AQUIS ENTERTAINMENT LIMITED
ABN 48 147 411 881
Annual Report
for the Year Ended 31 December 2016
CONTENTS
FINANCIAL STATEMENTS
CORPORATE GOVERNANCE STATEMENT
SHAREHOLDER INFORMATION
CORPORATE DIRECTORY
Page
1
48
61
63
AQUIS ENTERTAINMENT LIMITED
ABN 48 147 411 881
Financial Statements
for the Financial Year Ended 31 December 2016
1
The Directors present their report together with the consolidated financial statements for the financial year ended
31 December 2016. The consolidated financial statements comprise the financial statements of Aquis
Entertainment Limited (“Aquis” or “Company”) and its controlled entities (together referred to as the “Group” or
“Consolidated Entity”).
On 25 August 2015, the Company advised the ASX that it had changed its accounting year end from June to
December. Accordingly, except where otherwise stated, this report considers the activities of the Group from the
end of the previous financial year (30 June 2015) to 31 December 2015.
DIRECTORS
The names and details of the Company’s Directors in office during the financial year and until the date of this
report are set out below:
Tony Fung
Raymond Or Ching Fai
Justin Fung
Alex Chow
Russell Shields
Jessica Mellor
Dr Ken Chapman
Aaron Gomes
Chairman
Vice Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director & CEO (from 4 October)
Non-Executive Director (Resigned 3 November 2016)
Executive Director (from 31 May to 3 October) & CEO
Current Directors
Tony Fung (Chairman)
Mr Tony Fung is the ultimate owner and controller of the Aquis Group. He has significant experience in corporate
finance and company administration, including running Sun Hung Kai & Co. Ltd, a leading Hong Kong-based non-
bank financial and securities holding company. Mr Fung has significant property investments in Hong Kong and
also in Australia.
Raymond Or Ching-Fai (Deputy Chairman)
Mr Or Ching-Fai is Chairman and Chief Executive of China Strategic Holdings Limited. Mr Or has had a long
career in banking and insurance including as the Chairman of HSBC Insurance Limited, Vice-Chairman and Chief
Executive of Hang Seng Bank, Chairman of Hang Seng Insurance Co Limited and currently he is a director of
Industrial and Commercial Bank of China Limited. Mr Or was previously a director of Cathay Pacific Airways
Limited and Hutchison Whampoa Limited. He was (among other roles) the Vice President and a Council Member
of the Hong Kong Institute of Bankers. He has a bachelor’s degree in economics and psychology from the
University of Hong Kong.
Mr Or is a member of the Remuneration and Nomination Committee.
Justin Fung (non-Executive Director)
Mr Justin Fung is Mr Tony Fung’s son. He plays a lead role in day to day operational, management and strategic
decisions of the Aquis Group. Mr Fung has an arts degree from Duke University, North Carolina and a law degree
from Loyola University, Los Angeles and has previously worked in the Fung family’s property/development
businesses.
Mr Fung is a member of the Audit and Risk Committee.
Alex Chow (Independent Non-Executive Director)
Mr Chow Yu Chun, Alexander, is a senior non-executive director with over 35 years of experience in commercial,
financial and investment management in Hong Kong and Mainland China. He has served as an lndependent Non-
executive Director of Top Form International Limited since February 1993 and is a Certified Public Accountant of
the Hong Kong institute of Certified Public Accountants. Mr. Chow is also currently an independent non-executive
director of Playmates Toys Limited, China Strategic Holdings Limited and Symphony Holdings Ltd, each of which
are listed on the Hong Kong Stock Exchange.
Mr Chow is the Chair of the Audit and Risk Committee And a member of the Remuneration and Nomination
Committee.
2 Russell Shields (Independent Non-Executive Director)
Russell Shields is a senior non-executive director with more than 35 years’ experience in the financial services
industry. He was Chairman Queensland and Northern Territory of ANZ Bank for 6 years. Prior to joining ANZ, Mr
Shields held senior executive roles in Australia and Asia with HSBC including Managing Director Asia Pacific –
Transport, Construction and Infrastructure and State Manager Queensland, HSBC Bank Australia. He is currently
a non-executive director of ASX-listed Eclipx Group Limited, is a non-executive director of Retail Food Group
Limited (since December 2015) and was Chairman of Onyx Property Group Limited until December 2015. Mr
Shields is the Chair of the Remuneration and Nomination Committee and a member of the Audit and Risk
Committee
Jessica Mellor (Executive Director & CEO)
Jessica Mellor is a seasoned project manager with experience spanning major infrastructure projects, residential
and commercial development and funds management Jess is responsible for Strategy and Project Development
for the Company.
Ms Mellor was involved in major infrastructure projects with Leighton Contractors in Queensland before moving
into residential development and later funds management. Ms Mellor joined the greater Aquis Group in 2013
where she a played key leadership role in the groups’ ambitious Yorkeys Knob project in Cairns and following the
acquisition of Casino Canberra was appointed as Executive Director, Strategy and Project Development with
responsibility for new projects strategy and growth. Ms Mellor was appointed as Chief Executive Officer of Aquis
Entertainment Limited and Casino Canberra on 4 October 2016.
Company Secretary
The Company Secretary in office at the end of the reporting period was Garry Gill. He has more than 30 years’
experience in all facets of corporate financial and administrative functions and has served in Chief Financial
Officer and Company Secretarial positions at a number of listed and unlisted public companies, private companies
and statutory authorities. Garry is a member of Chartered Accountants Australia and New Zealand, a Fellow of
the Governance Institute of Australia and the Institute of Chartered Secretaries and Administrators and a member
of the Australian Institute of Company Directors. On 11 January 2017, Mr Gill resigned from the Company with
effect from 11 April 2017.
INTERESTS IN SHARES AND OPTIONS
As at the date of this report, the interests of the Directors in the ordinary shares of Aquis were:
Directors
Ordinary Shares Unlisted Options
T Fung
R Or Ching Fai
J Fung1
A Chow
R Shields
J Mellor
153,871,874
-
153,871,874
-
-
-
1 Interest held as related party to Mr T Fung
-
-
-
-
-
-
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
The principal activity of the Consolidated Entity during the year was entertainment, gaming and leisure through
the ownership of Casino Canberra.
OPERATING AND FINANCIAL REVIEW
Operating Results for the Year
The operating result for the consolidated entity for the year to 31 December 2016 was a loss of $7,680,683
(2015:loss $6,019,882). Operating revenue for the year amounted to $24,212,531 a 21.7% increase over the
2015 result ($19,887,113). Earnings before Interest Tax Depreciation and Amortisation (EBITDA) for the year
was a loss of $5,933,573 (2015: loss $6,194,301) an improvement of 4.2% notwithstanding that operations
were considerably restricted during the 4 month period during which Casino Canberra was refurbished.
Strategy
Aquis has a clear strategy to develop and manage quality destination integrated resorts in underserved areas of
Australia. Casino Canberra is the first such investment and has been used to demonstrate the Company’s ability
3
to significantly improve an underperforming operation by a combination of leadership and targeted investment in
the business.
Aquis advanced its strategy during the year by:
• Completing the refurbishment of the Casino Canberra property on time and at lower than budget cost
• Continuing to improve the operations of Casino Canberra by engaging experienced management who
are focussed on improving revenue and customer service standard and
• Lodging the detailed business case with the ACT Government, for the development of a world-class
integrated entertainment precinct in the heart of Canberra’s CBD. This is discussed further in the Future
Developments, Prosects and Business Strategies section of this report.
Refurbishment of Casino Canberra
Between February and early June of 2016, Casino Canberra underwent an extensive remodelling and
refurbishment of its gaming and public spaces. The project featured an enhanced arrival experience, a new
gaming floor including two new VIP gaming rooms and a separate high limits gaming area along with new food
and beverage offerings; The Chandelier Bar, Onyx Lounge and Natural 9 restaurant. New state of the art gaming
equipment was installed as part of the refurbishment, including 50 gaming terminals in the first ever live stadium
gaming experience in the ACT. A sports bar and a new poker lounge, the Lotus Room, were also added.
Operations
Revenue from operations for the year increased 21.7% over the prior year to $24,212,531 in 2016 compared to
$19,887,113 in 2015. The result was driven by a 21.0% increase gaming revenue and a 29.2% increase in food
and beverage and other sales. Operating expenses including payroll related expenses increased by 20.0% for
the year with the major increases being in payroll and marketing related expenses.
During the refurbishment period, the gaming operations were moved to a first floor temporary gaming area which
had earlier undergone minor refreshment. The temporary facility featured 16 gaming tables and minimal food and
beverage service. The limited facilities along with the normal disruption resulting from substantial construction
activities affected the financial results for the first half of the financial year. While revenue during this period was
higher than the previous corresponding period, the marketing and other costs of generating and servicing the
revenue was higher than the prior year.
Throughout the 2016 year, Casino Canberra maintained its focus on improving operating and service standards
and implementing new marketing initiatives. To this end, the management team was further strengthened by
adding experienced leaders to the gaming, cash desk and marketing departments. These team leaders with their
experience in both Macau and Australia are assisting with the transition process commenced last year and made
possible through the refurbishment.
The marketing focus following the refurbishment was firstly to reacquaint Canberra with its casino through a series
of television, radio and print advertisements and features and then to actively seek to attract VIP players to the
casino. This process, which remains in its infancy, generated early success with record revenues being achieved
in a number of months. The introduction of VIP players has increased the volatility being experienced and affected
overall hold rates. As the volume of VIP play grows over the coming periods, it is expected that this volatility will
be able to be better managed.
Financial Position
At 31 December 2016, the Group had cash reserves of $5,184,389 (2015: $6,804,470) and unused borrowing
facilities of $4,871,318. Following the end of the financial year the Group drew down a further $1 million under
the facility. The balance sheet at 31 December 2016 shows a net tangible asset deficit of $14,341 (2015:
$1,298,358 positive) as a result of the loss incurred during the financial year.
At the Company’s Annual General Meeting on 31 May 2016, shareholders passed a resolution to enter into the
Amended Loan Conversion Deed between the Company and major shareholder Aquis Canberra Holdings Pty
Ltd. The Deed (and related amended loan agreements entered into by the Company) consolidated all existing
loans from multiple lenders into a single loan. The new loan provided the Group with a new Facility Limit of $36.45
million and a more advantageous interest rate of the lower of BBSY +2% and the RBA indicator rate for small
business loans.
Outlook
Directors are confident of the outlook for Aquis. With the completion of the refurbishment of Casino Canberra
the Group now has a high quality facility to attract new and existing customers. Since September 2016,
Canberra has been receiving direct flights from Singapore and already visitors from Singapore have attended
the casino.
4 With the arrival of a new Director of Marketing in January, the casino now has compiled a highly experienced
operations leadership team which can execute the vision of attracting and servicing players from Australia and
overseas. Additional Business Development staff are also being engaged to assist in bringing VIP players to
Casino Canberra to provide the critical mass needed to manage the volatility and generate additional revenue.
Planning continues for the redevelopment of Casino Canberra into a world class multi faceted establishment
and discussions with the Government will continue throughout 2017.
The Board will also continue to investigate new investment opportunities in line with the Group’s broader vision
and strategy.
Employees
The number of people employed by the Consolidated Entity at the reporting date was 255.
DIVIDENDS
The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of
a dividend to the date of this report.
Directors’ and Committee Meetings
The number of meetings of the Company’s Board of Directors held during the period and the number of
meetings attended by each Director was:
Director
Board Meetings
Audit & Risk
Remuneration and
Nomination
Eligible to
Attend
Attended
Eligible to
Attend
Attended
Eligible to
Attend
Attended
T Fung
R Or Ching Fai
J Fung
A Chow
R Shields
J Mellor
K Chapman1
A Gomes2
6
6
6
6
6
6
5
1
6
5
5
5
5
6
5
1
n/a
n/a
n/a
1
1
n/a
1
n/a
1Resigned 3 November 2016
2Resigned 3 October 2016
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
n/a
n/a
n/a
1
1
n/a
1
n/a
n/a
1
n/a
n/a
1
n/a
1
n/a
n/a
1
n/a
n/a
1
n/a
1
n/a
There were no significant changes in the state of affairs of the Company during the year, other than disclosed in
this report.
SIGNIFICANT EVENTS AFTER BALANCE DATE
Other than as set out in this report and the attached financial statements, no matters or circumstances have
arisen since 31 December 2016, which significantly affected or may significantly affect the operations of the
Company, the results of those operations, or the state of affairs of the Company in subsequent financial years.
INDEMNIFICATION OF OFFICERS
The Company is required to indemnify Directors, and other officers of the Company against certain liabilities which
they may incur as a result of or by reason of (whether solely or in part) being or acting as an officer of the
Company.
During the financial year, the Company paid a premium to insure the Directors against potential liabilities for costs
and expenses incurred by them in defending legal proceedings arising from their conduct while acting in the
capacity of Director of the Company other than conduct involving wilful breach of duty in relation to the Company.
