AQUIS ENTERTAINMENT LIMITED
ABN 48 147 411 881
ANNUAL REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
CONTENTS
Financial Statements
Corporate Governance Statement
Shareholder Information
Corporate Directory
3
48
62
64
Page 2 of 64 AQUIS ENTERTAINMENT LIMITED
ABN 48 147 411 881
Financial Statements
for the Financial Year Ended 31 December 2018
Page 3 of 64
AQUIS ENTERTAINMENT LIMITED
DIRECTORS’ REPORT
The Directors present their report together with the consolidated financial statements for the financial year ended
31 December 2018. 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”).
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
Justin Fung
Alex Chow
Russell Shields
Jessica Mellor
Allison Gallaugher
Current Directors
Tony Fung (Chairman)
Chairman
Non-Executive Director (resigned 14 May 2018)
Non-Executive Director
Non-Executive Director
Executive Director & CEO (to 31 December 2018) (resigned 21 February 2019)
Executive Director (appointed 28 June 2018) & CEO (Acting) (from 1 January 2019)
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.
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 Independent Non-
executive Director of Top Form International Limited since February 1993 and was a Certified Public Accountant of
the Hong Kong Institute of Certified Public Accountants until January 2019. 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.
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, was a non-executive director of Retail Food Group
Limited (December 2015 to October 2018) 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 to 21 February 2019 & CEO to 31 December 2018)
Jessica Mellor is a seasoned project manager with experience spanning major infrastructure projects, residential
and commercial development and funds management.
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. Ms Mellor was
appointed as Chief Executive Officer of Aquis Entertainment Limited and Casino Canberra on 4 October 2017.
Ms Mellor ceased her CEO duties from 31 December 2018 and resigned as director effective from 21 February
Page 4 of 64 2019.
Allison Gallaugher (Executive Director, Financial Controller & Acting CEO from 1 January 2019)
Allison Gallaugher is a Chartered Accountant with over 20 years experience in the accounting industry, advising a
range of local and international listed and unlisted companies, across a broad range of industries.
Ms Gallaugher held senior management positions including at a top 5 accounting firm in Sydney, before returning
to Canberra where she joined the leading boutique accounting firm as an advisor to many of Canberra’s largest
businesses, predominantly in the property and development industry. Ms Gallaugher’s experience spans the full
range of business advisory, taxation and audit fields. Most recently, Ms Gallaugher was the Financial Controller of
a large club group, before joining Aquis on 24 March 2017 as Financial Controller.
Ms Gallaugher was appointed as a director on 28 June 2018 and as acting Chief Executive Officer effective from 1
January 2019.
Company Secretary
The Company Secretary in office at the end of the reporting period was Company Matters practitioner, Louise
Sheppard. Louise is an experienced company secretary whose professional experience spans three decades.
Louise’s commercial career began at AMP where she worked both in Australia and the UK across several financial
services finance and project roles. Thereafter she worked for ABN AMRO in what would today be recognised as an
AML/CTF equivalent compliance officer role. Louise has also held compliance and company secretarial roles at
Babcock & Brown, and most recently was the Secretarial Governance Manager at Origin Energy Limited.
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
A Chow
R Shields
A Gallaugher
163,871,874
-
-
-
-
-
-
-
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 2018 was a loss of $3,396,832 (2017:
loss $13,811,804, included in the 2017 loss is a $5,498,173 write down of deferred tax assets).
Operating revenue for the year amounted to $26,032,797, an 0.45% decrease from the 2017 result ($26,150,567).
Earnings before Interest Tax Depreciation and Amortisation (EBITDA) for the year was a profit of $625,885 (2017:
loss $4,702,327).
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 to
significantly improve an underperforming operation by a combination of leadership and targeted investment in the
business.
Page 5 of 64 Strategy (continued)
Aquis advanced its strategy during the year by:
Focused marketing activities to capitalise on the refurbishment of the Casino Canberra property in 2016;
Continuing to improve the operations of Casino Canberra by engaging experienced management who are
focussed on improving revenue and customer service standards;
Implementation of a cost control program to reduce expenditure and streamline efficiencies in business
processes to improve economies of scale;
Ongoing consideration of alternative and complementary business lines; and
Ongoing liaison with the ACT Government, in relation to the proposal for the development of a world-class
integrated entertainment precinct in the heart of Canberra’s CBD. The current status of this proposal is
discussed further in the Future Developments, Prospects and Business Strategies section of this report.
Operations
Revenue from operations for the year decreased 0.45% from the prior year to $26,032,797 in 2018 compared to
$26,150,567 in 2017. The result was driven by a 0.87% increase in gaming revenue and a 12% decrease in food
and beverage and other sales. Operating expenses including payroll related expenses decreased by 17.7% for the
year, with the major decreases being in payroll and marketing expenses. The reduction in payroll expenditure was
a result of more efficient use of the workforce, combined with inter-departmental restructuring to better align teams
to leaders. The marketing reduction was a result of refinement of the operation of our VIP program expenses.
2017 saw the first full year of operation of the refurbished gaming floor. Throughout the year, Casino Canberra
maintained its focus on improving awareness the brand to increase visitation, improving VIP offerings to increase
market share, together with a cost reduction program to increase profitability.
Toward the end of the year, the increase in visitation rates as a result of the marketing efforts reduced volatility and
produced an overall improvement in hold rates, which is expected to continue and stabilise over the coming year
as record visitation rates are maintained via new and continuing marketing initiatives.
Financial position
At 31 December 2018, the Group had cash reserves of $4,676,086 (2017: $4,658,166) and unused borrowing
facilities of $3,071,317. Following the end of the financial year no further drawdowns have been made and the
group has forecast a positive net cashflow for the financial year. The balance sheet at 31 December 2018 shows a
net asset deficit of $16,651,690 (2017: $13,254,858 deficit) as a result of the loss incurred during the financial year
and the de-recognition of the deferred tax asset representing carry forward tax losses.
