Aquis Entertainment
Annual Report 2020

Plain-text annual report

AQUIS ENTERTAINMENT LIMITED ABN 48 147 411 881 Annual Report for the Financial Year Ended 31 December 2020 Page 1 CONTENTS Financial Statements Corporate Governance Statement Shareholder Information Corporate Directory 3 48 66 68 Page 2 AQUIS ENTERTAINMENT LIMITED ABN 48 147 411 881 Financial Statements for the Financial Year Ended 31 December 2020 Page 3 AQUIS ENTERTAINMENT LIMITED DIRECTORS’ REPORT The Directors present their report together with the consolidated financial statements for the financial year ended 31 December 2020. 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 Alex Chow Russell Shields Allison Gallaugher Chairman Non-Executive Director Non-Executive Director Executive Director Current Directors Tony Fung (Chairman) Mr Tony Fung is the ultimate owner and controller of the Aquis Group. He has significant experience in corporate finance and company administration, including running Sun Hung Kai & Co. Ltd, a leading Hong Kong-based non- bank financial and securities holding company. Mr Fung has significant property investments in Hong Kong and also in Australia. 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 retired in October 2019. He 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. Allison Gallaugher (Executive Director) 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 was acting Chief Executive Officer from 1 January 2019. She was formally appointed as Chief Executive Officer effective from 27 February 2020. Page 4 Company Secretary The Company Secretary in office at the end of the reporting period was Company Matters practitioner, Kim Bradley-Ware. Kim holds a Bachelor of Laws (LLB), a Bachelor of Commerce (B.Com), and is a full member of the Australian Society of CPAs. Kim has over 20 years of experience as a Company Secretary and CFO and has worked in the Company Matters team since 2017, providing company secretarial, governance and chief financial officer services to Company Matters clients across a range of different industries, including, retail, infrastructure and energy. Kim has provided support to a large number of ASX companies including Elixinol Global Limited (ASX: EXL), Energy Action Limited (ASX: EAX), People Infrastructure Ltd (ASX: PPE), as well as various Infrastructure Joint Ventures and Private Company’s. Prior to joining Company Matters, Kim was a Company Secretary and Chief Financial Officer at ASX listed Pan Pacific Petroleum Limited (ASX: PPP) and prior to that, held various roles in accounting across a variety of different industries including credit reporting, telecommunications and media. 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 2020 was a profit of $798,201 (2019: loss $3,957,193). Operating revenue for the year amounted to $18,687,684, a 23.51% decrease from the 2019 result ($24,433,082). Earnings before Interest Tax Depreciation and Amortisation (EBITDA) for the year was a profit of $4,819,796 (2019: profit $72,244). 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. Aquis advanced its strategy during the year by:  Focused marketing activities to streamline expenditure on profitable revenue streams within the gaming department;  Continuing to improve the operations of Casino Canberra by engaging experienced management who are focussed on improving revenue and customer service standards;  Continuation of a cost control program to minimise expenditure and streamline efficiencies in business processes to improve economies of scale particularly in the post shutdown period;  Ongoing consideration of alternative and complementary business lines as opportunities arise; and  Effective hibernation of the business during the Government mandated Covid-19 shutdown, with preparation and plans implemented on reopening to take advantage of competitive advantages of the business location and floor plans. Page 5 Operations Revenue from operations for the year decreased 23.51% to $18,687,684 (2019: $24,433,082). The result was due to an ACT Government mandated shutdown from 23 March 2020 to 9 August 2020 and capped patron visitation to our premises as part of Canberra’s Covid-19 recovery roadmap. The operating profit includes a portion of JobKeeper rebates received and offset against wages paid post reopening, as well as a refund of the annual Casino licence fee from the ACT Government as part of their Covid-19 economic package. Operating expenses including payroll related expenses decreased by 36.94% for the year, with the major decreases being in payroll and marketing expenses, again due to the shutdown. Post reopening, location and size advantages allowed for a strong recovery period which has continued through the end of the year. Ongoing expenditure control and improvements in efficiencies have ensured a solid result for the business post reopening. Financial position At 31 December 2020, the Group had cash reserves of $7,259,495 (2019: $5,105,943) and unused borrowing facilities of $5,071,317. Following the end of the financial year no further drawdowns have been made and the group has a positive net cashflow for the financial year. The balance sheet at 31 December 2020 shows a net asset deficit of $19,809,879 (2019: $20,608,259 deficit). Outlook Directors are confident of the outlook for Aquis. The casino’s highly experienced operations leadership team continue to execute the vision of attracting and servicing quality players. Ongoing internal restructures to improve the alignment of teams within the group continues to improve efficiencies in our workforce, in addition to the absorption of several roles on resignation of incumbent employees. 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. Customised offers to individual members have proved very successful in maximising revenues while minimising costs, as all expenditure has been effective. Legislation was enacted in 2018 to allow 200 electronic gaming machines (EGM’s) to operate within the casino. During 2020 the planning for the redevelopment of Casino Canberra and further discussions with the Government were paused due to the Covid-19 pandemic and shutdown, however as restrictions continue to ease, focus will return to future plans for redevelopment and discussions surrounding the details of the legislated requirements for the EGM’s will recommence to enable planning for the future. Employees The number of people employed by the Consolidated Entity at the reporting date was 206. DIVIDENDS The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report. Directors’ and committee meetings The number of meetings of the Company’s Board of Directors held during the period and the number of meetings attended by each Director was: Director Board Meetings Audit & Risk Remuneration & Nomination Eligible to Attend Attended Eligible to Attend Attended Eligible to Attend Attended T Fung A Chow R Shields A Gallaugher 4 4 4 4 4 4 4 4 1 1 1 n/a 1 1 1 n/a 1 1 1 n/a 1 1 1 n/a Page 6 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 Casino Canberra was an eligible employer under the Federal Government’s JobKeeper payment scheme. From 4 January 2021, it is no longer eligible to receive JobKeeper payments under phase three of this payment scheme. Other than as set out in this report and the attached financial statements, no other matters or circumstances have arisen since 31 December 2020, 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. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES Aquis is an entertainment, gaming and leisure company which currently operates a casino business in Canberra. Following the termination of the Blue Whale transaction, the company was released from the Implementation Deed and will continue ahead with it’s own strategy, without the opportunities planned as a result of the proposed change in majority shareholding under that deal. The company still has intentions to update plans in relation to a proposed redevelopment, incorporating the 200 EGM’s for which approval has been legislated. There are several terms in the legislation which require clarification prior to the company being able to settle any plans. Discussions have been held with the government in relation to a plan as to clarification of these items, which will progress further through 2021. Following these clarifications, the company will evaluate options and variables to determine a suitable and viable way forward with regard to the redevelopment. There are several other prospects available to the company, which have been deferred due to the Covid-19 pandemic, but will be investigated and evaluated in the future prior to reporting in due course. The existing short to medium term strategy to improve service and gaming offerings, increase revenues and minimise expenditure via improvements in processes and increased efficiencies continues from prior years and the Page 7 current major focus is solidifying the performance of the company following the Covid-19 pandemic shutdown and ongoing related trading restrictions. The company remains committed to the operation of the casino and to advancing the strategy of creating a world class entertainment precinct in the Canberra CBD with the casino as its centrepiece and believes that the post Covid-19 refurbishment of the area surrounding the casino presents the perfect opportunity to do so. SHARE OPTIONS As at the date of this report, there were no unissued ordinary Aquis shares under option (2019: 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 Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 31 to the financials. The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are of the opinion that the services disclosed in note 31 of the financial statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:  All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and  None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards. AUDITOR INDEPENDENCE A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is attached. Page 8 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 A Gallaugher Role Relevant Dates Financial Controller Director Chief Executive Officer (Acting) Chief Executive Officer Appointed 24 March 2017 Appointed 28 June 2018 Appointed 1 January 2019 Appointed 27 February 2020 Previous Directors and Executives Name J Mellor Role Chief Executive Officer Director R Bach Vice President & General Manager Relevant Dates CEO to 31 December 2018 Resigned 21 February 2019 Appointed 2 July 2015 Resigned 7 June 2019 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 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 2020 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 C. Details of remuneration Remuneration received or receivable by Key Management Personnel during the reporting period was as follows. Post- employment benefits super - annuation Other long- term benefits Share based payment Total Performanc e based remuneratio n Remun- eration at risk - STI $ $ $ $ $ % % - - - - - - - 6,761 20,241 - - - 12,303 27,002 12,303 - - - - - - 59,167 77,928 396,099 533,194 - - - 23% - - - 23% Post- employment benefits super - annuation Share based payment Total Performance based remuneration Remun- eration at risk - STI $ $ $ $ % % - - 9,975 5,776 10,164 19,135 45,050 - - - - - - - - 105,000 114,975 124,415 149,548 249,327 743,265 - - - - - 15% - - - - - 15% Key management personnel Fees and/or salary Short-term benefits Cash, profit sharing / other bonuse s $ $ Other 2020 T Fung A Chow R Shields A Gallaugher1 - 59,167 71,167 273,555 - - - 90,000 Totals 403,889 90,000 1 Appointed as CEO from 27 February 2020 Key management personnel 2019 T Fung A Chow R Shields J Mellor1 R Bach2 A Gallaugher3 Fees and/or salary Short-term Benefits Cash, profit sharing / other bonuses $ $ Other - 105,000 105,000 109,039 116,785 191,221 - - - - - 38,365 - - - 9,600 22,599 606 Totals 627,045 38,365 32,805 1 Resigned 21 February 2019 2 Resigned 7 June 2019 3 Appointed as Director from 28 June 2018 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  $20,000 per annum for acting as the Chair of a Board Committee and  $5,000 per annum for serving on a Board Committee.  Statutory superannuation where required by law. Page 11 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 Commencement Date Term of Agreement Annual Salary Superannuation Bonus Post-employment restraint Allison Gallaugher Financial Controller 1 & CEO, 2,3 24-Mar-2017 Open $192,500 from 7 January 2019 as Financial Controller $300,000 from 2020 as CEO Statutory superannuation Maximum annual bonus = 20% (2019) 30% (2020) 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 Company may impose restraint for various periods up to12 months and for various regions Termination Period 2 months either party 1 Was Financial Controller to 26 February 2020 2 Appointed acting CEO from 1 January 2019 3 Appointed CEO from 27 February 2020 Page 12 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 2020 T Fung Name 2019 Opening Balance1 Acquired on Market Disposed Closing Balance2 163,871,874 - - 163,871,874 Opening Balance1 Acquired on Market Disposed Closing Balance2 T Fung 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 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 $37.4 million (2019: $38.4 million) inclusive of accrued interest. End of audited remuneration report Signed in accordance with a resolution of the directors. Russell Shields Director Canberra 11 March 2021 Page 13 AQUIS ENTERTAINMENT LIMITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 31 December 2020 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 Profit / (Loss) before income tax Income tax expense / (benefit) Profit / (Loss) attributable to members of the consolidated entity Other comprehensive income for the year, net of tax Total comprehensive profit / (loss) for the year attributable to the members of the consolidated entity Consolidated Note 2020 $ 2019 $ 3 3 4 4 4 4 5 18,687,684 245,498 24,433,082 368,271 18,933,182 24,801,353 (1,951,035) (8,251,025) (3,896,394) (2,244,286) (1,766,606) (25,635) (2,644,989) (15,655,937) (6,389,903) (2,253,670) (1,788,412) (25,635) 798,201 (3,957,193) - - 798,201 (3,957,193) 179 624 798,380 (3,956,569) Basic and diluted earnings per share (cents per share) 6 0.43 (2.14) The accompanying notes form part of these financial statements. Page 14 AQUIS ENTERTAINMENT LIMITED STATEMENT OF FINANCIAL POSITION as at 31 December 2020 Consolidated Note 2020 $ 2019 $ CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other current assets Total current assets NON-CURRENT ASSETS Property, plant and equipment Right of use assets Trade and other receivables Intangible assets Financial assets at fair value through other comprehensive income Total non-current assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Lease liabilities Employee benefit provisions Total current liabilities NON-CURRENT LIABILITIES Employee benefit provisions Lease liabilities 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 8 13 14 15 16 17 17 16 18 19 19 20 7,259,495 536,765 255,585 243,474 8,295,319 8,783,682 18,133 5,000 1,816,907 5,105,943 132,548 166,723 341,929 5,747,143 10,423,463 66,032 - 1,842,542 4,909 4,730 10,628,631 12,336,767 18,923,950 18,083,910 2,958,574 18,133 1,413,205 4,389,912 188,524 - 34,155,393 34,343,917 3,021,045 47,899 1,553,949 4,622,893 139,245 18,133 33,911,898 34,069,276 38,733,829 38,692,169 (19,809,879) (20,608,259) 4,167,952 6,276,150 (30,253,981) 4,167,952 6,678,349 (31,454,560) (19,809,879) (20,608,259) The accompanying notes form part of these financial statements Page 15 AQUIS ENTERTAINMENT LIMITED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2020 Balance at 1 January 2019 Loss attributable to members of the company Other Comprehensive income for the year net of tax Balance at 31 December 2019 Balance at 1 January 2020 Profit attributable to members of the company Other Comprehensive loss for the year net of tax Balance at 31 December 2020 Share capital Reserve Accumulated losses $ $ $ Total $ 4,167,952 - 6,677,725 - (27,497,367) (3,957,193) (16,651,690) (3,957,193) - 624 - 624 4,167,952 6,678,349 (31,454,560) (20,608,259) - - 798,201 798,201 - 4,167,952 (402,199) 402,378 179 6,276,150 (30,253,981) (19,809,879) The accompanying notes form part of these financial statements Page 16 AQUIS ENTERTAINMENT LIMITED STATEMENT OF CASH FLOWS for the year ended 31 December 2020 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest paid Consolidated 2020 $ 2019 $ 20,149,049 (15,825,652) 14,933 (791) 27,048,071 (26,408,872) 38,281 (25) Net cash provided by (used in) operating activities 21 4,337,539 677,455 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 lease liabilities Repayment of borrowings Net cash (used in) provided by financing activities Net increase (decrease) in cash held Cash at beginning of the period Cash at end of the period 7 (165,969) 3,780 101 (162,088) - (21,899) (2,000,000) (2,021,899) 2,153,552 5,105,943 7,259,495 (247,728) - 130 (247,598) - - - - 429,857 4,676,086 5,105,943 The accompanying notes form part of these financial statements Page 17 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 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 27. 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 26. 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 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 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, and is recognised upon the outcome of the game. Sale of goods Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery. 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. Contract and contract-related liabilities In providing goods and services to its customers, there may be a timing difference between cash receipts from customers and recognition of revenues, resulting in a contract or contract-related liability. The Group primarily has liabilities related to contracts with customers as follows:  Unredeemed casino chips, which represent the amounts owed to customers for chips in their possession.  Loyalty program liabilities, which represent the deferral of revenue until loyalty points are redeemed. These liabilities are generally expected to be recognised as revenues within one year of being purchased, earned, or deposited and are recorded within current trade and other payables on the Statement of Financial Position. Decreases in these balances generally represent the recognition of revenues and increases in the balances represent additional chips held by customers and increases in customer loyalty program balances made by customers. (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 Page 19 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 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. (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 include 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 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 1. Statement of significant accounting policies (continued) (i) Property, plant and equipment Land and buildings are stated based on historical cost less accumulated depreciation and impairment for buildings. Historical cost includes expenditure that is directly attributable to the acquisition of the land and building. 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 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 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 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 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 profit or 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 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 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. (t) COVID-19 government assistance During the year, the consolidated group received a number of Covid-19 economic support measures from the ACT and Federal Governments. The support received during the period was as follows: ACT Government • • • Casino licence fee for 2020 waived in full $972,196 – funds used in the operations of the business Casino tax for March 2020 waived in full $123,240 – funds used in the operations of the business Liquor licence fee for the June quarter waived and refunded $3,489 returned funds used in the operations of the business • Payroll tax for March to August waived in full $187,263 - funds used in the operations of the business Federal Government • JobKeeper payments funding totalling $4,793,250 (paid up to fortnight ending 3 January 2021), funds used as follows: - - $1,812,004 passed through directly to employees, with no effect on the company’s financials $2,981,246 received as reimbursements for wages paid netted against employee benefits expense • • • Cash flow boost $120,000 (included in other revenue) Interest free deferral of payment for PAYG withholding tax (March to September) to October 2020 Interest free deferral of payment for March 2020 Business Activity Statement to September 2020 The Group is no longer eligible for JobKeeper effective from 4 January 2021. Page 24 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 1. Statement of significant accounting policies (continued) (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 produced a profit of $798,201 (2019: $3,957,193 loss), had net cash inflows from operating activities of $4,337,539 (2019: inflows of $677,455) and net liabilities of $19,808,879 (2019: $20,608,259) for the year ended 31 December 2020. 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 $5.07 million at the balance date. This facility is sufficient to meet the cash flow requirements for the consolidated group. The 2021 forecast cash flow is positive. Cash balances are in excess of $7 million at balance date and are forecast to increase. 