The amount of the premium is not disclosed as it is considered confidential.
The Company provides no indemnity to any auditor.
5
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the consolidated entity is a party for the purpose of taking responsibility on behalf of the
consolidated entity or any part of those proceedings.
ENVIRONMENTAL REGULATIONS
The Directors are mindful of the regulatory regime in relation to the impact of the organisation’s activities on the
environment.
There have been no known breaches of any environmental regulation by the Consolidated Entity during the
financial period.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
Aquis is an entertainment, gaming and leisure company which currently operates a casino business in Canberra.
On 17 June 2016, the Company announced that in response to an invitation from the ACT Government it had
lodged a detailed business case, progressing the bid for development of a world-class integrated entertainment
precinct in the heart of Canberra’s CBD.
The business case bid proposes a $307 million redevelopment to transform the current Casino Canberra and
surrounding area into a comprehensive first-tier leisure and nightlife precinct. Plans include complete
modernisation and upscaling of the casino, as well as building a critical mass of world-class restaurants, bars,
retail boutiques, accommodation and entertainment options across City Walk in Canberra’s CBD.
It is currently contemplated that the Proposed Redevelopment will be undertaken in two stages across a five-year
development period.
The Company will require funding in addition to its current cash at hand and funding facilities in order to complete
the proposed redevelopment.
SHARE OPTIONS
As at the date of this report, there were no unissued ordinary Aquis shares under option (2015:5,000,000). During
the financial year ended 31 December 2016 the 5,000,000 options on issue expired unexercised. Accordingly
during the financial year and to the date of this report no options were exercised
No options have been issued in the period since year end to the date of this report.
INDEPENDENT PROFESSIONAL ADVICE
Directors of the Company are expected to exercise considered and independent judgement on matters before
them and may need to seek independent professional advice. A director with prior written approval from the
Chairman may, at the Company’s expense obtain independent professional advice to properly discharge their
responsibilities.
NON-AUDIT SERVICES
There were no non-audit services provided by the entity’s auditors, RSM Australia Pty Ltd during the financial year.
AUDITOR INDEPENDENCE
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is
attached.
6
REMUNERATION REPORT (AUDITED)
This Remuneration Report forms part of the Directors’ Report and has been prepared in accordance with
Section 300A of the Corporations Act 2001and has been audited as required by Section 308(3C) of that Act.
The Remuneration Report is set out under the following key headings:
A
B
C
D
E
Introduction
Principles used to determine the nature and amount of remuneration
Remuneration details
Service agreements
Other KMP disclosures
A.
Introduction
The Remuneration Report sets out information relating to the remuneration of the non-executive Directors,
executive Directors and senior management of the Company - collectively termed Key Management Personnel
(KMP). The KMP are the persons primarily accountable for planning, directing and controlling the affairs of the
Company. For the purposes of this report the executive Directors and senior management are referred to as
Executives.
Details of KMP for whom remuneration disclosures are included in this Report are as follows:
Current Non-Executive Directors
T Fung
R Or Ching Fai
J Fung
A Chow
R Shields
Chairman
Vice Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Current Executives
Name
J Mellor
G Gill
R Bach
Role
Relevant Dates
Executive Director
Appointed Chief Executive
Officer
4 October 2016
Chief Financial Officer and
Company Secretary
Announced resignation on 11
January 2017
Vice President & General
Manager
Previous Directors and Executives
Name
Role
Relevant Dates
K Chapman
Non-Executive Director
Resigned 3 November 2016
A Gomes
CEO and Executive Director
Appointed as Director 31 May
2016
Resigned 3 October 2016
Except where otherwise stated, KMP held office from the commencement of the year.
B.
Principles used to determine the nature and amount of remuneration
Aquis’ corporate goal is to develop and manage quality integrated resorts in Australia. To achieve this, the Group
has sought to engage and retain experienced and talented Directors and Executives. The Group therefore aims
to offer Directors and Executives a competitive remuneration package which reflects individual duties and
responsibilities. The remuneration approach seeks to align Executive reward with the achievement of strategic
objectives and the creation of value for shareholders.
The Remuneration Committee will be responsible for determining and reviewing on-going remuneration
arrangements for its Directors and Executives. This Committee may seek advice of external remuneration
7
consultants in conducting its duties. Further information regarding the Committee is set out in the Corporate
Governance Statement.
The Group has established differing remuneration structures for Non-Executive Directors and Executives.
Non-Executive Directors
Fees and payments to the Non-Executive Directors reflect the demands which are made on, and the
responsibilities of, these Directors. Non-Executive Director fees comprise a base salary plus statutory
superannuation. Non-Executive Directors are not entitled to receive share based payments or other performance
based incentives.
ASX listing rules require the aggregate non-executive directors remuneration be determined periodically by a
general meeting. The most recent determination was at the Annual General Meeting held on 26 November 2015,
where the shareholders approved an aggregate remuneration pool of $600,000.
Executives
Aquis aims to reward executives with a level and mix of remuneration based on their position and responsibility,
which has both fixed and variable components.
Fixed remuneration
Fixed remuneration aims to provide a base level of remuneration and is determined with reference to available
market data, the scope of the executive’s responsibilities and their experience and qualifications.
Fixed remuneration, consists of base salary, superannuation and complementary privileges at Casino Canberra,
and may include other benefits where Executives may elect to sacrifice part of their salary to be contributed
towards any non-cash benefit including motor vehicles, accommodation costs etc.
Fixed remuneration for Executives is reviewed annually and approved by the Remuneration Committee.
Performance based remuneration
Short Term Incentives
The performance based component of Executive remuneration aligns the strategies set by the Board with the
individual targets of the Executives responsible for implementing those strategies.
Executives are entitled to receive short term incentives based on service and on the achievement of Key
Performance Indicators.
Long Term Incentive Plan
At the Annual General Meeting of the Company held on 31 May 2016, Shareholders approved the implementation
of the Aquis Entertainment Limited Share Rights Plan (Plan). Under the Plan, Participants may become entitled
to receive Rights (which are entitlements on vesting to fully paid ordinary shares in Aquis Entertainment Limited).
The Rights would be granted for no monetary consideration and have no exercise price, unless otherwise
determined by the Board. One vested Right is an entitlement to one Share.
The Plan allows for three kinds of Rights, being:
•
•
•
Performance Rights which vest when performance conditions have been satisfied,
Retention Rights which vest after the completion of a period of service, and
Restricted Rights which are vested but subject to disposal restrictions.
At the date of this report, no Rights have been issued pursuant to the Plan.
Consolidated entity performance and link to remuneration
Remuneration for certain individuals is directly linked to performance of the consolidated entity. A portion of short
term incentive payments are dependent on achieving defined KPI. For the 2016 year, the KPI’s were set by the
Board and related to the achievement of revenue and profitability outcomes. These outcomes were to be driven
by the Board’s strategy to improve the overall product offered to customers including service standards and
marketing programs. Improvements in revenue generating capability and profitability will form the basis of
providing long term earnings growth for Casino Canberra and consequently for shareholder value growth.
Use of remuneration consultants
During the period ended 31 December 2016, the consolidated entity engaged a remuneration consultant to assist
with the development of the Long Term Incentive Plan. The Consolidated Entity did not engage other
remuneration consultants.
8 C.
Details of Remuneration
Remuneration received or receivable by Key Management Personnel during the reporting period was as
follows.
Short-term Benefits
Fees
and/or
Salary
$
Cash,
Profit
Sharing /
Other
Bonuses
$
Other
Post-
Employment
Benefits
Super -
annuation
Share
Based
Payment
Total
Performance
based
remuneration
Remun-
eration at
Risk - STI
$
$
$
$
%
%
-
-
-
100,000
90,000
225,022
257,061
240,501
88,375
568,037
-
-
-
-
-
17,423
61,824
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,838
17,921
19,780
19,321
7,564
27,778
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
97,838
260,366
338,665
259,821
95,939
595,815
-
-
-
7%
18%
-
-
-
-
-
7%
18%
-
-
-
Totals
1,568,995
79,247
100,202
- 1,748,444
1 Resigned 3 November 2016
2 Resigned 3 October 2016
Short-term Benefits
Cash,
Profit
Sharing /
Other
Bonuses
$
Fees
and/or
Salary
$
Other
Benefits
Post-
Employment
Benefits
Super -
annuation
Share
Based
Payment
Total
Performance
based
remuneration
Remun-
eration at
Risk - STI
$
$
$
$
%
%
-
-
51,560
31,667
36,048
40,081
118,462
82,083
102,525
78,768
328,932
2,083
16,660
2,083
7,000
-
-
-
-
84,063
-
-
-
-
-
-
-
39,148
-
17,918
- -
-
-
-
-
-
-
-
-
-
-
4,898
3,008
3,425
3,808
11,254
7,798
9,740
6,577
31,249
-
-
-
-
-
-
-
-
- 56,458
- 34,675
- 39,473
- 43,888
- 213,778
- 89,881
- 151,413
- 103,263
- 360,181
- 2,083
- 16,660
- 2,083
- 7,000
-
-
-
-
-
-
39%
-
26%
17%
-
-
-
-
-
-
-
-
-
-
-
39%
-
26%
17%
-
-
-
-
-
Key
Management
Personnel
2016
T Fung
R Or Ching Fai
J Fung
A Chow
R Shields
J Mellor
R Bach
G Gill
K Chapman1
A Gomes2
Key
Management
Personnel
2015
T Fung
R Or Ching Fai
J Fung1
A Chow
R Shields
K Chapman
J Mellor
A Gomes
R Bach
G Gill2
G Andres3
T Adcock4, 5
J Puckridge4,5
T Pickett4, 5
A Wilbers4
Totals
870,126
141,128
-
81,756
- 1,093,010
1 Represents salary and benefits received as Managing Director from 1 July 2015 to 25 August 2015. Mr Fung receives no salary
as a non-executive Director.
2 Includes fees received as Company Secretary prior to being engaged as an employee
3 Resigned 13 November 2015
4 Resigned 7 August 2015
5 At the EGM on 10 July 2015, Shareholders voted to make the following share issues to Messrs Adcock, Pickett and Puckridge:
250,000 shares valued at $50,000 at an issue price of $0.20 each to Messrs Adcock and Pickett in consideration of them
resigning as Directors and
1,000,000 shares valued at $200,000 at an issue price of $0.20 each in consideration of his assistance in implementing
the acquisition of ACPL / CCL
•
•
The shares are to be issued within 3 Business Days of
•
The successful submission of the Redevelopment Proposal, provided the 30 day VWAP as at the date immediately prior
to the submission is at least $A0.25 or
• Such later date within 12 months of the submission of the Redevelopment Proposal on which the 30 day VWAP as at the
date immediately prior to the issue is at least $A0.25.
At the date of this report no shares have been issued.
9
D.
Service Agreements
Non-Executive Directors
Each Director has signed a letter of appointment which sets out the conditions of the appointment including the
remuneration for the position.
The Chairman, Vice Chairman and Mr Justin Fung have each elected to receive no remuneration for performing
their Director roles..
The remaining Non-Executive Directors are entitled to the following remuneration:
• A base fee of $80,000 per annum
• $20,000 per annum for acting as the Chair of a Board Committee and
• $5,000 per annum for serving on a Board Committee.
• Statutory superannuation where required by law.
Executives
Remuneration and other terms of employment for key management personnel are formalised in service
agreements. Details of these agreements are as follows:
Name
Title
Jessica Mellor
Rhiannon Bach
Garry Gill
Executive Director
VP and General Manager
Chief Financial Officer and
Company Secretary
Commencement Date
23 December 2014
23 April 2015
14 September 2015
Term of Agreement
Open
Annual Salary
$380,0001
Open
$250,000
Open
$240,000
Superannuation
Statutory superannuation Statutory superannuation
Statutory superannuation
Bonus
Maximum annual bonus = 50% of Remuneration comprising:
• Guaranteed amount of 50% of the maximum annual potential bonus and
• Amount up to 50% of the maximum annual potential bonus as determined at the absolute
discretion of the Board subject to KPI’s agreed between the Executive and the Chair of
the Remuneration Committee.
• No bonus payment if Executive gives notice of termination prior to the payment date or if
terminated for cause
Post-employment
restraint
Company may impose restraint for various periods up to12
months and for various regions
Termination Period
6 months either party
3 months either party
6 months either party
1 Increased to $380,000 from 16 November 2016 following assumption of role of full time CEO. Annual salary will increase to $450,000 on
completion of probation on 1 April 2017.
10
E.
