2010 Amalgamated Holdings Limited Annual Report A H L A n n u A L R e p o R t 2 0 1 0 amalgamated holdings limited abn 51 000 005 103 abn 51 000 005 103 Contents CorporAte GovernAnCe StAtement DireCtorS’ report DireCtorS’ report: remunerAtion report LeAD AuDitor’S inDepenDenCe DeCLArAtion StAtement of finAnCiAL poSition inCome StAtement 2 12 20 28 29 30 StAtement of CompreHenSive inCome 31 StAtement of CHAnGeS in equity StAtement of CASH fLowS noteS to tHe finAnCiAL StAtementS 1. Significant accounting policieS 2. Segment reporting 3. revenue and other income 4. profit before income tax 5. diScontinued operationS 6. auditorS’ remuneration 7. taxation 8. dividendS 9. earningS per Share 10. caSh and caSh equivalentS 11. receivableS 12. inventorieS 13. other current aSSetS 14. other financial aSSetS 15. available-for-Sale financial aSSetS 16. inveStmentS accounted for uSing the equity method 17. property, plant and equipment 32 33 34 34 41 46 47 48 49 49 52 53 53 53 54 54 54 54 54 55 18. inveStment propertieS 19. goodwill and other intangible aSSetS 20. other non-current aSSetS 21. payableS 22. intereSt bearing liabilitieS and borrowingS 23. financing arrangementS 24. proviSionS 25. other liabilitieS 26. Share capital 27. reServeS and retained earningS 28. parent entity diScloSureS 29. financial riSk management 30. employee benefitS 31. commitmentS and leaSeS 32. contingent aSSetS and liabilitieS 33. deed of croSS guarantee 34. buSineSS combinationS 35. particularS in relation to conSolidated entitieS 36. inveStmentS in aSSociateS 37. inveStmentS in jointly controlled entitieS 38. director and executive diScloSureS 39. related partieS 40. reconciliation of caSh flowS from operating activitieS 41. eventS SubSequent to reporting date DireCtorS’ DeCLArAtion inDepenDent AuDitor’S report SHAreHoLDer informAtion otHer informAtion 58 59 60 60 61 61 62 63 63 64 65 66 73 75 76 77 79 81 82 84 85 89 90 90 91 92 94 96 Amalgamated Holdings Limited Contents 1 Corporate Governance Statement 1. introDuCtion this 2010 corporate governance Statement (“Statement”) sets out the key corporate governance principles adopted by the directors in governing amalgamated holdings limited (“company”) and its subsidiaries (collectively referred to as “ahl” or “group”) and reflects the corporate governance policies and procedures which applied during the financial year ended 30 june 2010. the company continues to monitor and review its corporate governance policies and procedures. 2. ApproACH to CorporAte GovernAnCe 2.1 FRAmewoRk And AppRoACh to CoRpoRAte goveRnAnCe And Responsibility the board has the responsibility for ensuring ahl is properly managed so as to protect and enhance shareholders’ interests in a manner that is consistent with ahl’s responsibility to meet its obligations to all stakeholders. for this reason, the board is committed to maintaining the highest standards of corporate governance across the group. the board believes that corporate governance is about having a set of values and behaviours that underpin ahl’s everyday activities and which ensures transparency, risk management, accountability, value creation, fair dealing and protection of the interests of stakeholders. consistent with this belief, the board’s approach is to consider corporate governance within the broader framework of corporate responsibility and regulatory oversight. 2.2 CompliAnCe with the CoRpoRAte goveRnAnCe pRinCiples And ReCommendAtions the australian Securities exchange (“aSx”) has issued the aSx listing rules which require listed companies to include in their annual report a statement disclosing the extent to which they have followed the aSx corporate governance council’s corporate governance principles and recommendations (“recommendations”) in the reporting period. listed companies must identify the recommendations that have not been followed and provide reasons for the company’s decision. a table outlining the compliance, or otherwise, to the recommendations has been included in section 10 of this Statement. the corporate governance page of the company’s website (www.ahl.com.au) contains most of the documents which are referred to in this Statement. the Statement, charters, code and various policies are regularly reviewed to take account of any recent changes in the law and governance practices. if a shareholder does not have access to the internet, they may contact the company Secretary for copies of the relevant documents. • monitoring and assessing management’s performance in achieving any strategies and budgets approved by the board; 3. BoArD 3.1 Role And Responsibilities oF the boARd the board recognises its overriding responsibility to act honestly, fairly, diligently and in accordance with the law in serving the interests of the company’s shareholders as well as its employees, customers and the community. its primary responsibilities are: • providing input into, reviewing and approving the corporate and divisional strategic plans; • making decisions in relation to matters of a sensitive, extraordinary or strategic nature; • providing advice and counsel to management on a periodic and ad hoc basis; • ensuring best practice corporate governance; • appointing and where appropriate removing the managing director and approving succession plans; • ratifying the appointment and, where appropriate the termination, of the direct reports to the managing director; • monitoring the performance of the managing director and senior management and approving remuneration policies and practices for such managing director and senior management; • enhancing and protecting the reputation of the group; • reporting to shareholders; • ensuring appropriate compliance frameworks and controls are in place and are operating effectively; • approving and monitoring the effectiveness of and compliance with policies governing the operations of the group; • monitoring compliance with regulatory requirements and ethical standards; • monitoring the integrity of internal control and reporting systems; • monitoring strategic risk management systems and risk management policies and procedures and oversight of internal controls and review of major assumptions used in the calculation of significant risk exposure; • reviewing and approving business plans, the annual budget and financial plans, including available resources and major capital expenditure initiatives; • approving decisions concerning the capital of the company, including capital restructures; • reviewing and approving half yearly and annual statutory accounts and other reporting and monitoring financial results on an ongoing basis; and • determining dividend policy and declaring dividends. the board operates in accordance with the principles set out in the board charter. the board charter details the board’s purpose, role, responsibilities and functions. a copy of the board’s charter is available from the company’s website or upon request from the company Secretary. the board has delegated responsibility for operation and administration of the company and group to the managing director and executive management. responsibilities are delineated by formal authority delegations. Senior executives reporting to the managing director have their roles and responsibilities defined in position descriptions. 3.2 boARd pRoCesses to assist in the execution of its responsibilities, the board has in place an audit committee and a nomination and remuneration committee. these committees have charters which are reviewed on a regular basis. other board committees may be appointed from time to time to deal with issues associated with the conduct of the group’s various activities. recommendation 2.4 of the recommendations states that the board should establish a nomination committee. the board has determined that any recommendations required by a nomination committee are undertaken, as required, by the nomination and remuneration committee. the full board holds at least 10 scheduled meetings each year, including strategy meetings. unscheduled meetings are arranged as necessary to address any specific significant matters that may arise. Site visits are arranged on a regular basis to improve directors’ understanding of the group’s locations and operations. the agenda for meetings is prepared in conjunction with the chairman, managing director and company Secretary. Standing items include the managing director’s report, financial reports, strategic matters, governance and compliance. Submissions are circulated in advance. executives are regularly involved in board discussions and directors 2 Amalgamated Holdings Limited Annual Report 2010 have other opportunities, including visits to business operations, for contact with a wider group of employees. director is a director who is not a member of management (a non-executive director) and who: 3.3 Composition oF the boARd the composition of the board is determined using the following principles: • • • the Board should comprise of a majority of non-executive independent directors; the Board should comprise of directors with a broad range of relevant expertise; and the same individual should not exercise the role of chairman and managing director. the chairman of the board is a non-executive director. there is a managing director, who is also the chief executive officer. it is standard practice to have six non- executive directors, the majority of whom are deemed to be independent under the principles set out below. the composition of the board is reviewed periodically by the chairman and the other directors to ensure that the board has an appropriate mix of expertise and experience. when a vacancy exists, through whatever cause, or where it is considered that the board would benefit from the services of a new director with particular skills, the nomination and remuneration committee identifies suitable candidates with the appropriate expertise and experience and makes a recommendation to the board. the board then appoints the most suitable candidate who must then stand for election at the next general meeting of shareholders. non-executive directors must stand for re-election each three years. the terms and conditions of the appointment and the retirement of directors, including the managing director, are first considered by the nomination and remuneration committee and then recommended for determination by the board. a formal letter of appointment is provided to all incoming non- executive directors. the board considers that individually and collectively the directors bring a level of skill, knowledge and experience that enables the board to discharge its responsibilities effectively. further information on the skills, experience and expertise of the directors has been included in section 9.1 of this Statement. details of the number of board meetings and the attendance of the directors have been included in section 9.2 of this Statement. 3.4 diReCtoRs’ independenCe the board has considered specific principles in relation to a director’s independence. the board has determined that an independent • is not a substantial shareholder of the company or does not have a material beneficial interest in a substantial shareholder of the company; • has not within the last three years been employed in an executive capacity by the company or group, or been a director after ceasing to hold any such employment; • within the last three years has not been a principal or employee of a material professional advisor or a material consultant to the company or group; • is not a material supplier or customer of the company or group, or an officer of or otherwise associated, directly or indirectly, with a material supplier or customer; • must have no material contractual relationship with the company or group other than as a director of the company; and • is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the company. in forming this view, the board has considered and determined that “material”, in this context, to be where any director related business relationship has represented, or is likely in the future to represent, the lesser of at least 10% of the relevant segment’s or the director related business’s revenue. the board considered the nature of the relevant industries’ competition, and size and nature of each director related business relationship, in arriving at this threshold. two directors of the company are also directors of carlton investments limited (“carlton”), which is a substantial shareholder of the company. carlton is a publicly listed company. carlton’s main activity is the holding of a wide portfolio of listed investments. the board has considered the question of independence of the director of carlton who does not have a substantial beneficial shareholding in his own right. the board has concluded that, as the nature of carlton’s business is in no way similar to that of the businesses of the group, the sole holding of a directorship in carlton should not impact on the ability and willingness of a director to effectively review and challenge the performance of management and exercise independent and objective judgement for the benefit of all shareholders of the company. 3.5 ChAiRmAn And mAnAging diReCtoR the chairman is responsible for leading the board, ensuring that board activities are organised and effectively conducted and for ensuring directors are properly briefed for meetings. the managing director is responsible for implementing group strategies and policies. recommendation 2.2 of the recommendations states that the chairman should be an independent director. the chairman, mr ag rydge, is not considered an independent director due to the substantial shareholding clause. mr rydge was previously chairman and managing director of the company until retiring from the position of managing director on 31 december 2001. the board has determined that the chairmanship of mr rydge is of significant benefit to the company and group due to his long standing contribution to, and association with, the company and extensive knowledge of the film, hospitality, leisure and tourism industries. mr rydge has been a non-executive chairman since 1 january 2002. 3.6 ConFliCt oF inteRest in accordance with the Corporations Act 2001 and the company’s constitution, directors give standing notice on appointment of any interest that could potentially conflict with that of the company or group and must keep the board advised of any changes. where the board believes a significant conflict of interest exists, the director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered. 3.7 diReCtoR eduCAtion the company has a process to educate new directors about the nature of the business, current issues, corporate strategy and the company’s expectations of directors. all directors are made aware of their rights to access employees, information and resources. directors are encouraged to visit facilities of the group and meet with management to gain a better understanding of business operations. 3.8 independent pRoFessionAl AdviCe each director has the right of access to all relevant company information and to the group’s executives and, subject to prior consultation with the chairman, may seek independent professional advice from a suitably qualified advisor at the group’s expense. the director must consult with an advisor suitably qualified in the relevant field, and obtain the chairman’s approval of the fee payable for the advice before proceeding with the consultation. a copy of the advice received by the director is made available to all other members of the board. Amalgamated Holdings Limited Corporate governance statement 3 Corporate Governance Statement continued 3.9 diReCtoRs’ RetiRement plAn the directors’ retirement plan was suspended in may 2003 and directors appointed to the board after that date are not entitled to participate in the plan. eligible directors in office prior to the suspension of the plan in may 2003 are able to participate in the plan. Subject to the Corporations Act 2001, those eligible directors with more than three years service receive a retirement lump sum based on the length of service and the average of the fees paid. the benefit is capped at a maximum lump sum per eligible director of $165,000. the chairman and managing director are not eligible to participate in the plan. the total accrued retirement benefits for non- executive directors other than superannuation, and further details on directors’ remuneration, are disclosed within the remuneration report. 4. AuDit Committee 4.1 Role And Responsibilities oF the Audit Committee the audit committee charter sets out the committee’s roles and responsibilities. its primary responsibilities are to: • • review and monitor the financial integrity of the group’s financial reports and statements; review the adequacy and integrity of the group’s risk management framework and system of internal control and the monitoring of the various control processes; • ensure compliance with relevant laws, regulations and statutory obligations; • • review and approve the internal and external audit work plans; and review significant accounting changes or reporting issues. the committee reviews the performance of the external auditors on an annual basis and meets with them during the year to discuss a number of matters including the external audit plan, proposed fees for audit work to be performed, half year and annual reporting and other matters as necessary. the audit committee, in scheduled sessions at the end of each meeting, without the presence of management, addresses questions to the external auditors and group internal audit manager on matters relating to the committee’s responsibilities. the committee is responsible for making recommendations to the board concerning the appointment of the external auditor including remuneration and other terms of the auditor’s engagement. the committee reviews and ensures that the level of any non-audit work carried out by the external auditor is compatible with maintaining audit independence, taking into account the guidelines which it has set. the current practice, subject to amendment in the event of legislative change, is for the rotation of the engagement partner to occur every five years, with the most recent rotation having taken place in august 2006. the board receives the minutes and regular updates from the chairman of the committee, and reviews and approves the charter of the committee. a copy of the audit committee charter is available from the company’s website or upon request from the company Secretary. 4.2 Composition oF the Audit Committee the audit committee consists of a minimum of three non-executive directors, the majority of whom are independent, and is chaired by an independent director who is not the chairman of the board. all committee members are familiar with finance and accounting procedures. the members of the audit committee during the year were: • AJ Clark (Chairman) – independent non-executive director; • the remuneration strategy for the managing director and other senior executives. the committee also acts as a nomination committee and reviews the need for appointment of new directors for recommendation to the board and shareholders for approval. the board receives the minutes and regular updates from the chairman of the committee, and reviews and approves the charter of the committee. a copy of the nomination and remuneration committee charter is available from the company’s website or upon request from the company Secretary. 5.2 Composition oF the nominAtion And RemuneRAtion Committee the nomination and remuneration committee consists of a minimum of three non-executive directors, the majority of whom are independent, and is chaired by an independent director who is not the chairman of the board. the members of the nomination and remuneration committee during the year were: • AJ Clark (Chairman) – independent • RM Graham – independent non-executive non-executive director; director; and • RM Graham – independent non-executive • AG Rydge – non-executive director. director; and other directors who are not members of the committee are invited to attend meetings. the managing director, director finance & accounting, company Secretary, group internal audit manager and external auditors are invited to attend committee meetings. other executives may be invited to committee meetings at the discretion of the committee. the audit committee meets at least four times per year. details of the number of committee meetings and the attendance of the committee members have been included in section 9.2 of this Statement. 5. nominAtion AnD remunerAtion Committee 5.1 Role And Responsibilities oF the nominAtion And RemuneRAtion Committee the nomination and remuneration committee charter sets out the committee’s roles and responsibilities. its primary responsibilities are to advise the board on matters including: • • the composition, remuneration and performance evaluation of the board; the appointment of the managing director; • succession plans for the position of managing director; and • AG Rydge – non-executive director. other directors who are not members of the committee are invited to attend meetings. the managing director and company Secretary are invited to attend committee meetings. other executives may be invited to committee meetings at the discretion of the committee. the nomination and remuneration committee meets at least two times per year and further as required. details of the number of committee meetings and the attendance of the committee members have been included in section 9.2 of this Statement. 