Aquis Entertainment
Annual Report 2021

Plain-text annual report

AQUIS ENTERTAINMENT LIMITED ABN 48 147 411 881 Financial Statements for the Financial Year Ended 31 December 2021 Page 1 | 67 CONTENTS Financial Statements Corporate Governance Statement Shareholder Information Corporate Directory 3 47 65 67 Page 2 | 67AQUIS ENTERTAINMENT LIMITED DIRECTORS’ REPORT The Directors present their report together with the consolidated financial statements for the financial year ended 31 December 2021. 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 Russell Shields Alex Chow Mark Purtill Allison Gallaugher Chairman Chairman Non-Executive Director Non-Executive Director Executive Director (resigned 30 August 2021) (appointed Chairman 30 August 2021) (appointed 30 August 2021) Current Directors Tony Fung (Chairman – resigned 30 August 2021) 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. Russell Shields (Chairman – appointed 30 August 2021) Mr 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 was appointed as the Chairman of the Aquis Entertainment Board on the retirement of Mr Fung. He is also a member of the Remuneration and Nomination Committee (previously the Chair) and is a member of the Audit and Risk Committee. Alex Chow (Independent Non-Executive Director) Mr Yu Chun (Alexander) Chow 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 was appointed as the Chair of the Remuneration and Nomination Committee during the year and is a member of the Audit and Risk Committee (previously the Chair). Page 3 | 67Mark Purtill (Independent Non-Executive Director – appointed 30 August 2021) Mr Mark Purtill is a Chartered Accountant, Registered Company Auditor, Registered Tax Agent, Registered SMSF Auditor and Justice of the Peace. He has over 25 years’ experience in the Chartered Accounting profession and prior to that, in commercial lending. Mr Purtill has a wide range of experience across many industries and entities and has been at the Partner level in accounting firms for 20+ years, currently as a Partner at MPM Chartered Accountants. Mr Purtill is a director and member of the advisory board of several large private companies as well as a Charitable Foundation. He also holds a Diploma of Financial Planning. Mr Purtill brings expertise in audit and risk management, including Anti Money Laundering matters, as well as strong corporate governance and strategic skills. Mr Purtill was appointed as the Chair of the Audit and Risk Committee on joining the Board and is a member of the Remuneration and Nomination Committee. Allison Gallaugher (Executive Director) Ms 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. 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 Companies. 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 (resigned 30 August 2021) R Shields A Chow M Purtill A Gallaugher 163,871,874 - - - - - - - - - Page 4 | 67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 2021 was a loss of $470,628 (2020: profit $798,201). Operating revenue for the year amounted to $24,821,129, a 32.82% increase from the 2020 result ($18,687,684). Earnings before Interest Tax Depreciation and Amortisation (EBITDA) for the year was a profit of $3,369,368 (2020: profit $4,819,796). Casino Canberra was closed for 2 ½ months during 2021 (12 August 2021 through to 28 October 2021) due to Government mandated shutdown directions related to Covid-19 (2020 closure was 4 ½ months 23 March 2020 through to 9 August 2020). 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 revenue maximisation and improving customer service standards; • Continuation of a cost control program to minimise expenditure and streamline efficiencies in business processes to improve economies of scale particularly during the 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 projects undertaken during closure to ensure continued improvements in efficiencies post reopening. Operations Revenue from operations for the year increased 32.82% to $24,821,129 (2020: $18,687,684). The operating profit includes a small Government Covid-19 business support grant. Other operating expenses increase by 39.8% with the major increase being the full annual casino licence fee (2020 nil). Year on year comparatives are affected by ACT Government directions which resulted in Casino Canberra being closed for a period in each of the two years as follows: • Closed from 23 March 2020 to 9 August 2020 (approx. 4 ½ months); and • Closed from 12 August 2021 to 28 October 2021 (approx. 2 ½ months). Other material differences were: • Casino Canberra was no longer an eligible employer under the Federal Government’s JobKeeper payment scheme from 4 January 2021; The 2020 the annual casino licence fee was waived as part of the ACT Government’s Covid-19 support response; and The 2021 licence fee was payable in full with no reduction granted in relation to the closure. • • Following the recommencement of trading on 29 October 2021, capacity restrictions and other Covid-19 restrictions remained in place under Government directions through to the end of the year. Page 5 | 67Financial position At 31 December 2021, the Group had cash reserves of $9,379,330 (2020: $7,259,495) and unused borrowing facilities of $7,571,317. The group had a positive net cashflow for the financial year and following the end of the financial year no further drawdowns have been made on the finance facility. The balance sheet at 31 December 2021 shows a net asset deficit of $19,578,423 (2020: $19,809,879 deficit). Outlook The 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 growing the existing customer database over the year, continuing to customise offers to individual members which has proved very successful in maximising revenues while minimising costs, ensuring all expenditure is effective. Legislation was enacted in 2018 to allow 200 electronic gaming machines (EGM’s) to operate within the casino, subject to several conditions. During 2021 the planned advancement of this part of the strategy was restricted due to ongoing effects of the Covid-19 pandemic and another shutdown, however as the Omicron outbreak eases and operations stabilise, focus will again return to future plans for redevelopment and discussions surrounding the details of the legislated requirements for the EGM’s to enable planning for the future. Employees The number of people employed by the Consolidated Entity at the reporting date was 195. 