Other KMP disclosures
Movements in share holdings
The movement during the year in the number of ordinary shares in the Company held directly, indirectly or
beneficially by each key management person, including their related parties, follows:
Name
2016
T Fung
J Fung3
K Chapman (resigned 3
November 2016)
Opening
Balance1
Acquired
on
Market
153,871,874
153,871,874
-
-
10,000
250,000
Disposed
Closing
Balance2
- 153,871,874
- 153,871,874
-
260,000
Name
2015
Opening
Balance1
Acquired
on
Market
Disposed
Closing
Balance2
153,871,874
T Fung
J Fung3
153,871,874
K Chapman
-
1 Opening balance includes balance at beginning of the period or at date of appointment
2 Closing balance includes balance at end of the period or at date of resignation
3 Interest held as related party to Mr T Fung
- 153,871,874
- 153,871,874
10,000
-
-
-
10,000
Other than included in the table above, no key management person held in the Company held directly, indirectly
or beneficially
b) Movement in option holdings
The movement during the year in the number of options over ordinary shares in the Company held directly,
indirectly or beneficially by each key management person, including their related parties, was as follows:
Name
2016
T Fung
J Fung3
Name
2015
Opening
Balance1
Acquired
Lapsed
Closing
Balance2
5,000,000
5,000,000
-
-
(5,000,000)
(5,000,000)
-
-
Opening
Balance1
Acquired Disposed
Closing
Balance2
T Fung
J Fung3
1 Opening balance includes balance at beginning of the period or at date of appointment
2 Closing balance includes balance at end of the period or at date of resignation
3 Interest held as related party to Mr T Fung
5,000,000
5,000,000
5,000,000
5,000,000
-
-
-
-
Other than included in the table above, no key management person held options over ordinary shares in the
Company directly, indirectly or beneficially
Loans to directors and executives
There were no loans to directors or executives at balance date.
Other transactions and balances with directors and executives
There were no other transactions with Directors or executives during the financial year. At the reporting date, the
Group had loans outstanding from entities related to Mr Tony Fung totalling $32.3 million (2015: $18.01 million).
End of audited Remuneration Report
11
7
12 AQUIS ENTERTAINMENT LIMITED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
for the year ended 31 December 2016
Revenue and Other Income
Revenue
Other income
Total Revenue and Other Income
Expenses from Continuing Operations:
Casino taxes
Employee benefit expenses
Share based payment expense
Other operating expenses
Finance charges
Depreciation
Loss on disposal of fixed assets
Amortisation
Consolidated
Note
2016
$
2015
$
3
3
24,212,531
240,368
19,887,113
236,659
24,452,899
20,123,772
(2,513,822)
(17,322,296)
-
(10,371,434)
(1,665,960)
(1,118,217)
(178,920)
(25,635)
(2,127,173)
(16,286,276)
(1,119,940)
(6,784,684)
(672,335)
(493,814)
-
(25,635)
21
4
4
4
4
4
Loss before income tax expense
(8,743,385)
(7,386,085)
Income tax benefit
5
1,062,702
1,366,203
Loss attributable to members of the consolidated entity
(7,680,683)
(6,019,882)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss for the year attributable to the
members of the consolidated entity
(7,680,683)
(6,019,882)
Basic and diluted earnings per share (cents per share)
6
(4.14)
(3.66)
The accompanying notes form part of these financial statements.
13 AQUIS ENTERTAINMENT LIMITED
STATEMENT OF FINANCIAL POSITION
as at 31 December 2016
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total Current Assets
NON-CURRENT ASSETS
Property, plant and equipment
Capital work-in-progress
Intangible assets
Available for sale financial asset
Deferred tax assets
Other non-current assets
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Employee benefit provisions
Loans and borrowings
Total Current Liabilities
NON-CURRENT LIABILITIES
Employee benefit provisions
Loans and borrowings
Consolidated
Note
2016
$
2015
$
7
8
9
10
11
12
13
14
5
10
15
16
17
5,184,389
85,092
665,708
1,317,219
6,804,470
34,414
586,277
1,158,886
7,252,408
8,584,047
14,751,809
-
1,919,447
4,106
5,498,003
1,858,079
3,829,220
1,590,710
1,945,082
4,106
4,435,051
2,749,954
24,031,444
14,554,123
31,283,852
23,138,170
4,246,136
689,250
753,378
3,132,978
651,492
1,630,940
5,688,764
5,415,410
16
17
13,348
25,596,081
43,008
16,381,394
Total Non-Current Liabilities
25,609,429
16,424,402
TOTAL LIABILITIES
31,298,193
21,839,812
NET ASSETS
EQUITY
Contributed equity
Reserve
Accumulated losses
TOTAL EQUITY
(14,341)
1,298,358
18
19
20
4,167,952
6,367,984
(10,550,277)
4,167,952
-
(2,869,594)
(14,341)
1,298,358
The accompanying notes form part of these financial statements
14 AQUIS ENTERTAINMENT LIMITED
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2016
Share Capital
Reserve
Accumulated
Losses
$
$
$
Total
$
2015
Balance at 1 January 2015
Shares issued on acquisition
Shares issued during the period
2,167,951
2,000,000
Total transactions with owners
4,167,951
Loss attributable to members of
the company
-
Balance at 31 December 2015
4,167,952
3,150,288
-
-
2,167,951
2,000,000
4,167,951
(6,019,882)
(6,019,882)
(2,869,594)
1,298,358
-
-
-
-
-
2016
Equity component of convertible
debt
Loss attributable to members of
the company
6,367,984
-
6,367,984
-
-
(7,680,683)
(7,680,683)
Balance at 31 December 2016
4,167,952
6,367,984
(10,550,277)
(14,341)
The accompanying notes form part of these financial statements
15 AQUIS ENTERTAINMENT LIMITED
STATEMENT OF CASH FLOWS
for the year ended 31 December 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other costs of finance paid
Interest paid
Net cash provided by (used in) operating
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Plant and equipment
Proceeds from sale of assets
Payments for capital work-in-progress
Payments in respect of licenses
Dividend received
Investments
Net proceeds from acquisition of controlled entities
Net cash provided by (used in) investing
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Proceeds from borrowings
Net cash provided by (used in) financing
activities
Net increase (decrease) in cash held
Cash at beginning of the period
Consolidated
2016
$
2015
$
24,310,837
(28,432,182)
90,866
-
(7,519)
22,046,377
(25,265,891)
89,503
-
22
(4,037,998)
(3,130,011)
(10,532,803)
455
-
-
265
-
-
(220,790)
-
(1,590,710)
(4,459,385)
(4,106)
1,048,010
(10,532,083)
(5,226,981)
-
12,950,000
2,000,000
8,090,000
12,950,000
10,090,000
(1,620,081)
6,804,470
1,733,008
5,071,462
Cash at end of the period
7
5,184,389
6,804,470
The accompanying notes form part of these financial statements
16 1. Statement of Significant Accounting Policies
The financial report covers the consolidated group of Aquis Entertainment Limited (“Aquis” or “Company”)
and its controlled entities (together referred to as the “Consolidated Entity” or “Group). Aquis is a for-profit
company limited by shares incorporated and domiciled in Australia. The Company’s shares are publicly
traded on the Australian Securities Exchange (AQS).
The principal accounting policies adopted in the preparation of the financial report are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of Preparation
This general purpose financial report has been prepared on a going concern basis in accordance with
Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001. Compliance with Australian Accounting Standards
ensures that the financial statements and notes of the Company comply with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
Basis of Accounting
These financial statements have been prepared on an accruals basis under the historical cost convention,
except for, where applicable, the revaluation of available-for-sale financial assets, financial assets and
liabilities at fair value through profit or loss, investment properties, certain classes of property, plant and
equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It
also requires management to exercise judgements in the process of applying the consolidated entity's
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements, are disclosed in note 2
Functional and Presentation Currency
The Company’s functional and presentation currency is Australian dollars.
Capital Restructure
On 7 August 2015, Aquis acquired all of the shares in Aquis Canberra Pty Limited (ACPL) the owner of
Casino Canberra Limited (CCL) by issuing 149,421,874 shares in Aquis to ACPL’s shareholder. The
acquisition of Aquis by ACPL cannot be considered to be a business combination, as Aquis could not be
considered to be a business under AASB 3 “Business Combinations”. Thus for accounting purposes, the
consolidation of the two companies was performed on the basis of the continuation of ACPL with no fair
value adjustments, whereby ACPL was deemed to be the accounting parent and Aquis the subsidiary.
Accordingly, the comparative information for Aquis is that of ACPL for the period.
The transaction has therefore been treated as a share based payment under AASB 2 “Share Based
Payments”, whereby ACPL is deemed to have issued shares in exchange for the net assets and listing
status of Aquis. As the deemed acquirer, ACPL has acquisition accounted for Aquis as at the date of the
acquisition (7 August 2015 - the “Transaction Date”). Refer note 21 for further details on the acquisition
accounting treatment.
Summary of Accounting Policies
The following is a summary of the material accounting policies adopted by the Company in the
preparation of the Financial Statements.
(a) Principles of Consolidation
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity
controls an entity when the consolidated entity 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
17 activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the consolidated entity. They are de-consolidated from the date that control ceases. A list of subsidiaries
is contained at Note 28. All controlled entities have a December year end.
All inter-company balances and transactions between entities in the consolidated entity, including any
unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries
have been changed where necessary to ensure consistencies with those policies applied by the parent
entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in
ownership interest, without the loss of control, is accounted for as an equity transaction, where the
difference between the consideration transferred and the book value of the share of the non-controlling
interest acquired is recognised directly in equity attributable to the parent.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including
goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation
differences recognised in equity. The consolidated entity recognises the fair value of the consideration
received and the fair value of any investment retained together with any gain or loss in profit or loss.
(b) Revenue Recognition
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity
and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration
received or receivable.
Gaming Revenue
Gaming Revenue is the net of gaming wins and losses.
Sale of goods
Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery
of the goods, the risks and rewards are transferred to the customer and there is a valid sales contract.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
(c) Income Tax
The charge for current income tax expense is based on the result for the period adjusted for non-
assessable or disallowed items. It is calculated using the tax rates that have been enacted or are
substantially enacted by the balance date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. No deferred income tax will be recognised from the initial recognition of an asset or liability,
excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is
realised or liability is settled. Deferred tax is credited in the Statement of Profit or Loss and Other
Comprehensive Income except where it relates to items that may be credited directly to equity, in which
case the deferred tax is adjusted directly against equity.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting
date Deferred income tax assets are recognised to the extent that it is probable that future tax profits will
be available against which deductible temporary differences can be utilised. Previously unrecognised
18 deferred tax assets are recognised to the extent that it is probable that there are future taxable profits
available to recover the asset.
The amount of benefits brought to account or which may be realised in the future is based on the
assumption that no adverse change will occur in income taxation legislation and the anticipation that the
consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and
comply with the conditions of deductibility imposed by the law.
(d) Goods & Services Tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Goods & Services Tax (GST) receivable from, or payable to, the Australian Taxation Office has been
accounted for and included as part of receivables or payables in the Statement of Financial Position.
Cash flows are presented in the Statement of Cash Flows on a gross basis except for the GST
component of investing activities, which are disclosed as an operating cash flow.
e) Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12
months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the
purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
All other liabilities are classified as non-current.
(f) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
For the statement of cash flows presentation purposes, cash and cash equivalents also includes bank
overdrafts, which are shown within borrowings in current liabilities on the statement of financial position.
g) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method, less any provision for impairment. Trade receivables are generally
due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade
receivables is raised when there is objective evidence that the consolidated entity will not be able to
collect all amounts due according to the original terms of the receivables. Significant financial difficulties
of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or
delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable
may be impaired. The amount of the impairment allowance is the difference between the asset's carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest
rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is
immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
19 (h) Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated
selling price in the ordinary course of business less any applicable selling expenses.
(i) Property, plant and equipment
Land and buildings are shown at fair value, based on periodic, at least every 3 years, valuations by
external independent valuers, less subsequent depreciation and impairment for buildings. The valuations
are undertaken more frequently if there is a material change in the fair value relative to the carrying
amount. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying
amount of the asset and the net amount is restated to the revalued amount of the asset. Increases in the
carrying amounts arising on revaluation of land and buildings are credited in other comprehensive income
through to the revaluation surplus reserve in equity. Any revaluation decrements are initially taken in other
comprehensive income through to the revaluation surplus reserve to the extent of any previous
revaluation surplus of the same asset. Thereafter the decrements are taken to profit or loss.
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical
cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant
and equipment (excluding land) over their expected useful lives as follows:
Buildings
Plant and equipment
40 years
3-20 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance
sheet date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired
period of the lease or the estimated useful life of the assets, whichever is shorter.
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.
An item of property, plant and equipment is derecognised upon disposal or when there is no future
economic benefit to the consolidated entity. Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These gains or losses are included in the income statement.
(j) Capital Work in Progress
Capital work in progress represents expenditure on the refurbishment and equipment refreshment project.
No depreciation is charged against the assets until such time as they are available for use.