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. 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 13. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Management judgement is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and level of future taxable profits Page 25 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 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. 3. Revenue and other income Revenue Revenue from services Revenue from sale of goods Total revenue Other income Interest Other revenue Total other income Consolidated 2020 $ 2019 $ 17,292,814 1,394,870 18,687,684 14,933 230,565 245,498 22,139,726 2,293,356 24,433,082 38,281 329,990 368,271 Page 26 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 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 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 Right-of-use assets Total depreciation (d) Amortisation Casino licence and fees Consolidated 2020 $ 2019 $ 412,898 74,323 - 219,261 415,089 241,532 23,830 1,085,118 308,503 9,027 129,312 146,235 151,553 47,947 631,766 3,896,394 791 2,243,495 2,244,286 1,046,428 698,279 21,899 1,766,606 684,721 891,877 36,009 291,612 548,594 241,694 29,529 1,592,605 569,181 47,954 177,652 143,648 266,862 88,058 815,907 6,389,903 25 2,253,646 2,253,670 1,047,449 711,533 29,430 1,788,412 25,635 25,635 Page 27 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 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 profit / loss from Ordinary activities at 26% (2019: 27.5%) 1 Tax effect of permanent differences: Non-deductible amortisation Non-deductible interest expense Sundry items De-recognition of DTA on accruals Use of tax losses not previously recognised as a DTA De-recognition of DTA / (DTL) 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 26% Net deferred tax assets at beginning Charged to income statement current year Net deferred tax assets at end of the year Consolidated 2020 $ - - - 2019 $ - - - 798,201 (3,957,193) 207,532 (1,088,228) 6,665 441,144 (13,620) 45,574 (687,295) - - - - - - - 7,050 459,208 75,572 291,532 - 254,866 - - - - - - As at 31 December 2020, a net deferred tax asset of $8,013,243 has not been recognized. 6. Earnings per share Basic and diluted earnings per share (cents per share) 0.43 (2.14) 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 No. No. Options are considered potential ordinary shares. For the years ended 31 December 2020 and 31 December 2019, 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. 1 Re-assessment on the income tax rate applicable to 2019. No impact on the financial statement due to carried forward losses from previous years. Page 28 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 7. Cash and cash equivalents Cash at bank and on hand Consolidated 2020 $ 2019 $ 7,259,495 5,105,943 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. The funds were not used during the year. 8. Trade and other receivables Current Trade receivables Other receivables Total Non-current Other receivables 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 34,900 501,865 536,765 56,814 75,734 132,548 5,000 - 170,379 85,206 255,585 - 176,737 66,737 243,474 91,873 74,850 166,723 74,323 204,569 63,037 341,929 - - 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 amortisation of the prepayment was completed in early 2020. The 2020 licence fee due was remitted by the ACT Government as part of the response to the Covid-19 pandemic. Future licence fees are payable annually in advance in February. Page 29 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 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 Balance 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 – transfer from right-of-use assets Profit / (loss) on disposal of plant and equipment Depreciation expense Carrying value at 31 December 12. Non-current assets – right-of-use assets Plant and equipment – right-of-use Less: accumulated depreciation Consolidated 2020 $ 2019 $ 28,196,319 (13,188,595) (8,223,418) 28,196,319 (12,142,167) (8,223,418) 6,784,306 7,830,734 5,591,234 (3,591,858) - - 5,377,946 (2,910,097) (1,120) 126,000 1,999,376 2,592,729 8,783,682 10,423,463 7,830,734 8,878,184 (1,046,428) (1,047,450) 6,784,306 7,830,734 2,529,729 139,969 26,000 1,957 (698,279) 1,999,376 3,125,411 182,213 - (3,363) (711,532) 2,592,729 54,399 (36,266) 18,133 95,462 (29,430) 66,032 The consolidated entity lease plant and equipment under agreements of between one to three years. There are also office equipment under agreements either short-term or low-value, so have been expensed as incurred and not capitalised as right-of-use assets. Page 30 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 Consolidated 13. Intangible assets Casino Licence and associated costs At cost Accumulated amortisation and impairment Carrying value at 31 December Movements in intangible assets Opening written down value Amortisation Carrying value at 31 December 2020 $ 19,000,000 (17,183,093) 1,816,907 1,842,542 (25,635) 1,816,907 2019 $ 19,000,000 (17,157,458) 1,842,542 1,868,177 (25,635) 1,842,542 The Casino Canberra licence is tested annually for impairment. The remaining term on the licence is 70 years. 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 2020 of $9,794,265 (2019: $11,280,127) 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% (2019: 2 – 2.5%). A post-tax discount rate of 13.5% (2019:13.5%) 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. 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:  Revenue would need to decrease by more than 23% (2019: 2%) from the forecast levels (with all other assumptions remaining constant) before the carrying value of the CGU would need to be impaired,  Expenses would need to increase by more than 24% (2019: 10%) 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 60% (2019: 25%) (with all other assumptions remaining constant) before the carrying value of the CGU would need to be impaired. 14. Financial assets at fair value through other comprehensive income Listed equities – at fair value 4,909 4,730 The fair values of listed investments are determined by reference to published price quotations in an active market. Page 31 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 15. Trade and other payables Current unsecured: Trade payables Sundry payables and accrued expenses Total payables (unsecured) Consolidated 2020 $ 305,229 2,653,345 2,958,574 2019 $ 345,306 2,693,872 3,039,178 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. 16. Lease liabilities Current liabilities Non-current liabilities 17. Employee benefit provisions Current Annual Leave Long Service Leave Non-current Long Service Leave Total 18. Loans and borrowings 18,133 - 18,133 47,899 18,133 66,032 857,851 555,354 1,413,205 965,075 588,874 1,553,949 188,524 139,245 1,601,729 1,693,194 Interest bearing loans from related party (unsecured) 34,155,393 33,911,898 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 34,155,393 6,275,347 40,430,740 33,911,898 6,677,725 40,589,623 Page 32 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 18. 