6. performAnCe AnD remunerAtion 6.1 boARd peRFoRmAnCe And RemuneRAtion the board reviews its performance annually to ensure that individual directors and the board as a whole work efficiently and effectively in achieving their functions set out within the charter. the chairman annually assesses the board performance of individual directors and meets privately with each director to discuss this assessment and any ideas for improvement. at this same time, directors are able to provide feedback on the performance of the chairman. the board as a whole discusses and analyses its own performance during the year. 4 Amalgamated Holdings Limited Annual Report 2010 the board also has in place an annual process to review its performance as well as the performance of the committees of the board. each director completes a performance evaluation questionnaire. the questionnaire covers topics including: • the Board’s role; • composition and effectiveness; • procedures and practices; • behaviours; • Board administration; and • the conduct of the Chairman. directors are requested to provide comment and feedback and to evaluate each area by providing a rated response to various questions. the results of the performance evaluation are collated by the company Secretary and submitted to the nomination and remuneration committee for review. a summary of the results is then submitted to the full board. the board evaluation process was last completed in june 2010. the results of the performance evaluation form the basis of an action plan designed to address performance improvement opportunities. the group’s remuneration philosophy and details of the current remuneration arrangements are outlined within the remuneration report. the remuneration report confirms that the structure of non-executive director remuneration is separate and distinct from that of senior executive remuneration. the nomination and remuneration committee is responsible for recommending to the board, fees applicable to non-executive directors. non-executive directors may also be reimbursed for their expenses properly incurred as a director, or in the course of their duties. non-executive directors are also encouraged to own shares in the company. the non-executive directors do not participate in any other short or long term incentive schemes. the maximum aggregate amount of fees that may be paid to all non-executive directors each year is capped at $1.1 million, which was approved by shareholders at the 2007 annual general meeting of shareholders. the board maintains a fee buffer to give it sufficient flexibility to plan its structure in advance of specific needs that may arise. the total fees paid to non-executive directors during the reporting period were $747,706. information regarding the directors’ retirement plan has been included at section 3.9 of this Statement, and disclosed within the remuneration report. 6.2 exeCutive peRFoRmAnCe And • physical security over the Group’s assets; RemuneRAtion each year, the board, with the assistance of the managing director, and the nomination and remuneration committee, undertake a formal process of reviewing the performance of senior executives. the measures generally relate to the performance of the group, the performance of the senior executive’s division or department and the performance of the senior executive individually. the nomination and remuneration committee and the board review the performance of the managing director. the managing director is not present at the nomination and remuneration committee or board meetings when his own performance and remuneration are being considered. for senior executives, the managing director conducts interviews with each executive and provides comments and feedback in relation to the senior executive’s performance. a formal review process occurs for each employee with nominated supervisors conducting the performance review. the formal review process occurs annually and was completed in june 2010. further details on the assessment criteria for the managing director and senior executive remuneration (including equity- based share plans) are disclosed within the remuneration report. 6.3 RemuneRAtion RepoRt the remuneration report is set out with, and forms part of, the directors’ report for the year ended 30 june 2010. 7. riSK mAnAGement 7.1 Risk pRoFile And oveRsight oF the Risk mAnAgement system the board oversees the establishment, implementation and annual review of the group’s risk management and internal control systems. management has established and implemented the systems for identifying, assessing, monitoring and managing material operational, financial reporting, internal controls and compliance risks for the group. the systems and processes implemented to manage material risks include: • risk management framework; • clearly defined management responsibilities and organisational structure; • delegated limits of authority; • treasury and accounting controls and reconciliations; • comprehensive management reporting systems; • budgeting and strategic planning processes; • segregation of duties; • appropriate policies and procedures that are widely disseminated to, and understood by, employees; and • risk management and internal audit functions. divisional managing directors and other senior executives complete and sign off on an annual directors’ risk management questionnaire. the operational and other compliance risk management procedures have also been assessed and found to be operating efficiently and effectively. all risk assessments cover the whole financial year and the period up to the signing of the annual financial report for all material operations in the group. the annual directors’ risk management questionnaire for the year ended 30 june 2010 was completed in july 2010. as well as the directors’ risk management questionnaire, matters relating to the business risk and risk management system are analysed and discussed as part of the annual strategic planning process. the board provides assistance to management in the development and maintenance of processes to minimise and mitigate business risks. a summary of the risk management policy is available from the company’s website or upon request from the company Secretary. 7.2 FinAnCiAl RepoRting the managing director and the director finance & accounting have declared, in writing to the board that the financial report of the group are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board. the declaration for the year ended 30 june 2010 was received in august 2010. 7.3 inteRnAl Audit the group internal audit manager assists the board in ensuring compliance with internal controls and risk management programs, by regularly reviewing the effectiveness of compliance and control systems. the audit committee is responsible for approving the program of internal audit visits to be conducted each year and the scope of the work to be performed at each location. 7.4 Code oF ConduCt And ethiCAl stAndARds the company has a code of conduct and ethical Standards (“code”), which has been endorsed by the board and applies to all directors and group employees. the code is reviewed and updated as necessary to ensure it reflects the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the group’s integrity. Amalgamated Holdings Limited Corporate governance statement 5 Corporate Governance Statement continued in summary, the code encapsulates that all directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the group. every employee has a nominated supervisor to whom they refer any issues arising from their employment. the board reviews the code regularly and processes are in place to promote and communicate the code’s contents. the code is available from the company’s website or upon request from the company Secretary. 7.5 whistleblowing poliCy the company has a whistleblowing policy for the australian operations. the policy is designed to support and protect any employees who report non-compliant, suspicious or unethical conduct by other employees of the group, regardless of seniority of those involved in the alleged conduct. the whistleblowing policy formalises the company’s commitment to protect the confidentiality and position of employees wishing to raise serious matters that affect the integrity of the company and group. the board reviews the whistleblowing policy regularly and processes are in place to promote and communicate the whistleblowing policy’s contents. the whistleblowing policy is available from the company’s website or upon request from the company Secretary. 7.6 legAl CompliAnCe tRAining all senior management personnel are required to complete legal compliance training at least once every two years. the training covers such topics as: • contract fundamentals; • issues relating to the Trade Practices Act 1974; • employment contracts, termination and redundancy; • harassment and discrimination; • workplace relations; • occupational health and safety obligations; and • corporate policies (including limits of authority and share trading). 7.7 deAling in CompAny shARes by diReCtoRs And employees the constitution allows directors to acquire shares in the company. however, it is the policy of the company that directors only buy or sell shares in the company in the six week period immediately following any price sensitive announcement including the half year and full year results, and the annual general meeting. purchases outside of this period must receive the prior approval of the board. this policy is subject to the overall restriction that persons may at no time deal in any securities when they are in possession of price sensitive information. this policy is also applicable to employees of the group and the policy is outlined within the code. all directors have entered into written agreements to notify the company Secretary when they buy or sell shares in the company. in accordance with the provisions of the Corporations Act 2001 and the aSx listing rules, the company Secretary advises the aSx of any transactions conducted by directors in shares in the company. this information is also reported to the board. each senior executive is requested, on an annual basis, to provide information regarding the financial arrangements (including margin loans) attached to their personal holdings of shares in the company. in addition, each senior executive has provided an undertaking to advise the company Secretary of any subsequent change regarding the financial arrangements (including margin loans) attached to their personal holdings of shares. this information is reported to the board. the group has instituted prohibitions on employees from using derivatives or entering into transactions that operate, or are intended to operate, to limit the economic risk of security holdings over unvested performance shares issued under the group’s long term incentive scheme. 8. CommuniCAtion AnD environment 8.1 Continuous disClosuRe poliCy the board provides shareholders with information using a comprehensive continuous disclosure policy which includes identifying matters that may have a material effect on the price of the company’s shares, notifying them to the aSx, posting them on the company’s website, and issuing media releases. in summary, the continuous disclosure policy operates as follows: • the Chairman, Managing Director, director finance & accounting and company Secretary are responsible for interpreting the continuous disclosure policy and where necessary informing the board. the company Secretary is responsible for all communications with the aSx. Such matters are advised to the aSx on the day they are discovered and all senior executives must follow a set process, which involves monitoring all areas of the group’s internal and external environment. the company considers it has complied with all of its continuous disclosure obligations; 6 Amalgamated Holdings Limited Annual Report 2010 • • • • the half year report contains summarised financial information and a review of the operations of the group during the period. the report is sent to all shareholders (unless a shareholder has specifically requested not to receive the document); the Annual Report is distributed to all shareholders who have requested to receive a copy. the board ensures that the annual report contains disclosures required by the Corporations Act 2001 and the aSx listing rules; the full texts of notices of meetings and associated explanatory material are placed on the company’s website; the Chairman’s address is presented at the annual general meeting and subsequently distributed by mail to all shareholders; and • notification is made to the ASX of any other significant matters regarding the group in accordance with the aSx listing rules. all of the above information, including that of the previous three years, is made available on the group’s website within one day of public release. 8.2 shAReholdeRs And the AnnuAl geneRAl meeting the board encourages full participation of shareholders at the annual general meeting to ensure a high level of accountability and identification with the group’s strategy and goals. important issues are presented to shareholders as single resolutions and in plain english. Shareholders are requested to vote on the appointment and maximum aggregate amount of fees that may be paid to all non-executive directors, the granting of performance shares to the managing director and changes to the constitution. the external auditor attends the annual general meeting to answer shareholder questions about the conduct of the audit and the preparation and content of the independent audit report. the meeting is held in Sydney and shareholders can attend in person or send a proxy as their representative. unless indisposed, all current directors and senior executives attend the meeting, along with the external auditor. a copy of the constitution is available to any shareholder who requests it. 8.3 enviRonmentAl RepoRting systems the group’s operations are subject to various environmental regulations under commonwealth, state or territory and other applicable legislation. the group has an established environmental reporting system for its environmentally sensitive businesses, which monitors compliance with existing environmental regulations and new regulations as they are enacted. the recreational and other ancillary activities conducted by those businesses are subject to various licences and legislation issued under environmental laws that apply in each respective location. the board has a responsibility to ensure that robust systems are in place to manage the assets in a sustainable and responsible manner and to ensure that the activities of each business are conducted in compliance with legislation. the reporting system is documented in a legal compliance manual and includes procedures to be followed should an incident occur which may adversely impact the environment. the directors are not aware of breaches of any applicable legislation during the year, which are material in nature, and have no reason to believe that any possible legal or remedial action would result in a material cost or loss to the group. 9. DireCtorS’ quALifiCAtionS AnD AttenDAnCe At meetinGS 9.1 diReCtoRs’ QuAliFiCAtions, expeRienCe And independent stAtus AlAn Rydge age 58. non-executive chairman, board member since 1978, chairman of the board since 1980, audit committee member and nomination and remuneration committee member. Experience a company director with 30-plus years experience in the film, hospitality, leisure and tourism industries. joined the greater union group in 1971 and was formerly the group managing director. Directorships mr rydge is also a director of the listed company, carlton investments limited (appointed 1980, chairman since 1980). in addition, mr rydge is chairman of alphoeb pty limited and enbeear pty limited. kenneth ChApmAn mb,bS, faicd, faim, afracma age 48. independent non-executive director and board member appointed 18 february 2010. Experience a company director with 20-plus years senior executive experience in the tourism area. currently, chief executive officer of Skyrail rainforest cableway and Skyrail-itm and executive director of the chapman group of companies. Directorships mr chapman held the following positions during the year: Directorships directorships of other listed companies, held during the last three years, include: • chairman of Far North Queensland • Downer EDI Limited (appointed 2008 hospital foundation; and resigned 2009); • director of Far North Queensland Ports corporation limited (chairman since july 2010); • Minara Resources Limited (appointed director and chairman 2008); and • Santos Limited (appointed director • chairman of Skyrail Rainforest 2008 and chairman 2009). foundation limited; • director of GFB Fisheries Limited; and • director of various entities associated with the privately held chapman group of companies. Anthony ClARk am, fca, faicd age 71. independent non-executive director, board member since 1998, audit committee member and nomination and remuneration committee member. mr clark is chairman of the audit committee and nomination and remuneration committee and is the lead independent director. Experience a company director with 40-plus years accounting, audit, consulting and finance related experience. mr clark previously practised as a chartered accountant. Directorships directorships of other listed companies, held during the last three years, include: • Carlton Investments Limited (appointed 2000); • Cumnock Coal Limited (appointed director and chairman 2001 and resigned 2007); and • Ramsay Health Care Limited (appointed 1998). in addition, mr clark was previously the deputy chairman of tourism australia (resigned december 2006). peteR CoAtes ao age 64. independent non-executive director and board member appointed 10 july 2009. Experience a company director with 40-plus years senior executive experience in the mining and commodities industries. mr coates’ experience includes exposure to domestic and international business practices, mergers and acquisitions and the development of industry- leading workplace reporting and governance standards for numerous joint venture partnerships and companies listed in australia and the united kingdom. former non- executive chairman of xstrata australia pty limited and chief executive of xstrata coal. mr coates was past chairman of the minerals council of australia, the nSw minerals council and the australian coal association and a member of the apec 2007 business consultative group, the prime minister’s emission trading task group, nSw minerals ministerial advisory council and business council of australia. thomAs FoRd faicd age 70. mr ford resigned as a director on 23 october 2009. prior to resignation, mr ford held the position of independent non- executive director and board member having been appointed in 1993. Experience a company director and investment banker with 40-plus years of banking and finance related experience. previous directorships include resolute mining limited and australian pipeline trust. Directorships directorships of other listed companies, held during the last three years, include: • Resolute Mining Limited (appointed 2001); and • Australian Pipeline Trust (appointed 1999 and resigned 2004). in addition, mr ford is a director of australian jockey club limited and chairman of resimac limited. RobeRt gRAhAm be Sydney, mba harvard, faicd age 73. independent non-executive director, board member since 1990, audit committee member and nomination and remuneration committee member. Experience a company director with 40-plus years experience as a management consultant and senior executive. former group general manager and director of consolidated press holdings limited and managing director of Samuel taylor. Directorships mr graham was a former director of the australian institute of company directors (1998 – 2001). Amalgamated Holdings Limited Corporate governance statement 7 Corporate Governance Statement continued RiChARd newton bbuS (marketing), faicd age 50. independent non-executive director and board member since 2008. Experience a company director with 20-plus years senior executive experience in property investment and development, specifically in hotel operations. Directorships mr newton held the following positions during the year: • chairman of Capricorn Village Joint venture, wa; • director of Carlton Football Club; • director of Mobileworld Communications pty limited (resigned november 2009); and • director of Selpam (Australia) Pty Limited (chairman since 2007) and a director of various companies wholly owned by Selpam (australia) pty limited. dAvid seARgeAnt age 60. managing director, board member since 2001 and appointed managing director in january 2002. Experience managing director with 30-plus years experience in the hospitality and leisure industries. former managing director of Rydges Hotels group (1988 – 2002) and the Greater Union group (2000 – 2002). Directorships mr Seargeant is also a director of tourism training australia. Explanation of abbreviations and degrees: afracma associate fellow of the royal australasian college of medical administrators; am member in the order of australia; ao officer in the order of australia; bbus (marketing) bachelor of business (marketing); be Sydney bachelor of engineering, the university of Sydney; faicd fellow of the australian institute of company directors; faim fellow of the australian institute of management; fca fellow of the institute of chartered accountants in australia; mba harvard master of business administration, harvard university; and mb,bS bachelor of medicine, bachelor of Surgery. 9.2 diReCtoRs’ AttendAnCe At meetings the number of directors’ meetings (including meetings of committees of directors) and the number of meetings attended by each of the directors of the company during the financial year are: Directors’ meetings Audit Committee meetings Nomination and Remuneration Committee meetings Special Purpose Committee meetings entitled to attend Attended entitled to attend Attended entitled to attend Attended entitled to attend Attended ag rydge kg chapman (a) aj clark pr coates (b) tc ford (c) RM Graham RG Newton dc Seargeant (d) 14 5 14 14 5 14 14 14 14 5 14 14 5 13 13 14 4 – 4 – – 4 – 4 4 – 4 – – 4 – 4 3 – 3 – – 3 – 3 3 – 3 – – 3 – 3 3 – 3 3 – – – 3 3 – 3 3 – – – 3 (a) kg chapman was appointed 18 february 2010. pr coates was appointed 10 july 2009. (b) (c) tc ford resigned 23 october 2009. (d) attended audit committee and nomination and remuneration committee meetings by invitation. during the financial year, directors also visited various sites to improve their understanding of the group’s site locations and operations. 10. reCommenDAtionS recommendation 1.1 companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions. 3.1 recommendation 1.2 companies should disclose the process for evaluating the performance of senior executives. 