(k) Financial Instruments
Recognition and Initial Measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the
entity becomes a party to the contractual provisions of the instrument. Details of financial instruments
are set out in Note 23. Trade date accounting is adopted for financial assets that are delivered within
timeframes established by marketplace convention.
Financial instruments are initially measured at fair value plus transactions costs where the instrument is
not classified as being at fair value through the Statement of Profit or Loss and Other Comprehensive
Income. Transaction costs related to instruments classified as at fair value through profit or loss are
expensed through the Statement of Profit or Loss and Other Comprehensive Income immediately.
Financial instruments are classified and measured as set out below.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market and are stated at amortised cost using the effective interest rate method.
20 Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets, principally equity securities y. After
initial recognition, fair value movements are recognised in other comprehensive income through the
available-for-sale reserve in equity. Cumulative gain or loss previously reported in the available-for-sale
reserve is recognised in profit or loss when the asset is derecognised or impaired.
Impairment of financial assets
The consolidated entity assesses at the end of each reporting period whether there is any objective
evidence that a financial asset or group of financial assets is impaired. Objective evidence includes
significant financial difficulty of the issuer or obligor; a breach of contract such as default or delinquency in
payments; the lender granting to a borrower concessions due to economic or legal reasons that the
lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy or other
financial reorganisation; the disappearance of an active market for the financial asset; or observable data
indicating that there is a measurable decrease in estimated future cash flows.
The amount of the impairment allowance for financial assets carried at cost is the difference between the
asset's carrying amount and the present value of estimated future cash flows, discounted at the current
market rate of return for similar financial assets.
Available-for-sale financial assets are considered impaired when there has been a significant or
prolonged decline in value below initial cost. Subsequent increments in value are recognised in other
comprehensive income through the available-for-sale reserve.
(l) Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured
at their fair value at the date of the acquisition. Intangible assets acquired separately are initially
recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at
cost less any impairment. Finite life intangible assets are subsequently measured at cost less
amortisation and any impairment. The gains or losses recognised in profit or loss arising from the de-
recognition of intangible assets are measured as the difference between net disposal proceeds and the
carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are
reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for
prospectively by changing the amortisation method or period.
(m) Impairment of non-financial assets
Goodwill and other 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 non-financial 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
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The
value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax
discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not
have independent cash flows are grouped together to form a cash-generating unit.
(n) Employee Benefits
Provision is made for the Company's liability for employee benefits arising from services rendered by
employees to balance date. Employee benefits expected to be wholly settled within one year, together
with entitlements arising from wages and salaries and annual leave, which will be settled after one year,
have been measured at the amounts expected to be paid when the liability is settled, plus related on
costs. Employee benefits payable later than one year have been measured at the present value of the
estimated future cash outflows to be made for those benefits. Contributions are made by the entity to
employee superannuation funds and are charged as expenses when incurred.
21 (o) Trade and Other Payables
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the
consideration to be paid in the future for goods and services received, whether or not billed to the
Company
(p) Borrowings
Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition,
borrowings are measured at amortised cost with any difference between the initial recognised amount
and the redemption value being recognised in the Statement of Profit or Loss and Other Comprehensive
Income over the period of the borrowing using the effective interest rate method.
(q) Contributed Equity
Ordinary share capital is recognised at the fair value of the consideration received.
Any transaction costs arising on the issue of shares are recognised (net of tax) directly in equity as a
reduction of the share proceeds received.
(r) Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether
equity instruments or other assets are acquired
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred,
equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the
amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling
interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's
identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and
liabilities assumed for appropriate classification and designation in accordance with the contractual terms,
economic conditions, the consolidated entity's operating or accounting policies and other pertinent
conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously
held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair
value and the previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value.
Subsequent changes in the fair value of contingent consideration classified as an asset or liability is
recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its
subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any
non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair
value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration
transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired,
being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by
the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration
transferred and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively
adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the
measurement period, based on new information obtained about the facts and circumstances that existed
at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date
of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.
22 (s) Earnings per Share (EPS)
Basic earnings per Share
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company,
excluding any costs of servicing equity other than shares, by the weighted average number of shares
outstanding during the financial year, adjusted for any bonus elements in Shares issued during the year.
Diluted earnings per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with dilutive
potential shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential shares.
(t) New Accounting Standards for First Time Application in Subsequent Periods
Australian Accounting Standards and Interpretations that have recently been issued or amended but are
not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period
ended 31 December 2016. The consolidated entity's assessment of the impact of these new or amended
Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial
Instruments: Recognition and Measurement'. AASB 9 introduces new classification and measurement
models for financial assets. A financial asset shall be measured at amortised cost, if it is held within a
business model whose objective is to hold assets in order to collect contractual cash flows, which arise on
specified dates and solely principal and interest. All other financial instrument assets are to be classified
and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial
recognition to present gains and losses on equity instruments (that are not held-for-trading) in other
comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the change in
fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an
accounting mismatch). New simpler hedge accounting requirements are intended to more closely align
the accounting treatment with the risk management activities of the entity. New impairment requirements
will use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be measured
under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly
since initial recognition in which case the lifetime ECL method is adopted. The standard introduces
additional new disclosures. The consolidated entity will adopt this standard from 1 January 2018 but the
impact of its adoption is yet to be assessed by the consolidated entity.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard provides a single standard for revenue recognition. The core principle of the standard is that an
entity will recognise revenue to depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services. The standard will require: contracts (either written, verbal or implied) to be identified,
together with the separate performance obligations within the contract; determine the transaction price,
adjusted for the time value of money excluding credit risk; allocation of the transaction price to the
separate performance obligations on a basis of relative stand-alone selling price of each distinct good or
service, or estimation approach if no distinct observable prices exist; and recognition of revenue when
each performance obligation is satisfied. Credit risk will be presented separately as an expense rather
than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer
obtains control of the goods. For services, the performance obligation is satisfied when the service has
been provided, typically for promises to transfer services to customers. For performance obligations
satisfied over time, an entity would select an appropriate measure of progress to determine how much
revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be
23 presented in an entity's statement of financial position as a contract liability, a contract asset, or a
receivable, depending on the relationship between the entity's performance and the customer's payment.
Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts
with customers; the significant judgments made in applying the guidance to those contracts; and any
assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated entity will
adopt this standard from 1 January 2018 but the impact of its adoption is yet to be assessed by the
consolidated entity.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The
standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases
and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of
financial position, measured at the present value of the unavoidable future lease payments to be made
over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-
value assets (such as personal computers and small office furniture) where an accounting policy choice
exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss
as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future
restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be
replaced with a depreciation charge for the leased asset (included in operating costs) and an interest
expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease,
the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses
under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation)
results will be improved as the operating expense is replaced by interest expense and depreciation in
profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will
be separated into both a principal (financing activities) and interest (either operating or financing
activities) component. For lessor accounting, the standard does not substantially change how a lessor
accounts for leases. The consolidated entity will adopt this standard from 1 January 2019 but the impact
of its adoption is yet to be assessed by the consolidated entity
(u) Going concern
The financial statements have been prepared on the going concern basis, which contemplates continuity
of normal business activities and the realisation of assets and discharge of liabilities in the normal course
of business.
As disclosed in the financial statements, the consolidated entity incurred a loss of $7,680,683 (2015:
$6,019,882 loss), had net cash outflows from operating activities of $4,037,999 (2015: $3,130,011) and
negative net assets of $14,341 for the year ended 31 December 2016.
The Directors believe that there are reasonable grounds to believe that the consolidated entity will be able
to continue as a going concern, after consideration of the following factors:
•
•
•
•
The consolidated entity has unused financing facilities of $4.9 million at the balance date.
The equipment refreshment and refurbishment project which was completed in June 2016 is
expected to significantly enhance the consolidated entity’s ability to generate revenue, profit and
cash flow to meet its future ongoing commitments.
The current loan facilities are sufficient to meet the consolidated entity’s obligations until the
consolidated entity becomes cash positive.
The Company’s major shareholder (Aquis Canberra Holdings Pty Ltd) has provided the Directors
with an undertaking to provide financial support to the consolidated entity should it be required.
Accordingly, the Directors believe that the going concern basis is the appropriate basis for the preparation
of the financial report. If for any reason the consolidated entity is unable to continue as a going concern, it
would impact on the consolidated entity’s ability to realise assets at their recognised values and to
24 extinguish liabilities in the normal course of business at the amounts stated in the consolidated financial
statements.
The financial report does not include any adjustments relating to the amounts or classification of recorded
assets or liabilities that might be necessary if the consolidated entity does not continue as a going
concern.
2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and
expenses. Management bases its judgements, estimates and assumptions on historical experience and
on other various factors, including expectations of future events management believes to be reasonable
under the circumstances. The resulting accounting judgements and estimates will seldom equal the
related actual results. The judgements, estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within
the next financial year are discussed below
Impairment of Intangibles
The consolidated entity assesses impairment of intangible assets at least on an annual basis. This
requires an estimation of the recoverable amount of the cash generating unit to which the intangible is
allocated. The assumptions and methodology used to assess the recoverable amount are set out in Note
13.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if the
consolidated entity considers it is probable that future taxable amounts will be available to utilise those
temporary differences and losses. Management judgement is required to determine the amount of
deferred tax assets that can be recognised based upon the likely timing and level of future taxable profits
Employee benefits provision
As discussed in note 1, the liability for employee benefits expected to be wholly settled more than 12
months from the reporting date are recognised and measured at the present value of the estimated future
cash flows to be made in respect of all employees at the reporting date. In determining the present value
of the liability, estimates of attrition rates and pay increases through promotion and inflation have been
taken into account.
25 3. Revenue and Other Income
Revenue
Revenue from services
Revenue from sale of goods
Total Revenue
Other Income
Interest
Other revenue
Total Other Income
4. Expenses from Continuing Operations
(a) Other operating expenses
Cost of sales
Annual casino licence fee
Stamp Duty
Repairs & Maintenance
Utilities
Insurance
Printing & Stationery
Marketing, promotion and associated costs
Legal, accounting and consultants
Travel and associated costs
Gaming supplies
Rates and taxes
Computer supplies
Contracts
Uniform replacement and cleaning
Other expenses
Total Other Operating Expenses
(b) Finance charges
Interest – 3rd parties
Interest – related parties
Total Finance Charges
(c) Depreciation
Buildings
Plant and equipment
Total Depreciation
(d) Amortisation
Casino licence and fees
Consolidated
2016
$
2015
$
21,961,684
2,250,847
24,212,531
18,144,522
1,742,591
19,887,113
90,866
149,502
240,368
89,503
147,156
236,659
690,512
891,877
-
302,467
419,063
186,447
77,927
4,140,376
816,568
182,764
237,568
126,975
169,104
726,649
187,236
1,215,901
534,513
891,877
385,540
361,047
364,035
215,213
75,868
1,829,183
314,012
127,520
165,999
119,103
33,044
592,573
116,546
658,611
10,371,434
6,784,684
7,519
1,658,441
1,665,960
714,335
403,882
1,118,217
-
672,335
672,335
268,834
224,980
493,814
25,635
25,635
26 5. Income Tax
(a) The components of income tax expense comprise
Current tax
Deferred tax
Adjustment recognised for prior periods
(b) The prima facie tax on loss from ordinary activities before
income tax is reconciled to the income tax as follows:
Net profit/(loss)
Prima facie income tax on the loss from
Ordinary activities at 30% (2015: 30%)
Tax effect of permanent differences:
Non-deductible amortisation
Non-deductible interest expense
Sundry items
De-recognition of DTA on Accruals
De-recognition of DTA on CY tax losses
De-recognition of DTA on arising from tax consolidation
Adjustment recognised for prior periods
Income tax attributable to entity
(c) Unused tax losses and temporary differences for which no
deferred tax asset has been recognised at 30%
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Property, plant and equipment
Accruals
Employee benefits
Tax losses
Net deferred tax assets
Set-off deferred tax liabilities pursuant to set-off provisions
Amounts recognised in profit or loss
Accruals other
Net deferred tax assets
Net deferred tax assets at beginning
Charged to income statement current year
Prior period tax adjustment
Current period tax adjustment
Net deferred tax assets at end of the year
Consolidated
2016
$
2015
$
(1,199,356)
132,584
4,070
(1,062,702)
(2,398,723)
1,035,553
(3,033)
(1,366,203)
(8,743,385)
(7,386,085)
(2,623,016)
(2,215,826)
7,691
7,691
172,761
45,236
9,310
1,241,656
79,590
4,070
-
419,620
-
425,345
-
(3,033)
(1,062,702)
(1,366,203)
2,511,179
16,603
524,056
3,618,152
6,669,990
2,722,627
103,433
456,764
2,422,616
5,705,440
(1,171,987)
(1,270,389)
5,498,003
4,435,051
4,435,051
(132,335)
(4,070)
1,199,357
5,498,003
3,068,849
(1,035,552)
2,832
2,398,922
4,435,051
27 6. Earnings Per Share
Consolidated
2016
$
No.