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. DIRECTOR 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 (resigned 30 August 2021) R Shields A Chow M Purtill (appointed 30 August 2021) A Gallaugher 3 7 7 4 7 2 7 6 4 7 2 4 4 2 1 4 4 2 2 2 2 - 2 2 2 - n/a n/a n/a n/a SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There were no significant changes in the state of affairs of the Company during the year, other than disclosed in this report. Page 6 | 67SIGNIFICANT EVENTS AFTER BALANCE DATE The ACT has suffered an outbreak of the Omicron variant of Covid-19 during the beginning of 2022. The casino remains open and as at the date of this report, trading results continue unaffected by the outbreak, with operational procedures having been implemented to manage all mandated Government restrictions. Staff absences due to illness and quarantine requirements affected payroll expenses in January at the peak of the outbreak, with significant overtime hours issued to cover the approximately 25% of staff on leave over a two week peak for the business. Irrespective of this situation, the January monthly revenue result was approximately 10% above budget and casino EBITDA was 245% above budget for the month. As at the date of this report, the ACT Government has lifted all restrictions and Casino Canberra has returned to its pre Covid-19 trading and capacity arrangements. Other than as set out in this report and the attached financial statements, no other matters or circumstances have arisen since 31 December 2021, 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. The company maintains its 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 and conditions in the legislation which require clarification prior to the company being able to settle any plans. Planned discussions with the government in relation to clarification of these items were stalled due to Covid-19 closures taking the focus away from future developments, however as the pandemic eases, discussions will progress in due course. Following necessary clarifications, the company will evaluate options and variables to determine a suitable and viable way forward with regard to the redevelopment. There remain several other prospects available to the company, which have also continued to be delayed due to the Covid-19 pandemic, but will be investigated and evaluated in the future prior to reporting in due course as appropriate. Page 7 | 67Future Developments, Prospects and Business Strategies (cont’d) The existing short to medium term strategy to improve service and gaming offerings, maximise revenues and minimise expenditure via improvements in processes and increased efficiency projects continues from prior years and the current major focus is solidifying the performance of the company following the second Covid-19 pandemic shutdown in two years in conjunction with managing the ongoing related trading restrictions. The company reiterates that it remain 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 continues to believe 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 (2020: 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 | 67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 A Chow R Shields M Purtill Non-Executive Director Non-Executive Director, Chairman Non-Executive Director (appointed 30 August 2021) Current Executives Name A Gallaugher Role Financial Controller Director Chief Executive Officer (Acting) Chief Executive Officer Relevant Dates Appointed 24 March 2017 Appointed 28 June 2018 Appointed 1 January 2019 Appointed 27 February 2020 Previous Directors and Executives Name T Fung Role Chairman Relevant Dates Resigned 30 August 2021 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 | 67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 2021 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 | 67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 Fees and/or salary Short-term benefits Cash, profit sharing / other bonuse s $ $ Other Key management personnel 2021 T Fung1 R Shields2 A Chow A Gallaugher M Purtill3 $ $ $ $ $ % % - 109,167 105,000 321,539 35,000 - - - 259,269 - - - - 4,750 - - 10,654 - 22,631 3,500 - - - 50,7104 - - - - - - - - 119,821 105,000 658,899 38,500 922,220 - - - 39% - - - - 39% - Totals 570,706 259,269 4,750 36,785 50,710 1 Resigned as Chairman on 30 August 2021 2 Appointed as Chairman from 1 November 2021 3 Appointed as Director from 30 August 2021 4 Includes retention component of performance bonus payable if still in employment on 31 January 2022 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 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% Page 11 | 67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. Non-Executive Directors are entitled to the following remuneration components: • A base fee of $80,000 per annum as a director • • • 50% of the base director’s fee per annum for the Chairman of the Board $20,000 per annum for the Chair of a Board Committee $5,000 per annum for serving on a Board Committee (each committee) Statutory superannuation where required by law. Executives Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows: Name Title Allison Gallaugher Financial Controller 1 & CEO, 2,3 Commencement Date 24-Mar-2017 Term of Agreement Open Annual Salary $300,000 from 2020 as CEO, increased to $320,000 from July 2021 Superannuation Bonus Post-employment restraint Statutory superannuation Annual KPI bonus = 30% (2020) 30% (2021) of base salary 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 An additional performance bonus of $100,000 p.a. for achievement of a Casino EBITDA of $3m (2021), plus a sliding scale for performance above $3m EBITDA (EBITDA setting determined annually by the Chair of the RNC). The total performance bonus is payable 60% on achievement of the set EBITDA and 40% on a retention arrangement on 31 January in the subsequent year subject to continued employment at that date. Company may