6.2 yes yes recommendation 1.3 companies should provide the information indicated in the guide to reporting on principle 1. Reference Comply guide to RepoRting on pRinCiple 1 the following material should be included in the corporate governance statement in the annual report: • an explanation of any departure from Recommendations 1.1, 1.2 or 1.3; and • whether a performance evaluation for senior executives has taken place in the reporting period and whether it was in accordance with the process disclosed. a statement of matters reserved for the board, or the board charter or the statement of areas of delegated authority to senior executives should be made publicly available, ideally by posting it to the company’s website in a clearly marked corporate governance section. recommendation 2.1 a majority of the board should be independent directors. recommendation 2.2 the chair should be an independent director 8 Amalgamated Holdings Limited Annual Report 2010 – 6.2 3.1 3.3, 9.1 3.5, 9.1 not applicable yes yes yes no Reference Comply recommendation 2.3 the roles of chair and chief executive officer should not be exercised by the same individual. recommendation 2.4 the board should establish a nomination committee. recommendation 2.5 companies should disclose the process for evaluating the performance of the board, its committees and individual directors. recommendation 2.6 companies should provide the information indicated in the guide to reporting on principle 2. 3.3 3.2 6.1 guide to RepoRting on pRinCiple 2 the following material should be included in the corporate governance statement in the annual report: • • • the skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report; the names of the directors considered by the board to constitute independent directors and the company’s materiality thresholds; the existence of any of the relationships affecting the independent status of a director and an explanation of why the board considers a director to be independent, notwithstanding the existence of those relationships; 3.3, 9.1 3.4, 9.1 3.4 • a statement as to whether there is a procedure agreed by the board for directors to 3.8 • • take independent professional advice at the expense of the company; the period of office held by each director in office at the date of the annual report; the names of members of the nomination committee and their attendance at meetings of the committee, or where a company does not have a nomination committee, how the functions of a nomination committee are carried out; 9.1 5.2, 9.2 • whether a performance evaluation for the board, its committees and directors has 6.1 taken place in the reporting period and whether it was in accordance with the process disclosed; and • an explanation of any departures from Recommendations 2.1, 2.2, 2.3, 2.4, 2.5 or 2.6. the following material should be made publicly available, ideally by posting it to the company’s website in a clearly marked corporate governance section: • a description of the procedure for the selection and appointment of new directors and the re-election of incumbent directors; the charter of the nomination committee or a summary of the role, rights, responsibilities and membership requirements for that committee; and the board’s policy for the nomination and appointment of directors. • • 3.3, 3.4, 3.5 3.3 5.2 3.3 recommendation 3.1 companies should establish a code of conduct and disclose the code or a summary of the code as to: 7.4, 7.5 • • • the practices necessary to maintain confidence in the company’s integrity; the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes recommendation 3.2 companies should establish a policy concerning trading in company securities by directors, senior executives and employees, and disclose the policy or a summary of that policy. 7.4, 7.7 yes recommendation 3.3 companies should provide the information indicated in the guide to reporting on principle 3. guide to RepoRting on pRinCiple 3 an explanation of any departure from recommendations 3.1, 3.2 or 3.3 should be included in the corporate governance statement in the annual report the following material should be made publicly available, ideally by posting it to the company’s website in a clearly marked corporate governance section: • any applicable code of conduct or a summary; and • the trading policy or a summary. recommendation 4.1 the board should establish an audit committee. – not applicable 7.4 7.7 3.2, 4.1, 4.2 yes yes yes Amalgamated Holdings Limited Corporate governance statement 9 Corporate Governance Statement continued recommendation 4.2 the audit committee should be structured so that it: • consists only of non-executive directors; • consists of a majority of independent directors; • • has at least three members. is chaired by an independent chair, who is not chair of the board; and Reference Comply 4.2 yes recommendation 4.3 the audit committee should have a formal charter. 4.1 yes recommendation 4.4 companies should provide the information indicated in the guide to reporting on principle 4. guide to RepoRting on pRinCiple 4 the following material should be included in the corporate governance statement in the annual report: • the names and qualifications of those appointed to the audit committee and their attendance at meetings of the committee, or, where a company does not have an audit committee, how the functions of an audit committee are carried out; the number of meetings of the audit committee; and • • explanation of any departures from Recommendations 4.1, 4.2, 4.3 or 4.4. the following material should be made publicly available, ideally by posting it to the company’s website in a clearly marked corporate governance section: • • the audit committee charter; and information on procedures for the selection and appointment of the external auditor, and for the rotation of external audit engagement partners. recommendation 5.1 companies should establish written policies designed to ensure compliance with aSx listing rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies. recommendation 5.2 companies should provide the information indicated in the guide to reporting on principle 5. guide to RepoRting on pRinCiple 5 an explanation of any departures from recommendations 5.1 or 5.2 should be included in the corporate governance statement in the annual report. the policies or a summary of those policies designed to guide compliance with listing rule disclosure requirements should be made publicly available, ideally by posting them to the company’s website in a clearly marked corporate governance section. 4.2, 9.1, 9.2 yes 4.2, 9.2 – yes not applicable 4.1 4.1 8.1 – 8.1 yes yes yes not applicable yes recommendation 6.1 companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy. 8.1, 8.2 yes recommendation 6.2 companies should provide the information indicated in the guide to reporting on principle 6. guide to RepoRting on pRinCiple 6 an explanation of any departure from recommendations 6.1 or 6.2 should be included in the corporate governance statement in the annual report. the company should describe how it will communicate with its shareholders publicly, ideally by posting this information on the company’s website in a clearly marked corporate governance section. – not applicable 8.1, 8.2 yes recommendation 7.1 companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies. 7.1 recommendation 7.2 the board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. the board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks. 3.1, 4.1, 7.1, 7.2, 7.3 yes yes 10 Amalgamated Holdings Limited Annual Report 2010 recommendation 7.3 the board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295a of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. recommendation 7.4 companies should provide the information indicated in the guide to reporting on principle 7. guide to RepoRting on pRinCiple 7 the following material should be included in the corporate governance statement in the annual report: • explanation of any departures from Recommendations 7.1, 7.2, 7.3 or 7.4; • whether the board has received the report from management under Recommendation 7.2; and • whether the board has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) under recommendation 7.3. the following material should be made publicly available, ideally by posting it to the company’s website in a clearly marked corporate governance section: • a summary of the company’s policies on risk oversight and management of material business risks. recommendation 8.1 the board should establish a remuneration committee. Reference Comply 7.2 yes – 7.1 7.2 7.1 3.2, 5.1, 5.2 not applicable yes yes yes yes recommendation 8.2 companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives. 6.1, 6.2 yes recommendation 8.3 companies should provide the information indicated in the guide to reporting on principle 8. guide to RepoRting on pRinCiple 8 the following material or a clear cross-reference to the location of the material should be included in the corporate governance statement in the annual report: • • the names of the members of the remuneration committee and their attendance at meetings of the committee, or where a company does not have a remuneration committee, how the functions of a remuneration committee are carried out; the existence and terms of any schemes for retirement benefits, other than superannuation, for non-executive directors; and 5.2, 9.1, 9.2 yes 3.9, 6.1 yes • an explanation of any departures from Recommendations 8.1, 8.2 or 8.3. – not applicable the following material should be made publicly available, ideally by posting it to the company’s website in a clearly marked corporate governance section: • the charter of the remuneration committee or a summary of the role, rights, responsibilities and membership requirements for that committee; and • a summary of the company’s policy on prohibiting entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity-based remuneration schemes. 5.1 7.7 yes yes Amalgamated Holdings Limited Corporate governance statement 11 Directors’ report the directors present their report together with the financial report of amalgamated holdings limited, being the company and its controlled entities (“group”), for the year ended 30 june 2010 and the auditor’s report thereon. DireCtorS the directors of the company in office at any time during or since the end of the year are: mr ag rydge (chairman) director since 1978 CompAny SeCretAry mr gc dean ca, aciS was appointed to the position of company Secretary for amalgamated holdings limited in december 2002. gc dean was accounting manager for the Company (2001 – 2002) and was previously employed by an international mining corporation and a regional accounting practice. gc dean is a chartered accountant and a member of chartered Secretaries australia. prinCipAL ACtivitieS SiGnifiCAnt CHAnGeS in tHe StAte of AffAirS the significant change in the state of affairs of the group during the year included the acquisition of the Skycity cinema business in february 2010. the business includes 14 cinemas (106 screens) located throughout new Zealand, a 50% interest in rialto cinemas in new Zealand which has three cinemas (16 screens) and a 66.67% interest in Skycity cinemas fiji which has two cinemas (10 screens). mr aj clark (lead independent director) director since 1998 the principal activities of the group during the course of the year were: operAtinG AnD finAnCiAL review • motion picture exhibition in cinemas; • operation of hotels, resorts and restaurants; • ownership of cinema, drive-in and hotel properties; • ownership and operation of Thredbo alpine resort; • ownership and operation of Featherdale wildlife park; • ownership and operation of the State theatre, Sydney; • ownership of investment properties, including office and retail properties; • property development activities; • supply of film processing and cinema equipment; and • investment in shares in listed and unlisted companies. there were no significant changes in the nature of the activities of the group during the year. mr kg chapman appointed 18 february 2010 mr pr coates appointed 10 july 2009 mr rm graham director since 1990 mr rg newton director since 2008 mr dc Seargeant (managing director) director since 2001 and managing director since 2002 mr tc ford was a director since 1993 and resigned 23 october 2009. particulars of the qualifications, experience and independence status of each director, as at the date of this report, are set out within the corporate governance Statement included with the annual report. DireCtorS’ meetinGS the number of directors’ meetings (including meetings of committees of directors) and the number of meetings attended by each of the directors of the company during the financial year has been disclosed within the corporate governance Statement included with the annual report. the normalised result before individually significant items and income tax expense was $127,255,000 (2009: $93,894,000), an increase of $33,361,000 or 35.5% above the prior year result. net profit was $98,772,000 (2009: $69,483,000), an increase of $29,289,000 or 42.2% above the prior year result. individually significant items in the current year totalled $9,189,000 and included a $10,163,000 development gain on the valuation and reclassification of the canberra civic property to an investment property and $8,304,000 development profit on sale of the residential land lots at former bass hill drive-in site. the gain and profit were offset by various impairment adjustments and an onerous contract provision totalling $9,278,000 (net of impairment reversals). individually significant items in the previous year totalled $5,340,000 and consisted of write-downs in the carrying value of land and buildings. in the prior year, there was a fair value decrement of $1,030,000 relating to the revaluation of those group properties classified as investment properties. the current year includes a fair value increment totalling $275,000 relating to the investment properties. 12 Amalgamated Holdings Limited Annual Report 2010 2010 2009 individually normalised discontinued significant items operations result* individually normalised discontinued significant items operations result* total $’000 $’000 $’000 $’000 $’000 $’000 $’000 enteRtAinment Australia New Zealand Germany United Arab Emirates hospitAlity & leisuRe Hotels Thredbo Alpine Resort Leisure/Attractions enteRtAinment teChnology Technology stRAtegiC investments Available-for-sale investments Property Unallocated revenues and expenses Finance revenue Finance costs Income tax expense income tax benefit from discontinued operations Non-controlling interest Net profit 52,979 694 30,166 9,005 27,776 15,046 2,424 1,780 428 4,135 (13,431) 131,002 858 (4,605) 127,255 (35,705) – 91,550 – 91,550 – – – – – – – – – – – – – – – – – – – – 3,262 – (1,215) – (5,800) – – 56,241 694 28,951 9,005 21,976 15,046 2,424 42,983 – 12,016 11,085 24,530 16,012 1,574 – 1,780 (761) – 12,942 428 17,077 428 2,127 – (13,431) (12,428) 9,189 – – 9,189 (1,967) – 7,222 – 7,222 140,191 858 (4,605) 136,444 (37,672) – 98,772 – 98,772 97,566 1,440 (5,112) 93,894 (22,932) – 70,962 6 70,968 – – – – – – – – – – 250 250 – – 250 – 3,605 3,855 – 3,855 – – – – (3,028) – – – – (2,312) (5,340) – – (5,340) – – (5,340) – (5,340) * normalised result is profit/(loss) before individually significant items, discontinued operations, non-controlling interest and income tax. an analysis of the last five years is outlined below: total revenue and other income ($’000) net profit^ ($’000) basic earnings per share (cents) dividends declared ($’000) dividends per share (cents) 2010 812,840 98,772 66.4 58,522 37.0 2009 712,311 69,483 48.2 41,727 32.0 2008 619,028 99,369 77.3 38,738 30.0 2007 628,905 82,195 64.6 35,854 28.0 – (12,178) total $’000 42,983 – 12,016 11,085 21,502 16,012 1,574 (761) 428 (185) 92,476 1,440 (5,112) 88,804 (22,932) 3,605 69,477 6 69,483 2006 614,612 59,441 47.3 30,261 24.0 ^ net profit after individually significant items, net finance costs, non-controlling interest and income tax. investments the group acquired property, plant and equipment and software totalling $83,845,000 during the year. the acquisitions were primarily attributable to the purchase of rydges gladstone and rydges townsville, the expansion of the existing cinema circuits, refurbishment requirements for the cinemas, hotels and resorts and the infrastructure and operational requirements for the thredbo alpine resort. acquisitions exclude capital expenditure incurred through partnership activities. in february 2010, the group acquired the Skycity cinema business. the net purchase price was $43,897,000. the business includes 14 cinemas (106 screens) located throughout new Zealand, a 50% interest in rialto cinemas in new Zealand which has 3 cinemas (16 screens) and a 66.67% interest in Skycity cinemas fiji which has 2 cinemas (10 screens). all cinema properties in new Zealand are leasehold, whereas the sites in fiji are owned sites. in addition, the group acquired the beverly hills and cronulla cinema complexes, the 50% interest in the glendale cinema not already owned by the group and an interest in a cinema site in noosa, queensland for a total consideration of $17,892,000. Amalgamated Holdings Limited directors’ Report 13 Directors’ report continued CApitAl stRuCtuRe the group completed a 1 for 5 renounceable pro-rata entitlement offer in december 2009. the offer closed oversubscribed and the company issued 26,080,088 shares at $4.10 per share and raised net proceeds totalling $105,987,000. in february 2010, the company announced the reintroduction of the dividend reinvestment plan and in march 2010 the company issued 2,150,415 shares at $5.48 per share. in addition, the company issued 570,193 performance shares to employees under the executive performance Share plan in june 2010. borrowings decreased by $33,344,000 during the year. the net debt to book equity ratio has decreased to 0.2% as at 30 june 2010 (2009: 9.5%). tReAsuRy poliCy the group manages interest rate risk in accordance with a board approved policy covering the types of instruments, range of protection and duration of instruments. the financial instruments cover interest rate swaps and forward rate agreements. maturities of these instruments are up to a maximum of five years. interest rate swaps and forward rate agreements allow the group to raise long term borrowings including long term finance leases, at floating rates and swap a portion of those borrowings into fixed rates. the approved range of interest rate cover is based on the projected debt levels for each currency and reduced for each future year. the group currently hedges interest bearing debt in aud, eur and nZd with cover at 30 june 2010 extending to march 2012 in aud to december 2010 in eur and to September 2011 in nZd. at 30 june 2010, due to the low level of group debt, the group had only 20% (2009: 64%) of debt hedged. the group classifies interest rate swaps as cash flow hedges and states them at fair value in the Statement of financial position. liQuidity And Funding the group’s secured bank debt facilities comprise the following: • A$160,000,000 of revolving multi-currency loan facility; • A$70,000,000 of cash advance facility; • A$38,750,000 of credit support facility (for the issue of letters of credit and bank guarantees); and • A total of A$5,050,000 in overdraft limits to support its transactional banking facilities. the above facilities mature on 10 july 2012. these facilities are supported by interlocking guarantees from most group entities and are secured by specific property mortgages. debt drawn under these facilities bears interest at the relevant inter-bank benchmark reference rate plus a margin of between 0.45% to 0.90%. at 30 june 2010, the group had drawn $40,624,000 (2009: $67,093,000) under the debt facilities, of which 20% was subject to interest rate swaps used for hedging. in addition to the above facilities, wholly owned subsidiaries in germany have a working capital facility totalling €9,000,000 (a$12,896,000), secured by a letter of credit and bank guarantees drawn under the credit support facility in australia. debt drawn under this facility bears interest at the relevant inter-bank benchmark reference rate plus a margin of 0.85%. this facility is subject to annual review. at 30 june 2010, the group had no debt drawn under this facility (2009: debt of a$700,000). use of funds under the group’s main bank facilities is limited by certain undertakings; however, it is considered that the group has sufficient bank facilities available to meet any investment opportunities and seasonal fluctuations in working capital requirements. CAsh Flows FRom opeRAtions operating net cash inflows increased to $136,586,000 from $101,991,000 in the prior year to 30 june 2009. the increase was mostly attributable to increased revenues from operations, particularly from the exhibition businesses, with a significant improvement from the australian and german cinema exhibition segments. impACt oF legislAtion And otheR exteRnAl ReQuiRements there were no changes in environmental or other legislative requirements during the year that have significantly impacted the results of operations of the group. review of operAtionS By DiviSion enteRtAinment CinemA exhibition – AustRAliA As at 30 June 2010 2009 Movement cinema locations* cinema screens* 55 473 53 460 2 13 * managed and joint venture cinema sites. the normalised profit before interest and income tax expense was $52,979,000, an increase of $9,996,000 on the prior year result. the australian cinema circuit experienced a strong year, achieving a 16.3% increase in box office over the prior year. this result was driven by the strong performance of the 3d blockbuster Avatar, which achieved a record at the australian box office grossing in excess of $115 million. other major contributors were Harry Potter and the Half-Blood Prince and Transformers: Revenge of the Fallen which both achieved in excess of $40 million and Alice in Wonderland, The Twilight Saga: New Moon, Ice Age 3: Dawn of the Dinosaurs, Up and Iron Man 2 each grossing in excess of $25 million. during the year, the group significantly expanded its 3d digital footprint so as to capitalise on the increasing number of titles being released in 3d. over the 12 month period, an additional 55 3d projectors were installed over the circuit, taking the total number of projectors to 110, which is the largest deployment of any exhibitor within australia. merchandising revenue continued to grow with a 6.8% improvement in revenue per admission over the prior year. this growth was driven by the continued rollout of the successful self serve