2015
$
No.
Weighted average number of ordinary shares outstanding during the period
used in the calculation of basic and diluted EPS
185,141,050
164,300,556
Options are considered potential ordinary shares. For the years ended 31 December 2016 and 31 December 2015,
their conversion to ordinary shares would have had the effect of reducing the loss per share (from continuing
operations). Accordingly the options were not included in the determination of diluted earnings per share for that
period. Details relating to options are set out at note 18(b).
7. Cash and Cash Equivalents
Cash at bank and on hand
5,184,389
6,804,470
Pursuant to the Deed between the ACT Gambling and Racing Commission, the Company and the Australian Capital
Territory dated 23 December 2014, the Company is required to maintain at all times a minimum of $3 million in liquid
assets that are not otherwise used in the day to day operations of the business unless with the prior written consent
of the Commission.
8. Trade and Other Receivables
Trade receivables
Other receivables
Total
9. Inventories
Consumable stores - at cost
Goods for resale – at cost
Total
10. Other Assets
Current
Prepaid casino licence fee
Prepayments and deferrals
Other
Non-current
Prepaid casino licence fee
49,458
35,634
85,092
25,982
8,432
34,414
568,406
97,302
516,416
69,861
665,708
586,277
891,877
388,134
37,208
891,877
261,974
5,035
1,317,219
1,158,886
1,858,079
2,749,954
In February 2015, the consolidated entity prepaid 5 years of annual casino licence fees to the ACT Gambling and
Racing Commission. The fees totalled $4,459,385 and are amortised on a straight line basis. The amount of the
prepayment that is to be amortised over the following 12 months is treated as a current asset. The remainder of the
prepayment is treated as a non-current asset. The recoverable value of the prepayment is reviewed annually for
potential impairment (refer Note 13).
28 11. Property Plant and Equipment
Building and leasehold improvements
Building at cost
Accumulated depreciation
Accumulated impairment
Plant and equipment
Plant and equipment at cost
Accumulated depreciation
Accumulated impairment
Balance
Movements in property plant and equipment:
Building and leasehold improvements
Opening written down value
Additions
Depreciation
Carrying value at 31 December
Plant and equipment
Opening written down value
Additions
Loss on disposal of plant and equipment
Disposals and zero value assets written off
Depreciation expense
Depreciation written back on disposal or write off of zero value assets
Carrying value at 31 December
12. Capital work-in-progress
Consolidated
2016
$
2015
$
28,196,319
(8,999,561)
(8,223,418)
20,764,271
(8,828,885)
(8,418,579)
10,973,340
3,516,807
4,682,153
(765,580)
(138,104)
3,778,469
889,562
(439,045)
(138,104)
312,413
14,751,809
3,829,220
3,516,807
8,325,601
(869,068)
3,694,294
91,346
(268,833)
10,973,340
3,516,807
312,413
3,894,581
178,920
(1,022,473)
(401,138)
816,166
408,481
129,443
(531)
(4,533,360)
(143,727)
4,452,107
3,778,469
312,413
Refurbishment and equipment refreshment project at cost
-
1,590,710
13. Intangible assets
Casino Licence and associated costs
At cost
Accumulated amortisation and impairment
Carrying value at 31 December
Movements in intangible assets
Opening written down value
Amortisation
Carrying value at 31 December
19,000,000
(17,080,553)
19,000,000
(17,054,918)
1,919,447
1,945,082
1,945,082
(25,635)
1,970,717
(25,635)
1,919,447
1,945,082
29 Consolidated
2016
$
2015
$
13. Intangible assets (continued)
The Casino Canberra licence is tested annually for impairment.
Casino Canberra is considered a cash-generating unit (CGU) for the purpose of impairment testing. The
recoverable value of the casino CGU was based on its fair value less costs to sell. The fair value less costs to sell of
the CGU was determined to be higher than its carrying value at 31 December 2016 of $18,483,337
(2015:$10,062,309) and accordingly no impairment loss was recognised.
Fair value less costs to sell was determined by discounting the future cash flows generated from the continuing use
of the CGU for five years and a terminal growth rate thereafter and adjusting the result for the likely costs to sell the
CGU. The calculation of the fair value less costs of disposal was based on the following key assumptions.
•
•
•
Cash flows are based primarily on a five year forecast extrapolated using average annual growth rates of
approximately 2 – 2.5% (2015: 2 – 2.5%).
A post-tax discount rate of 13.22% (2015:12.27%) was applied in determining the recoverable amount of the unit.
The discount rate was determined by using the weighted average cost of capital applicable to the CGU.
Forecast after tax cash flow was based on expectations of future outcomes taking into account the likely effects of
the refurbishment and equipment renewal project completed during the reporting period.
Sensitivity
Judgements and estimates have been applied in respect of impairment testing of the CGU. Should these
judgements and estimates not occur the resulting carrying amount may decrease. The key sensitivities are as
follows:
o Revenue would need to decrease by more than 5% (2015: 1%) from the forecast levels (with all other
assumptions remaining constant) before the carrying value of the CGU would need to be impaired,
o Expenses would need to increase by more than 5% (2015: 1%) from the forecast levels (with all other
assumptions remaining constant) before the carrying value of the CGU would need to be impaired,
The discount rate would be required to increase to approximately 44% (2015: 13.6%) (with all other
assumptions remaining constant) before the carrying value of the CGU would need to be impaired,
o
14. Available for Sale Financial Assets
Listed equities – at fair value
4,106
4,106
The fair values of listed investments are determined by reference to published price quotations in an active market.
15. Trade and Other Payables
Current unsecured:
Trade payables
Annual Leave
Sundry payables and accrued expenses
Total payables (unsecured)
804,829
811,626
2,629,681
364,741
791,604
1,976,633
4,246,136
3,132,978
Trade and other payables are non-interest bearing and have maturity dates of less than 90 days. The fair
value of the liabilities is determined in accordance with the accounting policies disclosed in Note 1.
30 16. Employee Benefit Provisions
Long Service Leave
Movement in the provision was as follows:
Opening balances:
Current
Non-Current
Entitlements
Payments
Closing balances:
Current
Non-Current
17. Loans and Borrowings
Current
Interest bearing loans from related party (unsecured)
Closing balance
Non- Current
Interest bearing loans from related party (unsecured)
Closing balance
Financing Facilities:
Consolidated
2016
$
2015
$
702,598
694,500
651,492
43,008
7,199
(39,101)
689,250
13,348
613,422
52,346
37,941
(9,209)
651,492
43,008
753,378
1,630,940
753,378
1,630,940
25,596,081
16,381,394
25,596,081
18,012,334
At the Company’s Annual General Meeting on 31 May 2016, shareholders passed a resolution to enter into the
Amended Loan Conversion Deed between the Company and major shareholder Aquis Canberra Holdings Pty
Ltd. The Deed (and related amended loan agreements entered into by the Company) consolidated all existing
loans from multiple lenders into a single loan. As a result of entering into the deed, all loan facilities on foot at
31 May are now classified as non-current in the Company’s Statement of Financial Position.
Key terms of the financing facility are as follows:
▪
▪
▪
Facility limit is $36,450,000
The Loan Agreement matures on 25 August 2024 (Maturity Date);
Interest is payable on the balance of the new loan at an interest rate of the lower of: BSY + 2% per
annum; and the Reserve Bank of Australia's indicator lending rate for small business; variable;
residential secured and term rates.
Interest will accrue monthly and will be capitalised on the last day of each month.
▪
▪ Repayment/conversion: the outstanding amount under the loan agreement may be repaid in any of the
following ways:
▪ at the sole election of Aquis Canberra Holdings under the Amended Loan Conversion Deed, by
conversion into Shares at a conversion price of $0.20 per Share, provided that the Company is not
required to issue Shares to the extent that conversion would result in either:
▪
▪ Aquis Canberra Holdings and its associates having voting power in the Company in excess of
the issue of greater than 250,000,000 Shares; or
89.59%;
31 Consolidated
2016
$
2015
$
17. Loans and Borrowings (continued)
▪
the Company prepays to Aquis Canberra Holdings all or any part of the amount outstanding on
the new loan in cash at any time up to the date that is 5 Business Days before the Maturity Date
The Loan represents a compound financial instrument comprising elements of debt (the contractual obligation
to pay cash to the lender) and equity (the lender’s option to convert the liability into fully paid ordinary shares).
Accordingly the initial carrying amount of the loan has been allocated to its debt and equity components by
assigning to equity the residual amount after deducting the amount separately determined for the carrying
value of the liability from the fair value of the instrument as a whole. The carrying amount of the liability has
been determined by measuring the fair value of a similar liability that does not have an associated equity
component.
The fair value of the non current balance of the Loan has been divided into its debt and equity components as
follows:
Carrying value of the Loan
Equity component of convertible debt
Less equity
Comprehensive and Other /income
component of
the
Fair Value of Loan
18. Contributed Equity
loan amortised
to
$
25,596,081
6,367,984
(385,383)
31,578,682
Consolidated
2016
2015
$
$
(a) Fully paid ordinary shares
4,167,952
4,167,952
The share capital of the Company consists only of fully paid ordinary shares, which do not have a par value. All
shareholders participate in dividends and the proceeds on winding up of the parent entity in proportion to the
number of shares held. At shareholders' meetings each ordinary share is entitled to one vote when a poll is
called, otherwise each shareholder has one vote on a show of hands.
Balance at the beginning of the reporting period
Reverse acquisition refer Note 20
Issued for $0.20 each pursuant to underwritten Rights Issue
Total shares issued during the financial year
Balance at reporting date
4,167,952
-
-
-
1
2,167,951
2,000,000
4,167,952
4,167,952
4,167,952
In accordance with the reverse acquisition procedure, the equity balance recognised in the consolidated
financial statements in 2015 was the equity balance of the legal subsidiary Aquis Canberra Pty Ltd immediately
before the business combination. The amount recognised as contributed equity in the consolidated financial
statements in 2015 was determined by adding the cost of the acquisition to the contributed equity of the legal
subsidiary ACPL.
32 18. Contributed Equity (continued)
Number at the beginning of the reporting period
Reverse acquisition refer Note 20
Issued for $0.20 each pursuant to underwritten Rights Issue
Balance at reporting date
(b) Unlisted Options
Consolidated
2016
$
2015
$
Consolidated
2016
No.
185,141,050
-
-
2015
No.
25,719,176
149,421,874
10,000,000
185,141,050
185,141,050
Consolidated
2016
No.
2015
No.
Balance at the beginning and end of the reporting period
-
5,000,000
The options expired on 27 September 2016.
Opening balance
Equity component of convertible debt
Balance at 31 December
20. Accumulated Losses
Opening balance
Comprehensive loss for the period
Balance at 31 December
21. Acquisition of Controlled Entities (2015)
Aquis / ACPL (2015)
-
6,367,984
6,367,984
-
-
-
(2,869,594)
(7,680,683)
3,150,288
(6,019,882)
(10,550,277)
(2,869,594)
On 7 August 2015, Aquis (formerly Discovery Resources Limited), the legal parent and legal acquirer,
completed the acquisition of ACPL. The acquisition did not meet the definition of a business combination in
accordance with AASB 3: Business Combinations. Instead the acquisition has been treated as a share
based payment under AASB 2 “Share Based Payments to be the accounting parent whereby ACPL is
deemed to have issued shares to Aquis Shareholders in exchange for the net assets held by Aquis. The
transaction is measured at the fair value of the equity instruments that would have been given by ACPL to
have exactly the same percentage holding in the new structure at the date of the transaction which was
assessed at $2,167,952.
The excess of the deemed consideration over the pre-acquisition equity balances of Aquis was deemed to
be the amount paid for the listing status of Aquis, being $1,119,941 (recognised as a share based payment
in the statement of profit or loss) as set out below:
33 21. Acquisition of Controlled Entities (2015) (continued)
Purchase consideration -149,421,874 shares issued at fair value
2,167,952
$
Less
Cash and cash equivalents
Trade and other receivables
Other current assets
Trade and other payables
Identifiable net assets
Share based payment expense
1,137,888
15,458
1,703
(107,038)
1,048,010
1,119,941
The equity structure in the consolidated financial statements (the number and type of equity instruments
issued) at the date of the acquisition reflects the equity structure of Aquis, including the equity instruments
issued by Aquis to effect the acquisition.
The results for the year ended 31 December 2014 and 31 December 2015 comprise the results of ACPL and
the results of Aquis subsequent to the acquisition.