impose restraint for various periods up to 12 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 | 67 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 2021 Opening Balance1 Acquired on Market Disposed Closing Balance2 T Fung 163,871,874 - - 163,871,874 Name 2020 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 $35.6 million (2020: $37.4 million) inclusive of accrued interest. End of audited remuneration report Signed in accordance with a resolution of the directors. Mark Purtill Director Canberra 24 February 2022 Page 13 | 67AQUIS ENTERTAINMENT LIMITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 31 December 2021 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 Total expenses from continuing operations (Loss) / Profit before income tax expense Income tax benefit Consolidated Note 2021 $ 2020 $ 3 3 4 4 4 4 5 24,821,129 363,338 18,687,684 245,498 25,184,467 18,933,182 (2,743,608) (13,617,118) (5,447,799) (2,015,175) (1,805,760) (25,635) (1,951,035) (8,251,025) (3,896,394) (2,244,286) (1,766,606) (25,635) 25,655,095 18,134,980 (470,628) 798,201 701,424 - Profit attributable to members of the consolidated entity 230,796 798,201 Other comprehensive income for the year, net of tax Total comprehensive profit for the year attributable to the members of the consolidated entity 660 179 231,456 798,380 Basic and diluted earnings per share (cents per share) 6 0.12 0.43 The accompanying notes form part of these financial statements. Page 14 | 67AQUIS ENTERTAINMENT LIMITED STATEMENT OF FINANCIAL POSITION as at 31 December 2021 Consolidated Note 2021 $ 2020 $ 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 Deferred tax assets 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 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 5 15 16 17 17 18 19 19 20 9,379,330 155,020 247,774 457,547 10,239,671 7,319,289 - 5,000 1,791,272 5,569 701,424 7,259,495 536,765 255,585 243,474 8,295,319 8,783,682 18,133 5,000 1,816,907 4,909 - 9,822,554 10,628,631 20,062,225 18,923,950 4,076,550 - 1,700,452 5,777,002 2,958,574 18,133 1,413,205 4,389,912 193,078 33,670,568 188,524 34,155,393 33,863,646 34,343,917 39,640,648 38,733,829 (19,578,423) (19,809,879) 4,167,952 5,773,838 (29,520,213) 4,167,952 6,276,150 (30,253,981) (19,578,423) (19,809,879) The accompanying notes form part of these financial statements Page 15 | 67AQUIS ENTERTAINMENT LIMITED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2021 Share capital Reserve Accumulated losses $ $ $ Total $ Balance at 1 January 2020 Profit attributable to members of the company Other Comprehensive income for the year net of tax Balance at 31 December 2020 Balance at 1 January 2021 Profit attributable to members of the company Other Comprehensive loss for the year net of tax Balance at 31 December 2021 4,167,952 - - 4,167,952 6,678,349 - (31,454,560) (20,608,259) 798,201 798,201 (402,199) 402,378 179 6,276,150 (30,253,981) (19,809,879) - - 231,456 231,456 - 4,167,952 (502,312) 502,972 660 5,773,838 (29,520,214) (19,578,423) The accompanying notes form part of these financial statements Page 16 | 67AQUIS ENTERTAINMENT LIMITED STATEMENT OF CASH FLOWS for the year ended 31 December 2021 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest paid Consolidated 2021 $ 2020 $ 27,843,722 20,149,049 (22,888,744) 6,574 - (15,825,652) 14,933 (791) Net cash provided by operating activities 21 4,961,552 4,337,539 CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment (348,897) (165,969) Proceeds from sale of assets Dividend received 25,000 313 3,780 101 Net cash (used in) investing activities (323,584) (162,088) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of lease liabilities Repayment of borrowings (18,133) (21,899) (2,500,000) (2,000,000) Net cash (used in) provided by financing activities (2,518,133) (2,021,899) Net increase (decrease) in cash held Cash at beginning of the period Cash at end of the period 7 2,119,835 7,259,495 9,379,330 2,153,552 5,105,943 7,259,495 The accompanying notes form part of these financial statements Page 17 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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. Page 19 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 1. Statement of significant accounting policies (continued) Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the Statement of Profit or Loss and Other Comprehensive Income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. (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. Page 20 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 1. Statement of significant accounting policies (continued) (h) Inventories Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses. (i) Property, plant and equipment Land and buildings are 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 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. Impairment of financial assets The Company 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. Page 21 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 1. Statement of significant accounting policies (continued) (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. (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. Page 22 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 1. Statement of significant accounting policies (continued) (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. (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. Page 23 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 1. Statement of significant accounting policies (continued) (t) JobKeeper Payments The Group is no longer eligible for JobKeeper effective from 4 January 2021. In accordance with Section 323DB(1) of the Corporations Act 2001, the Group disclosed all JobKeeper payments in the JobKeeper Payments Notification announcement to the ASX on 11 November 2021. Employees who were eligible, while the ACT was in lockdown during the year, received Covid-19 disaster payments from the Federal Government directly. (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 loss of $470,628 (2020: $798,201 profit), had net cash inflows from operating activities of $4,961,552 (2020: inflows of $4,337,539) and net liabilities of $19,578,423 (2020: $19,808,879) for the year ended 31 December 2021. 