Outlook
Directors are confident of the outlook for Aquis. The completion of the refurbishment of Casino Canberra has
proven the ability to attract new and existing customers. The casino’s highly experienced operations leadership
team continue to execute the vision of attracting and servicing quality players from Australia and overseas. Several
internal restructures to improve the alignment of teams within the group has resulted in better efficiency in our
workforce. Our Business Development team have focused on mining of the existing customer database over the
year, solidifying the efforts of the past several years which were spent building its size and quality. This focus
allowed for a decrease in expenditure, resulting in a profitable VIP sector for the year.
Legislation has been enacted to allow 200 electronic gaming machines (EGM’s) to operate within the casino;
planning continues for the redevelopment of Casino Canberra discussions with the Government will continue
throughout 2019 surrounding the details of the legislated requirements for the EGM’s to enable planning for the
future.
The Board has agreed to and recommended to shareholders a transaction for the major shareholder to sell the
majority of their shares to a new investor; this is discussed in further detail in the Future Developments, Prospects
and Business Strategies section of this report. The Board will work together with the proposed new shareholder to
progress the transaction, which will bring great opportunities to the business, particularly in the VIP sector.
Employees
The number of people employed by the Consolidated Entity at the reporting date was 253.
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.
Page 6 of 64 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 &
Nomination
Eligible to
Attend
Attended
Eligible to
Attend
Attended
Eligible to
Attend
Attended
T Fung
J Fung1
A Chow
R Shields
J Mellor2
A Gallaugher3
1Resigned 14 May 2018
2Resigned 21 February 2019
3Appointed 28 June 2018
3
3
3
3
3
2
3
2
3
3
3
2
n/a
2
2
2
n/a
n/a
n/a
1
2
2
n/a
n/a
n/a
n/a
2
2
n/a
n/a
n/a
n/a
2
2
n/a
n/a
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
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 2018, 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.
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.
Page 7 of 64 FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
Aquis is an entertainment, gaming and leisure company which currently operates a casino business in Canberra.
On 21 December 2018, the company announced that it had entered into a binding Implementation Deed (and
related documentation) with Blue Whale Entertainment Pty Limited (Blue Whale), a company owned and controlled
by Mr Michael Gu, the Group CEO of iProsperity Group, and Aquis Canberra Holdings (Aus) Pty Limited (ACH).
The transaction contemplates Blue Whale’s acquisition of the outstanding convertible loan and 137.0 million shares
held by ACH.
Pursuant to the transaction, ACH will transfer:
-
-
137,004,377 AQS shares to Blue Whale; and
Its convertible loan with the company to Blue Whale, following which Blue Whale will forgive a minimum
of $2.0 million of the convertible loan and then immediately convert the balance of the convertible loan
to AQS shares at a conversion price of $0.20 per share and subject to a cap.
The above transfers will result in Blue Whale replacing ACH as the controlling shareholder of the company with a
shareholding of up to a maximum of 86.99% of Aquis’ share capital.
Blue Whale also grants ACH a put option in respect of its remaining 26,867,497 shares, pursuant to which ACH
may elect to sell those shares to Blue Whale after approximately 3 years should such shares not have a value of
more than $4 million at that time.
The transaction is subject to shareholder approval by the independent shareholders of Aquis and ACT gaming
regulatory approvals. Blue Whale may also terminate the agreements if certain limited material adverse events
occur. The Extraordinary General Meeting (EGM) to seek the approval of the independent shareholders is to be
held on 21 March 2019. ACT Government regulatory approval is expected to take approximately 3-6 months to
complete.
An independent expert provided a favourable opinion on his review of the transaction and there are no other
proposals which are superior to the Blue Whale offer, so the independent directors of Aquis unanimously
recommend that the independent shareholders vote in favour of the proposed transactions,
Following completion of the proposed transaction, it is anticipated that the company will work with Blue Whale to
achieve further cost efficiencies and to work on opportunities for the future with VIP markets and look at options
available regarding a redevelopment of the precinct, in order to operate the 200 electronic gaming machines for
which the legislation was passed in the last year. .
SHARE OPTIONS
As at the date of this report, there were no unissued ordinary Aquis shares under option (2017: nil). 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
their
responsibilities.
the Company’s expense, obtain
independent professional advice
to properly discharge
NON-AUDIT SERVICES
There were no non-audit services provided by the entity’s auditors, RSM Australia Partners 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.
Page 8 of 64 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 2001 and 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
A Chow
R Shields
Chairman
Non-Executive Director
Non-Executive Director
Current Executives
Name
J Mellor
A Gallaugher
Role
Relevant Dates
Chief Executive Officer
Director
CEO to 31 December 2018
Resigned 21 February 2019
Financial Controller
Director
Chief Executive Officer (Acting)
Appointed 24 March 2017
Appointed 28 June 2018
Appointed 1 January 2019
R Bach
Vice President & General Manager
Appointed 2 July 2015
Previous Directors and Executives
Name
J Fung
Role
Relevant Dates
Non-Executive Director
Resigned 14 May 2018
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
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.
Page 9 of 64 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 remuneration structure 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 2017, 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’s. For the 2018 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.
Page 10 of 64 C.
Details of remuneration
Remuneration received or receivable by Key Management Personnel during the reporting period was as follows.
Post-
employment
benefits
super -
annuation
Share
based
payment
Total
Performance
based
remuneration
Remun-
eration at
risk - STI
$
$
$
$
%
%
-
-
-
9,975
34,833
17,381
21,655
83,844
-
-
-
-
-
-
-
-
-
-
105,000
114,975
489,125
385,805
230,743
1,325,648
-
-
-
-
-
27%
15%
-
-
-
-
-
27%
15%
Post-
employment
benefits
super -
annuation
Share
based
payment
Total
Performance
based
remuneration
Remun-
eration at
risk - STI
$
$
$
$
%
%
-
-
-
-
9,856
34,712
19,616
8,034
10,870
83,088
-
-
-
-
-
-
-
-
-
-
-
-
-
104,583
113,606
578,366
384,273
126,699
144,155
1,451,682
-
-
-
-
-
19%
16%
-
13%
-
-
-
-
-
19%
16%
-
13%
Short-term benefits
Key
management
personnel
2018
T Fung
J Fung1
A Chow
R Shields
J Mellor
R Bach
A Gallaugher2
Fees
and/or
salary
$
-
-
105,000
105,000
391,892
210,577
175,000
Cash,
profit
sharing /
other
bonuses
$
-
-
-
-
-
105,290
34,088
Other
-
-
-
-
62,400
52,557
-
Totals
987,469
139,378
114,957
1 Resigned 14 May 2018
2 Appointed as Director from 28 June 2018
Short-term Benefits
Key
management
personnel
2017
T Fung
R Or Ching Fai1
J Fung
A Chow
R Shields4
J Mellor
R Bach
G Gill2
A Gallaugher3
Fees
and/or
salary
$
Cash,
profit
sharing /
other
bonuses
$
Other
-
-
-
104,583
103,750
368,754
250,000
107,787
114,423
-
-
-
-
-
112,500
62,500
-
18,862
-
-
-
-
-
62,400
52,157
10,878
-
Totals
1,049,297
193,862
125,435
1 Resigned 31 December 2017
2 Resigned 12 May 2017
3 Appointed 24 March 2017
4 Committee Chair from 1 February 2017
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 and Vice Chairman 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
Statutory superannuation where required by law.