Scoop alley candy bar concept, a number of successful candy bar combo promotions and the ongoing success of the gold class concept. the increased box office and merchandising revenue contributed to the 23.3% growth in earnings for the australian circuit. the continued focus on driving growth in online ticket sales was boosted by the new mobile and iphone applications. in addition, a continued focus on corporate sales as well as the broadening of retail sales channels for gift card products resulted in a 9.2% increase in the sale of these products. during october 2009, the group purchased the beverly hills and cronulla cinema businesses. both cinemas comprise of six screens and are located within south-western and southern Sydney. additionally in june 2010, the group purchased the noosa cinema business located on the Sunshine coast and closed the regent cinema complex located in the brisbane cbd. Subsequent to the end of the financial year, the group announced it had acquired the moonlight cinema business for $1,750,000. moonlight cinema operates an outdoor cinema business across five sites, located in Sydney, melbourne, adelaide, brisbane and perth. Settlement of this transaction is expected in September 2010, subject to certain conditions precedent being met. 14 Amalgamated Holdings Limited Annual Report 2010 the contribution for the group’s 50% interest in the village managed circuit in victoria showed a significant increase over the prior year due largely to the strong movie line-up and a focus on control of operating costs. CinemA exhibition – new ZeAlAnd & FiJi As at 30 June 2010 2009 Movement Cinema locations* Cinema screens* 19 132 – – N/A N/A * managed and joint venture cinema sites. in february 2010, the group completed the transaction to purchase the Skycity cinema business in new Zealand. the business consists of 14 leasehold cinemas, the rialto joint venture (50% share in three cinemas) and the fiji cinema joint venture (66.67% share in two cinemas). the normalised profit before interest and income tax expense for the period since acquisition was $694,000. a total of 12 of the wholly owned cinemas, which had previously been branded Skycity cinemas were rebranded to event cinemas. a major marketing campaign was undertaken in june 2010 to launch and promote the event cinemas brand. the embassy and new plymouth cinemas retained their original independent cinema names. the circuit experienced a strong year, with box office up 36.5% on the prior year. this result was underpinned by the strong performance of Avatar, which achieved a record in excess of $17 million at the new Zealand box office and the local new Zealand produced Boy which grossed in excess of $9 million. other major contributors were Harry Potter and the Half-Blood Prince, Alice in Wonderland, The Twilight Saga: New Moon, Ice Age 3: Dawn of the Dinosaurs and Up with each film grossing in excess of $5 million. merchandising revenue showed good growth with a 5% improvement in revenue per admission over the prior year. this growth was driven by a focused approach on a number of successful candy bar combo promotions. during the year, an additional six new 3d projectors were installed over the circuit, taking the total amount of projectors to 10, which helped the circuit capitalise on the increased number of 3d films. CinemA exhibition – geRmAny As at 30 June 2010 2009 Movement cinema locations* cinema screens* 62 464 66 504 (4) (40) * managed and joint venture cinema sites. the normalised profit before interest and income tax expense was $30,166,000, an increase of $18,150,000 on the prior year result. the group’s cinema exhibition operations in germany again produced an excellent result following on from the strong result of the prior year. the increase was largely achieved in the first half of the financial year. results for the last three months of the financial year were disappointing with warmer weather in germany and a lack of quality film product, particularly german film product. the football world cup also had a significant negative effect on the results for the month of june 2010 with no major film releases from the start of the event to 30 june. box office revenue in euros increased by 16.2% on the prior year. admissions increasing by 4.4% with average admission price showing an increase of 11.2%.this increase in average admission price was driven partly by the additional surcharge on 3d admissions. a total of 36 screens at 28 sites have 3d capability across the german circuit. the top performing films at the german box office for the financial year were Avatar, Ice Age: Dawn of the Dinosaurs, Harry Potter and the Half-Blood Prince, Twilight Saga: New Moon, 2012 and the german productions Wickie und die starken Männer and Zweiohrküken. german films contributed 18% of the box office compared with 18.9% in the prior year. live broadcasts of the metropolitan opera have been very successful. these featured at a select number of cinemas sites in germany. four cinema sites were closed during the year to 30 june 2010. the strengthening of the australian dollar against the euro had a negative impact on the result when translated to australian dollars. CinemA exhibition – united ARAb emiRAtes As at 30 June 2010 2009 Movement cinema locations* cinema screens* 5 50 4 40 1 10 * joint venture cinema sites. the contribution from the group’s interest in the cinema circuit based in the united arab emirates was $9,005,000. despite increasing competition in the region, the circuit traded strongly with box office revenue in dirhams up on the prior year by 3.6% and merchandising spend per head up by 8.7%. the opening of a new 10-screen cinema at mirdif in march of this year assisted with this growth, together with an increase in the average admission price, which was up 8% on the prior year. the increase in the average admission price can be largely attributed to an increase in the volume of 3d content and the availability of vip seating options at mirdif, both of which are sold at a higher ticket price. the strengthening of the australian dollar against the dirham negatively impacted the contribution from the circuit when translated to australian dollars. hospitAlity And leisuRe Rydges hotels And ResoRts As at 30 June 2010 2009 Movement locations* rooms* 41 39 7,528 6,761 2 767 * owned and managed hotels. the normalised profit before interest and income tax expense was $27,776,000, an increase of $3,246,000 on the prior year result. occupancy in the group’s owned hotels was 75.6%, up 2.3 percentage points over the prior year. occupancy for like-for-like hotels was at the highest level achieved in over a decade. growth was driven by significant levels of promotional activity designed to combat weaker demand in the first half of the year. occupancy also benefited from strengthening demand as restrictions on corporate and conference travel eased in the fourth quarter of the year. continued price sensitivity maintained pressure on room rate; however, the stronger occupancy and market share enabled revenue per-available-room to grow (on a like-for-like basis) by almost 3% on the prior year. trading conditions were most favourable in australian mainland capital cities, with Sydney hotels leading the recovery. the trading environment is more difficult in regional areas, particularly the queensland resort locations, although signs of a strengthening in demand did emerge towards the end of the year. internationally, london is trading well, and whilst occupancies have returned to normal levels in new Zealand and dubai, rates have not yet begun to recover. the group continues to leverage the increasingly powerful combination of rydges. com and the Rydges PriorityGUEST program to deal directly with guests and drive increasing revenues into hotels. the program increased membership by 85,000, finishing the year with 331,000 members. revenue booked via rydges.com increased by some 18% over the prior year. the focus on expanding innovative food and beverage offerings across the group continued with the launch of new bar and restaurant concepts in several owned hotels. Amalgamated Holdings Limited directors’ Report 15 Directors’ report continued major extensions at the managed rydges bell city and rydges auckland hotels were completed during the year and two new ‘art Series’ hotels opened under rydges management in melbourne. the group acquired rydges gladstone and rydges townsville in late october 2009. the total acquisition cost of the two hotels was $36,132,000. a review of the carrying value of owned hotel properties as at 30 june 2010 resulted in an impairment write-down totaling $5,800,000. the impairment write-down has been disclosed as an individually significant item for the year ended 30 june 2010. thRedbo Alpine ResoRt the normalised profit before interest and income tax expense was $15,046,000, a decrease of approximately 6.0% on the prior year. thredbo experienced solid trading despite inconsistent natural snow conditions for winter 2009. favourable snow and weather conditions during the months of july and august 2009 were followed by varied and unseasonal conditions from September to the end of the 2009 ski season. the warmer September 2009 weather for Sydney, the resort’s major market place, also impacted visitation. the full benefit of the investment in snow-making was particularly evident in the early part of the season. thredbo achieved approximately 369,000 skier days, 6% below the prior year. thredbo continues to maintain a focus on summer activities and events. the summer events, including the Snowy ride and blues and jazz festivals, assist in drawing visitors to the alpine area and building thredbo as a year-round destination. the start of winter 2010 commenced well with good natural snow falls; however, more recently, all australian ski-resorts have had to rely on snow-making. the prevailing temperatures have greatly assisted and thredbo has been able to utilise the full benefit of the automated snow- making facilities. leisuRe And AttRACtions the normalised profit before interest and income tax expense was $2,424,000, an increase of $850,000 on the prior year result. the featherdale result increased by 8% over the prior year. the result was commendable given that the prior year benefited from increased visitation during the world youth day celebrations. Strong domestic admission growth and improved yields offset the continued weakness in the inbound tourist market. an increased number of performances held at the State theatre resulted in significantly improved trading conditions compared to the prior year. enteRtAinment teChnology the normalised profit before interest and income tax expense was $1,780,000, an increase of $2,541,000 on the prior year result. edge digital technology continued to benefit from the ongoing rollout of digital technology to cinema operators in australia and new Zealand. filmlab continued to produce a satisfactory result. stRAtegiC investments pRopeRty the normalised profit before interest and income tax expense was $4,135,000, an increase of $2,008,000 on the prior year. contributing to the improved result was a fair value increment of $275,000 on the revaluation of the group’s investment properties compared to a fair value decrement in the prior year of $1,030,000. construction of the seven-level commercial office development at the former cinema site in canberra civic was completed in december 2009. the building is fully leased to actewagl and a favourable fair value adjustment of $10,163,000 in relation to this development has been included as an individually significant item. the residential subdivision of the bass hill drive-in site is progressing well, with 52 unconditional contracts exchanged as at 30 june 2010. a profit of $8,304,000 has been booked as an individually significant item in relation to these contracts as at 30 june 2010. at year end, an impairment write-down totalling $5,525,000 was booked in relation to plant and equipment at the gowings and State theatre office buildings in Sydney. the write-down was recognised due to the planned hotel and retail redevelopment of the two buildings, which will result in certain plant items becoming redundant. the write- down has been included as an individually significant item. StrAteGiC pLAnS By DiviSion the group’s strategic plan, which includes future expansion, will depend on industry, economic and political conditions, the potential impact of global events, the future financial performance and available capital, the competitive environment, evolving customer needs and trends, and the availability of attractive opportunities. it is likely that the group’s strategies will continue to evolve and change in response to these and 16 Amalgamated Holdings Limited Annual Report 2010 other factors, and there can be no absolute assurance that these current strategies, as detailed below, will be achieved. enteRtAinment the strategic plans for entertainment are applicable to both the domestic and international cinema businesses. CinemA exhibition – domestiC And inteRnAtionAl Enhancing the customer experience whilst the group has no control over the general audience appeal of available films, providing consumers with a demonstrably superior experience in the cinema to that which can be achieved in the home, is a central strategic platform. to provide this enhanced cinema experience, the group will pursue the following strategies: • the continued refurbishment of existing cinemas and expansion of the number of cinemas with the event cinemas brand; • expansion of the Gold Class cinema concept to certain cinema locations within the australian domestic circuit; • expansion of the Vmax cinema concept which provides the ultimate big screen cinema experience through larger screens and seats than a traditional auditorium; • continued improvement of food and beverage outlets within the cinemas to maximise food and beverage revenue opportunities; • continued expansion of the 3D digital footprint within the australian domestic circuit to ensure all regions have access to the release of 3d titles; and • enhanced customer communication and ticketing through online applications. Maximising returns from existing locations the cinema exhibition markets in australia, and those international locations in which the group currently operates, are considered to be mature markets with limited growth and expansion opportunity. the group anticipates achieving growth primarily through further expansion of the premium cinema concepts of gold class and vmax and building higher frequency through loyalty programs. Rationalising under-performing cinema sites the group will continue to pursue the policy of rationalising under-performing cinema sites. all sites, in all territories, are reviewed periodically and, where it is assessed that there is limited profit or potential for performance turnaround, an exit strategy is formulated. where the site (or group of sites) is subject to long term leases, the exit strategy may be over a protracted period of time. Industry developments the group believes that there are certain current issues pertaining to the industry that have the capacity to impact the strategic plans and future direction of the cinema operations. the group will continue to monitor developments in relation to the following issues: • increase in capital expenditure resulting from the deployment of a digital platform for film exhibition; • alternative film delivery methods and the rise in popularity of other forms of entertainment (including dvd ownership and the increase of home entertainment systems); • shortening of the release window of film to dvd; and • increase in unauthorised recording (piracy) of audio and visual recordings for commercial sale. hospitAlity And leisuRe Rydges hotels And ResoRts Enhancing the guest experience the group will continue to provide hotel guests with quality 4 star accommodation that consistently delivers a product and service that meets or exceeds guest expectations. to provide this, the group will continue to pursue the following strategies: • a constant focus on innovative and dynamic recruitment and training practices to ensure talented and dynamic people are attracted to work in rydges hotels; • maintenance of all hotels at 4 star standard and when required, rejuvenation of key areas of hotels to ensure rydges’ reputation continues to be enhanced; • a specific focus on creating stand out food and beverage experiences that build incremental spend and enhance each hotel’s reputation; and • maintenance of a leadership position in the online distribution and booking capabilities for guests. the Rydges PriorityGuest program and the sales and revenue structure are important support functions for the online strategy. Increasing the number of hotel rooms the group will continue to seek opportunities for future growth through gaining of new hotel management agreements and freehold acquisitions. Maximising returns from existing locations the group anticipates achieving continuing improvements in results through growth in market share and initiatives that drive increased spend and capture rates in all hotels. thRedbo Alpine ResoRt Premier holiday destination the key strategy for the thredbo alpine resort is to maintain the facility as one of the premier australian holiday destinations. this strategy includes: • continuing to ensure the popularity, high quality and ambience of the winter-time resort facility; • enhancing of snow-making automation to minimise risks in poor seasons; • increasing the summer and shoulder visitations by both leisure and conference guests; • staging special events that help to promote the resort; and • ensuring that the environmental integrity of the resort is maintained and, where possible, improved. Maximising returns from existing facility the group anticipates that the resort will achieve growth through shoulder periods, summer revenue and cost improvements, increased visitation and increased occupancy rates. enteRtAinment teChnology the strategic plans for entertainment technology are applicable to each of the technology businesses. edge digitAl teChnology And FilmlAb Maintaining pace with technological advances the group will continue to build and maintain knowledge in relation to evolving cinema systems, and in particular digital projection systems. Maximising returns from existing businesses the group is focusing on restructuring business processes to reduce the level of operating costs of the existing business and ensuring the appropriate structures are in place for the rollout of the digital platform. Industry developments the group expects that a digital platform will replace the current 35mm film release printing process over the next one to three years. the group is assessing potential income streams from digital content delivery platforms, including alternate content distribution. stRAtegiC investments pRopeRty Maximising returns from existing investments the group has a number of property assets that it intends to redevelop over time. the timing of these redevelopments is dependent on the type of use and stage of the property cycle. DiviDenDS dividends paid or declared by the company since the end of the previous year were: type deClARed And pAid duRing the yeAR final 2009 dividend interim 2010 dividend deClARed AFteR the end oF the yeAR final 2010 dividend per share Cents total amount $’000 date of payment tax rate for franking credit 21 14 23 17 September 2009 29 march 2010 30% 30% 27,383 21,907 49,290 36,615 16 September 2010 30% all the dividends paid or declared by the company since the end of the previous year were 100% franked. Amalgamated Holdings Limited directors’ Report 17 Directors’ report continued remunerAtion report the remuneration report, which forms part of the directors’ report, is set out on pages 20 to 27 and has been audited as required by section 308(3c) of the Corporations Act 2001. eventS SuBSequent to reportinG DAte Subsequent to 30 june 2010, the group announced the acquisition of the moonlight cinema business for a purchase price of $1,750,000. moonlight cinema is an outdoor cinema operation with five sites screening films in melbourne, Sydney, perth, brisbane and adelaide during the three month summer season. other than the matter outlined above, there has not arisen in the interval between the end of the year and the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the company, to affect significantly the operations of the group, the results of those operations, or the state of affairs of the group, in future years. LiKeLy DeveLopmentS likely developments in the operations of the group are referred to in the review of operations by division, set out within this report. DireCtorS’ intereStS the relevant interest of each director of the company in share capital of the company, as notified by the directors to the australian Securities exchange (“aSx”) in accordance with section 205g(1) of the Corporations Act 2001, at the date of this report is as follows: director AG Rydge AJ Clark KG Chapman PR Coates RM Graham RG Newton DC Seargeant tc ford (b) ordinary shares held by companies in which a director has a beneficial interest (a) ordinary shares held directly 3,037,915 30,000 – – 6,992 – 719,518 – 68,548,033 35,000 54,000 28,000 5,760 66,000 299,972 – options held directly performance shares held directly – – – – – – – – – – – – – – 580,000 – (a) relevant interest under the Corporations Act 2001 differs from the disclosure required under australian accounting Standards as presented in note 38 to the financial report. (b) mr tc ford resigned on 23 october 2009. at the date of resignation, mr ford had a beneficial interest in 10,000 ordinary shares. inDemnifiCAtion AnD inSurAnCe of DireCtorS AnD offiCerS the company’s constitution provides an indemnity to each person, including ag rydge, aj clark, kg chapman, pr coates, rm graham, rg newton and dc Seargeant, who is or who has been a director or alternate director of the company or of any related body corporate of the company. the indemnity also extends to such other officers or former officers, including executive officers or former executive officers, of the company and of any related body corporate of the company as the directors of the company determine. in terms of the indemnity, the company will indemnify the directors and other officers of the company acting as such, to the full extent permitted by law, against any liability to another person (other than the company or a related body corporate) incurred in acting as a director or officer of the company, unless the liability arises out of conduct involving a lack of good faith. the indemnity includes any liability for costs and expenses incurred by such person in defending any proceedings, whether civil or criminal, in which judgement is given in that person’s favour, or in which the person is acquitted and in making an application in relation to any proceedings in which the court grants relief to the person under the law. the company has provided directors’ and officers’ liability insurance policies that cover all the directors and officers of the company and its controlled entities. the terms of the policies prohibit disclosure of details of the amount of the insurance cover, its nature and the premium paid. offiCerS wHo were previouSLy pArtnerS of tHe AuDit firm the following persons were officers of the company during the year and were previously partners of the current audit firm, kpmg, at a time when kpmg undertook an audit of the group: • AJ Clark (retired from audit firm in 1998); and • PW Horton (retired from audit firm in 2001). 