA PTY LTD
ONE MANAGED INVT FUNDS LTD
BNP PARIBAS NOMINEES PTY LTD
ALL STATES FINANCE PTY LTD
MR SHANE NEWMAN ABEL
DEEMCO PTY LIMITED
Top investors as at 25 August 2020
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
Balance of register
Grand total
No. of shares
72,967,874
61,972,871
25,174,310
22,672,159
21,277,233
17,989,045
12,722,171
10,792,866
5,699,294
5,407,382
4,639,794
4,383,837
3,281,458
3,200,047
2,910,409
2,045,167
2,005,320
1,773,959
1,515,000
1,370,000
283,800,196
195,905,820
479,706,016
Range report as at 25 August 2020
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
No. of shares
353,734,937
97,451,575
15,609,512
12,025,619
884,373
479,706,016
% No. of holders
289
3,290
2,028
4,362
2,225
12,194
73.74
20.31
3.25
2.51
0.18
100.00
The total number of investors with an unmarketable parcel of 995,792 shares as at 25 August 2020 was 2,332.
%
15.21
12.92
5.25
4.73
4.44
3.75
2.65
2.25
1.19
1.13
0.97
0.91
0.68
0.67
0.61
0.43
0.42
0.37
0.32
0.29
59.16
40.84
100.00
%
2.37
26.98
16.63
35.77
18.25
100.00
Voting rights
In accordance with the Company’s Constitution, each member present at a meeting, whether in person, by proxy, by power of
attorney or by a duly authorised representative in the case of a corporate member, shall have one vote on a show of hands and
one vote for each fully paid ordinary share on a poll.
On-market buy-back
There is no current on-market-buy-back.
%
Substantial shareholder notices received as at 25 August 2020
9.45%
The Ariadne Substantial Holder Group*
6.33%
FIL Ltd
Sumitomo Mitsui Trust Holdings Inc
13.59%
* The Ariadne Substantial Holder Group includes the following companies and partnerships – Portfolio Services Pty Limited, Ariadne Holdings Pty
Limited, Ariadne Australia Limited, Bivaru Pty Limited and Kayaal Pty Ltd.
No. of shares
45,344,317
30,389,058
65,207,895
94
Ardent Leisure Group Limited | Annual Report 2020
Investor Relations and Corporate
Directory
Corporate Governance Statement
Investor Relations and Corporate Directory
In accordance with the ASX Listing Rules, the Group’s Corporate Governance Statement is published and located in the
Corporate Governance page of the Group’s website (http://www.ardentleisure.com.au/Company/Corporate-
Governance.aspx). A copy has also been provided to the ASX.
Contact details
Security registry
To access information on your holding or to update/change your details, contact:
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Telephone
1300 720 560 (within Australia)
+61 1300 720 560 (outside Australia)
Facsimile
+61 2 9287 0303
Website
www.linkmarketservices.com.au
Email
registrars@linkmarketservices.com.au
All other enquiries relating to your Ardent Leisure Group Limited investment can be directed to:
Ardent Leisure Group Limited
PO Box 1927
North Sydney NSW 2059
Telephone
+61 2 9168 4600
Facsimile
+61 2 9168 4601
Email
investor.relations@ardentleisure.com
Website
www.ardentleisure.com
Ardent Leisure Group Limited | Annual Report 2020
95
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Investor Relations and Corporate
Directory
Corporate Directory
Company
Ardent Leisure Group Limited
ABN 51 628 881 603
Registered office
Level 8, 60 Miller Street
North Sydney NSW 2060
Directors
Gary Weiss AM
David Haslingden
Randy Garfield
Brad Richmond
Antonia Korsanos (resigned 30 June 2020)
Group Chief Financial Officer
Darin Harper
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Company Secretary
Bronwyn Weir
ASX code
ALG
Auditor of the Group
Ernst & Young
200 George Street
Sydney NSW 2000
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Ardent Leisure Group Limited | Annual Report 2020