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 $7.57 million at the balance date. This facility is sufficient to meet the cash flow requirements for the consolidated group. The facility matures on 25 August 2024. The 2022 forecast cash flow is positive. Cash balances are in excess of $9 million at balance date and are forecast to increase, current assets in excess of current liabilities of $4.46 million and generated cash flow from operations of $4.96 million. 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. Page 24 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 2. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. Impairment of Intangibles The consolidated entity assesses impairment of intangible assets at least on an annual basis. This requires an estimation of the recoverable amount of the cash generating unit to which the intangible is allocated. The assumptions and methodology used to assess the recoverable amount are set out in Note 13. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Management judgement is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and level of future taxable profits. Employee benefits provision As discussed in note 1, the liability for employee benefits expected to be wholly settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account. 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 2021 $ 2020 $ 22,837,340 1,983,789 24,821,129 6,574 356,764 363,338 17,292,814 1,394,870 18,687,684 14,933 230,565 245,498 Page 25 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 4. Expenses from continuing operations (a) Other operating expenses Cost of sales Annual casino licence fee 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 2021 $ 2020 $ 511,116 980,563 246,257 397,309 266,916 18,068 1,514,037 235,572 17,665 189,725 139,941 178,385 80,931 671,314 5,447,799 - 2,015,175 2,015,175 1,085,221 702,406 18,133 1,805,760 412,898 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 25,635 25,635 Page 26 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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 (loss)/profit Prima facie income tax on the profit / loss from Ordinary activities at 25% (2020: 26%) Tax effect of permanent differences: Non-deductible amortisation Non-deductible interest expense Sundry items De-recognition of DTA on temporary differences 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 Recognition of DTA for tax losses Adjustment recognised for prior periods Income tax attributable to entity (c) DTA recognised at 25% Net deferred tax assets at beginning Charged to income statement current year Net deferred tax assets at end of the year Consolidated 2021 $ - (701,424) (701,424) 2020 $ - - - (470,628) 798,201 (117,657) 207,532 6,409 380,183 11,412 178,322 (259,033) - - (701,424) (199,636) (701,424) - 701,424 701,424 6,665 441,144 (13,620) 45,574 (687,295) - - - - - - - - As at 31 December 2021, a net deferred tax asset of $6,767,645 (2020: $8,013,243) has not been recognised. 6. Earnings per share Basic and diluted earnings per share (cents per share) 0.12 0.43 Weighted average number of ordinary shares outstanding during the period used in the calculation of basic and diluted EPS No. No. 185,141,050 185,141,050 Options are considered potential ordinary shares. For the years ended 31 December 2021 and 31 December 2020, 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. Page 27 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 7. Cash and cash equivalents Cash at bank Cash on hand Total Consolidated 2021 $ 7,800,050 1,579,280 9,379,330 2020 $ 6,094,748 1,164,747 7,259,495 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 Prepayments and deferrals Other . 155,020 - 155,020 34,900 501,865 536,765 5,000 5,000 178,668 69,106 247,774 375,299 82,190 457,489 170,379 85,206 255,585 176,737 66,737 243,474 Page 28 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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 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 (Loss) / Profit on disposal of plant and equipment Depreciation expense Carrying value at 31 December 12. Non-current assets – right-of-use assets Carrying amount at beginning of the period Depreciation expense Carrying amount at end of the period Consolidated 2021 $ 2020 $ 27,977,763 28,196,319 (14,104,698) (13,188,595) (8,173,980) (8,223,418) 5,699,085 6,784,306 5,726,557 5,591,234 (4,106,353) (3,591,858) 1,620,204 1,999,376 7,319,289 8,783,682 6,784,306 7,830,734 (1,085,221) (1,046,428) 5,699,085 6,784,306 1,999,376 348,897 - (25,663) (702,406) 1,620,204 2,529,729 139,969 26,000 1,957 (698,279) 1,999,376 18,133 (18,133) - 54,399 (36,266) 18,133 The consolidated entity lease plant and equipment under agreements of between one to three years. There is also office equipment under agreement either short-term or low-value, which have been expensed as incurred and not capitalised as right-of-use assets. Page 29 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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 Consolidated 2021 $ 2020 $ 19,000,000 (17,208,728) 19,000,000 (17,183,093) 1,791,272 1,816,907 1,816,907 (25,635) 1,7916,272 1,842,542 (25,635) 1,816,907 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 2021 of $8,293,338 (2020: $9,794,265) 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% (2020: 2 – 2.5%). A post-tax discount rate of 13.5% (2020:13.5%) 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 5.4% (2020: 23%) 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 6% (2020: 24%) 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 32.7% (2020: 60%) (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 5,569 4,909 The fair values of listed investments are determined by reference to published price quotations in an active market. Page 30 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 15. Trade and other payables Current unsecured: Trade payables Sundry payables and accrued expenses Total payables (unsecured) Consolidated 2021 $ 314,764 3,761,786 4,076,550 2020 $ 305,229 2,653,345 2,958,574 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 