18 Amalgamated Holdings Limited Annual Report 2010 SHAre optionS there were no options issued during the period. there are no unissued ordinary shares of the company under option at 30 june 2010. during the prior financial year, the managing director and certain executives exercised options to acquire 733,500 fully paid ordinary shares in the company at a weighted average exercise price of $3.47 per share. refer note 30 to the financial report for further details of the options. no options have been exercised during or since the end of the year. AuDitor inDepenDenCe the lead auditor’s independence declaration is set out on page 28 and forms part of the directors’ report for the year ended 30 june 2010. audit services: auditors of the group - kpmg australia audit and review of financial reports other assurance services overseas kpmg firms audit and review of financial reports other assurance services other services: Auditors of the Group – KPMG Australia income tax compliance indirect tax compliance advice overseas kpmg firms income tax compliance indirect tax compliance advice other taxation services non-AuDit ServiCeS proviDeD By KpmG • during the year, kpmg, the group’s auditor, has performed certain other services in addition to their statutory duties. the board has considered the non-audit services provided during the year by the auditor and in accordance with written advice provided by resolution of the audit committee is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons: • all non-audit services were subject to the corporate governance procedures adopted by the group and have been reviewed by the audit committee to ensure they do not impact the integrity and objectivity of the auditor; and the non-audit services provided do not undermine the general principles relating to auditor independence as set out in apeS 110 code of ethics for professional accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the group, acting as an advocate for the group or jointly sharing risks and rewards. a copy of the auditors’ independence declaration as required under section 307c of the Corporations Act 2001 has been included in this directors’ report. details of the amounts paid to the auditor of the group, kpmg, and its related practices for audit and non-audit services provided during the year are set out below: 2010 $ 2009 $ 886,407 128,403 398,324 8,018 855,191 32,210 378,740 14,606 1,421,152 1,280,747 152,721 39,270 191,991 110,366 11,170 100,001 221,537 413,528 156,492 108,129 264,621 100,502 13,572 132,176 246,250 510,871 rounDinG off the company is of a kind referred to in class order 98/100 (as amended by class order 04/667) as issued by australian Securities and investments commission (“aSic”). in accordance with that class order, amounts in the financial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated. Signed in accordance with a resolution of the directors: AG Rydge director DC Seargeant director dated at Sydney this 19th day of august 2010. Amalgamated Holdings Limited directors’ Report 19 Directors’ report continued remunerAtion report – AuDiteD this report outlines the remuneration arrangements in place for directors and executives of the group. remunerAtion pHiLoSopHy the nomination and remuneration committee is responsible for making recommendations to the board on remuneration policies and packages applicable to the board members and senior executives of the group. the objective of the remuneration policy is to ensure the remuneration package properly reflects the person’s duties and responsibilities, and that remuneration is competitive in attracting, motivating and retaining people of the appropriate quality. remuneration levels are competitively set to attract appropriately qualified and experienced directors and executives. the nomination and remuneration committee obtains independent advice on the level of remuneration packages. the remuneration packages of the managing director and senior executives include an at-risk component that is linked to the overall financial and operational performance of the group and based on the achievement of specific goals of the group. executives participate in the group’s executive performance Share plan. the long term benefits of the executive performance Share plan are conditional upon the group achieving certain performance criteria, details of which are outlined below. the group also has the following share and option plans: • Tax Exempt Share Plan; • Management Share Option Plan (suspended to new issues and no grants have been made under this plan since 2004); and • Employee Share Plan (closed to new members and no offers have been made under the plan since 1998). further details in relation to the various share plans and option plan are provided in note 30 to the financial report. remunerAtion StruCture in accordance with best practice corporate governance, the structure of non-executive director remuneration is separate and distinct from senior executive remuneration. non-exeCutive DireCtor remunerAtion obJeCtive the board seeks to set aggregate remuneration at a level which provides the group with the ability to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders. stRuCtuRe the constitution and the aSx listing rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. an amount not exceeding the amount determined is then divided between the directors as agreed. the latest determination was at the annual general meeting held on 30 november 2007 when shareholders approved an aggregate remuneration of $1,100,000 per year. non-executive directors do not receive any performance related remuneration nor are they issued options, shares or performance shares. the amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned among directors is reviewed annually. the board considers advice from external consultants as well as the fees paid to non-executive directors of comparable companies when undertaking the annual review process. each director receives a fee for being a director of the company. an additional fee is also paid for being a member of the audit committee and the nomination and remuneration committee. the payment of an additional fee recognises the additional time commitment required by directors who serve on those committees. directors’ base fees are presently $102,000 per annum (chairman: $255,000 per annum, inclusive of committee fees). directors’ fees cover all main board activities. non-executive director members who sit on both the audit committee and the nomination and remuneration committee receive an additional payment of $16,000 per annum (chairman of both the audit committee and the nomination and remuneration committee: $31,000 per annum). the remuneration of non-executive directors for the year ended 30 june 2010 is detailed on page 24 in this report. the company also has a directors’ retirement plan. the plan was suspended in respect of any new director appointments, on 15 may 2003 and directors appointed to the board after that date are not entitled to participate in the plan. under the plan, directors with more than three years service receive a retirement lump sum based on the length of service. the plan benefits accrued on a monthly basis and reach the maximum amount after 12 years service. the benefit is capped to a maximum lump sum per director of $165,000. the plan has been fully accrued since the year ended 30 june 2007 and the company has not incurred any additional expense since that date. during the year, the company paid $165,000 to mr tc ford under the plan. mr ford resigned as a director on 23 october 2009. there were no other benefits paid under the plan during the year ended 30 june 2010. the amounts accrued in respect of the directors’ retirement plan are as follows: Directors aj clark rm graham TC Ford total 2010 $ 2009 $ 165,000 165,000 – 165,000 165,000 165,000 330,000 495,000 the maximum benefit amount has been accrued for each participating director and no further directors’ retirement plan expense accruals will occur in future years. mAnAGinG DireCtor AnD exeCutive remunerAtion obJeCtive the group aims to reward the managing director and executives with a level and mix of remuneration commensurate with their position and responsibilities within the group, and so as to: • reward executives for Group, business unit and individual performance against targets set by reference to appropriate benchmarks and key performance indicators (“kpis”); • align the interests of executives with those of shareholders; • link reward with the strategic goals and performance of the group; and • ensure total remuneration is competitive by market standards. stRuCtuRe in determining the level and make-up of executive remuneration, the nomination and remuneration committee obtains independent advice on the appropriateness of remuneration packages for executives, given remuneration trends in other companies, from which recommendations are made to the board. it is the nomination and remuneration committee’s policy that employment contracts are entered into with the managing director and other executives. details of these employment contracts are provided on page 23. remuneration consists of both fixed and variable remuneration components. the variable remuneration component consists of a Short term incentive plan and a long term incentive plan. 20 Amalgamated Holdings Limited Annual Report 2010 the proportion of fixed remuneration and variable remuneration (potential short term and long term incentives) is established for each senior executive by the nomination and remuneration committee. fixeD AnnuAL remunerAtion obJeCtive remuneration levels for executives are reviewed annually to ensure that they are appropriate for the responsibility, qualifications and experience of each executive and are competitive with the market. the nomination and remuneration committee establishes and issues an appropriate guideline for the purpose of the annual review of fixed remuneration levels. the guideline is based on both current and forecast consumer price index and market conditions. there are no guaranteed fixed remuneration increases in any senior executives’ contracts. stRuCtuRe executives have the option to receive their fixed annual remuneration in cash and a limited range of prescribed fringe benefits such as motor vehicles and car parking. the total employment cost of any remuneration package, including fringe benefits tax, is taken into account in determining an employee’s fixed annual remuneration. certain employees have been relocated from their country of origin. in some cases, expatriate employees are entitled to the payment or reimbursement of relocation costs (at the commencement and termination of the contract), annual return airfares to the employee’s country of origin and the provision of assistance to complete various taxation returns and visa applications. vAriABLe remunerAtion – SHort term inCentive (“Sti”) obJeCtive the objective of the Sti program is to link the achievement of the operational targets with the remuneration received by the executives charged with meeting those targets. the total potential Sti available is set at a level so as to provide sufficient incentive to the executive to achieve the operational targets and such that the cost to the group is reasonable in the circumstances. stRuCtuRe actual Sti payments granted to each executive depend on the extent to which specific operating targets, set at the beginning of the year, are met. the operational targets consist of a number of kpis covering both financial and non-financial measures of performance. typically, kpis and assessment criteria include: • meeting of pre-determined growth in group earnings over the prior year; • meeting of strategic and operational objectives; and • assessed personal effort and contribution. the group has pre-determined benchmarks which must be met in order to trigger payments under the Sti. the measures were chosen as they directly align the individual’s Sti reward to the kpis of the group and to its strategies and performance. on an annual basis, after consideration of performance against kpis, an overall performance rating for the group and each individual business unit is assessed and approved by the nomination and remuneration committee. the individual performance of each executive is also rated and all three ratings are taken into account when determining the amount, if any, of the Sti pool to be allocated to each executive. the aggregate of annual Sti payments available for executives across the group is subject to the approval of the nomination and remuneration committee. Sti payments are delivered as a cash bonus. for the managing director and named executives, the general target bonus opportunity range is from 0% to 150% of the executives’ fixed annual remuneration. the target bonus range for the managing director and named executives is detailed below: maximum sti calculated on fixed annual remuneration (a) group earnings divisional earnings department costs special projects Quantitative kpis Qualitative kpis Allocated between 150% 50% 25% 40% 40% 50% 35% 50% 50% 16 2⁄3% 12 1⁄2% 20% 20% 162⁄3% 20% 162⁄3% – 16 2⁄3% – – – 16 2⁄3% – – – – – – – – – – 40% – 2 1⁄2% 31⁄3% 10% – – 20% – 162⁄3% 21⁄2% 10% 21⁄2% – 10% 131⁄3% 60% – 71⁄2% 62⁄3% 71⁄2% 16 2⁄3% 5% – executive DC Seargeant nc arundel pc bourke GC Dean MR Duff hr eberstaller PW Horton kj kobishop (a) fixed annual remuneration is comprised of base salary, superannuation and benefits provided through salary sacrificing arrangements. bonuses may be paid above these levels at the discretion of the nomination and remuneration committee and the board, if it is assessed that an exceptional contribution has been made by an executive. there is no separate profit-share plan. Amalgamated Holdings Limited directors’ Report 21 Directors’ report continued vAriABLe remunerAtion – LonG term inCentive (“Lti”) obJeCtive the executive performance Share plan was approved by shareholders at the 2006 annual general meeting. the executive performance Share plan was designed to link employee reward with kpis that drive sustainable growth in shareholder value over the long term. the objectives of the lti plan are to: • align senior employees’ incentives with shareholder interests; • balance the short term with the long term group focus; and • retain high calibre senior employees by providing an attractive equity-based incentive that builds an ownership of the group mindset. only senior employees who are able to directly influence the long term success of the group participate in the executive performance Share plan. stRuCtuRe executives are awarded performance shares which will only vest on the achievement of certain performance hurdles and service conditions. an offer is made under the executive performance Share plan to senior employees each financial year and is based on individual performance as assessed by the annual appraisal process. if a senior employee does not sustain a consistent level of high performance, they will not be nominated for executive performance Share plan participation. the nomination and remuneration committee reviews all nominated senior employees with participation subject to final board approval. in accordance with the aSx listing rules, approval from shareholders is obtained before participation in the executive performance Share plan commences for the managing director. each award of performance shares is divided into equal portions, with each portion being subject to a different performance hurdle. the performance hurdles are based on earnings per share (“epS”) and total shareholder return (“tSr”) growth of amalgamated holdings limited as determined by the board over a three year period (“performance period”). the extent to which the performance hurdles have been met will be assessed by the board at the expiry of the performance period. the performance hurdles for the awards of performance shares to executives in the financial year ended 30 june 2010 are based on amalgamated holdings limited’s epS and tSr growth over the performance period of the three years from 30 june 2009 (being the “base year”) to 30 june 2012. the tSr performance hurdle was chosen as it is widely recognised as one of the best indicators of shareholder value creation. the comparator group for tSr purposes has been chosen as it represents the group with which the group competes for shareholders’ capital. the hurdle is as follows: the performance hurdles are as follows: epS HurDLe the epS hurdle requires that the group’s epS growth for the performance period must be greater than the target set by the board. the epS hurdle was chosen as it provides evidence of the group’s growth in earnings. the hurdle is as follows: • • • if annual compound EPS growth over the performance period is less than 8%, no shares will vest with the executive; if annual compound EPS growth over the performance period is equal to 8% but less than 12%, the proportion of performance shares vesting will be increased on a pro-rata basis between 50% and 100%; or if annual compound EPS growth over the performance period compared to the base year is equal to or greater than 12%, all of the performance shares awarded (and attaching to this hurdle) will vest with the executive. if the epS measure is not achieved within the initial performance measurement period to a threshold level or higher, there will be no entitlement to shares for a participant. if the epS performance measure is achieved to a threshold level or higher in the initial period, it will not be retested. tSr HurDLe the tSr hurdle requires that the growth in the group’s tSr must be at or above the median of the group’s comparator group (“comparator group”). the comparator group is the S&p/aSx 200 (excluding mining stocks). growth in tSr is defined as share price growth and dividends paid and reinvested on the ex-dividend date (adjusted for rights, bonus issues and any capital reconstructions) measured from the time of issue to the time of vesting. • • • if annual compound TSR growth over the performance period is less than the 51st percentile, no shares will vest with the executive; if annual compound TSR growth over the performance period is equal to or exceeds the 51st percentile but is less than 75th percentile, the proportion of performance shares vesting will be increased on a pro- rata basis between 50% and 100%; or if annual compound TSR growth over the performance period is equal to or greater than 75th percentile, all of the performance shares awarded (and attaching to this hurdle) will vest with the executive. the tSr calculation, once completed, is independently reviewed. if the tSr measure is not achieved within the initial performance measurement period to a threshold level or higher, there will be no entitlement to shares for a participant. if the tSr performance measure is achieved to a threshold level or higher in the initial period, it will not be retested. the board has retained the discretion to vary the performance hurdles and criteria. optionS prior to 17 September 2004, the group delivered lti grants to executives in the form of options. the last issue of options was granted on 16 September 2004. the management Share option plan has since been suspended and no further grants have been made since 2004. the details of the value of options, options exercised and options lapsed during the prior financial year are outlined on page 27. there are no unissued ordinary shares of the group under option at 30 june 2010 (2009: nil). performAnCe inDiCeS in considering the group’s performance and benefits for shareholders’ wealth, the nomination and remuneration committee has regard to the following indices in respect of the current year and the previous four years: net profit before individually significant items, income tax and non-controlling (minority) interest Share price (year end) 127,255,000 5.70 94,144,000 4.30 77,738,000 4.87 81,914,000 6.45 73,693,000 4.87 2010 $ 2009 $ 2008 $ 2007 $ 2006 $ 22 Amalgamated Holdings Limited Annual Report 2010 empLoyment ContrACtS it is the group’s policy that employment contracts for the managing director and each senior executive (with the exception of kj kobishop) are unlimited in term. mr kobishop’s employment contract is for a period of three years to 14 September 2011. the employment contracts typically outline the components of remuneration paid to the managing director and executives but do not prescribe how remuneration levels are to be modified from year to year. generally, remuneration levels are reviewed each year to take into account consumer price index changes, and any change in the scope of the role performed by the senior executive and any changes required to meet the principles of the remuneration policy. termination provisions in the employment contracts with the named executives are summarised in the table below: Executives Termination by executive Termination by Group dc Seargeant the notice period is three months. the notice period is four weeks. nc arundel pc bourke gc dean mr duff hr eberstaller pw horton the notice period for the group is one month. on termination, the group may make a payment in lieu of