The fair value of the assets and liabilities of CCL at the acquisition date were as follows:
Purchase consideration
Less
Cash and cash equivalents
Trade and other receivables
Inventory
Other current assets
Property, Plant and Equipment
Intangible assets
Deferred tax assets
Trade and other payables
Provisions
$
6,000,000
1,859,350
38,044
139,632
286,801
4,111,886
1,971,337
3,046,924
(1,005,669)
(1,257,789)
Identified assets acquired and liabilities assumed
9,190,516
Discount on acquisition
3,190,516
34 22. Cash Flow Information
Reconciliation of Cash Flow from Operations with Loss after Income
Tax:
Loss from ordinary activities after income tax
Non-cash flows in profit from ordinary activities:
Depreciation and amortisation
Loss on disposal
Interest on loan
Casino licences
Dividends received
Share based payment
Employee provisions - current
Employee provisions – non current
Changes in operating assets and liabilities:
(Increase)/Decrease in receivables
(Increase)/Decrease in inventory
Decrease / (Increase) in other assets
Decrease / (Increase) in deferred tax asset
(Decrease)/Increase in creditors and accruals
Cash flows from operations
23. Financial Instruments
a) General objectives, policies and processes
Consolidated
2016
$
2015
$
(7,680,683)
(6,019,882)
1,143,852
178,920
1,658,441
891,875
(265)
-
37,758
(29,660)
519,980
-
672,335
817,554
-
1,119,940
38,070
(9,338)
(50,678)
(79,431)
(158,333)
(1,062,952)
1,113,158
(4,446)
(448,740)
(16,534)
(1,366,202)
1,567,252
(4,037,998)
(3,130,011)
The consolidated entity’s financial instruments consist mainly of deposits with banks, accounts receivable,
accounts payable and loans from related parties. The consolidated entity’s business exposes it to market
risk (interest rates), credit risk and liquidity risk.
The Board has overall responsibility for the determination of the Company’s risk management objectives
and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for
designing and operating processes that ensure the effective implementation of the objectives and policies
to the Company’s finance function. The Company’s risk management objectives are therefore designed
to minimise the potential impacts of these risks on the results of the Company where such impacts may
be material. The overall objective of the Board is to set polices that seek to reduce risk as far as possible
without unduly affecting the Company’s competitiveness and flexibility.
(b) Credit Risk
The Company has exposure to credit risk on the receivables in the balance sheet. However the
Company has no significant concentrations of credit risk. The Company has policies in place to ensure
that sales of products and services are made to customers with an appropriate credit history, and as
such collateral is not requested. Cash at bank is held with the ANZ Banking Group Limited,
35 23. Financial Instruments (continued)
The maximum exposure to credit risk at balance date is as follows:
Cash at bank
Trade and other receivables
(c) Liquidity risk
The consolidated entity manages liquidity risk by monitoring forecast cash flows.
Maturity Analysis - 2016
Financial Liabilities
Trade Creditors
Carrying
amount
$
< 6 months
6-12
months
$
$
804,829
804,829
-
Loans and borrowings
-
26,349,459
-
753,378
Other creditors and accruals
2,629,681
2,629,681
-
Total
29,783,969
3,434,510
753,378
2016
$
2015
$
5,184,389
85,092
5,341,342
34,414
5,269,481
5,375,756
1-3 years
> 3 years
$
-
-
-
-
$
-
25,596,081
-
25,596,081
Intercompany loans are repayable within 6 months of receipt of written notice. At the date of this report no
notice had been received
Maturity Analysis - 2015
Carrying
amount
$
< 6 months
$
6-12
months
$
1-3 years
> 3 years
$
$
Financial Liabilities
Trade Creditors
364,741
364,741
-
Loans and borrowings
-
18,012,334
-
1,630,940
Other creditors and accruals
1,976,633
1,976,633
-
Total
20,353,708
2,341,374
1,630,940
-
-
-
-
-
16,381,394
-
16,381,394
(d) Market Risk
Market risk arises from the use of interest bearing, tradable and foreign currency financial instruments. It is
the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
interest rates (interest rate risk), foreign exchange rates (currency risk) or other market factors (other price
risk).
(i) Interest rate risk
The Company’s exposure to market interest rates relates to both the Company’s long-term (interest bearing)
loan obligation as set out in note 17 and the company’s future cash flows from its cash holdings. The
Company’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods
is set out in the tables below:
36 23. Financial Instruments (continued)
Fixed / Floating
Interest Rate
Maturing
Within 1
Year
1 to 5
Years
Non-
Interest
Bearing
Total
Amount
Weighted
Average
Effective
Interest
Rate
At 31 December 2016
Financial Assets
%
$
$
$
$
$
Cash & Cash Equivalents
1.6%
5,184,389 4,093,114
Trade & Other Receivable
85,092
-
Total Financial Assets
5,269,481 4,093,114
Financial Liabilities
Trade Creditors
804,829
-
-
-
-
-
1,091,275
5,184,389
85,092
85,092
1,176,367
5,269,481
804,829
804,829
Loans and borrowings
5%
26,349,459
- 26,349,459
- 26,349,459
Total Financial Liabilities
27,154,288
- 26,349,459
804,829 27,154,288
At 31 December 2015
%
$
$
Financials Assets
Cash & Cash Equivalents
1.9%
6,804,470
5,295,487
Trade & Other Receivable
34,414
-
Total Financial Assets
6,838,884
5,295,487
$
-
-
-
$
$
1,508,983
6,804,470
34,414
34,414
1,543,397
6,838,884
Financial Liabilities
Trade Creditors
Shareholder loan
Newberth loan
Newberth loan
364,741
14,195,656
736,148
2,185,738
8%
8%
8%
- 14,195,656
-
2,185,738
736,148
-
Working capital facility
4.3%
894,792
894,792
-
- 14,195,656
736,148
-
2,185,738
-
-
894,792
-
-
364,741
364,741
Total Financial Liabilities
18,377,075 1,630,940 16,381,394
364,741 18,377,075
ii) Net Fair Values
The carrying amount of financial assets and financial liabilities recorded in the financial statements
represents their respective net fair values, determined in accordance with the accounting policies
disclosed in Note 1 to the financial statements.
iii) Sensitivity Analysis
The group has performed sensitivity analysis relating to its exposure to interest rate risk at balance date.
The sensitivity analysis demonstrates the effect on the current year results and equity which could result
from a change in these risks.
37 23. Financial Instruments (continued)
Interest Rate Sensitivity Analysis
At 31 December 2016, the effect on profit and equity as a result of changes in the interest rate, with all
other variables remaining constant would be as follows:
Consolidated Group
2015
2016
$
$
(549,711)
631,574
(254,337)
259,632
(549,711)
631,574
(254,337)
259,632
Change in profit:
Increase in interest rate by 2%
Decrease in interest rate by 2%
Change in Equity
Increase in interest rate by 2%
Decrease in interest rate by 2%
(ii) Other Price Risk
The Company is not subject to other price risk
24. Key Management Personnel Disclosures
(a) Key Management Personnel
Directors
T Fung
R Or Ching Fai
J Fung
A Chow
R Shields
K Chapman
J Mellor
G Andres
T Adcock
J Puckridge
T Pickett
Executives
A Gomes
J Mellor
G Gill
R Bach
A Wilbers
Chairman (Appointed 7 Aug 2015)
Vice Chairman (Appointed 7 Aug 2015)
Non-Executive Director (Appointed 7 Aug 2015)
Non-Executive Director (Appointed 7 Sept 2015)
Non-Executive Director (Appointed 7 Aug 2015)
Non-Executive Director (Appointed 14 Aug 2015)
Executive Director (Appointed 14 Aug 2015)
Executive Director and CEO (Appointed 7 Aug 2015 – Resigned 13 Nov 2015)
Non-Executive Chairman (Resigned 7 Aug 2015)
Executive Director/Chief Executive Officer (Resigned 7 Aug 2015)
Non-Executive Director (Resigned 7 Aug 2015)
CEO (Appointed 16 November 2015, - Resigned 3 October 2016)
Senior Executive to 14 July 2015, appointed CEO 4 October 2016
CFO and Company Secretary appointed 7 August 2015
VP and General Manager appointed 2 July 2015
Company Secretary resigned 7 August 2015
38 24. Key Management Personnel Disclosures (continued)
Transactions with Key Management Personnel
Key management personnel remuneration includes the following:
2016
$
2015
$
1,648,242
100,202
1,011,254
81,756
1,748,444
1,093,010
Short term employee benefits:
Post-employment benefits:
Total remuneration
Further details are included in the Remuneration Report.
25 Related Party Transactions
(a) Controlling entities
The ultimate parent is TF Reef – Canberra Holdings Limited (incorporated in BVI. The ultimate Australian
parent entity is Aquis Entertainment Canberra Holdings (Aus) Pty Ltd
(b) Key Management Personnel
Disclosures relating to KMP are included in Note 23 and the Remuneration report.
(c) Transaction with Related Parties
The Group received loans from related parties during the year. Details of the loans are set out at Note 17.
26. Expenditure Commitments
Capital Expenditure Commitments
Not later than one year
27. Contingent Liabilities
2016
$
2015
$
nil
11,707,484
Pursuant to the Deed between the ACT Gambling and Racing Commission, CCL and the Australian
Capital Territory dated 23 December 2014, CCL granted the Commission and the Territory:
•
•
First ranking mortgage over the casino land and
First ranking security interest over all other property.
CCL can replace the mortgage with a bank guarantee for $3 million should it raise debt finance in
connection with improvements or redevelopment of the business.
39 28. Investment in Controlled Entities
Interests in controlled entities are set out below. All entities are incorporated and domiciled in Australia.
Name
Principal Activity
Incorporated
Aquis Canberra Pty Ltd
Gaming and entertainment
Casino Canberra Limited1
Gaming and entertainment
Australia
Australia
1 Shares held by ACPL
For details of the acquisition of controlled entities refer Note 21.
Ownership
Interest
2016
100%
100%
2015
100%
100%
29. Parent Entity Information
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
2016
$
2015
$
102,451
30,668,762
30,771,213
(1,005,800)
(25,596,081)
(26,601,881)
1,947,835
1,305,089
3,252,924
(281,297)
(894,792)
(1,176,089)
4,169,332
2,076,835
4,727,776
6,495,697
(7,054,141)
4,727,776
127,713
(2,778,654)
4,169,332
2,076,835
Statement of Profit or Loss and Other Comprehensive
Income
Income
(Loss) for the year
28,757
(4,275,487)
17,397
(971,175)
Commitments for the parent entity are the same as those for the consolidated entity and are set out at Note
25.
The parent entity has not entered into a deed of cross guarantee nor are there any contingent liabilities at
year end.
30. Subsequent Events
Other than as disclosed in this report, there has not arisen in the interval between the end of the reporting
period and the date of this report any item, transaction or event of a material and unusual nature likely, in
the opinion of the Directors, to significantly affect the operations of the entity, the results of those operations
or the state of affairs of the Company in future financial years.
40 31. Segment Information
The consolidated entity has identified its operating segments based on the internal reports that are
reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance
and determining the allocation of resources. The consolidated entity operates in a single operating
segment: that of the gaming and entertainment industry in Australia.
32. Auditor Information
The following fees were paid or payable for services provided by the Group’s auditors:
2016
$
2015
$
205,580
53,750
Audit of the Financial Statements
RSM Australia Partners
33. Company Information
The registered office and principal place of business is as follows:
21 Binara Street
Canberra ACT 2601
34. Authorisation of Financial Statements
The consolidated financial statements for the year ended 31 December 2016 (including comparatives) were
approved and authorised for issue by the Board of Directors on 28 February 2017.
41 42 INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF AQUIS ENTERTAINMENT LIMITED
Opinion
We have audited the financial report of Aquis Entertainment Limited (the “Company”) and its subsidiaries
(the “Group”), which comprises the consolidated statement of financial position as at 31 December 2016,
the consolidated statement of comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 31 December 2016 and of its
financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the
Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor's report.*
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
43
Key Audit Matter
How our audit addressed this matter
Recognition of Revenue - Note 3 in the financial statements
Revenue for the year ended 31 December 2016 was
$24.2 million.
Our audit procedures in relation to the recognition of
revenue included:
Revenue is considered to be a Key Audit Matter
because, while it is not judgmental, it involves the
transfer of significant volumes of cash
in
circumstances where there is no immediate paper
trail.
There is potential for management override to
achieve revenue targets via manual journal entries
posted to revenue. Revenue could be inaccurately
stated as a result. Our procedures were designed to
corroborate our assessment that revenue should be
closely aligned to cash banked and identify manual
adjustments that are made to revenue for further
testing.
Assessing whether the Group’s revenue
recognition policies were in compliance
with Australian Accounting Standards.
Evaluating the operating effectiveness, of
management’s controls related to revenue
recognition.
Using data extracted from the accounting
system, we tested the appropriateness of
journal entries impacting revenue.
We
the
verified
recognition
and
measurement of revenue by tracing a
sample of transactions throughout the year
from the table performance reports to the
monthly summary reports and then back to
the cash desk, to verify the accuracy of
reported revenue.