$20,000 per annum for acting as the Chair of a Board Committee and
$5,000 per annum for serving on a Board Committee.
Page 11 of 64 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
Allison Gallaugher
Chief Executive Officer
VP and General Manager
Financial Controller & Acting CEO2
Commencement Date
23 December 2014
Term of Agreement
Open1
Annual Salary
$450,000
23-Apr-15
Open
$250,000
24-Mar-18
Open
$175,000 ($192,500 from 7 January
2019)
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
Maximum annual bonus = 20% of
Remuneration 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
2 months either party
1 Resigned effective 21 February 2019, CEO duties cease 31 December 2018
2 Appointed acting CEO from 1 January 2019
Page 12 of 64 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
2018
T Fung
J Fung3
Name
2017
Opening
Balance1
Acquired
on
Market
Disposed
Closing
Balance2
163,871,874
163,871,874
Opening
Balance1
-
-
- 163,871,874
- 163,871,874
Acquired
on
Market
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
163,871,874
163,871,874
-
-
- 163,871,874
- 163,871,874
Other than as detailed in the table above, no shares were held in the Company either directly,
indirectly or beneficially by any key management personnel.
b) Movement in option holdings
There were no options over ordinary shares in the Company held directly, indirectly or beneficially
by key management personnel.
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
$35.5 million (2017: $36.8 million) inclusive of accrued interest.
End of audited remuneration report
Signed in accordance with a resolution of the directors.
Russell Shields
Director
Brisbane
27 February 2019
Page 13 of 64 AQUIS ENTERTAINMENT LIMITED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
for the year ended 31 December 2018
Revenue and other income
Revenue
Other income
Total revenue and other income
Expenses from continuing operations:
Casino taxes
Employee benefit expenses
Other operating expenses
Finance charges
Depreciation
Amortisation
Loss before income tax
Income tax expense / (benefit)
Consolidated
Note
2018
$
2017
$
3
3
4
4
4
4
5
26,032,797
378,434
26,150,567
473,710
26,411,231
26,624,277
(2,867,390)
(16,400,518)
(6,517,438)
(2,254,424)
(1,742,658)
(25,635)
(2,669,047)
(18,500,315)
(10,157,242)
(1,834,813)
(1,750,856)
(25,635)
(3,396,832)
(8,313,631)
-
(5,498,173)
Loss attributable to members of the consolidated entity
(3,396,832)
(13,811,804)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss for the year attributable to the
members of the consolidated entity
(3,396,832)
(13,811,804)
Basic and diluted earnings per share (cents per share)
6
(1.83)
(7.46)
The accompanying notes form part of these financial statements.
Page 14 of 64 AQUIS ENTERTAINMENT LIMITED
STATEMENT OF FINANCIAL POSITION
as at 31 December 2018
Consolidated
Note
2018
$
2017
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Financial assets at fair value through other
comprehensive income
Other non-current assets
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Employee benefit provisions
Total current liabilities
NON-CURRENT LIABILITIES
Employee benefit provisions
Loans and borrowings
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserve
Accumulated losses
TOTAL EQUITY
7
8
9
10
11
12
13
10
14
15
15
16
17
17
18
4,676,086
118,319
172,746
1,172,688
6,139,839
4,658,166
58,910
335,634
1,299,615
6,352,325
12,003,595
1,868,177
13,433,742
1,893,812
4,106
74,322
4,106
966,200
13,950,200
16,297,860
20,090,039
22,650,185
4,352,234
690,517
5,042,751
4,452,358
719,911
5,172,269
40,726
31,658,252
27,579
30,705,195
31,698,978
30,732,774
36,741,729
35,905,043
(16,651,690)
(13,254,858)
4,167,952
6,677,725
(27,497,367)
4,167,952
6,939,271
(24,362,081)
(16,651,690)
(13,254,858)
The accompanying notes form part of these financial statements
Page 15 of 64 AQUIS ENTERTAINMENT LIMITED
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2018
Share
capital
Reserve
Accumulated
losses
$
$
$
Total
$
Balance at 1 January 2017
Equity component of convertible debt
Loss attributable to members of the company
Balance at 31 December 2017
Balance at 1 January 2018
Equity component of convertible debt
Loss attributable to members of the company
Balance at 31 December 2018
4,167,952
-
-
4,167,952
6,367,984
571,287
-
6,939,271
(10,550,277)
-
(13,811,804)
(14,341)
571,287
(13,811,804)
(24,362,081)
(13,254,858)
-
-
4,167,952
(261,546)
-
6,677,725
261,546
(3,396,832)
-
(3,396,832)
(27,497,367)
(16,651,690)
The accompanying notes form part of these financial statements
Page 16 of 64 AQUIS ENTERTAINMENT LIMITED
STATEMENT OF CASH FLOWS
for the year ended 31 December 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Consolidated
2018
$
2017
$
28,618,396
(27,216,734)
49,537
(1,367)
26,602,924
(29,835,937)
47,190
(7,789)
Net cash provided by (used in) operating activities
19
1,449,832
(3,193,612)
CASH FLOWS FROM INVESTING ACTIVITIES
Plant and equipment
Proceeds from sale of assets
Dividend received
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
(189,271)
57,119
240
(131,912)
(432,789)
-
178
(432,611)
300,000
(1,600,000)
4,100,000
(1,000,000)
Net cash (used in) provided by financing activities
(1,300,000)
3,100,000
Net increase (decrease) in cash held
Cash at beginning of the period
Cash at end of the period
7
17,920
4,658,166
4,676,086
(526,223)
5,184,389
4,658,166
The accompanying notes form part of these financial statements
Page 17 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
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 (ASX: 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
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the
Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply
with International Financial Reporting Standards as issued by the International Accounting Standards Board
('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where
applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets
at fair value through other comprehensive income, 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.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the
consolidated entity only. Supplementary information about the parent entity is disclosed in note 25.