notice, equal to the notice period. the group retains the right to terminate the contract immediately under certain conditions. on termination, the executive is entitled to accrued annual and long service benefits. there are no other termination payments. payment of any lti incentive (or pro-rata thereof) is at the discretion of the board. Expiry date of contract not applicable, rolling contracts. kj kobishop the notice period is the lesser of: the notice period for the group is the lesser of: 14 September 2011 • 12 months; or • 12 months; or • the balance of the term of the employment contract. • the balance of the term of the employment contract. the group retains the right to terminate the contract immediately under certain conditions. on termination, the executive is entitled to accrued annual and reasonable relocation associated costs. there are no other termination payments. payment of any lti incentive (or pro-rata thereof) is at the discretion of the board. Key mAnAGement perSonneL key management personnel have authority and responsibility for planning, directing and controlling the activities of the group, including directors of the company and executives. Name Position non-exeCutive diReCtoRs alan rydge anthony clark kenneth chapman peter coates thomas ford robert graham richard newton chairman and non-executive director independent non-executive director independent non-executive director independent non-executive director independent non-executive director independent non-executive director independent non-executive director exeCutive diReCtoR david Seargeant managing director and chief executive officer Period of responsibility Employing company 1 July 2009 – 30 June 2010 1 July 2009 – 30 June 2010 18 February 2010 – 30 June 2010 10 July 2009 – 30 June 2010 1 July 2009 – 23 October 2009 1 July 2009 – 30 June 2010 1 July 2009 – 30 June 2010 amalgamated holdings limited amalgamated holdings limited amalgamated holdings limited amalgamated holdings limited amalgamated holdings limited amalgamated holdings limited amalgamated holdings limited 1 July 2009 – 30 June 2010 amalgamated holdings limited exeCutives norman arundel peter bourke gregory dean mathew duff hans eberstaller peter horton kevin kobishop managing director rydges hotels & resorts director of information technology company Secretary director commercial managing director ahl Strategic investments director finance & accounting corporate director of food and beverage 1 July 2009 – 30 June 2010 19 April 2010 – 30 June 2010 1 July 2009 – 30 June 2010 1 July 2009 – 30 June 2010 1 July 2009 – 30 June 2010 1 July 2009 – 30 June 2010 1 July 2009 – 30 June 2010 rydges hotels limited amalgamated holdings limited amalgamated holdings limited amalgamated holdings limited the greater union organisation pty limited amalgamated holdings limited amalgamated holdings limited Amalgamated Holdings Limited directors’ Report 23 Directors’ report continued DireCtorS’ AnD exeCutiveS’ remunerAtion details of the nature and amount of each major element of the remuneration of each director of the company and each of the named executive officers of the group receiving the highest remuneration are set out below. in accordance with the requirements of aaSb 124 related party disclosures, the remuneration tables only include remuneration relating to the portion of the relevant periods that each individual was a key management person. r e m u n e r a t i o n i F x e d a n n u a l a n d f e e s $ b o n u s e s s t i $ 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 230,539 221,255 128,000 108,810 32,592 – 87,627 – 32,667 90,000 113,000 104,000 – 70,050 89,908 82,569 – – – – – – – – – – – – – – – – 2010 2009 1,735,539 1,141,255 2,030,000 1,732,500 diReCtoRs Non-executive ag rydge aj clark kg chapman (d) pr coates (e) tc ford (f) rm graham m hellicar (g) rg newton Executive dc Seargeant exeCutives – the CompAny pc bourke (h) gc dean mr duff pw horton kj kobishop (i) 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 46,133 – 248,539 241,255 382,539 383,255 335,539 354,338 350,705 334,872 exeCutives – the gRoup nc arundel hr eberstaller rd entwistle (j) 2010 2009 2010 2009 2010 2009 405,539 391,255 162,028 154,568 – 338,757 – – 97,741 62,651 153,837 56,550 122,500 81,620 69,999 – 87,763 96,289 265,500 51,995 – 59,952 Short term n o n - c a s h b e n e fi t s $ – – – – – – – – – – – – – – – – – – – – – – – – – – 32,276 19,286 – – – – – – Post- employ- ment Share- based Other long term Other s e r v c e i l e a v e A c c r u e d l o n g b e n e fi t s ( c ) R e t i r e m e n t a n n u a l l e a v e A c c r u e d $ – – – – – – – – – – – – – – – – s u p e r a n n u a t i o n c o n t r i b u t i o n s $ 14,461 13,745 – 9,190 2,933 – 7,887 – – – – – – 4,950 8,092 7,431 p r e m u m s i ( a ) i n s u r a n c e $ – – – – – – – – – – – – – – – – l t i e q u i t y ( b ) $ – – – – – – – – – – – – – – – – $ – – – – – – – – – – – – – – – – 95,621 168,303 10,461 10,561 14,461 13,745 473,726 486,462 67,835 314,407 4,089 – 2,788 7,650 7,141 7,092 (17,917) (2) (13,189) 15,028 (353) 1,325 9,218 34,068 – 4,645 – – 2,088 1,105 2,088 2,210 2,088 2,210 835 697 835 884 1,044 1,105 – 537 3,179 – 14,461 13,745 14,461 13,745 14,461 13,745 – – 44,980 41,493 71,264 67,045 69,321 66,072 – – 156,145 55,888 14,461 13,745 11,183 11,432 – 8,869 69,315 54,814 14,585 22,292 – 42,499 – – 7,028 5,938 11,047 7,370 8,529 2,489 – – – – 3,123 4,091 – (15,375) – 123,750 p e r f o r m a n c e r e a t e d l r e m u n e r a t i o n p r o p o r t i o n o f % t o t a l $ 245,000 235,000 128,000 118,000 35,525 – 95,514 – 32,667 90,000 113,000 104,000 – 75,000 98,000 90,000 – – – – – – – – – – – – – – – – 4,427,643 3,867,233 56.5% 57.4% 53,401 – 417,625 373,837 642,377 537,267 534,521 520,472 596,771 425,771 577,560 558,312 466,681 279,551 – 563,634 – – 34.2% 27.9% 35.0% 23.0% 35.9% 28.4% 37.9% 13.1% 27.2% 27.1% 60.0% 26.6% – 18.2% $ – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 24 Amalgamated Holdings Limited Annual Report 2010 (a) amounts disclosed above for remuneration of directors and named executives exclude insurance premiums paid by the group in respect of directors’ and officers’ liability insurance contracts as the contracts do not specify premiums paid in respect of individual directors and officers. information relating to the insurance contracts is set out within this remuneration report. the amounts disclosed in the table above relate to premiums paid by the group for group salary continuance insurance. (b) amounts disclosed above for remuneration relating to performance shares have been determined in accordance with the requirements of aaSb 2 Share-based payment. aaSb 2 requires the measurement of the fair value of performance shares at the grant date and then to have that value apportioned in equal amounts over the period from grant date to vesting date. a value has been placed on the performance shares using a monte carlo simulation model. details of performance shares on issue are set out within the remuneration report and further details on the terms and conditions of these performance shares is set out in note 30 to the financial report. there were no amounts accrued during the year relating to the directors’ retirement plan. an amount of $165,000, which had been accrued in prior years, was paid in the year to 30 june 2010 to tc ford on his resignation from the board. further information regarding the directors’ retirement plan has been included within the remuneration report. (c) (d) kg chapman was appointed on 18 february 2010. pr coates was appointed on 10 july 2009. (e) (f) tc ford resigned 23 october 2009. (g) m hellicar resigned 23 april 2009. (h) (i) pc bourke commenced employment with the group on 19 april 2010. kj kobishop commenced employment with the group on 15 September 2008. kj kobishop is a citizen of the united States of america and is a 457 visa holder, and his employment arrangements have satisfied certain exemption conditions as set out by the australian taxation office. as a result, the group does not have any superannuation obligations in relation to the employment of kj kobishop. rd entwistle ceased employment with the group on 7 february 2009. (j) AnALySiS of Sti BonuSeS inCLuDeD in remunerAtion the bonus table below is calculated on the basis of including awarded bonuses only. it only includes remuneration relating to the portion of the relevant periods that each individual was a key management person. details of the vesting profile of the Sti bonuses awarded as remuneration to the managing director and each of the named executive officers of the group are detailed below: mAnAging diReCtoR dc Seargeant (c) exeCutives nc arundel pc bourke (d) gc dean mr duff hr eberstaller (e) PW Horton kj kobishop (f) Included in remuneration (a) $ Awarded in year % Not awarded in year (b) % 2,030,000 87,763 – 97,741 153,837 265,500 122,500 69,999 92.5% 43.3% –% 95.8% 96.9% 100% 100% 43.3% 7.5% 56.7% –% 4.2% 3.1% –% –% 56.7% (a) amounts included in remuneration for the year represent the amounts that were awarded in the year based on achievement of personal goals and satisfaction of specified performance criteria for the 30 june 2009 year. no amounts vest in future years in respect of the Sti bonus schemes for the 2009 year. the amounts not awarded are due to the performance criteria not being met in relation to the assessment period. the Sti bonus includes a total of $86,625 awarded as an additional bonus payment for exceptional performance recognised during the year. the Sti bonus payment also includes $875,000 representing the payment of the early achievement of certain 2010 bonus hurdles. pc bourke commenced employment with the group on 19 april 2010. the Sti bonus includes a total of $182,500 awarded as an additional bonus payment for exceptional performance recognised for the 30 june 2009 year. kj kobishop commenced employment with the group on 15 September 2008. the Sti bonus has been calculated pro-rata based on the relevant service period for the 30 june 2009 year. (b) (c) (d) (e) (f) Amalgamated Holdings Limited directors’ Report 25 Directors’ report continued AnALySiS of Lti performAnCe SHAreS GrAnteD AS remunerAtion details of vesting profile of the performance shares granted as remuneration to the managing director and named executives are detailed below: number grant date vested during the year Forfeited during the year (a) year in which the grant vests performance share – eps performance share – tsR Fair value % % mAnAging diReCtoR dc Seargeant exeCutives nc arundel pc bourke (b) gc dean mr duff hr eberstaller pw horton 240,000 140,000 100,000 100,000 18,987 23,491 14,739 5,972 28 jun 2010 23 feb 2009 18 feb 2008 19 feb 2007 28 jun 2010 23 feb 2009 18 feb 2008 19 feb 2007 – – 11,889 14,791 8,996 7,337 17,947 23,027 14,433 12,183 7,866 5,972 4,982 15,822 22,099 14,203 12,183 28 jun 2010 23 feb 2009 18 feb 2008 19 feb 2007 28 jun 2010 23 feb 2009 18 feb 2008 19 feb 2007 28 jun 2010 18 feb 2008 19 feb 2007 28 jun 2010 23 feb 2009 18 feb 2008 19 feb 2007 kj kobishop (c) 100,000 23 feb 2009 – – – 100% – – – 100% – – – – 100% – – – 100% – – 100% – – – 100% – – – – – – – – – – – – – – – – – – – – – – – – – – 30 jun 2013 30 jun 2012 30 jun 2011 30 jun 2010 30 jun 2013 30 jun 2012 30 jun 2011 30 jun 2010 – 30 jun 2013 30 jun 2012 30 jun 2011 30 jun 2010 30 jun 2013 30 jun 2012 30 jun 2011 30 jun 2010 30 jun 2013 30 jun 2011 30 jun 2010 30 jun 2013 30 jun 2012 30 jun 2011 30 jun 2010 30 jun 2012 $ 5.78 4.34 6.02 6.39 5.78 4.34 6.02 6.39 – 5.78 4.34 6.02 6.39 5.78 4.34 6.02 6.39 5.78 6.02 6.39 5.78 4.34 6.02 6.39 4.34 $ 4.72 3.80 4.31 4.63 4.72 3.80 4.31 4.63 – 4.72 3.80 4.31 4.63 4.72 3.80 4.31 4.63 4.72 4.31 4.63 4.72 3.80 4.31 4.63 3.80 the % forfeited in the year represents the reduction from the maximum number of performance shares available to vest due to the performance criteria not being achieved. pc bourke commenced employment with the group on 19 april 2010. (a) (b) (c) kj kobishop commenced employment with the group on 15 September 2008. 26 Amalgamated Holdings Limited Annual Report 2010 AnALySiS of movementS in performAnCe SHAreS the movement during the year by value, of performance shares in the company held by the managing director and each of the named executives is detailed below: mAnAging diReCtoR DC Seargeant exeCutives NC Arundel PC Bourke GC Dean MR Duff HR Eberstaller PW Horton KJ Kobishop granted during the year (a) $ exercised during the year (b) $ Forfeited during the year $ performance shares exercised number Amount paid per share $ 1,260,000 – 99,682 – 62,418 94,223 41,297 83,066 – 33,682 – – – – – – – – – – – – – – – 5,972 – – – – – – – Nil – – – – – – (a) (b) the value of performance shares granted in the year is the fair value of the performance shares calculated at grant date using a monte carlo simulation model. the total value of the performance shares granted is included in the table above. this amount is allocated to remuneration over the vesting period. the value of performance shares exercised during the year is calculated as the market price of shares of the company on the aSx as at close of trading on the date that the performance shares were exercised. there were no performance shares granted since the end of the year. AnALySiS of Lti optionS GrAnteD AS remunerAtion no options granted as remuneration to the managing director and named executives vested during the year. all outstanding options were exercised or lapsed in the previous financial year. there are no options yet to vest as at 30 june 2010 (2009: nil). there were no amounts unpaid on the shares issued as a result of the exercise of options. no options have been granted since 16 September 2004. there were no options granted since the end of the year. Amalgamated Holdings Limited directors’ Report 27 Lead Auditor’s independence Declaration undeR seCtion 307C oF the CoRpoRAtions ACt 2001 to: the directors of amalgamated holdings limited i declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 june 2010 there have been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) no contraventions of any applicable code of professional conduct in relation to the audit. KPMG David Rogers partner 19 august 2010 28 Amalgamated Holdings Limited Annual Report 2010 Statement of financial position As At 30 June 2010 note 2010 $’000 2009 $’000 Assets CuRRent Assets cash and cash equivalents receivables inventories other Total current assets non-CuRRent Assets receivables other financial assets available-for-sale financial assets investments accounted for using the equity method property, plant and equipment investment properties goodwill and other intangible assets deferred tax assets other Total non-current assets Total assets liAbilities CuRRent liAbilities payables interest bearing liabilities and borrowings current tax liabilities provisions deferred revenue other Total current liabilities non-CuRRent liAbilities payables interest bearing liabilities and borrowings deferred tax liabilities provisions deferred revenue other Total non-current liabilities Total liabilities Net assets eQuity Share capital reserves retained earnings Total equity attributable to equity holders of the Company Non-controlling (minority) interest Total equity 10 11 12 13 11 14 15 16 17 18 19 7(c) 20 21 22 7(b) 24 1(t) 25 21 22 7(c) 24 1(t) 25 26 27 27 45,288 50,476 18,124 6,600 120,488 405 312 10,447 124,284 599,082 78,875 32,889 13,990 7,780 868,064 988,552 74,035 4,993 14,209 16,643 41,652 8,535 23,227 38,370 13,776 4,974 80,347 516 312 9,362 117,750 561,751 29,600 14,856 14,726 9,258 758,131 838,478 77,316 6,714 11,906 12,689 30,201 8,473 160,067 147,299 2 41,629 8,002 10,909 2,937 4,820 68,299 228,366 760,186 219,126 103 540,957 760,186 – 760,186 2 73,252 5,919 9,578 2,503 840 92,094 239,393 599,085 101,353 6,167 491,475 598,995 90 599,085 the Statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages 34 to 90. Amalgamated Holdings Limited statement of Financial position 29 income Statement FoR the yeAR ended 30 June 2010 Revenue and other income revenue from sale of goods and rendering of services other revenue and income expenses occupancy expenses employee expenses film hire and other film expenses purchases and other direct expenses other operating expenses depreciation and amortisation advertising, commissions and marketing expenses impairment of assets finance costs Fair value decrement on investment properties equity profit Share of net profit of equity accounted investees: associates jointly controlled entities Profit before tax from continuing operations income tax expense Profit after tax from continuing operations discontinued operations Profit after tax from discontinued operations Profit for the year Attributable to: equity holders of the company Non-controlling (minority) interest Profit for the year Earnings per share for profit attributable to equity holders of the Company basic from continuing operations Basic from discontinued operations Basic – total diluted from continuing operations Diluted from discontinued operations Diluted – total note 3 3 4(a) 4(a) 4(a) 4(a) 18 36 37 4 7 5 9 2010 $’000 2009 $’000 758,861 53,979 812,840 (189,457) (172,266) (163,263) (89,937) (40,641) (33,647) (19,770) (11,325) (4,605) – 669,860 42,451 712,311 (186,080) (166,997) (147,139) (68,696) (35,783) (30,632) (18,666) (5,811) (5,112) (1,030) (724,911) (665,946) 8,803 39,712 48,515 136,444 (37,672) 98,772 – 98,772 98,772 – 98,772 2010 Cents 66.4 – 66.4 66.4 – 66.4 11,196 30,993 42,189 88,554 (22,932) 65,622 3,855 69,477 69,483 (6) 69,477 2009 Cents 48.2 2.8 51.0 48.2 2.8 51.0 the income Statement is to be read in conjunction with the notes to the financial statements on pages 34 to 90. 30 Amalgamated Holdings Limited Annual Report 2010 Statement of Comprehensive income FoR the yeAR ended 30 June 2010 Profit for the year other comprehensive (expense)/income foreign currency translation differences for foreign operations Share of associates’ reserve movements – foreign currency translation Net increase/(decrease) in fair value of available-for-sale financial assets – net of tax Effective portion of change in fair value of cash flow hedges – net of tax Ineffective portion of change in fair value of cash flow hedges – net of tax Revaluation of property on reclassification to investment properties Other comprehensive expense for the period – net of income tax Total comprehensive income for the period Total comprehensive income attributable to: equity holders of the company Non-controlling (minority) interest Total comprehensive income for the period note 27 2010 $’000 98,772 (9,248) (735) 759 1,170 232 – (7,822) 2009 $’000 69,477 (290) 2,228 (873) (1,853) – 267 (521) 90,950 68,956 90,950 – 90,950 68,962 (6) 68,956 the Statement of comprehensive income is to be read in conjunction with the notes to the financial statements on pages 34 to 90. Amalgamated Holdings Limited statement of Comprehensive income 31 Statement of Changes in equity FoR the yeAR ended 30 June 2010 Attributable to equity holders of the Company share capital Reserves $’000 $’000 Retained earnings $’000 non- controlling interest $’000 total $’000 total equity $’000 Balance at 1 July 2009 Profit for the period otheR CompRehensive inCome foreign currency translation differences including net investment hedges Share of associates’ reserves movements – foreign currency translation net increase in fair value of available-for-sale financial assets – net of tax net change in fair value of cash flow hedges – net of tax Total other comprehensive income recognised directly in equity Total comprehensive income for the period Distribution to non-controlling (minority) interests in subsidiaries Employee share-based payments expense – net of tax renounceable pro-rata entitlement share issue – net of costs and tax Shares issued under the Dividend Reinvestment Plan Net present value adjustment to employee share loans Dividends paid 101,353 6,167 491,475 598,995 – – – – – – – – – 105,987 11,786 – – – 98,772 98,772 (9,248) (735) 759 1,402 (7,822) – – – – – (9,248) (735) 759 1,402 (7,822) (7,822) 98,772 90,950 – 1,710 – – 48 – – – – 1,710 – – – (49,290) 105,987 11,786 48 (49,290) 90 – 599,085 98,772 – – – – – – (90) – – – – – (9,248) (735) 759 1,402 (7,822) 90,950 (90) 1,710 105,987 11,786 48 (49,290) Total transactions with owners 117,773 1,758 (49,290) 70,241 (90) 70,151 Balance at 30 June 2010 219,126 103 540,957 760,186 – 760,186 Balance at 1 July 2008 Profit for the period otheR CompRehensive inCome foreign currency translation differences including net investment hedges Share of associates’ reserves movements – foreign currency translation net decrease in fair value of available-for-sale financial assets – net of tax net change in fair value of cash flow hedges – net of tax Revaluation of property on reclassification to investment properties Total other comprehensive income recognised directly in equity Total comprehensive income for the period Distribution to non-controlling (minority) interests in subsidiaries Employee share-based payments expense – net of tax Exercise of employee share options Employee share-based payments – related entity employees Net present value adjustment to employee share loans Dividends paid Total transactions with owners Balance at 30 June 2009 98,809 5,177 460,832 564,818 223 565,041 – – – – – – – – – – 2,544 – – – 2,544 – 69,483 69,483 (6) 69,477 (348) 58 (290) 2,228 (873) (1,853) 267 (579) (579) – 1,367 – 166 36 – – – – – 2,228 (873) (1,853) 267 58 (521) 69,541 68,962 – – – – – (38,898) – 1,367 2,544 166 36 (38,898) – – – – – – (6) (127) – – – – – (290) 2,228 (873) (1,853) 267 (521) 68,956 (127) 1,367 2,544 166 36 (38,898) 1,569 (38,898) (34,785) (127) (34,912) 101,353 6,167 491,475 598,995 90 599,085 the Statement of changes in equity is to be read in conjunction with the notes to the financial statements on pages 34 to 90. 