Impairment of Intangible Assets - Note 13 in the financial statements
At 31 December 2016 the Group has intangible
assets with a carrying value of $1.9 million. This is
the Casino licence and its associated costs.
We focused on this area due to the size of the
intangible balance, and because the directors’
assessment of the ‘value in use’ of the cash
generating unit (“CGU”), Casino Canberra (Casino)
involves judgements about the future underlying
cash flows of the business and the discount rates
applied to them.
For the year ended 31 December 2016
management have performed an impairment
assessment over the intangible balance by:
calculating the value in use for the Casino
using a discounted cash flow model. This
model used cash flows (revenues, expenses
and capital expenditure) for the Casino for 5
years, with a terminal growth rate applied to
the 5th year. These cash flows were then
discounted to net present value using the
Group’s weighted average cost of capital
(WACC); and
comparing the resulting value in use of the
Casino to the respective book value.
Management also performed a sensitivity analysis
over the value in use calculations, by varying the
assumptions used (growth rates, terminal growth
rate and WACC) to assess the impact on the
valuations.
Our audit procedures in relation to management’s
impairment assessment included:
Updating
our
of
management’s annual impairment testing
process.
understanding
Assessing management’s determination
that the intangible asset should be allocated
to a single CGU, the Casino, based on the
nature of the Group’s business and the
manner in which results are monitored and
reported.
We assessed the forecasts underlying the
impairment review and agreed to budgets
approved by the Board, reviewing these
against actual performance and historic
accuracy of forecasting. We also performed
sensitivity analysis on earnings multiples
and growth rates applied to cash flows to
determine the extent of headroom for the
Casino.
We agreed other key assumptions such as
discount rates and revenue growth to
supporting evidence and corroborated
these to industry averages/trends.
We compared the cash flow projections to
historic performance and observable trends
and corroborated the reasons for deviations
to third party evidence as appropriate.
44
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group's annual report for the year ended 31 December 2016, but does not include the financial
report and the auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/Pronouncements/Australian-Auditing-
Standards/Auditors-Responsibilities.aspx. This description forms part of our auditor's report.
45
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 6 to 10 of the directors' report for the year ended
31 December 2016.
In our opinion, the Remuneration Report of Aquis Entertainment Limited, for the year ended 31 December
2016, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Rodney Miller
RSM Australia Partners
Canberra, Australian Capital Territory
Date: 28 February 2017
46
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Aquis Entertainment Limited for the year ended 31 December
2016, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Canberra, Australian Capital Territory
Dated: 28 February 2017
RODNEY MILLER
Partner
47
AQUIS ENTERTAINMENT LIMITED
ACN 147 411 881
(Company)
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement is current as at 20 April 2017 and has been approved by the Board of Directors on that date.
This Corporate Governance Statement discloses the extent to which the Company follows the recommendations set by the ASX Corporate
Governance Council in its publication Corporate Governance Principles and Recommendations (Recommendations). The Recommendations
are not mandatory; however the Recommendations that will not be followed have been identified and reasons provided for not following
them along with what (if any) alternative governance practices the Company intends to adopt in lieu of the recommendation.
The Company has adopted a Corporate Governance Plan which provides the written terms of reference for the Company’s corporate
governance duties.
The Company’s Corporate Governance Plan is available on the Company’s website at www.aquisentertainment.com.
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1
A listed entity should have and disclose a charter which sets
out the respective roles and responsibilities of the Board, the
Chair and management, and includes a description of
those matters expressly reserved to the Board and those
delegated to management.
Yes
responsibilities of
The Company has a Board Charter which sets out the respective
roles and
the Chair and
management, and includes a description of those matters
expressly reserved to the Board and those delegated to
management. A copy of the Charter can be viewed on the
Company’s website.
the Board,
48 RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
Recommendation 1.2
A listed entity should:
(a) undertake appropriate checks before appointing a
person, or putting forward to security holders a
candidate for election, as a Director; and
(b) provide security holders with all material information
relevant to a decision on whether or not to elect or re-
elect a Director.
Recommendation 1.3
A listed entity should have a written agreement with each
Director and senior executive setting out the terms of their
appointment.
Recommendation 1.4
Yes
The Company:
•
•
including character
undertakes appropriate checks
references, criminal history and insolvency checks before
appointing or putting forward to security holders a
candidate for election, as a Director
security holders are provided with all material information
relevant to a decision on whether or not to elect or re-elect
a Director. The information is included in the Company’s
Annual Reports, Notices of Meeting and website.
Yes
The Company has written agreements with each Director and
senior executive setting out the terms of their appointment.
The company secretary of a listed entity should be
accountable directly to the Board, through the Chair, on all
matters to do with the proper functioning of the Board.
Yes
The Board Charter establishes that the Company Secretary is
accountable directly to the Board through the Chair on all matters
to do with the proper functioning of the Board.
Recommendation 1.5
A listed entity should:
(a) have a diversity policy which includes requirements for
the Board or a relevant committee of the Board to set
measurable objectives for achieving gender diversity
and to assess annually both the objectives and the
entity’s progress in achieving them;
Yes - Partly
(b) disclose that policy or a summary or it; and
Yes
(c) disclose as at the end of each reporting period:
Aquis Entertainment acknowledges the positive outcomes that
can be achieved through a diverse workforce and recognises
and utilises the diverse skills and talent from its directors, officers
and employees. To this end the Company has developed a
diversity policy which can be viewed on the Company’s website.
The Remuneration & Nomination Committee is responsible for
reviewing and making recommendations to the Board on the
effectiveness of the Diversity Policy. If the Committee considers
necessary, it will advise the Board on the establishment of
49 RECOMMENDATIONS (3RD EDITION)
(i)
the measurable objectives for achieving gender
diversity set by the Board in accordance with the
entity’s diversity policy and its progress towards
achieving them; and
COMPLY
Yes
(ii) either:
(A)
the respective proportions of men and
women on the Board, in senior executive
positions and across the whole organisation
(including how the entity has defined
“senior executive” for these purposes); or
(B)
if the entity is a “relevant employer” under
the Workplace Gender Equality Act, the
entity’s most
recent “Gender Equality
Indicators”, as defined in the Workplace
Gender Equality Act.
EXPLANATION
measurable objectives set to achieve gender diversity to enable
the Board to annually assess and report the Company’s progress
in achievement of its objectives. If developed, the measurable
objectives will be included in either the Annual Corporate
Governance Statement or the Company’s Annual Report.
At 31 March 2017, the respective proportions of men and women
on the Board, in senior executive positions and across the whole
organisation were as follows:
Board (including Executive Directors)
Senior Executives (excl. Executive Directors)1
Management – Casino Canberra (excl. Exec
Directors and Senior Executives)
Staff
Total
Female Male
Total
1
1
5
87
94
6
1
4
7
2
9
164
174
251
268
1 For the purposes of this statement, Senior Executives are defined as Key
Management Personnel (excluding Directors).
Recommendation 1.6
A listed entity should:
(a) have and disclose a process for periodically evaluating
the performance of the Board, its committees and
individual Directors; and
(b) disclose, in relation to each reporting period, whether a
the
performance evaluation was undertaken
in
reporting period in accordance with that process.
Yes
Yes
The Board Charter establishes the requirement and process to
conduct an annual evaluation of the performance of the Board,
its committees and individual Directors. The Remuneration &
Nomination Committee is responsible for the conduct of the
evaluation.
At the time of approving this statement a performance evaluation
for the 2016 year is being conducted.
Recommendation 1.7
50 RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
A listed entity should:
(a) have and disclose a process for periodically evaluating
Yes
the performance of its senior executives; and
The Board is responsible for reviewing the performance of senior
management against strategies established by the Board. To this
the
the Board has established KPI’s against which
end
performance of its senior executives are assessed.
(b) disclose, in relation to each reporting period, whether a
the
in
performance evaluation was undertaken
reporting period in accordance with that process.
Yes
A performance evaluation of executives against KPI’s set for the
2016 financial year has been conducted.
Principle 2: Structure the Board to add value
Recommendation 2.1
The Board of a listed entity should:
(a) have a nomination committee which:
Yes
(i) has at least three members, a majority of whom are
independent Directors; and
(ii)
is chaired by an independent Director,
The Remuneration and Nomination Committee has three
members the majority of whom are independent Directors. The
Committee is chaired by an independent Director.
The names of the Committee Members are as follows:
and disclose:
(iii)
the charter of the committee;
(iv) the members of the committee; and
(v) as at the end of each reporting period, the number
of times the committee met throughout the period
and the individual attendances of the members at
those meetings; or
(b) if it does not have a nomination committee, disclose
that fact and the processes it employs to address Board
succession issues and to ensure that the Board has the
experience,
appropriate
balance
skills,
of
• Mr Russell Shields (Chair)
• Mr Raymond Or Ching-Fai
• Mr Alex Chow
A copy of the Committee Charter may be viewed on the
Company website.
The qualifications and experience of the members of the
Committee are set out on the Company’s website and in the
Annual Reports. The number of times the committee met
throughout a period and the individual attendances of the
members at those meetings are disclosed in the Annual Report.
51
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
independence and knowledge of the entity to enable
it to discharge its duties and responsibilities effectively.
Recommendation 2.2
A listed entity should have and disclose a Board skills matrix
setting out the mix of skills and diversity that the Board
currently has or is looking to achieve in its membership.
Yes
The Remuneration and Nomination Committee has developed a
Board Skills Matrix to assist in identifying the experience, skills,
expertise and diversity required for the Board to discharge its
mandate to maintain the necessary mix of expertise. Key skills held
by Board members
financing and
administration, banking, finance, property development, business
strategy and business management.
include: corporate
The Board is of the view that at this stage of its development the
current directors possess an appropriate mix of skills, experience,
expertise and diversity to enable the Board to discharge its
responsibilities and deliver the company’s strategic priorities. To
the extent that skills are not directly represented on the Board,
they are augmented through management and external
advisors.
Recommendation 2.3
A listed entity should disclose:
(a) the names of the Directors considered by the Board to
Yes
be independent Directors;
The names of the Directors considered to be independent are as
follows:
(b) if a Director has an interest, position, association or
relationship of the type described in Box 2.3 of the ASX
Corporate
and
Recommendation (3rd Edition), but the Board is of the
Governance
Principles
• Mr Alex Chow and
• Mr Russell Shields
Yes
The names of the Directors who are not considered independent
are:
• Mr Tony Fung
• Mr Raymond Or Ching-Fai
52
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
opinion that it does not compromise the independence
of the Director, the nature of the interest, position,
association or
in question and an
explanation of why the Board is of that opinion; and
relationship
(c) the length of service of each Director
Recommendation 2.4
A majority of the Board of a listed entity should be
independent Directors.
Yes
Yes
Recommendation 2.5
The Chair of the Board of a listed entity should be an
independent Director and, in particular, should not be the
same person as the CEO of the entity.
No
• Mr Justin Fung
• Ms Jessica Mellor
Ms Mellor was appointed on 14 August 2015.
Mr Chow was formally appointed on 7 September 2015.
All other Directors were appointed with affect from 7 August 2015.
At the date of this report, the Board comprises 6 members, 2 of
whom are independent and 4 of whom are non-independent
Directors.
The Company considers this to be an appropriate balance given
its majority shareholder and the importance to the company at
this time to have the Chief Executive Officer who is an Executive
Directors, who is not considered independent.
The Chair of the Board is Mr Tony Fung who is also the owner of the
majority shareholder and therefore is not independent. Mr Fung is
a highly experienced Director and Chairman. The Company
considers that, reflective of the majority shareholding, the Board
will function more effectively with Mr Fung as Chairman.
Recommendation 2.6
A listed entity should have a program for inducting new
Directors and providing appropriate professional
development opportunities for continuing Directors to
develop and maintain the skills and knowledge needed to
perform their role as a Director effectively.
Principle 3: Act ethically and responsibly
Yes
The Company has an induction program for new Directors and
encourages ongoing professional development of directors and
senior management.
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Recommendation 3.1
A listed entity should:
(a) have a code of conduct for its Directors, senior
Yes
executives and employees; and
The Company has a Code of Conduct for its Directors, senior
executives and employees.
(b) disclose that code or a summary of it.
A copy of the Code of Conduct may be viewed on the
Company’s website.
Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1
The Board of a listed entity should:
(a) have an audit committee which:
Yes
(i)
(ii)
has at least three members, all of whom are non-
executive Directors and a majority of whom are
independent Directors; and
is chaired by an independent Director, who is not
the Chair of the Board,
and disclose:
(iii)
(iv)
(v)
the charter of the committee;
the relevant qualifications and experience of the
members of the committee; and
in relation to each reporting period, the number
of times the committee met throughout the
period and the individual attendances of the
members at those meetings; or
(b) if it does not have an audit committee, disclose that
fact and the processes it employs that independently
verify and safeguard the integrity of its financial
The Audit and Risk Management Committee has three members
the majority of whom are independent Directors. The Committee
is chaired by an independent Director.