1,042,188 658,264 1,700,452 857,851 555,354 1,413,205 193,078 188,524 1,893,530 1,601,729 Interest bearing loans from related party (unsecured) 33,670,568 34,155,393 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 33,670,568 5,772,375 39,442,943 34,155,393 6,275,347 40,430,740 Page 31 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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%; and  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 32 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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 2021 $ 28,878,683 10,564,260 39,442,943 40,430,740 - (2,500,000) (502,972) 2,015,175 39,442,943 2020 $ 31,378,683 9,715,981 40,430,740 40,589,623 - (2,000,000) (402,378) 2,243,495 40,430,740 (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 (ACPL) 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 2021 $ 6,276,150 (502,972) 660 5,773,838 2020 $ 6,678,349 (402,378) 179 6,276,150 Page 33 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 20. Accumulated losses Opening balance Transfer to Reserve Comprehensive profit for the period Balance at 31 December 21. Cash flow information Reconciliation of cash flow from operations with Loss after income tax: (Loss) / Profit from ordinary activities after income tax Non-cash flows from ordinary activities: Depreciation and amortisation Loss / (Profit) on disposal Interest on loan Casino licences Dividends received Increase / (Decrease) in Employee provisions – current Increase in Employee provisions – non-current Changes in operating assets and liabilities: Decrease / (Increase) in receivables Decrease / (Increase) in inventory (Increase) / Decrease in other assets Decrease / (Increase) in deferred tax asset Increase in creditors and accruals Cash flows from operations 22. Financial instruments a) General objectives, policies and processes Consolidated 2021 $ 2020 $ (30,253,981) (31,454,560) 502,312 231,456 402,378 798,201 (29,520,213) (30,253,981) 230,796 798,201 1,831,395 663 2,015,175 - (313) 287,246 4,554 381,745 7,811 (214,073) (701,424) 1,117,977 4,961,552 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 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 34 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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 2021 $ 7,800,050 155,020 2020 $ 6,094,748 541,765 7,955,070 6,636,513 (c) Liquidity risk The consolidated entity manages liquidity risk by monitoring forecast cash flows. Maturity analysis - 2021 Carrying amount < 6 months 6-12 months 1-3 years > 3 years Financial liabilities Trade creditors $ $ 314,764 314,764 Loans and borrowings 33,670,568 - Other creditors and accruals 3,761,786 3,761,786 Total 37,747,118 4,076,550 $ - - - - $ - 33,670,568 - 33,670,568 $ - - - - 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 - 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 Page 35 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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 % $ $ $ $ 0.05% 7,800,050 - 7,800,050 - - - - 1,579,280 9,379,330 155,020 155,020 1,734,300 9,534,350 314,764 314,764 33,670,568 - 33,670,568 33,670,568 314,764 33,985,332 % $ $ $ $ 0.05% 6,094,748 - 6,094,748 - - - - 1,164,747 541,765 7,259,495 541,765 1,706,512 7,801,260 305,229 305,229 34,155,393 - 34,155,393 34,155,393 305,229 34,460,622 - - - - - - Loans and borrowings 2.09% Total financial liabilities At 31 December 2021 Financial assets Cash & cash equivalents Trade & other receivable Total financial assets Financial liabilities Trade creditors At 31 December 2020 Financial assets Cash & cash equivalents Trade & other receivable Total financial assets Financial liabilities Trade creditors Loans and borrowings 2.76% Total financial liabilities Page 36 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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 2021, 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 2021 $ 2020 $ (517,410) 673,411 (517,410) 673,411 (561,213) 683,108 (561,213) 683,108 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 M Purtill A Gallaugher Executives A Gallaugher Chairman (resigned 30 August 2021) Non-Executive Director (appointed 7 September 2016) Non-Executive Director (appointed 7 August 2016), Chairman (appointed 1 November 2021) Non-Executive Director (appointed 30 August 2021) Executive Director (appointed 28 June 2018) Financial Controller appointed 24 March 2017 to 26 February 2020, CEO (Acting) appointed from 1 January 2019 and CEO appointed from 27 February 2020 Page 37 | 67 AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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 2021 $ 834,725 36,785 50,710 922,220 2020 $ 493,889 27,002 12,303 533,194 * include retention component of performance bonus payable if still in employment on 31 January 2022 Further details are included in the Remuneration Report. 24. Related party transactions (a) Controlling entities The ultimate parent is TF Reef – Canberra Holdings Limited (incorporated in BVI). The ultimate Australian parent entity is Aquis 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, Casino Canberra Limited (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 Aquis Canberra Pty Ltd Gaming and entertainment Incorporated Ownership Interest 2020 100% 2021 100% Australia Casino Canberra Limited1 Gaming and entertainment Australia 100% 100% 1 Shares held by ACPL Page 38 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 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 2021 $ 24,197,084 - 24,197,084 (197,206) (33,670,568) (33,867,774) 2020 $ 27,218,805 1,017 27,219,822 (179,146) (34,155,393) (34,334,539) (9,670,690) (7,114,717) 4,727,776 5,900,088 (20,298,554) 4,727,776 6,403,060 (18,245,553) (9,670,690) (7,114,717) Statement of profit or loss and other comprehensive income Income (Loss) for the year 1 (2,555,972) 20,008 (2,639,753) 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 2021, the Company had no capital expenditure commitments (2020: nil). (b) Commitment to Casino Licence Fee Commitments for Casino Licence fees are payable as follows: Within one year Later than one year but not later