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 excess the issue of greater than 250,000,000 Shares; or 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 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 18. 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 Equity component of convertible debt Interest Balance at the end of the year 19. Contributed equity Consolidated 2020 $ 31,378,683 9,715,981 40,430,740 40,589,623 - (2,000,000) (402,378) 2,243,495 40,430,740 2019 $ 33,378,683 7,210,940 40,589,623 38,335,9771 - - - 2,253,646 40,589,623 (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 (b) Reserves Consolidated No. No. Opening balance Equity component of convertible debt Fair value of shares Balance at 31 December 2020 $ 6,678,349 (402,378) 179 6,276,150 2019 $ 6,677,725 - 624 6,678,349 Page 34 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 20. Accumulated losses Opening balance Transfer to Reserve Comprehensive profit /(loss) for the period Balance at 31 December 21. Cash flow information Reconciliation of cash flow from operations with Loss after income tax: Profit / (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 Cash flows from operations 22. Financial instruments a) General objectives, policies and processes Consolidated 2020 $ 2019 $ (31,454,560) (27,497,367) 402,378 798,201 - (3,957,193) (30,253,981) (31,454,560) 798,201 (3,957,193) 1,792,242 (3,780) 2,243,495 74,323 (101) (107,224) 15,759 (494,601) (88,862) 24,132 - 83,955 4,337,539 1,814,047 - 2,253,646 891,877 (130) (66,873) (3,124) 71,155 6,023 13,205 - (345,178) 677,455 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 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 22. 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 as follows: Consolidated Cash at bank Trade and other receivables 2020 $ 6,094,748 541,765 2019 $ 3,987,606 132,548 6,636,513 4,120,154 (c) Liquidity risk The consolidated entity manages liquidity risk by monitoring forecast cash flows. Maturity analysis - 2020 Carrying amount < 6 months 6-12 months 1-3 years > 3 years Financial liabilities Trade creditors $ $ 305,229 305,229 Loans and borrowings 34,155,393 - Other creditors and accruals 2,653,345 2,653,345 Total 37,113,967 2,958,574 $ - - - - $ - - - - $ - 34,155,393 - 34,155,393 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 - 2019 Carrying amount $ < 6 months $ 6-12 months $ 1-3 years > 3 years $ $ Financial liabilities Trade creditors 345,306 345,306 Loans and borrowings 33,911,898 - Other creditors and accruals 2,693,872 2,693,872 Total 36,951,076 3,039,178 - - - - - - - - - 33,911,898 - 33,911,898 Page 36 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 22. 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 18 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 2020 Financial assets % $ $ $ $ Cash & cash equivalents 0.05% 6,094,748 Trade & other receivable Total financial assets Financial liabilities Trade creditors - 6,094,748 - - - - - 1,164,747 7,259,495 541,765 541,765 1,706,512 7,801,260 305,229 305,229 Loans and borrowings 2.76% - 34,155,393 - 34,155,393 Total financial liabilities - 34,155,393 305,229 34,460,622 At 31 December 2019 Financial assets Cash & cash equivalents 1.5% 3,987,606 Trade & other receivable Total financial assets Financial liabilities Trade creditors - 3,987,606 - - - - - 1,118,337 5,105,943 132,548 132,548 1,250,885 5,238,491 345,306 345,306 Loans and borrowings 5% - 33,911,898 - 33,911,898 Total financial liabilities - 33,911,898 345,306 34,257,204 Page 37 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 22. 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 2020, 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 2020 $ 2019 $ (561,213) 683,108 (598,486) 678,238 (561,213) 683,108 (598,486) 678,238 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 23. Key management personnel disclosures (a) Key management personnel Directors T Fung A Chow R Shields A Gallaugher Executives A Gallaugher Chairman (appointed 7 Aug 2016) Non-Executive Director (appointed 7 Sept 2016) Non-Executive Director (appointed 7 Aug 2016) Executive Director (appointed 28 Jun 2018) Financial Controller appointed 24 March 2017 to 26 February 2020, CEO (Acting) appointed from 1 Jan 2019 and CEO appointed from 27 February 2020. Page 38 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 23. Key management personnel disclosures (continued) Transactions with key management personnel Key management personnel remuneration includes the following: Consolidated Short term employee benefits: Post-employment benefits: Other long-term benefits Total remuneration Further details are included in the Remuneration Report. 24. Related party transactions (a) Controlling entities 2020 $ 2019 $ 493,889 27,002 12,303 533,194 698,215 45,050 - 743,265 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 23 and the Remuneration report. (c) Transaction with related parties The Group received loans from related parties during the year. Details of the loans are set out at Note 18. 25. 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. 26. Investment in controlled entities Interests in controlled entities are set out below. All entities are incorporated and domiciled in Australia. Name Principal Activity Gaming and entertainment Gaming and entertainment Australia 100% 100% Incorporated Ownership Interest 2019 100% 2020 100% Australia Aquis Canberra Pty Ltd Casino Canberra Limited1 1 Shares held by ACPL Page 39 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 27. 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 2020 $ 27,218,805 1,017 27,219,822 (179,146) (34,155,393) (34,334,539) 2019 $ 29,689,273 4,092 29,693,365 (256,431) (33,911,898) (34,168,329) (7,114,717) (4,474,964) 4,727,776 6,403,060 (18,245,553) 4,727,776 6,805,438 (16,008,178) (7,114,717) (4,474,964) Statement of profit or loss and other comprehensive income Income (Loss) for the year 20,008 (2,639,753) 216 (3,022,197) Commitments for the parent entity are the same as those for the consolidated entity and are set out at Note 28. The parent entity has not entered into a deed of cross guarantee nor are there any contingent liabilities at year end. 28. Expenditure commitments (a) Capital expenditure commitments At 31 December 2020, the Company had no capital expenditure commitments (2019: nil) (b) Commitment to Casino Licence Fee Commitments for Casino Licence fees are payable as follows: Within one year 2020 $ 2019 $ 980,563 891,877 Later than one year but not later than 5 years 3,922,251 3,567,508 Later than 5 years 64,717,139 59,755,759 Commitments not recognised in the financial statements 69,619,952 64,215,144 As part of the ACT Government’s response to the Covid-19 pandemic, the 2020 licence fee has been waived. Page 40 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2020 29. Subsequent events Casino Canberra was an eligible employer under the Federal Government’s JobKeeper payment scheme. From 4 January 2021, it is no longer eligible to receive JobKeeper payments under phase three of this payment scheme. 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. 30. 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. 