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 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 25. 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.
Page 18 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
1. Statement of significant accounting policies (continued)
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.
(b) Revenue recognition
The consolidated entity recognises revenue as follows:
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 income tax expense or benefit for the period is the tax payable on that period's taxable income based on
the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and
liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior
periods, where applicable.
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 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.
Page 19 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
1. Statement of significant accounting policies (continued)
(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.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses
a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been
grouped based on days overdue.
Other receivables are recognised at amortised cost, less any provision for impairment.
(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.
Page 20 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
1. Statement of significant accounting policies (continued)
(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
10-40 years
3-20 years
The assets’ residual values and useful lives and depreciation methods are reviewed, and adjusted if
appropriate, at each reporting 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 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) Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as
part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on their classification. Classification
is determined based on both the business model within which such assets are held and the contractual cash
flow characteristics of the financial asset unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.
When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is
written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are
classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either:
(i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of
making a profit, or a derivative; or
(ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in
profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the
consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as
such upon initial recognition.
Page 21 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
1. Statement of significant accounting policies (continued)
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are
either measured at amortised cost or fair value through other comprehensive income. The measurement of
the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period
as to whether the financial instrument's credit risk has increased significantly since initial recognition, based
on reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-
month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected
credit losses that is attributable to a default event that is possible within the next 12 months. Where a
financial asset has become credit impaired or where it is determined that credit risk has increased
significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of
expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit
or loss.
(k) 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.
(l) 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.
(m) Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a
result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the
best estimate of the consideration required to settle the present obligation at the reporting date, taking into
account the risks and uncertainties surrounding the obligation. If the time value of money is material,
provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
Page 22 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
1. Statement of significant accounting policies (continued)
(n) Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected
to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the
reporting date are measured at the present value of expected future payments to be made in respect of
services provided by employees up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted using market yields at the reporting date on
corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future
cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are
incurred.
(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) 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.
Page 23 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
1. Statement of significant accounting policies (continued)
(s) New or amended accounting standards and interpretation adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting
period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 9 Financial Instruments
The consolidated entity has adopted AASB 9 from 1 January 2018. The standard introduced 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 that are solely principal and interest. A debt
investment shall be measured at fair value through other comprehensive income if it is held within a
business model whose objective is to both hold assets in order to collect contractual cash flows which arise
on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair
value. All other financial assets are 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 or contingent consideration recognised in a business combination) in other
comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated
as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch.
For financial liabilities designated at fair value through profit or loss, 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 use
an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using 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. For receivables, a simplified approach to
measuring expected credit losses using a lifetime expected loss allowance is available. The impact of
adoption was not material.
AASB 15 Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15 from 1 January 2018. The standard provides a single
comprehensive model for revenue recognition. The core principle of the standard is that an entity shall
recognise revenue to depict the transfer of promised goods or services to customers at an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
The standard introduced a new contract-based revenue recognition model with a measurement approach
that is based on an allocation of the transaction price. This is described further in the accounting policies
below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts
with customers are 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. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be
capitalised as an asset and amortised over the contract period. The impact of adoption was not material .
Page 24 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
1. Statement of significant accounting policies (continued)
(t) New accounting standards and interpretations not yet mandatory or early adopted
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 2018. 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 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, the impact of its adoption is not expected to be material.
(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 $3,396,832 (2017:
$13,811,804 loss), had net cash inflows from operating activities of $1,449,832 (2017: outflows of
$3,193,612) and negative net assets of $16,651,690 (2017: $13,254,858) for the year ended 31 December
2018.
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 $3.07 million at the balance date. This
facility is sufficient to meet the cash flow requirements for the consolidated group.
The 2019 forecast cash flow is positive.
The Company’s major shareholder (Aquis Capital H K Limited through Aquis Canberra Holdings Pty
Ltd) has provided the Directors with an undertaking to provide financial support to the consolidated
entity should it be required; a current approved facility is in place with the shareholder as detailed
above for this purpose.
Following the anticipated approval by the independent shareholders regarding the proposed
transaction (note 26), the company will be debt free.
Page 25 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
1. Statement of significant accounting policies (continued)
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 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 12.
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.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation
charges for its property, plant and equipment and finite life intangible assets. The useful lives could change
significantly as a result of technical innovations or some other event. The depreciation and amortisation
charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or
non-strategic assets that have been abandoned or sold will be written off or written down.
Page 26 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
Consolidated
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
Business development
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
2018
$
23,700,065
2,332,732
26,032,797
49,536
328,898
378,434
747,115
891,877
122,086
349,652
485,727
185,359
30,654
1,571,840
406,196
61,164
162,807
140,077
257,925
-
87,423
1,017,536
6,517,438
1,367
2,253,057
2,254,424
1,047,558
695,100
1,742,658
2017
$
23,495,712
2,654,855
26,150,567
47,190
426,520
473,710
826,433
891,877
-
375,085
461,177
169,510
53,152
4,960,377
288,520
114,071
238,536
135,470
240,070
133,768
78,522
1,190,674
10,157,242
7,789
1,827,024
1,834,813
1,047,599
703,257
1,750,856
25,635
25,635
Page 27 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
5. Income tax
(a) The components of income tax expense comprise
Current tax
Deferred tax
(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% (2017: 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
De-recognition of DTA on prior year tax losses
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%
Net deferred tax assets at beginning
Charged to income statement current year
Net deferred tax assets at end of the year
6. Earnings per share
Consolidated
2018
$
-
-
-
2017
$
5,498,173
-
5,498,173
(3,396,832)
(8,313,631)
(1,019,050)
(2,494,089)
7,691
469,428
29,905
331,470
180,556
-
-
-
-
-
-
-
7,691
267,336
17,708
9,973
1,628,018
521,890
5,498,173
41,473
5,498,173
5,498,003
(5,498,003)
-
Basic and diluted earnings per share (cents per share)
(1.83)
(7.46)
Weighted average number of ordinary shares outstanding during
the period used in the calculation of basic and diluted EPS
185,141,050
185,141,050
Options are considered potential ordinary shares. For the years ended 31 December 2018 and 31 December
2017, 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.