32 Amalgamated Holdings Limited Annual Report 2010 Statement of Cash flows FoR the yeAR ended 30 June 2010 CAsh Flows FRom opeRAting ACtivities cash receipts in the course of operations cash payments in the course of operations cash provided by operations distributions from associates and jointly controlled entities other revenue finance costs paid dividends received interest received income tax refunds income tax paid note 2010 $’000 2009 $’000 820,817 (739,566) 720,628 (662,299) 81,251 45,357 41,219 (4,514) 479 862 778 (28,846) 58,329 43,940 40,556 (4,876) 453 1,455 666 (38,532) Net cash provided by operating activities 40 136,586 101,991 CAsh Flows FRom investing ACtivities payments for property, plant and equipment and redevelopment of investment property Payments for cinema operations in New Zealand and Fiji – net of cash acquired Payments for leasehold cinema sites and associated plant and equipment in Australia Payments for remaining 50% interest in cinema joint venture site including plant and equipment payments for increase in investments in associates and jointly controlled entities Purchase of management rights Proceeds from disposal of investments proceeds from disposal of other non-current assets decrease in other loans receivable decrease in loans from other entities decrease in loans to associates and jointly controlled entities (83,892) (47,521) (14,375) (3,517) (98) – – 962 111 (545) 387 (113,968) – – – (196) (615) 1,500 79 117 (1,598) 1,692 Net cash used by investing activities (148,488) (112,989) CAsh Flows FRom FinAnCing ACtivities proceeds from borrowings repayment of borrowings Net proceeds from renounceable pro-rata entitlement share issue dividends paid net of dividend reinvestment plan Dividends paid to non-controlling (minority) interests in subsidiaries Proceeds from exercise of employee share options Net cash provided by financing activities net increase/(decrease) in cash and cash equivalents cash and cash equivalents at the beginning of the year effect of exchange rate fluctuations on cash held Cash and cash equivalents at 30 June 137,304 (170,369) 105,987 (37,504) – – 35,418 23,516 23,227 (1,455) 45,288 90,251 (48,345) – (38,898) (126) 2,544 5,426 (5,572) 28,472 327 23,227 10 the Statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 34 to 90. Amalgamated Holdings Limited statement of Cash Flows 33 notes to the financial Statements FoR the yeAR ended 30 June 2010 note 1 – SiGnifiCAnt ACCountinG poLiCieS amalgamated holdings limited (“company”) is a company domiciled in australia. the consolidated financial report of the company for the year ended 30 june 2010 comprises the company and its subsidiaries (collectively referred to as the “group”) and the group’s interest in associates and jointly controlled entities. amalgamated holdings limited is a company incorporated in australia and limited by shares. the shares are publicly traded on the aSx. the nature of the operations and principal activities of the group are described in note 2. the financial report was authorised by the board of amalgamated holdings limited for issuance on 19 august 2010. (a) stAtement oF CompliAnCe the financial report is a general purpose financial report which has been prepared in accordance with australian accounting Standards (“aaSbs”) (including australian accounting interpretations) adopted by the australian accounting Standards board and the Corporations Act 2001. the financial report also complies with international financial reporting Standards and interpretations adopted by the international accounting Standards board. (b) bAsis oF pRepARAtion the financial report is presented in australian dollars and the functional currency of the group is australian dollars. the financial report is prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments, financial instruments classified as available- for-sale, share-based payments and investment properties. assets held for sale are stated at the lower of carrying amount, and fair value less costs to sell. the preparation of a financial report in conformity with aaSbs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. the estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. actual results may differ from these estimates. the estimates and underlying assumptions are reviewed on an ongoing basis. revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. judgements made by management in the application of aaSbs that have a significant effect on the financial report and estimates with a significant risk of material adjustment in the next year are discussed in note 1(z). the accounting policies have been applied consistently by all entities in the group. the company is of a kind referred to in aSic class order 98/100 dated 10 july 1998 (updated by class order 05/641 effective 28 july 2005 and class order 06/51 effective 31 january 2006) and in accordance with the class order, amounts in the financial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated. certain comparative amounts have been reclassified to conform with the current year’s presentation. ChAnge in signiFiCAnt ACCounting poliCies except as described below, the accounting policies applied in these financial reports are the same as those applied by the group in its financial reports as at and for the year ended 30 june 2009. (i) Presentation of Operating Segments accounting Standard aaSb 8 operating Segments replaced aaSb 114 Segment reporting and became mandatory for the group from 1 july 2009. aaSb 8 requires that the presentation of operating segment information be based on business unit dissections regularly used by the managing director, in assessing the performance of each segment. as a result of this change, the segment information note (note 2) now presents an additional dissection of business units previously grouped under the cinema exhibition international segment. this change in accounting standards only impacts presentation and disclosure aspects. comparative segment information has been re-presented in conformity with this change. (ii) Presentation of Financial Statements revised accounting Standard aaSb 101 presentation of financial Statements became mandatory for the group from 1 july 2009. revised aaSb 101 requires the presentation of a Statement of comprehensive income disclosing changes in equity not relating to share capital, which when added to the profit for the period gives the total comprehensive income for the period. this presentation has been applied in these financial reports as at and for the year ended on 30 june 2010. this change only impacts presentation aspects. comparative information has been re-presented in conformity with the revised standard. (iii) Accounting for Business Combinations revised accounting Standard aaSb 3 business combinations and aaSb 127 consolidated and Separate financial Statements became mandatory for the group from 1 july 2009. aaSb 3 changes the application of acquisition accounting for business combinations and the accounting for non-controlling (minority) interests. changes affect the valuation of non- controlling interests, the initial recognition and subsequent measurement of contingent consideration, business combinations achieved in stages and the determination of goodwill recognised. transaction costs relating to business combinations are also now expensed as incurred. revised accounting Standard aaSb 127 changes the accounting for investments in subsidiaries where there is a change in ownership interest by the group. a change in ownership interest, without a change in control, is now accounted for as a transaction with owners in their capacity as owners and as such will no longer give rise to goodwill, nor a gain or loss in the Statement of comprehensive income. also, the revised standard changes the accounting for losses incurred by a partially owned subsidiary as well as accounting for the loss of control of a subsidiary. the group has applied the new policy prospectively for business combinations that occurred during the year ended 30 june 2010 as disclosed in note 34. (iv) Accounting for Property under Construction or Development for Future Use as an Investment Property amendments made to accounting Standard aaSb 140 investment property require that, where the fair value option has been taken to measure investment property, an investment property under construction or development should also be measured at fair value (unless a fair value cannot be reliably determined). changes in fair value are recognised in the income Statement. these amendments, which have been applied from 1 july 2009, change the timing of the recognition of fair value adjustments in respect of investment properties under development. previously, a change in the fair value of a developed property was recognised on completion of the development. as the only investment property under construction or development was completed during the financial year to 30 june 2010, this change has had no impact on the results for the period. 34 Amalgamated Holdings Limited Annual Report 2010 note 1 – SiGnifiCAnt ACCountinG poLiCieS (ContinueD) ChAnge in signiFiCAnt ACCounting poliCies (Continued) the changes in these significant accounting policies were applied prospectively and have had no material impact on earnings per share. the following standards, amendments to standards and interpretations have been identified as those which may impact the group in the period of initial application. they were available for early adoption at 30 june 2010, but have not been applied by the group in preparing these financial statements: • Improvements to International Financial reporting Standards 2009 incorporates a number of amendments to accounting standards. one amendment that may impact on the group is as follows: • IAS 17 Leases (“IAS 17”). Under the amendment to iaS 17, a long term land lease may have to be classified as a finance lease, even if title to the land is not going to pass to the lessee at the end of the lease. this change will impact on the accounting treatment for certain leased properties within the group. the impact of this amendment on the group’s future financial reports, has not yet been determined; and • AASB 9 Financial Instruments includes requirements for the classification and measurement of financial assets resulting from the first part of phase 1 of the project to replace aaSb 139 financial instruments: recognition and measurement. aaSb 9 will become mandatory for the group’s 30 june 2014 financial statements. retrospective application is generally required, although there are exceptions, particularly if the entity adopts the standard for the year ending 30 june 2012 or earlier. the group has not yet determined the potential effect of the standard. (c) bAsis oF ConsolidAtion the consolidated financial statements comprise the financial statements of the company and its subsidiaries as at 30 june each year end. (i) business CombinAtions the group has adopted revised aaSb 3 business combinations (2008) and amended aaSb 127 consolidated and Separate financial Statements (2008) for business combinations occurring on or after 1 july 2009. business combinations are accounted for using the acquisition method. under the acquisition method, consideration transferred in a business combination is measured at fair value, which is measured as the sum of the fair values at acquisition date of the assets transferred, liabilities incurred by the group to the previous owners of the acquiree, and equity interests issued by the group. consideration transferred also includes the fair value of any contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the business combination. goodwill arising from the business combination is determined as the fair value of the consideration transferred, including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, which are measured at the acquisition date. a contingent liability of the acquiree is assumed in a business combination only if the liability represents a present obligation and arises from past events, and its fair value can be measured. the group measures any non-controlling interest at its proportionate interest of the fair value of identifiable net assets of the acquiree. transaction costs incurred by the group in connection with a business combination, such as due diligence fees, legal fees and other professional costs are expensed as incurred. (ii) subsidiARies Subsidiaries are entities controlled by the company. control exists when the company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. in assessing control, potential voting rights that are presently exercisable or convertible are taken into account. the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. (iii) AssoCiAtes And Jointly ContRolled entities (“eQuity ACCounted investees”) associates are those entities for which the group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the group holds between 20% and 50% of the voting power of another entity. jointly controlled entities are those entities over whose activities the group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. the consolidated financial statements include the group’s share of the total recognised gains and losses of associates and jointly controlled entities on an equity accounted basis, from the date that significant influence commences or joint control commences until the date that significant influence or joint control ceases. the group’s share of movements in reserves is recognised directly in consolidated reserves. when the group’s share of losses exceeds its interest in an equity accounted investee, the group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the group has incurred legal or constructive obligations to make payments on behalf of the investee. (iv) tRAnsACtions eliminAted on ConsolidAtion intra-group balances, and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. unrealised gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of the group’s interest in the entity. unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. gains and losses are recognised as the contributed assets are consumed or sold by the associates or jointly controlled entities or, if not consumed or sold by the associate or jointly controlled entity, when the group’s interest in such entities is sold. (d) FoReign CuRRenCy (i) FoReign CuRRenCy tRAnsACtions transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. monetary assets and liabilities denominated in foreign currencies at the year end date are translated to australian dollars at the foreign exchange rate ruling at that date. foreign exchange differences arising on translation are recognised in the income Statement. non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to australian dollars at foreign exchange rates ruling at the dates the fair value was determined. Amalgamated Holdings Limited notes to the Financial statements 35 notes to the financial Statements continued note 1 – SiGnifiCAnt ACCountinG poLiCieS (ContinueD) (d) FoReign CuRRenCy (Continued) (ii) FinAnCiAl stAtements oF FoReign opeRAtions the assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to australian dollars at foreign exchange rates ruling at the year end date. the revenues and expenses of foreign operations are translated to australian dollars at rates approximating the foreign exchange rates ruling at the dates of the transactions. foreign exchange differences arising on retranslation are recognised in the foreign currency translation reserve. when a foreign operation is disposed of, in part or in full, the relevant amount in the reserve is transferred to profit or loss. (iii) net investment in FoReign opeRAtions exchange differences arising from the translation of the net investment in foreign operations, and the effective portion of related hedges, are taken to the foreign currency translation reserve. they are released to profit or loss as an adjustment to profit or loss on disposal. foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned or likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised directly in equity in the foreign currency translation reserve. (e) deRivAtive FinAnCiAl instRuments the group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating activities, investing activities and financing activities. in accordance with its treasury policy, the group does not hold or issue derivative financial instruments for trading purposes. derivative financial instruments are recognised at fair value. the gain or loss on remeasurement to fair value is recognised immediately in profit or loss. however, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged (refer note 1(f)). the fair value of interest rate swaps is the estimated amount that the group would receive or pay to terminate the swap at the year end date, taking into account current interest rates and the creditworthiness of the swap counterparties. the fair value of forward exchange contracts is their quoted market price at the year end date, being the present value of the quoted forward price. (f) hedging on entering into a hedging relationship, the group formally designates and documents the hedge relationship and the risk management objective and strategy for undertaking the hedge. the documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they are designated. (i) CAsh Flow hedges where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity in the hedging reserve. when the forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or the forecast transaction for a non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the associated cumulative gain or loss is removed from equity and included in the initial cost or other carrying amount of the non-financial asset or liability. if a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, then the associated gains and losses that were recognised directly in equity are reclassified into profit or loss in the same period or periods during which the asset acquired or liability assumed affects profit or loss (i.e. when interest income or expense is recognised). for cash flow hedges, the associated cumulative gain or loss is removed from equity and recognised in the income Statement in the same period or periods during which the hedged forecast transaction affects profit or loss. the ineffective part of any gain or loss is recognised immediately in the income Statement. hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. at that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecast transaction occurs. if a hedge transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the income Statement. 36 Amalgamated Holdings Limited Annual Report 2010 (ii) hedge oF net investment in FoReign opeRAtions the portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation, that is determined to be an effective hedge, is recognised directly in equity. the ineffective portion is recognised immediately in the income Statement. (g) pRopeRty, plAnt And eQuipment (i) owned Assets items of property, plant and equipment (except for investment properties – refer note 1(g)(ii)) are stated at cost or deemed cost, less accumulated depreciation and impairment losses. the cost of assets represents the fair value of the consideration provided, plus incidental costs directly attributable to the acquisition and also includes: • the initial estimate of the cost at the time of installation and during the period of use, when relevant and probable, of removing items and restoring the site on which they are located (decommissioning); and • changes in the measurement of existing liabilities recognised for decommissioning costs resulting from changes in the discount rate applied to these future liabilities or changes to estimates of cost. the cost may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. the borrowing cost related to the acquisition or construction of qualifying assets is capitalised into the cost of the asset. where settlement of any part of cash consideration is deferred, the amounts payable are recorded at their present value, discounted at the rate applicable to the group if a similar borrowing were obtained from an independent financier under comparable terms and conditions. the unwinding of the discount is treated as interest expense. where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items or property, plant and equipment. (ii) investment pRopeRties investment properties comprise land and buildings which are held for long term rental yields or for capital appreciation, or both, and are not occupied by the group. initially, investment properties are measured at cost including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value. note 1 – SiGnifiCAnt ACCountinG poLiCieS (ContinueD) (g) pRopeRty, plAnt And eQuipment (Continued) (ii) investment pRopeRties (Continued) property that is being constructed or redeveloped for future use as an investment property is also measured at fair value (unless a fair value cannot be reliably determined) from the date a decision has been made to hold the property long term as an investment property. any gain or loss arising on remeasurement is recognised in the income Statement. when a property is reclassified from owner-occupied to an investment property following a change in its use, any difference at the date of transfer between the carrying amount of the property immediately prior to transfer and its fair value is recognised directly to the investment property revaluation reserve, if it is a gain. any decrease in value is recognised in the income Statement. gains or losses arising from changes in the fair values of investment properties are included in the income Statement in the period in which they arise. investment properties are derecognised when they have either been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal. any gains or losses on the derecognition of an investment property are recognised in the income Statement in the period of derecognition. (iii) leAsed Assets leases for property, plant and equipment under which the company or its controlled entities assume substantially all the risks and benefits of ownership are classified as finance leases. other leases are classified as operating leases. finance leases are capitalised. a lease asset and a lease liability equal to the present value of the minimum lease payments are recorded at the inception of the lease. contingent rentals are written off as an expense of the accounting period in which they are incurred. capitalised lease assets are depreciated on a straight-line basis over the term of the relevant lease, or where it is likely the group will obtain ownership of the asset, the life of the asset. they are stated in the Statement of financial position at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses. lease liabilities are reduced by repayments of principal. the interest components of the lease payments are charged to the income Statement. payments made under operating leases