than 5 years Later than 5 years 2021 $ 2020 $ 1,014,866 980,563 4,059,463 3,922,251 65,966,269 64,717,139 Commitments not recognised in the financial statements 71,040,597 69,619,952 As part of the ACT Government’s response to the Covid-19 pandemic, the 2020 licence fee has been waived. Page 39 | 67AQUIS ENTERTAINMENT LIMITED NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021 29. Subsequent events The ACT has suffered an outbreak of the Omicron variant of Covid-19 during the beginning of 2022. The casino remains open and as at the date of this report, trading results continue unaffected by the outbreak, with operational procedures having been implemented to manage all mandated Government restrictions. Staff absences due to illness and quarantine requirements affected payroll expenses in January at the peak of the outbreak, with significant overtime hours issued to cover the approximately 25% of staff on leave over a two-week peak for the business. Irrespective of this situation, the January monthly revenue result was approximately 10% above budget and casino EBITDA was 245% above budget for the month. As at the date of this report, the ACT Government has lifted all restrictions and Casino Canberra has returned to its pre Covid-19 trading and capacity arrangements. 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 2021 $ 2020 $ 138,000 135,000 15,800 11,000 33. Authorisation of financial statements The consolidated financial statements for the year ended 31 December 2021 (including comparatives) were approved and authorised for issue by the Board of Directors on 24 February 2022. Page 40 | 67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 2021 and of the performance for the year ended on that date of the company and consolidated group; 2. the Chief Executive Officer and Financial Controller have each declared that: a. b. c. the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; the financial statements and notes for the financial year comply with the Accounting Standards; and the financial statements and notes for the financial year give a true and fair view; 3. 4. in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. Note 1 confirms that the consolidated financial statements also comply with International Financial Reporting Standards Signed in accordance with a resolution of the Directors. Allison Gallaugher Director Canberra 24 February 2022 Page 41 | 67AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Aquis Entertainment Limited for the year ended 31 December 2021, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) (ii) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and any applicable code of professional conduct in relation to the audit. RSM AUSTRALIA PARTNERS C J HUME Partner Sydney, NSW Dated: 24 February 2022 Page 42 | 67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 2021, 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 2021 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 43 | 67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 2021 was $25.1 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 2021 the Group has intangible assets with a carrying value of $1.79 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 2021 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 the nature of business and the manner in which results are monitored and reported. • We assessed the forecasts underlying the impairment review and agreed to budgets approved by the Board, reviewing these against actual performance and historic accuracy also 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 44 | 67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 2021, 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 45 | 67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 8 to 12 of the directors' report for the year ended 31 December 2021. In our opinion, the Remuneration Report of Aquis Entertainment Limited, for the year ended 31 December 2021, 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 C J HUME Partner Sydney, NSW Dated: 24 February 2022 Page 46 | 67AQUIS ENTERTAINMENT LIMITED  ACN 147 411 881  (Company)  CORPORATE GOVERNANCE STATEMENT  This Corporate Governance Statement is current as at 24 February 2022 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  have  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.  All Corporate Governance documents and policies can be found on our website at https:aquisentertianment/statement.html 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) (b) the  respective  roles  and  responsibilities  of  its  board  and management; and those  matters  expressly  reserved  to  the  board  and  those delegated to management. Yes  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 47 | 67 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  company  secretary  of  a  The  should  be  accountable directly to the Board, through the Chair, on all  matters  to do with the proper functioning of the Board.  listed  entity  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. A is  required  by  the  ACT  Gambling  and  Racing probity  review  Commission, before a Director appointment is confirmed; 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 relevant  Director  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  which set out the terms of their appointment.  The  Board  Charter  establishes  that  the  Company  Secretary  is  accountable  directly to the Board through the Chair on all matters  to  do with  the proper  functioning of the Board.  Aquis  Entertainment  acknowledges  the  positive  outcomes  that  can  be  achieved through a diverse workforce and recognises and utilises the diverse  skills  and  talent  from  its  directors,  officers  and  employees.  To  this  end  the  Company  has  developed  a  diversity  policy  which  can  be  viewed  on  the  Company’s website.  The  Remuneration  &  Nomination  Committee  is  responsible  for  reviewing  and  making  recommendations  to  the  Board  on  the  effectiveness  of  the  Diversity  Policy.   