No.
No.
Page 28 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
7. Cash and cash equivalents
Cash at bank and on hand
Consolidated
2018
$
2017
$
4,676,086
4,658,166
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
112,888
5,431
118,319
105,644
67,102
172,746
46,021
12,889
58,910
206,471
129,163
335,634
891,877
214,793
66,018
1,172,688
891,877
329,883
77,855
1,299,615
74,323
966,200
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 12).
Page 29 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
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
Plant and equipment – work in progress
Consolidated
2018
$
28,196,319
(11,094,717)
(8,223,418)
8,878,184
5,202,535
(2,202,004)
(1,120)
126,000
3,125,411
2017
$
28,196,319
(10,047,159)
(8,223,418)
9,925,742
5,158,846
(1,512,742)
(138,104)
-
3,508,000
Balance
12,003,595
13,433,742
Movements in property plant and equipment:
Building and leasehold improvements
Opening written down value
Depreciation
Carrying value at 31 December
Plant and equipment
Opening written down value
Additions
Addition – work in progress
Transfer cost of chips to PP&E *
Loss on disposal of plant and equipment
Depreciation expense
Carrying value at 31 December
9,925,742
10,973,340
(1,047,558)
(1,047,598)
8,878,184
9,925,742
3,508,000
3,778,469
189,271
126,000
-
(2,760)
(695,100)
3,125,411
67,726
-
365,063
-
(703,258)
3,508,000
* Gaming chips in use have previously been classed as inventories – consumable stores. During 2017, gaming
chips in use have been more appropriately reclassified as Property & Plant & Equipment.
Page 30 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
12. 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
Consolidated
2018
$
2017
$
19,000,000
(17,131,823)
19,000,000
(17,106,188)
1,868,177
1,893,812
1,893,812
(25,635)
1,868,177
1,919,447
(25,635)
1,893,812
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 2018 of $13,956,538 (2017:
$16,275,879) 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% (2017: 2 – 2.5%).
A post-tax discount rate of 13.1% (2017:13.1%) 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 based on actual results achieved
during the first full year of operations post refurbishment of the casino.
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 8% (2017: 5%) 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 9% (2017: 5%) 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 27% (2017: 44%) (with all other
assumptions remaining constant) before the carrying value of the CGU would need to be impaired.
o
13. Financial assets at fair value through other comprehensive income
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.
Page 31 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
14. Trade and other payables
Current unsecured:
Trade payables
Annual leave
Sundry payables and accrued expenses
Total payables (unsecured)
Consolidated
2018
$
388,559
1,031,948
2,931,727
2017
$
467,524
1,060,494
2,924,340
4,352,234
4,452,358
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.
15. Employee benefit provisions
Long Service Leave
Movement in the provision was as follows:
Opening balances:
Add: Entitlements
Less: Payments
Closing balances:
Presented in the statement of financial position as:
Current
Non-current
Total
16. Loans and borrowings
731,243
747,490
747,490
43,613
(59,860)
731,243
690,517
40,726
731,243
702,598
100,834
(55,942)
747,490
719,911
27,579
747,490
Interest bearing loans from related party (unsecured)
31,658,252
30,705,195
The fair value of the loan has been divided into its debt and equity component as follows:
Presented in the statement of financial position as:
Borrowings
Equity
31,658,252
6,677,725
38,335,977
30,705,195
6,939,271
37,644,466
Page 32 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
16. Loans and borrowings (continued)
Financing facilities:
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 2016 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 for a capital value $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.
Capitalised interest is in addition to the capital value of the facility (i.e. the accrued interest
does not form part of the balance of the facility limit).
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
the issue of greater than 250,000,000 Shares; or
excess of 89.59%;
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 facility limit is $36,450,000 in principal; interest is capitalised in addition to the facility limit.
Page 33 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
16. Loans and borrowings (continued)
The fair value of the Loan has been divided into its debt and equity components as follows:
Breakdown of the financing facilities:
Principal (limit $36,450,000)
Interest capitalised
Movement during the year:
Balance at the beginning of the year
Drawdowns
Repayments
Interest
Balance at the end of the year
17. Contributed equity
Consolidated
2018
$
2017
$
33,378,683
5,218,840
38,597,523
34,678,683
2,965,783
37,644,466
37,644,466
300,000
(1,600,000)
2,253,057
38,597,523
32,717,443
4,100,000
(1,000,000)
1,827,023
37,644,466
(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 and end of the reporting date
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.
Balance at the beginning and end of the reporting date
185,141,050
185,141,050
No.
No.
(b) Reserves
Opening balance
Equity component of convertible debt
Balance at 31 December
Consolidated
2018
$
6,939,271
(261,546)
6,677,725
2017
$
6,367,984
571,287
6,939,271
Page 34 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
18. Accumulated losses
Opening balance
Comprehensive loss for the period
Balance at 31 December
19. Cash flow information
Consolidated
2018
$
2017
$
(24,362,081)
(3,135,286)
(10,550,277)
(13,811,804)
(27,497,367)
(24,362,081)
Reconciliation of cash flow from operations with Loss after income
tax:
Loss from ordinary activities after income tax
Non-cash flows from ordinary activities:
Depreciation and amortisation
Profit on disposal
Interest on loan
Casino licences
Dividends received
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
(3,396,832)
(13,811,804)
1,768,294
(54,359)
2,253,057
891,877
(240)
(57,940)
13,147
(58,706)
162,889
126,784
-
(198,139)
1,776,491
-
1,827,023
891,879
(178)
30,661
14,231
26,182
330,074
17,604
5,498,003
206,222
Cash flows from operations
(1,449,832)
(3,193,612)
20. Financial instruments
a) General objectives, policies and processes
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.