31. Auditor information The following fees were paid or payable for services provided by the Group’s auditors: Remuneration of auditors Audit services Other services 32. Company information The registered office and principal place of business is as follows: 21 Binara Street Canberra ACT 2601 2020 $ 2019 $ 135,000 162,080 11,000 - 33. Authorisation of financial statements The consolidated financial statements for the year ended 31 December 2020 (including comparatives) were approved and authorised for issue by the Board of Directors on 11 March 2021. Page 41 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 2020 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. the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; b. the financial statements and notes for the financial year comply with the Accounting Standards; and c. the financial statements and notes for the financial year give a true and fair view; 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 3. 4. Signed in accordance with a resolution of the Directors. Allison Gallaugher Director Canberra 11 March 2021 Page 42 AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Aquis Entertainment Limited for the year ended 31 December 2020, 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: 11 March 2021 RODNEY MILLER Partner Page 43 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 2020, 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 2020 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 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 2020 was $18.9 million. Our audit procedures in relation to the recognition of revenue included: Revenue is considered to be a Key Audit Matter because, while it is not judgmental, it involves the 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 13 in the financial statements At 31 December 2020 the Group has intangible assets with a carrying value of $1.82 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 2020 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 intangible asset should be that allocated to a single CGU, the Casino, based on the Group’s business and the manner in which results are monitored and reported. the nature of • 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 Key Audit Matters (Continued) Key Audit Matter How our audit addressed this matter Impairment of Intangible Assets – Refer to Note 13 in the financial statements (continued) • comparing the resulting fair value less cost to sell of the Casino to the respective book value. • We compared the cash flow projections to historic performance and observable trends. 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 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 2020, 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. Page 46 This description forms part of our auditor's report. 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 2020. In our opinion, the Remuneration Report of Aquis Entertainment Limited, for the year ended 31 December 2020, 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: 11 March 2021 RODNEY MILLER Partner Page 47 AQUIS ENTERTAINMENT LIMITED ACN 147 411 881 (Company) CORPORATE GOVERNANCE STATEMENT This Corporate Governance Statement is current as at 11 March 2021 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 (4th EDITION) COMPLY EXPLANATION Principle 1: Lay solid foundations for management and oversight Recommendation 1.1 A listed entity should have and disclose a board charter setting out: (a) the respective roles and responsibilities of its board and Yes management; and (b) those matters expressly reserved to the board and those delegated to management. The Company has a Board 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. A copy of the Charter can be viewed on the Company’s website. Page 48 RECOMMENDATIONS (4th EDITION) COMPLY EXPLANATION Recommendation 1.2 A listed entity should: (a) undertake appropriate checks before appointing a director or senior executive or putting someone forward for election as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. Recommendation 1.3 A listed entity should have a written agreement with each Director and senior executive setting out the terms of their appointment. Recommendation 1.4 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 and disclose a diversity policy; (b) through its board or a committee of the board set measurable objectives for achieving gender diversity in the composition of its board, senior executives and workforce generally; and (c) disclose as at the end of each reporting period: 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. • The Company has written agreements with each Director and senior executive setting out the terms of their appointment. The Board Charter establishes that is accountable directly to the Board through the Chair on all matters to do with the proper functioning of the Board. the Company Secretary 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. for The Remuneration & Nomination Committee reviewing and making recommendations to the Board on the effectiveness of the Diversity Policy. is responsible Yes Yes Yes Yes Page 49 RECOMMENDATIONS (4th EDITION) COMPLY EXPLANATION The following diversity targets have been set for 2021: o 45% female and 55% male staff across the company as a whole; and o maintenance of the current split of 33% female and 67% male Directors, Executives and Senior Management to maintain stability across the Board and senior management. Yes At 11 March 2021, 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 - 3 80 84 3 - 5 4 - 8 118198 126 210 40% 60% 1 For the purposes of this statement, Senior Executives are defined as Key Management Personnel (excluding Directors). (i) the measurable objectives set for that period to achieve gender diversity; (ii) the entity’s progress towards achieving those objectives; and (iii) either: (A) the respective proportions of men and women on the board, in senior executive positions and across the whole workforce (including how the entity has defined “senior executive” for these purposes); or if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act 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 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. Page 50 RECOMMENDATIONS (4th EDITION) COMPLY EXPLANATION (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. Recommendation 1.7 A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its senior executives at least once every reporting period; and No Yes A Board performance evaluation was not undertaken during the 2020 financial year as the Directors focused on navigating the business through COVID-19 conditions. The Board is responsible for reviewing the performance of senior management against strategies established by the Board. To this end the Board establishes annual KPI’s against which the performance of its senior executives are assessed. The KPI’s are set for the 2021 calendar year and are reviewed in January annually. (b) disclose, in relation to each reporting period, whether a in the reporting performance evaluation was undertaken period in accordance with that process. Yes A performance evaluation of executives against KPI’s set for the 2020 financial year has been conducted. Page 51 RECOMMENDATIONS (4th EDITION) COMPLY EXPLANATION Principle 2: Structure the Board to add value Recommendation 2.1 The Board of a listed entity should: (a) have a nomination committee which: (i) has at least three members, a majority of whom are independent Directors; and Yes The Remuneration and Nomination Committee has three members the majority of whom are independent Directors. The Committee is chaired by an independent Director. (ii) is chaired by an independent Director, and The names of the Committee Members are as follows: 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 those meetings; or the members at (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 balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. • 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 52 RECOMMENDATIONS (4th EDITION) Recommendation 2.2 COMPLY EXPLANATION A listed entity should have and disclose a board skills matrix setting out the mix of skills 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 include: financing and administration, banking, finance, property corporate development, business strategy and business management. 