Yes  Yes  Yes  Yes  Page 48 | 67 RECOMMENDATIONS (4th EDITION)  COMPLY  EXPLANATION  (i) the measurable objectives set for that period to achieve  gender diversity;  Yes  (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  The following diversity targets have been set for 2022:  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.  At 31 December 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  11  60  75  3  4  12  103  122  4  7  23  163  197  38%  62%  1 For the purposes of this statement, Senior Executives are defined as Heads  of Departments (excluding Directors).  Recommendation 1.6  A listed entity should:  (a) have  and  disclose  a  process  for  periodically  evaluating  the  individual  performance  of  the  Board,  its  committees  and  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 49 | 67                                           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  least  once  every  its  senior  executives  at  performance  of  reporting period; and  Yes  Yes  A Board performance self ‐ evaluation  was undertaken during the 2021 financial  year.  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  2022  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  2021 financial  year has been conducted.  Page 50 | 67                                         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 Alex Chow  (Chair)   Mr Russell Shields   Mr Mark Purtill  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  in  the  Annual  Reports.  The  set  out  on  the  Company’s  website  and  number  of  times  the  committee  met  throughout  a  period  and  the  individual  attendances of  the  members at those meetings are disclosed in the  Annual Report.  Page 51 | 67             RECOMMENDATIONS (4th EDITION)  COMPLY  EXPLANATION  Recommendation 2.2  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:  corporate  financing  and  administration,  banking,  finance,  property  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 52 | 67         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   Mr Mark Purtill  The names of the Directors who are not considered independent  a r e :   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  Mr Shields was appointed with effect from 7 August 2015  Mr Mark Purtill was appointed on 30 August 2021.  Recommendation 2.4  A majority of the Board of a listed entity should be  independent Directors.  Yes  The Company complied with the recommendations from 30 August 2021.  Page 53 | 67                                             RECOMMENDATIONS (4th EDITION)  COMPLY  EXPLANATION  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.  Yes  The Company complied with the recommendations from 30 August 2021.  Yes  The  Company  has  an  induction  program  for  new  Directors  and  encourages  ongoing professional development of directors and  senior management.  Page 54 | 67                   RECOMMENDATIONS (4th EDITION)  COMPLY  EXPLANATION  Principle 3: Instil a culture of acting lawfully, ethically and responsibly  Recommendation 3.1  A listed entity should articulate and disclose its values.  No  The Company is currently in the process of developing a Statement of Values  to articulate and disclose its values.  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 55 | 67                                                 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’ s   Antibribery and Corruption policy forms part of the  Company’s Code of Conduct.  A copy of the Policy may be viewed on the Company’s website.  The Board has implemented appropriate reporting processes to ensure that  any material incidents reported under the Code of Conduct and Anti‐Bribery  Policy are communicated to the board to ensure that the board is fully  informed.   Page 56 | 67                           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 Mark Purtill (Chair)   Mr Alex Chow   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 57 | 67         RECOMMENDATIONS (4th EDITION)  COMPLY  EXPLANATION  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.  Yes  The  Audit  and  Risk  Management  Charter  requires  the  CEO  and  CFO  to  provide  to  the  Board  prior  to  the  Company’s  financial  statements  being  approved,  a  declaration  that  the  financial  records  have  been  properly  maintained  and  that  the  financial  statements  comply  with  the  appropriate  accounting  standards  and  give  a  true  and  fair  view  of  the  financial  position  and  performance of the  entity and  that the opinion has  been formed  on  the  basis  of  a  sound  system  of  risk  management  and  internal  control  which  is  operating effectively.  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  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 58 | 67                   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.  Page 59 | 67                 RECOMMENDATIONS (4th EDITION)  COMPLY  EXPLANATION  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.  Recommendation 6.2  listed  entity  should  design  and  A  investor  relations  program  to  facilitate  effective  two‐way  communication  with investors.  implement  an  Recommendation 6.3  A  listed  entity  should  disclose  the  policies  and  processes  it  has  in  place  to  facilitate  and  encourage  participation  at  meetings  of  security holders.  Recommendation 6.4  A  listed  entity  should  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  Yes  Yes  The Company’s Corporate Governance Statement, Charters and  Corporate Governance Policies are included on its website.  The  Company  has  a  Shareholder  Communication  policy  which  is  aimed  at  facilitating  effective  two‐way  communication  with  investors.  A  copy  of  the  Policy can be viewed on the Company’s  website.  The  Shareholder  Communications  Policy  sets  out  the  policies  and  processes  the  Company’s  has  in  place  to  facilitate  and  encourage  participation  at  meetings of security holders.  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.  listed  entity  should  give  security  holders  the  option  to  A  receive  communications  from,  and  send  communications  to,  the  entity and its security registry electronically.  