Page 35 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
20. Financial instruments (continued)
(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,
The maximum exposure to credit risk at balance date is as follows:
Consolidated
Cash at bank
Trade and other receivables
2018
$
2017
$
4,676,086
4,658,166
118,319
58,910
4,794,405
4,717,076
(c) Liquidity risk
The consolidated entity manages liquidity risk by monitoring forecast cash flows.
Maturity analysis - 2018
Carrying
amount
< 6 months
6-12
months
1-3 years
> 3 years
Financial liabilities
Trade creditors
$
$
388,559
388,559
Loans and borrowings
31,658,252
-
Other creditors and accruals
2,931,726
2,931,726
Total
34,978,537
3,312,285
$
-
-
-
-
$
-
-
-
-
$
-
31,658,252
-
31,658,252
Intercompany working capital loans have no fixed repayment date. Parties to the loans have agreed that
repayments will not be called to the detriment of any other group company and at the date of this report no
notices have been issued in relation to repayment of any working capital loans. Parties have agreed that
there will be no repayments called within the next 13 months.
Maturity analysis - 2017
Carrying
amount
$
< 6 months
$
6-12
months
$
1-3 years
> 3 years
$
$
Financial liabilities
Trade creditors
467,524
467,524
Loans and borrowings
30,705,195
-
Other creditors and accruals
2,924,340
2,924,340
Total
34,097,059
3,391,864
-
-
-
-
-
-
-
-
-
30,705,195
-
30,705,195
Page 36 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
20. Financial instruments (continued)
(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 16 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:
Fixed / floating
interest rate
maturing
Within 1
year
1 to 5
years
Non-interest
bearing
Total
Weighted
average
effective
interest rate
At 31 December 2018
Financial assets
%
$
$
$
$
Cash & cash equivalents
1.5%
3,648,897
Trade & other receivable
Total financial assets
Financial liabilities
Trade creditors
Loans and borrowings
5%
Total financial liabilities
-
3,648,897
-
-
-
-
-
-
-
1,027,189
4,676,086
118,319
118,319
1,145,508
4,794,405
388,559
388,559
32,958,252
-
32,958,252
32,958,252
388,559
33,346,811
At 31 December 2017
Financial assets
Cash & cash equivalents
1.5%
3,294,955
Trade & other receivable
Total financial assets
Financial liabilities
Trade creditors
Loans and borrowings
5%
Total financial liabilities
-
3,294,955
-
-
-
-
-
-
-
1,363,211
4,658,166
58,910
58,910
1,422,121
4,717,076
467,524
467,524
30,705,195
-
30,705,195
30,705,195
467,524
31,172,719
Page 37 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
20. Financial instruments (continued)
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.
Interest rate sensitivity analysis
At 31 December 2018, 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
2018
$
2017
$
(560,187)
633,165
(548,205)
614,104
(560,187)
633,165
(548,205)
614,104
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
21. Key management personnel disclosures
(a) Key management personnel
Directors
T Fung
J Fung
A Chow
R Shields
J Mellor
A Gallaugher
Executives
J Mellor
R Bach
A Gallaugher
Chairman (appointed 7 Aug 2016)
Non-Executive Director (appointed 7 Aug 2016, resigned 14 May 2018)
Non-Executive Director (appointed 7 Sept 2016)
Non-Executive Director (appointed 7 Aug 2016)
Executive Director (appointed 14 Aug 2016, resigned 21 February 2019)
Executive Director (appointed 28 Jun 2018)
Senior Executive to 14 July 2015, appointed CEO 4 October 2016 to 31 December 2018
VP and General Manager appointed 2 July 2015
Financial Controller appointed 24 March 2017, CEO (Acting) appointed from 1 Jan 2019
Page 38 of 64
AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
21. Key management personnel disclosures (continued)
Transactions with key management personnel
Key management personnel remuneration includes the following:
Consolidated
Short term employee benefits:
Other benefits
Post-employment benefits:
Total remuneration
Further details are included in the Remuneration Report.
22. Related party transactions
(a) Controlling entities
2018
$
1,126,847
114,957
83,844
2017
$
1,243,159
125,435
83,088
1,325,648
1,451,682
The ultimate parent is TF Reef – Canberra Holdings Limited (incorporated in BVI). The ultimate Australian
parent entity is Aquis Canberra Holdings (Aus) Pty Ltd
(b) Key management personnel
Disclosures relating to KMP are included in Note 21 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 16.
23. Contingent liabilities
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.
24. Investment in controlled entities
Interests in controlled entities are set out below. All entities are incorporated and domiciled in Australia.
Name
Principal Activity
Aquis Canberra Pty Ltd
Gaming and entertainment
Incorporated Ownership Interest
2017
100%
2018
100%
Australia
Casino Canberra Limited1
Gaming and entertainment
Australia
100%
100%
1 Shares held by ACPL
Page 39 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
25. 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
2018
$
30,551,588
9,556
30,561,144
(355,659)
(31,658,252)
(32,013,911)
(1,452,767)
4,727,776
6,805,438
(12,985,981)
(1,452,767)
2017
$
32,456,965
13,658
32,470,623
(157,256)
(30,705,195)
(30,862,451)
1,608,172
4,727,776
7,066,984
(10,186,588)
1,608,172
Statement of profit or loss and other comprehensive income
Income
(Loss) for the year
1,804
(3,060,938)
1,112
(3,132,448)
Commitments for the parent entity are the same as those for the consolidated entity and are set out at Note
21.
The parent entity has not entered into a deed of cross guarantee nor are there any contingent liabilities at
year end.
26. Future developments
On 21 December 2018, the company announced that it had entered into a binding Implementation Deed (and
related documentation) with Blue Whale Entertainment Pty Limited (Blue Whale), a company owned and
controlled by Mr Michael Gu, the Group CEO of iProsperity Group, and Aquis Canberra Holdings (Aus) Pty
Limited (ACH). The transaction contemplates Blue Whale’s acquisition of the outstanding convertible loan
and 137.0 million shares held by ACH.