The names of the Committee Members are as follows:
• Mr Alex Chow (Chair)
• Mr Russell Shields and
• Mr Justin Fung
A copy of the Committee Charter may be viewed on the
Company website. The qualifications and experience of the
members of the Committee are set out on the Company’s website
and in the Annual Report. The number of times the committee
met throughout a period and the individual attendances of the
members at those meetings are disclosed in the Annual Report.
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RECOMMENDATIONS (3RD EDITION)
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reporting, including the processes for the appointment
and removal of the external auditor and the rotation of
the audit engagement partner.
Recommendation 4.2
The Board of a listed entity should, before it approves the
entity’s financial statements for a financial period, receive
from its CEO and CFO a declaration that the financial
records of the entity have been properly maintained and
that the financial statements comply with the appropriate
accounting standards and give a true and fair view of the
financial position and performance of the entity and that
the opinion has been formed on the basis of a sound system
of risk management and internal control which is operating
effectively.
Recommendation 4.3
Yes
The Audit and Risk Management Charter requires the CEO and
CFO to provide to the Board prior to the Company’s financial
statements being approved, a declaration that the financial
records have been properly maintained and that the financial
statements comply with the appropriate accounting standards
and give a true and fair view of the financial position and
performance of the entity and that the opinion has been formed
on the basis of a sound system of risk management and internal
control which is operating effectively.
A listed entity that has an AGM should ensure that its
external auditor attends its AGM and is available to answer
questions from security holders relevant to the audit.
Yes
The Shareholder Communications Policy of the Company states
that the external auditor will attend the AGM and will be available
to answer questions from security holders relevant to the audit.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1
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RECOMMENDATIONS (3RD EDITION)
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A listed entity should:
(a) have a written policy for complying with its continuous
Yes
disclosure obligations under the Listing Rules; and
(b) disclose that policy or a summary of it.
Principle 6: Respect the rights of security holders
The Company has a Disclosure Policy which sets out the process
by which the Company complies with its continuous disclosure
obligations under the Listing Rules.
A copy of the Policy may be viewed on the Company’s website.
Recommendation 6.1
A listed entity should provide information about itself and its
governance to investors via its website.
Recommendation 6.2
A listed entity should design and implement an investor
two-way
relations program
communication with investors.
facilitate effective
to
Recommendation 6.3
A listed entity should disclose the policies and processes it
has in place to facilitate and encourage participation at
meetings of security holders.
Recommendation 6.4
A listed entity should give security holders the option to
receive communications from, and send communications
to, the entity and its security registry electronically.
Yes
Yes
Yes
Yes
The Company’s Corporate Governance Statement, Charters and
Corporate Governance Policies are included on its website.
The Company has a Shareholder Communication policy which is
aimed at to facilitating effective two-way communication with
investors. A copy of the Policy can be viewed on the Company’s
website.
The Shareholder Communications Policy sets out the policies and
processes the Company’s has
in place to facilitate and
encourage participation at meetings of security holders.
The Shareholder Communications Policy establishes
the
Company’s commitment to receive communications from, and
send communications to, the entity and its security registry
electronically.
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Principle 7: Recognise and manage risk
Recommendation 7.1
The Board of a listed entity should:
(a) have a committee or committees to oversee risk, each
Yes
of which:
(i)
has at least three members, a majority of whom
are independent Directors; and
(ii)
is chaired by an independent Director,
and disclose:
(iii)
(iv)
(v)
the charter of the committee;
the members of the committee; and
as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of
the members at those meetings; or
(b) if it does not have a risk committee or committees that
satisfy (a) above, disclose that fact and the process it
employs for overseeing the entity’s risk management
framework.
The Audit and Risk Management Committee has three members
the majority of whom are independent Directors. The Committee
is chaired by an independent Director. A copy of the Committee
Charter may be viewed on the Company website.
The names of the Committee Members are as follows:
• Mr Alex Chow (Chair)
• Mr Russell Shields and
• Mr Justin Fung
The qualifications and experience of the members of the
Committee are set out on the Company’s website and in the
Annual Report. The number of times the committee met
throughout a period and the individual attendances of the
members at those meetings are disclosed in the Annual Report.
Recommendation 7.2
The Board or a committee of the Board should:
Yes
(a) review the entity’s risk management framework with
management at least annually to satisfy itself that it
continues to be sound; and
(b) disclose in relation to each reporting period, whether
such a review has taken place.
The Audit and Risk Management Committee Charter tasks the
Committee with the responsibility for reviewing and monitoring the
Company’s risk management framework to provide assurance
that major business risks are identified, consistently assessed and
appropriately addressed. The Charter requires the Committee to
undertake a
risk management
framework with management (at least once annually) to satisfy
review of the Company’s
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RECOMMENDATIONS (3RD EDITION)
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Recommendation 7.3
A listed entity should disclose:
No
(a) if it has an internal audit function, how the function is
structured and what role it performs; or
(b) if it does not have an internal audit function, that fact
and the processes it employs for evaluating and
continually
risk
management and internal control processes.
improving the effectiveness of
its
itself that Aquis Entertainment’s risk management framework
continues to be sound, to determine whether there have been
any changes in the material business risks the entity faces and to
ensure that they remain with the risk appetite set by the Board.
During the year the Audit Committee conducted various risk
reviews of aspects of the operations and commenced an overall
review of the Company’s risk management framework and risk
registers.
The Company does not, at this stage, have an Internal Audit
function. The Board is of the view that the Company’s’ size and
scale does not currently support an independent internal audit
function. The Board from time to time may utilise external parties
to undertake internal audit control reviews.
The Audit and Risk Management Committee Charter sets out the
processes the Committee employs to oversee the Company’s risk
management framework. The Company’s proposed operational
subsidiary, Casino Canberra Limited, also maintains a robust risk
management framework related to all operational matters as
required under the relevant casino legislation. This includes the
maintenance of a risk register identifying relevant operational risks
and
risk management
procedures where appropriate.
recording proposed solutions and
Recommendation 7.4
A listed entity should disclose whether it has any material
exposure
social
sustainability risks and, if it does, how it manages or intends
to manage those risks.
to economic, environmental and
Yes
The Company’s exposure to economic, environmental and social
sustainability risks and the way it manages or intends to manage
mitigate those risks is set out in the Annual Report.
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Principle 8: Remunerate fairly and responsibly
Recommendation 8.1
The Board of a listed entity should:
(a) have a remuneration committee which:
(i)
has at least three members, a majority of whom
are independent Directors; and
(ii)
is chaired by an independent Director,
and disclose:
(iii)
(iv)
(v)
the charter of the committee;
the members of the committee; and
as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of
the members at those meetings; or
(b) if it does not have a remuneration committee, disclose
that fact and the processes it employs for setting the
level and composition of remuneration for Directors
and senior executives and ensuring that such
remuneration is appropriate and not excessive.
The Remuneration and Nomination Committee has three
members the majority of whom are independent Directors. The
Committee is chaired by an independent Director.
The names of the Committee Members are as follows:
• Mr Russell Shields (Chair)
• Mr Raymond Or Ching-Fai
• Mr Alex Chow
A copy of the Committee Charter may be viewed on the
Company website.
The qualifications and experience of the members of the
Committee are set out on the Company’s website and in the
Annual Report. The number of times the committee met
throughout a period and the individual attendances of the
members at those meetings are disclosed in the Annual Report.
Recommendation 8.2
A listed entity should separately disclose its policies and
practices regarding the remuneration of non-executive
Directors and the remuneration of executive Directors and
other senior executives and ensure that the different roles
and responsibilities of non-executive Directors compared to
executive Directors and other senior executives are
Yes
The Remuneration and Nomination Committee is tasked with
developing policies and practices regarding the remuneration of
non-executive Directors and the remuneration of executive
Directors and other senior executives and ensure that the different
roles and responsibilities of non-executive Directors compared to
executive Directors and other senior executives are reflected in
the level and composition of their remuneration.
59 RECOMMENDATIONS (3RD EDITION)
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reflected
in
remuneration.
the
level and composition of
their
These policies and practices are disclosed in the Company’s
Annual Report.
Recommendation 8.3
A listed entity which has an equity-based remuneration
scheme should:
Yes
(a) have a policy on whether participants are permitted to
enter into transactions (whether through the use of
derivatives or otherwise) which limit the economic risk of
participating in the scheme; and
(b) disclose that policy or a summary of it.
The Company has established an equity–based remuneration
scheme (Plan). The Plan rules specifically prohibit participants from
entering into transactions (whether through the use of derivatives
or otherwise) which limit the economic risk of participating in the
Plan.
The Company’s Securities Trading Policy also prohibits participants
in any such scheme from entering into transactions (whether
through the use of derivatives or otherwise) which limit the
economic risk of participating in the scheme.
A copy of the Securities Trading Policy can be viewed on the
Company’s website.
60
SHAREHOLDER INFORMATION AT 28 MARCH 2017
1.
TWENTY LARGEST SHAREHOLDERS
Holder Name
1 AQUIS CANBERRA HOLDINGS (AUS) PTY LTD
2 MR PAUL JOSEPH MANKA
3 MR THOMAS JON PICKETT
4 RIVA ADMINISTRATION PTY LTD
5 TARALAKE PTY LTD
6 MR HONGHAO SUN
7 LANDSEC PTY LTD
8 PROSPERO CAPITAL PTY LTD
9 LIFE IN VERSE PTY LTD
10 CHANCERY HOLDINGS PTY LTD
11 MR JOHN HAMILTON
12 MRS JODIE LEE MAXTED
13 MR ANTHONY MICHAEL MALYNIAK
14 CONFIDO SUPERANNUATION PTY LTD
15 MRS EMILY ELIZABETH HAINSWORTH
16 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
17
18
MR GARY STANLEY SWIFT & MRS KAYLEEN LESLIE SWIFT
MR ANTHONY JOHN THOMAS DENNIS & MRS SELINA JAY DENNIS
19 MR ROBERT CAMERON GALBRAITH
20 BARCLAY WELLS LTD
Total
2.
DISTRIBUTION OF SHAREHOLDERS
Shares
163,871,874 88.51%
%
1,325,079
1,200,000
797,999
790,329
700,000
646,800
551,838
545,153
500,000
449,000
437,154
300,000
260,000
250,000
231,879
0.72%
0.65%
0.43%
0.43%
0.38%
0.35%
0.30%
0.29%
0.27%
0.24%
0.24%
0.16%
0.14%
0.14%
0.13%
220,000
0.12%
200,000
200,000
180,000
0.11%
0.11%
0.10%
173,657,105 93.80%
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and above
Total
Unmarketable Parcels
Total Holders
Shares
% Issued Capital
6
6
106
360
25
503
23
1,242
22,611
1,030,902
9,888,190
174,198,105
185,141,050
104,755
0.00%
0.01%
0.56%
5.34%
94.09%
100.00%
0.06%
3.
SUBSTANTIAL SHAREHOLDERS
Name
Aquis Canberra Holdings (Aus) Pty Ltd
No. of Shares % Issued Capital
88.51
163,871,874
4.
VOTING RIGHTS
Ordinary Shares
Every holder of ordinary shares has the right to receive notices of, to attend and to vote at general
meetings of the Company. On a show of hands every shareholder present at a meeting in person or
by proxy, attorney or representative is entitled to one vote and upon a poll each share is entitled to
one vote.
61
5.
RESTRICTED SECURITIES
Security
Number of Restricted
Securities
Date of Cessation of
Restriction
Ordinary Shares
149,421,874
25 August 2017
6.
USE OF CASH AND CONVERTIBLE ASSETS
During the period from admission to the official list of the Australian Stock Exchange to the date of this
statement, the company has used cash and assets readily convertible to cash in a manner consistent
with its business activities. The company is involved in the ownership and management of gaming
and waging assets in Australia.
62
CORPORATE DIRECTORY
Company
Aquis Entertainment Limited
ABN 48 147 411 881
21 Binara Street
Canberra ACT 2601
www.aquisentertainment.com
Registered Office and Place of Business
21 Binara Street
CANBERRA ACT 2601
Telephone: +61 2 6257 7074
Facsimile: +61 2 6257 7079
Directors
Mr Tony Fung (Chairman)
Mr Raymond Or Ching-Fai (Deputy Chairman)
Mr Justin Fung (Non-executive Director)
Mr Alex Chow (Independent Non-executive Director)
Mr Russell Shields (Independent Non-executive Director)
Ms Jessica Mellor (Chief Executive Officer & Executive Director)
Company Secretary
Ms Louise Sheppard
Auditors
RSM Australia Partners
GPO Box 200
Canberra ACT 2601
Share Registry
Boardroom Pty Limited
GPO Box 3993
Sydney NSW 2001
Stock Exchange Listing
Australian Securities Exchange Limited
Home Exchange – Melbourne
ASX code: AQS
63