Yes  the  Company’s  The  Shareholder  Communications  Policy  establishes  commitment  to  receive  communications  from,  and  send  communications  to,  the  entity  and  its  security  registry  electronically.  Page 60 | 67                                         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  all 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.  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.   Mr Mark Purtill (Chair)   Mr Alex Chow   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.  The  Audit  and  Risk  Management  Committee  Charter  the  Committee  with  the  responsibility  for  reviewing  and  monitoring  the  Company’s  risk  management  framework  to  provide  assurance  that  major  identified,  consistently  assessed  and  appropriately  business  risks  are  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  tasks  Page 61 | 67                       RECOMMENDATIONS (4th EDITION)  COMPLY  EXPLANATION  Recommendation 7.3  A listed entity should disclose:  (a) if  it  has  an  internal  audit  function,  how  the  function  is structured and what role it performs; or (b) if  it  does  not  have  an  internal  audit  function,  that  fact  and the  processes  it  employs  for  evaluating  and  continually risk improving  management and internal control processes. effectiveness  governance,  the  its  itself  that  Aquis  Entertainment’s  risk  management  framework  continues  to  be  sound,  to  determine  whether  there  have  been  any  changes  in  the  material  business  risks  the  entity  faces  and  to  ensure  that they  remain with  the risk appetite set by the Board.  During the year Management conducted various risk  reviews of aspects of the    An  annual  review  of  the  operations  Company’s  risk  management  framework  and  risk  registers  was  also  performed.  in  connection  with  COVID‐19.  No  The  Company  does  not  have  an  Internal  Audit  function.  The  Board  is  of  the  view  that  the  Company’s’  size  and  scale  does  not  currently  support  an  independent  internal  audit  function.  The  Board  from  time  to  time  may  utilise external parties  to undertake internal audit control reviews.  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  legislation.  This  includes  the  maintenance  of  a  risk  register  identifying  relevant  operational  risks  and  recording  proposed  solutions  and  risk  management  procedures  where appropriate.  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 62 | 67 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: Yes  has at least three members, a majority of whom  are independent Directors; and (i) (ii) The  Remuneration  and  Nomination  Committee  has  three  members  all  of  independent  Directors.  The  Committee  is  chaired  by  an  whom  are  independent Director.  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 Alex Chow  (Chair)  Mr Russell Shields  Mr Alex Chow A  copy  of  the  Committee  Charter  may  be  viewed  on  the  Company’s  website.  The  qualifications  and  experience  of  the  members  of  the  Committee  are  set  out  on  the  Company’s  website  and  in  the  Annual  Report.  The  number  of  times  the  committee  met  throughout  a  period  and  the  individual  attendances  of  the  members  at  those  meetings  are  disclosed  in  the Annual Report.  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 63 | 67 RECOMMENDATIONS (4th EDITION)  COMPLY  EXPLANATION  These policies and practices are disclosed  in  the  Company’s Annual Report  at pages 8 to 12.  Recommendation 8.3  A  listed  entity  which  has  an  equity‐based  remuneration  scheme should:  Yes  (a) have a policy on whether participants are permitted to  enter into transactions (whether through the use of  derivatives or otherwise)  which  limit  the  economic  risk  of  participating  in the scheme; and (b) disclose that policy or a summary of it. The  Company  has  established  an  equity–based  remuneration  scheme  (Plan).  The Plan rules specifically prohibit participants from  entering into transactions  (whether  through  the  use  of  derivatives  or  otherwise)  which  limit  the  economic risk of participating in the  Plan.  The Company’s Securities Trading Policy also prohibits participants  in any such  scheme  from  entering  into  transactions  (whether  through  the  use  of  derivatives  or  otherwise)  which  limit  the  economic risk of participating in the  scheme.  A  copy  of  the  Securities  Trading  Policy  can  be  viewed  on  the  Company’s website.  Page 64 | 67SHAREHOLDER INFORMATION AT 24 FEBRUARY 2022 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 786 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 LANDSEC PTY LTD TARALAKE PTY LTD LANDSEC PTY LTD MR JOHN HAMILTON MR NATHAN TIMOTHY OWEN MR GARY STANLEY SWIFT & MRS KAYLEEN LESLIE SWIFT CITICORP NOMINEES PTY LIMITED MR MARK TOMLINSON & MRS KRISTINA LEIGH TOMLINSON MARLU BUSINESS GROUP PTY LTD MISS HYOJIN KWON DI BATTISTA INVESTMENTS PTY LTD MR JOHN TAMBAKIS MS GANGABODA ARACHCHIGE TILLEKERATNE & DR WIDANA PUSHKARA EPA COSBI QUARTER PTY LTD HABITAT FINANCIAL PTY LTD MR MARK TOMLINSON ACCA INTERNATIONAL PTY LTD Balance as at 24-02-2022 163,871,874 1,325,079 1,200,000 797,999 790,329 646,800 442,000 300,428 250,000 243,150 240,000 225,392 215,438 200,000 % 88.512% 0.716% 0.648% 0.431% 0.427% 0.349% 0.239% 0.162% 0.135% 0.131% 0.130% 0.122% 0.116% 0.108% 199,980 0.108% 172,413 0.093% 163,883 160,000 160,000 158,888 0.089% 0.086% 0.086% 0.086% Total Securities of Top 20 Holdings 171,763,653 92.774% 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 41 193 149 376 27 786 23,481 534,788 1,332,546 10,567,979 172,682,256 185,141,050 0.010 0.290 0.720 5.710 93.270 100.000 Page 65 | 67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 $0.00053 at the specified date. Page 66 | 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 Russell Shields (Independent Non-executive Director) (Chairman) Mr Alex Chow (Independent Non-executive Director) Mr Mark Purtill (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 67 | 67

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