Pursuant to the transaction, ACH will transfer:
- 137,004,377 AQS shares to Blue Whale; and
- Its convertible loan with the company to Blue Whale, following which Blue Whale will forgive a minimum
of $2.0 million of the convertible loan and then immediately convert the balance of the convertible loan
to AQS shares at a conversion price of $0.20 per share and subject to a cap.
The above transfers will result in Blue Whale replacing ACH as the controlling shareholder of the company
with a shareholding of up to a maximum of 86.99% of Aquis’ share capital.
Blue Whale also grants ACH a put option in respect of its remaining 26,867,497 shares, pursuant to which
ACH may elect to sell those shares to Blue Whale after approximately 3 years should such shares not have a
value of more than $4 million at that time.
Page 40 of 64 AQUIS ENTERTAINMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
26. Future developments (continued)
The transaction is subject to shareholder approval by the independent shareholders of Aquis and ACT
gaming regulatory approvals. Blue Whale may also terminate the agreements if certain limited material
adverse events occur. The Extraordinary General Meeting (EGM) to seek the approval of the independent
shareholders is to be held on 21 March 2019. ACT Government regulatory approval is expected to take
approximately 3-6 months to complete.
27. 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.
28. 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.
29. Auditor information
The following fees were paid or payable for services provided by the Group’s auditors:
Audit of the financial statements
RSM Australia Partners
30. Company information
The registered office and principal place of business is as follows:
21 Binara Street
Canberra ACT 2601
2018
$
2017
$
139,250
141,730
31. Authorisation of financial statements
The consolidated financial statements for the year ended 31 December 2018 (including comparatives) were
approved and authorised for issue by the Board of Directors on 27 February 2019.
Page 41 of 64 AQUIS ENTERTAINMENT LIMITED
DIRECTORS’ DECLARATION
The Directors of the company declare that:
1.
the financial statements and notes are in accordance with the Corporations Act 2001 and:
a. comply with Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001; and
b. give a true and fair view of the financial position as at 31 December 2018 and of the
performance for the year ended on that date of the company and consolidated group;
2.
the Chief Executive Officer and Financial Controller have each declared that:
a.
b.
c.
the financial records of the company for the financial year have been properly maintained
in accordance with section 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the Accounting
Standards; and
the financial statements and notes for the financial year give a true and fair view;
3.
4.
in the directors’ opinion there are reasonable grounds to believe that the company will be able
to pay its debts as and when they become due and payable.
Note 1 confirms that the consolidated financial statements also comply with International
Financial Reporting Standards
Signed in accordance with a resolution of the Directors.
Allison Gallaugher
Director
Canberra
27 February 2019
Page 42 of 64 AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Aquis Entertainment Limited for the year ended 31 December
2018, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Canberra, Australia Capital Territory
Dated: 27 February 2019
RODNEY MILLER
Partner
Page 43 of 64 INDEPENDENT AUDITOR’S 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 2018, 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)
giving a true and fair view of the Group’s financial position as at 31 December 2018 and of its
financial performance for the year then ended; and
(ii)
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.
Page 44 of 64 Key Audit Matters (Continued)
Key Audit Matter
How our audit addressed this matter
Recognition of Revenue – Refer to Note 3 in the financial statements
Revenue for the year ended 31 December 2018 was
$26.4million.
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
in
transfer of significant volumes of cash
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 – Refer to Note 12 in the financial statements
At 31 December 2018 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 ‘fair value less cost to sell’ 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.
the year ended 31 December 2018
impairment
For
management have performed an
assessment over the intangible balance by:
•
expenses
calculating the fair value less cost to sell for
the Casino using a discounted cash flow
flows
model. This model used cash
(revenues,
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
and
Our audit procedures in relation to management’s
impairment assessment included:
• Updating
our
of
management’s annual impairment testing
process.
understanding
•
the
Assessing management’s determination
that
intangible asset should be
allocated to a single CGU, the Casino,
based on
the Group’s
the nature of
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
also
accuracy
performed sensitivity analysis on earnings
multiples and growth rates applied to cash
flows to determine the extent of headroom
for the Casino.
forecasting. We
of
• We agreed other key assumptions such as
discount rates and revenue growth to
supporting evidence and corroborated
these to industry averages/trends.
Page 45 of 64 Key Audit Matters (Continued)
Key Audit Matter
How our audit addressed this matter
Impairment of Intangible Assets – Refer to Note 12 in the financial statements (continued)
•
comparing the resulting fair value less cost to
sell of the Casino to the respective book
value.
Management also performed a sensitivity analysis
over the calculations, by varying the assumptions
used (growth rates, terminal growth rate and
WACC) to assess the impact on the valuations.
Other Information
• We compared the cash flow projections to
historic performance and observable
trends and corroborated the reasons for
deviations
third party evidence as
appropriate.
to
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 2018, 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/auditors_responsibilities/ar2.pdf.
This description forms part of our auditor's report.
Page 46 of 64 Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 11 of the directors' report for the year ended
31 December 2018.
In our opinion, the Remuneration Report of Aquis Entertainment Limited, for the year ended 31 December 2018,
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.
RSM AUSTRALIA PARTNERS
Canberra, Australia Capital Territory
Dated: 27 February 2019
RODNEY MILLER
Partner
Page 47 of 64 AQUIS ENTERTAINMENT LIMITED
ACN 147 411 881
(Company)
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement is current as at 9 April 2019 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,
Page 48 of 64
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
Recommendation 1.2
A listed entity should:
(a) undertake appropriate checks before appointing a
forward to security holders a
person, or putting
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.
Yes
The Company:
undertakes appropriate checks
including character
references, criminal history and insolvency checks before
appointing or putting
forward to security holders a
candidate for election, as a Director; and
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.
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
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.
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;
(b) disclose that policy or a summary or it; and
(c) disclose as at the end of each reporting period:
Yes
Yes
Yes
Yes
The Company has written agreements with each Director and
senior executive setting out the terms of their appointment.
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.
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. The Committee has set a
high level diversity target only for 2019 (40% female and 60% male
staff) due to the uncertainty around the impact of the corporate
transaction which was approved at an EGM on 21 March 2019.