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. Page 53 RECOMMENDATIONS (4th EDITION) COMPLY EXPLANATION Recommendation 2.3 A listed entity should disclose: (a) the names of the Directors considered by the Board to be independent Directors; (b) if a Director has an interest, position, association or relationship of the type described in Box 2.3 of the ASX Corporate Governance Principles 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 relationship in question and an explanation of why the Board is of that opinion; and Yes The names of the Directors considered to be independent are as follows: • Mr Alex Chow • Mr Russell Shields The names of the Directors who are not considered independent a r e : • Mr Tony Fung • Ms Allison Gallaugher (c) the length of service of each Director 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. No At the date of this report, the Board comprises fo ur members, two 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. Page 54 RECOMMENDATIONS (4th EDITION) Recommendation 2.5 listed entity should be an The Chair of the Board of a 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 for periodically reviewing whether there is a need for existing directors to undertake professional development to maintain the skills and knowledge needed to perform their role as directors effectively. Principle 3: Instil a culture of acting lawfully, ethically and responsibly Recommendation 3.1 A listed entity should articulate and disclose its values. COMPLY EXPLANATION 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. No The Company is currently in the process of developing a Statement of Values to articulate and disclose its values. Page 55 RECOMMENDATIONS (4th EDITION) COMPLY EXPLANATION Recommendation 3.2 A listed entity should: (a) have and disclose a code of conduct for its directors, senior executives and employees; and Yes The Company has a Code of Conduct for its Directors, senior executives and employees. (b) ensure that the board or a committee of the board is informed of any material breaches of that code by a director or senior executive; and 2) any other material breaches of that code that call into question the culture of the organisation. Recommendation 3.3 A listed entity should: (a) have and disclose a whistleblower policy; and (b) ensure that the board or a committee of the board is informed of any material incidents reported under that policy. A copy of the Code of Conduct may be viewed on the Company’s website. The Board has implemented appropriate reporting processes to ensure that any material breaches of the Code of Conduct are reported to the board. Yes The Company has a Whistleblower Policy in place and may be viewed on the Company’s website. The Board has implemented appropriate reporting processes to ensure that any material incidents reported under the Whistleblower Policy are communicated to the board to ensure that the board is fully informed. Page 56 RECOMMENDATIONS (4th EDITION) COMPLY EXPLANATION Recommendation 3.4 A listed entity should: (a) have and disclose an anti-bribery and corruption policy; and (b) ensure that the board or committee of the board is informed of any material breaches of that policy. Yes The Company is currently in the process of developing an anti-bribery and corruption policy. Page 57 RECOMMENDATIONS (4th EDITION) COMPLY EXPLANATION Principle 4: Safeguard the integrity of corporate reports 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 corporate 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 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 58 RECOMMENDATIONS (4th EDITION) 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, in their opinion, 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. COMPLY Yes Recommendation 4.3 A listed entity should disclose its process to verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor. Yes EXPLANATION 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 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. financial statements comply with that the Verification of periodic corporate reports For periodic corporate reports released to the market which are not required to be audited or reviewed by the external auditor, AQUIS has an internal verification and approval process to support the integrity of the information that is being disclosed. The specific process for each periodic corporate report will vary depending on the release but may generally involve: i. ii. iii. iv. v. As far as possible, separation of the responsibility for input and reconciliation of data from those responsible for preparation of periodic reports; the individuals with responsibility for the information confirming to the best of their knowledge and belief that the information is considered to be accurate and not misleading; the review and approval of the report or document by relevant internal subject matter experts (and in some cases AQUIS’s external advisers as appropriate); the review by and confirmation from the individual responsible for the periodic corporate report that it is appropriate for release; and Periodic corporate reports released to the market may also, depending upon the report, be required to be approved by the Board under AQUIS Continuous Disclosure Policy. Page 59 RECOMMENDATIONS (4th EDITION) COMPLY EXPLANATION Principle 5: Make timely and balanced disclosure Recommendation 5.1 A listed entity should have and disclose a written policy for complying with its continuous disclosure obligations under listing rule 3.1. Recommendation 5.2 A listed entity should ensure that its board receives copies of all material market announcements promptly after they have been made. Recommendation 5.3 A listed entity that gives a new and substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation. Yes Yes Yes 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. The Company Secretary is responsible for ensuring that the Board receives copies of all material market announcements promptly after they have been made. The Company has previously not given presentations, however, should a presentation be given in future, the Company will, prior to giving a new and substantive