Page 49 of 64
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
At 31 March 2019, the respective proportions of men and women
on the Board, in senior executive positions and across the whole
organisation were as follows:
Board (including the Executive Director)
Senior Executives (excl. Executive Directors)1
Management – Casino Canberra (excl. Exec
Directors and Senior Executives)
Staff
Total
Female Male
Total
1
1
2
94
98
3
-
5
4
1
7
127
135
221
233
42%
58%
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.
A Board performance evaluation was undertaken during the 2018
financial year.
Page 50 of 64 RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
Recommendation 1.7
A listed entity should:
(a) have and disclose a process for periodically evaluating
the performance of its senior executives; and
(b) disclose, in relation to each reporting period, whether a
the
performance evaluation was undertaken
in
reporting period in accordance with that process.
Principle 2: Structure the Board to add value
Recommendation 2.1
The Board of a listed entity should:
Yes
Yes
The Board is responsible for reviewing the performance of senior
management against strategies established by the Board. To this
end the Board e s t a b l i s h e s a n n u a l KPI’s against which the
performance of its senior executives are assessed. The KPI’s are
set for the calendar year and are reviewed in January annually.
A performance evaluation of executives against KPI’s set for the
2018 financial year has been conducted.
(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
appropriate
experience,
independence and knowledge of the entity to enable
it to discharge its duties and responsibilities effectively
balance
skills,
of
Mr Russell Shields (Chair)
Mr Tony Fung
Mr Alex Chow
A copy of the Committee Charter may be viewed on the
Company’s 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.
Page 51 of 64
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
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:
Governance
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
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
Principles
Mr Alex Chow
Mr Russell Shields
Yes
The names of the Directors who are not considered independent
a r e :
Mr Tony Fung
Ms Allison Gallaugher
Page 52 of 64 RECOMMENDATIONS (3RD EDITION)
(c) the length of service of each Director
COMPLY
Yes
EXPLANATION
Ms Gallaugher was appointed on 28 June 2018.
Mr Chow was formally appointed on 7 September 2015.
All other Directors were appointed with effect from 7 August 2015.
Recommendation 2.4
A majority of the Board of a listed entity should be
independent Directors.
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.
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.
Yes
At the date of this report, the Board comprises f o u r members,
t wo of whom are independent and t w o 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
Director, who is not considered independent.
No
Yes
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.
The Company has an induction program for new Directors and
encourages ongoing professional development of directors and
senior management.
Page 53 of 64
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
Principle 3: Act ethically and responsibly
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:
(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
Yes
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 Tony Fung
Mr Russell Shields and
A copy of the Committee Charter may be viewed on the
Company’s 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.
Page 54 of 64
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
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.
Page 55 of 64
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
Principle 5: Make timely and balanced disclosure
Recommendation 5.1
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
relations program
two-way
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.
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 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
facilitate and
encourage participation at meetings of security holders.
in place to
Page 56 of 64
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
the
Shareholder Communications Policy establishes
The
Company’s commitment to receive communications from, and
send communications to, the entity and its security registry
electronically.
Page 57 of 64
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
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 Tony Fung
Mr Russell Shields
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
Page 58 of 64 RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
Recommendation 7.3
A listed entity should disclose:
(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 completed a review of
the Company’s risk management framework and risk registers.
No
The Company does not 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.
framework.
The Audit and Risk Management Committee Charter sets out the
processes the Committee employs to oversee the Company’s risk
operational
management
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
The Company’s
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.
Page 59 of 64
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
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 Tony Fung
Mr Alex Chow
A copy of the Committee Charter may be viewed on the
Company’s 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.
Page 60 of 64
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
reflected in the level and composition of their remuneration.
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.
Page 61 of 64 SHAREHOLDER INFORMATION AT 31 MARCH 2019
Shareholder Information required by the Australian Securities Exchange Limited (ASX) Listing
Rules and not disclosed elsewhere in the Report is set out below.
1. Twenty Largest Shareholders
Name
AQUIS CANBERRA HOLDINGS (AUS) PTY LTD
MR HONGHAO SUN
MR PAUL JOSEPH MANKA
MR THOMAS JON PICKETT
LANDSEC PTY LTD
TARALAKE PTY LTD
LANDSEC PTY LTD
MR DENIS MUDDLE
MR JOHN HAMILTON
MRS JODIE LEE MAXTED
CHANCERY HOLDINGS PTY LTD
LIFE IN VERSE PTY LTD
MR PENGLIANG SHI
CONFIDO SUPERANNUATION PTY LTD
MR GARY STANLEY SWIFT & MRS KAYLEEN LESLIE SWIFT
MR ANTHONY JOHN THOMAS DENNIS & MRS SELINA JAY DENNIS
MR ROBERT CAMERON GALBRAITH
AE ELECTRONICS PTY LTD
MR CHENJUN JIANG
MISS JINAN ZHAI
MISS XIAOYING DAI
No. of Shares
%
163,871,874 88.512%
1,500,000
0.810%
1,325,079
0.716%
1,200,000
0.648%
797,999
0.431%
790,329
0.427%
646,800
0.349%
500,000
0.270%
449,000
0.243%
437,154
0.236%
400,000
0.216%
268,000
0.145%
239,366
0.129%
224,765
0.121%
220,000
0.119%
200,000
0.108%
200,000
0.108%
160,000
0.086%
152,084
0.082%
150,000
0.081%
150,000
0.081%
Total Securities of Top 20 Holdings
173,882,450 93.919%
2. Distribution of Shareholders
Quoted Securities
Range
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and above
Totals
Total Holders
Shares
% Issued Capital
9
7
95
344
26
481
1,790
21,429
919,118
9,677,562
174,521,151
185,141,050
0.001
0.012
0.496
5.227
94.264
100.000
Page 62 of 64 3. Substantial Shareholders
The number of securities held by substantial shareholders and their associates are set out
below:
Fully paid Ordinary Shares
Name
Number
%
AQUIS CANBERRA HOLDINGS (AUS) PTY LTD
163,871,874
88.512%
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.
5. 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.
Page 63 of 64 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
Facsimilie: +61 2 6257 7079
Directors
Mr Tony Fung (Chairman)
Mr Alex Chow (independent Non-executive Director)
Mr Russell Shields (Independent Non-executive Director)
Ms Allison Gallaugher (Acting 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
Page 64 of 64