investor or analyst presentation, release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation, and any material Information will not be released or discussed with the investors before it has been disclosed to the ASX. Principle 6: Respect the rights of security holders Recommendation 6.1 A listed entity should provide information about itself and its governance to investors via its website. Yes The Company’s Corporate Governance Statement, Charters and Corporate Governance Policies are included on its website. Page 60 Recommendation 6.2 listed entity should design and A relations communication with investors. program facilitate to implement an effective RECOMMENDATIONS (4th EDITION) Recommendation 6.3 investor two-way Yes 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. COMPLY EXPLANATION A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders. Yes The Shareholder Communications Policy sets out the policies and processes the Company’s has in place to facilitate and encourage participation at meetings of security holders. Recommendation 6.4 A listed entity should ensure that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands. Recommendation 6.5 Yes The Board has adopted a practice of requiring all voting on substantive resolutions at shareholder meetings to be conducted by way of a poll. 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 61 RECOMMENDATIONS (4th EDITION) Principle 7: Recognise and manage risk Recommendation 7.1 The Board of a listed entity should: COMPLY EXPLANATION (a) have a committee or committees to oversee risk, each of which: (i) has at least three members, a majority of whom are independent Directors; and 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. A copy of the Committee Charter may be viewed on the Company website. (ii) is chaired by an independent Director, and The names of the Committee Members are as follows: 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. • 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 at least annually to satisfy itself that it continues to be sound and that the entity is operating with due regard to the risk appetite set by the board; 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 identified, consistently assessed and major business risks are appropriately addressed. The Charter requires the Committee to undertake a review of the Company’s risk management framework with management (at least once annually) to satisfy Page 62 RECOMMENDATIONS (4th EDITION) COMPLY EXPLANATION Recommendation 7.3 A listed entity should disclose: No (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness its governance, risk management and internal control processes. 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 Management conducted various risk reviews of aspects of the operations in connection with COVID-19. An annual review of the Company’s risk management framework and risk registers was also performed . 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. The Audit and Risk Management Committee Charter sets out the processes the Committee employs to oversee the Company’s risk management framework. The Company’s operational subsidiary, Casino Canberra Limited, also maintains a robust risk management framework related to all operational matters as required under the relevant casino includes the maintenance of a risk register identifying relevant operational risks and recording proposed solutions and risk management procedures where appropriate. legislation. This Recommendation 7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. 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 63 RECOMMENDATIONS (4th 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 Yes The Remuneration and Nomination Committee has three members the majority of whom are independent Directors. The Committee is chaired by an independent Director. (ii) is chaired by an independent Director, The names of the Committee Members are as follows: 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. 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. Yes • 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 The qualifications and experience of in the Committee are set out on the Company’s website and 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. the members of 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 64 RECOMMENDATIONS (4th EDITION) COMPLY EXPLANATION 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. These policies and practices are disclosed in the Company’s Annual Report at page 7 and 8. 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 65 SHAREHOLDER INFORMATION AT 05 MARCH 2021 Shareholder Information required by the Australian Securities Exchange Limited (ASX) Listing Rules and not disclosed elsewhere in the Report is set out below. Number of security-holders There were 924 holders of ordinary shares (quoted and unquoted) in the Company. This is the only class of equity securities. Twenty Largest Shareholders Name AQUIS CANBERRA HOLDINGS (AUS) PTY LTD MR PAUL JOSEPH MANKA GLOBAL EXPORTERS LIMITED COMSEC NOMINEES PTY LIMITED LANDSEC PTY LTD TARALAKE PTY LTD LANDSEC PTY LTD MR HONGHAO SUN MR JOHN HAMILTON OLI PRIVATE INVESTMENT PTY LTD MR GARY STANLEY SWIFT & MRS KAYLEEN LESLIE SWIFT MR MARK TOMLINSON & MRS KRISTINA LEIGH TOMLINSON MISS HYOJIN KWON MR BENJAMIN FEDOTOV COSBI QUARTER PTY LTD HABITAT FINANCIAL PTY LTD MR MARK TOMLINSON HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED MR MICHAEL GRAEME HENSLER No. of Shares % 163,871,874 1,325,079 1,200,000 831,744 797,999 790,329 646,800 500,000 442,000 333,881 250,000 240,000 215,438 178,913 88.512% 0.716% 0.648% 0.449% 0.431% 0.427% 0.349% 0.270% 0.239% 0.180% 0.135% 0.130% 0.116% 0.097% 163,883 0.089% 160,000 160,000 146,201 129,018 118,000 0.086% 0.086% 0.079% 0.070% 0.064% Total Securities of Top 20 Holdings 172,501,159 93.173% Distribution of Shareholders Quoted Securities Range Total Holders Shares % Issued Capital 1-1000 1,001-5,000 5,001-10,000 10,001-100,000 100,001 and above Totals 56 262 175 384 22 899 38,926 645,210 1,568,228 10,172,175 172,716,511 185,141,050 0.020 0.350 0.850 5.490 93.290 100.000 Page 66 Substantial Shareholders The number of securities held by substantial shareholders and their associates are set out below: Name AQUIS CANBERRA HOLDINGS (AUS) PTY LTD Fully paid ordinary shares 163,871,874 % 88.512% 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. Unmarketable parcels There were 14 holders of less than a marketable parcel of shares based on the closing market price of $0.0006 at the specified date. Page 67 CORPORATE DIRECTORY Company Aquis Entertainment Limited ABN 48 147 411 881 21 Binara Street Canberra ACT 2601 www.aquisentertainment.com Registered Office and Place of Business 21 Binara Street Canberra ACT 2601 Telephone: +61 2 6257 7074 Facsimile: +61 2 6257 7079 Directors Mr Tony Fung (Chairman) Mr Alex Chow (Independent Non-executive Director) Mr Russell Shields (Independent Non-executive Director) Ms Allison Gallaugher (Chief Executive Officer & Executive Director) Company Secretary Ms Kim Michelle Bradley-Ware 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 68

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