are charged against profits in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property. (iv) subseQuent Costs the group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred, if it is probable that the future economic benefits embodied within the item will flow to the group and the cost of the item can be measured reliably. all other costs are recognised in the income Statement as an expense. (v) depReCiAtion depreciation is charged to the income Statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. land is not depreciated. the estimated useful lives in the current and comparative periods are as follows: buildings plant and equipment fixtures and fittings leasehold buildings and improvements 40 – 80 years 3 – 20 years 3 – 10 years Shorter of estimated useful life and term of lease assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed assets, from the time an asset is completed and held ready for use. depreciation rates are reviewed annually for appropriateness. the residual value, if not insignificant, is also reassessed annually. when changes are made, adjustments are reflected prospectively in current and future periods only. (h) intAngible Assets (i) goodwill goodwill acquired in a business combination is initially measured at cost of the business combination, being the excess of the consideration transferred over the fair value of the group’s net identifiable assets acquired and liabilities assumed. if this consideration transferred is lower than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised in the income Statement. following initial recognition, goodwill is measured at cost less any accumulated impairment losses. goodwill is not amortised. goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. as at the acquisition date, any goodwill acquired is allocated to each of the cash- generating units expected to benefit from the business combination’s synergies. impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised. an impairment loss recognised in respect of goodwill cannot be reversed. the carrying amount of goodwill in respect of associates and jointly controlled entities is included in the carrying amount of the investment in the associate or jointly controlled entity. (ii) ConstRuCtion Rights construction rights relate to the group’s ability to develop accommodation in the thredbo alpine resort. construction rights are recognised at cost and are amortised as the rights are either sold or developed. the carrying value of construction rights is reviewed annually. any amounts no longer considered recoverable are written off. (iii) otheR intAngible Assets other intangible assets, which largely comprise management rights and software costs, are stated at cost less accumulated amortisation and impairment losses. management rights are amortised over the life of the management agreements on a straight-line basis. Software costs for major operating systems are amortised over a four to five year period on a straight-line basis. (i) ReCoveRAble Amount oF Assets at each reporting date, the group assesses whether there is any indication that an asset may be impaired. where an indicator of impairment exists, the group makes a formal estimate of recoverable amount. where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. the recoverable amount of assets is the greater of their net selling price and value in use. in assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. for an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Amalgamated Holdings Limited notes to the Financial statements 37 notes to the financial Statements continued note 1 – SiGnifiCAnt ACCountinG poLiCieS (ContinueD) (i) ReCoveRAble Amount oF Assets (Continued) impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. receivables are individually assessed for impairment. an impairment loss is recognised whenever the carrying amount of an asset or its cash- generating unit exceeds the recoverable amount. impairment losses are recognised in the income Statement unless the asset or its cash-generating unit has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of the previous revaluation, with any excess recognised through the income Statement. an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. with the exception of goodwill, an impairment loss is reversed when there is a clear indication that the impairment loss no longer exists and there has been a change in the estimates used to determine the recoverable amount. investments (j) all investments are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the investment. after initial recognition, investments, which are classified as available-for-sale, are measured at fair value. available-for- sale financial assets comprise marketable equity securities. for investments that are actively traded in organised financial markets, fair value is determined by reference to securities’ exchange quoted market bid prices at the close of business at reporting date. gains or losses on available-for-sale investments are recognised as a separate component of equity in the available-for-sale investments revaluation reserve until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the income Statement. an impairment loss recognised in the income Statement in respect of an available-for- sale investment is not reversed through the income Statement. (k) inventoRies inventories are carried at the lower of cost and net realisable value. work in progress is valued at cost. cost is based on the first-in-first-out principle and includes expenditure incurred in bringing inventories to their existing condition and location. the cost of inventories may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of inventories. (l) ContRACt woRk in pRogRess for equipment build and cinema installation contracts, profit is brought to account on a percentage completion basis. (m) CAsh And CAsh eQuivAlents cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. bank overdrafts that are repayable on demand and form an integral part of the group’s cash management are included as a component of cash and cash equivalents for the purpose of the Statement of cash flows. (n) ReCeivAbles trade and other receivables are stated at their amortised cost less an allowance for impairment losses. where the payment terms for the sale of an asset are deferred, the receivable is discounted using the prevailing rate for a similar instrument of an issuer with similar credit terms. the unwinding of the discount is treated as finance revenue. (o) pAyAbles trade and other payables are recognised at their amortised cost. liabilities are recognised for amounts to be paid in the future for goods or services received. trade accounts payable are normally non-interest bearing and settled within 30 days. (p) boRRowings interest bearing and non-interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income Statement over the period of the borrowings on an effective interest basis. (q) pRovisions (i) employee beneFits provision is made for employee benefits including annual leave for employees and the retirement benefits for qualifying non-executive directors. the provision represents the amount which the group has a present obligation to pay, resulting from the employees’ services provided up to the reporting date. the provisions expected to be settled within 12 months have been calculated at undiscounted amounts based on the remuneration rates the employer expects to pay after the reporting date and includes related on-costs. the liability for employees’ benefits to long service leave represents the present value of the estimated future cash outflows to be made by the employer resulting from employees’ services provided up to the reporting date. liabilities for employee benefits which are not expected to be settled within 12 months are discounted using the rates attaching to national government securities at reporting date, which most closely match the terms of maturity of the related liabilities. in determining the liability for employee benefits, consideration has been given to future increases in wage and salary rates, and the group’s experience with staff departures. related on-costs have also been included in the liability. (ii) oneRous ContRACts a provision for onerous contracts is recognised when the expected benefits to be derived from a contract are less than the unavoidable costs of meeting the obligations under that contract, and only after any impairment losses to assets dedicated to that contract have been recognised. the provision recognised is based on the excess of the estimated cash flows to meet the unavoidable costs under the contract over the estimated cash flows to be received in relation to the contract, having regard to the risks of the activities relating to the contract. the net estimated cash flows are discounted using market yields on national government guaranteed bonds with terms to maturity that match, as closely as possible, the expected future cash flows. (iii) deCommissioning oF leAsehold impRovements a provision for the estimated cost of decommissioning leasehold improvements is made where a legal or constructive obligation exists. in determining the provision for decommissioning costs, an assessment is made for each location of the likelihood and amount of the decommissioning costs to be incurred in the future. the estimated future liability is discounted to a present value, with the discount amount unwinding over the life of the leasehold asset as an interest expense. the estimated decommissioning cost recognised as a provision is included as part of the cost of the leasehold improvements at the time of installation or during the term of the lease, as the liability for decommissioning is reassessed. this amount capitalised is then depreciated over the life of the asset. 38 Amalgamated Holdings Limited Annual Report 2010 note 1 – SiGnifiCAnt ACCountinG poLiCieS (ContinueD) (q) pRovisions (Continued) (iv) otheR other provisions are recognised in the Statement of financial position when the group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. (r) supeRAnnuAtion plAns the group contributes to several defined contribution superannuation plans. contributions are charged against income as they are made. these contributions are in accordance with the relevant trust deeds and the Superannuation guarantee levy. (s) shARe-bAsed pAyment tRAnsACtion – employee shARe And option plAns (i) exeCutive peRFoRmAnCe shARe plAn equity-based compensation benefits are provided to employees via the executive performance Share plan. the fair value of performance shares granted under the executive performance Share plan is recognised as an employee expense over the period during which the employees become unconditionally entitled to the shares. there is a corresponding increase in equity, being recognition of a share-based payments reserve. the fair value of performance shares granted is measured at grant date. the fair value of the shares was determined using the monte carlo simulation model, taking into account the terms and conditions upon which the shares were granted. to facilitate the operation of the executive performance Share plan, a third party trustee is used to administer the trust which holds shares allocated under the executive performance Share plan. performance shares are subject to performance hurdles. the performance shares are recognised in the Statement of financial position as restricted ordinary shares. performance shares are included within the weighted average number of shares used as the denominator for determining basic earnings per share and net tangible asset backing per share. the company incurs expenses on behalf of the trust. these expenses are in relation to administration costs of the trust and are recorded in the income Statement as incurred. for employee performance shares issued by the company to employees of subsidiaries, the amount recognised as an employee expense by the group in respect of those shares is charged to and recovered from subsidiaries by the company. (ii) employee shARe plAn the company has in prior years issued shares to certain employees under an employee Share plan. no shares have been issued under this plan since february 1998. other than costs incurred in administering the scheme which are expensed as incurred, the scheme does not result in any expense to the group. (t) Revenue ReCognition revenues are recognised at fair value of the consideration received, net of the amount of goods and services tax (“gSt”). (i) sAle oF goods revenue from the sale of goods comprises revenue earned (net of returns, discounts, allowances and gSt) from the provision of products to entities outside the group. revenue from the sale of goods is recognised when significant risks and rewards of ownership of goods pass to the customer. (ii) RendeRing oF seRviCes And deFeRRed Revenue revenue from rendering services is recognised in the period in which the service is provided. revenue relating to future periods which is not yet recognised because the service is yet to be provided or the admission made, is shown on the Statement of financial position as deferred revenue. (iii) inteRest And dividend Revenue interest income is recognised as it accrues, taking into account the effective yield on the financial asset. dividend income is recognised on the date that the group’s right to receive payment is established. (iv) RentAl inCome rental income is recognised in the income Statement on a straight-line basis over the term of the lease. lease incentives granted are recognised as an integral part of the total rental income. (v) sAle oF non-CuRRent Assets the gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal. (vi) CustomeR loyAlty pRogRAms a group entity operates loyalty programs where customers accumulate points for purchases made which entitles them to discounts on future purchases. the award points are recognised as a separately identifiable component of the initial sale transaction, by allocating the fair value of the consideration received between the award points and the components of the sale such that the award points are recognised at their fair value. revenue from the award points is recognised when the points are redeemed. the amount of the revenue is based on the number of points redeemed relative to the total number expected to be redeemed. (u) goods And 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 taxation office (“ato”). in these circumstances, the gSt is recognised as part of the cost of acquisition of the asset or as part of an item of expense. receivables and payables are stated with the amount of gSt included. the net amount of gSt recoverable from, or payable to, the ato is included as a current asset or liability in the Statement of financial position. cash flows are included in the Statement of cash flows on a gross basis. the gSt components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ato are classified as operating cash flows. (v) FinAnCe Costs finance costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs incurred in connection with arrangement of borrowings, and lease finance charges. ancillary costs incurred in connection with the arrangement of borrowings are capitalised and amortised over the life of the borrowings. finance costs are expensed as incurred unless they relate to qualifying assets. qualifying assets are assets which take more than 12 months to get ready for their intended use or sale. where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs capitalised is that incurred in relation to that borrowing, net of any interest earned on those borrowings. where funds are borrowed generally, borrowing costs are capitalised using a weighted average interest rate applicable to the entity’s borrowings during the period. inCome tAx (w) tAxAtion (i) income tax on the income Statement for the periods presented comprises current and deferred tax. income tax is recognised in the income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Amalgamated Holdings Limited notes to the Financial statements 39 notes to the financial Statements continued inCome tAx (Continued) note 1 – SiGnifiCAnt ACCountinG poLiCieS (ContinueD) (w) tAxAtion (Continued) (i) current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. the following temporary differences are not provided for: initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. the amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. a deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. (ii) tAx ConsolidAtion Regime the company is the head entity in the tax-consolidated group comprising all the australian wholly owned subsidiaries. the head entity recognises all of the current tax liabilities of the tax-consolidated group. the tax-consolidated group has entered into a tax funding agreement that requires australian wholly owned subsidiaries to make contributions to the head entity for current tax liabilities arising from external transactions occurring after the implementation of tax consolidation. under the tax funding agreement, the contributions are calculated using a “group allocation method” so that the contributions are equivalent to the tax balances generated by external transactions entered into by wholly owned subsidiaries. the contributions are payable as set out in the agreement and reflect the timing of the head entity’s obligations to make payments for tax liabilities to the relevant tax authorities. the company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the tax-consolidated group will be available against which the asset can be utilised. any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recovery are recognised by the company only. (x) segment RepoRting as of 1 july 2009, the group presents operating segment information based on the business unit dissections that are internally provided to the managing director, who is the group’s chief operating decision maker. this change in accounting policy is due to the adoption of ifrS 8 operating Segments. previously, operating segments were determined and presented in accordance with aaSb 114 Segment reporting. an operating segment is a component of the group that engages in business activities from which it earns revenues and incurs expenses, including revenues and expenses from transactions with other group segments. all segments’ operating results are regularly reviewed by the group’s managing director to make decisions about resources to be allocated to a segment and to assess its performance, and for which discrete financial information is available. Segment results that are reported to the managing director include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. unallocated items comprise mainly corporate head office assets, head office expenses, and income tax assets and liabilities. additions to non-current segment assets are the total cost incurred during the period to acquire assets that include amounts expected to be recovered over more than 12 months after the year end date. amounts include property, plant and equipment, but exclude financial instruments and deferred tax assets. (y) eARnings peR shARe basic earnings per share (“epS”) is calculated by dividing the profit for the period attributable to members of the company by the weighted average number of ordinary shares of the company. diluted epS adjusts the figures used in the determination of basic epS to take into account the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. dilutive potential ordinary shares comprise share options granted to employees. (z) ACCounting estimAtes And Judgements estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the group and that are believed to be reasonable under the circumstances. the estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: ReCoveRAble Amount oF Assets the group has undertaken assessments of whether long-lived assets including property assets, goodwill and plant and equipment could be deemed to be impaired. in assessing the recoverability of these assets, assumptions are made regarding the estimated future cash flows and other factors, including the pre-tax discount rate to be applied, to determine the recoverable amount of the respective assets. the estimate of cash flow is based upon, among other things, certain assumptions about expected future operating performance. estimates of discounted cash flow may differ from actual cash flow due to factors such as economic conditions, changes to business models or changes in operating performance. if the sum of the discounted estimated cash flows is less than the current carrying value, an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset, is recognised. 40 Amalgamated Holdings Limited Annual Report 2010 note 1 – SiGnifiCAnt ACCountinG poLiCieS (ContinueD) (z) ACCounting estimAtes And Judgements (Continued) ReCoveRAble Amount oF Assets (Continued) the group has also previously recognised impairment write-downs for property, plant and equipment. where trading circumstances improve at a site, an assessment of recoverable value is made to determine if an impairment loss can be reversed, net of depreciation that would have been incurred had no impairment loss been recognised. these determinations also require estimates and assumptions with regard to the future trading performance of those assets. refer note 17 for details of impairment losses recognised and prior period impairments written back. FAiR vAlue oF investment pRopeRties investment properties are independently revalued to fair value each reporting period, with any gain or loss arising on remeasurement being recognised in the income Statement. in assessing the fair value of properties, a number of assumptions are made at the end of each reporting period regarding future cash flows, future property market economic conditions and other factors including cash flow discount rates and rental capitalisation rates. the carrying value of investment properties is disclosed in note 18 along with a summary of the movements in the carrying value. Contingent Assets And liAbilities also, refer to note 32 for estimates and judgement made in relation to contingent assets and liabilities. shARe-bAsed pAyment tRAnsACtions the group measures the cost of the executive performance Share plan by reference to the fair value of the equity instruments at the date at which the shares are granted. the fair value of performance shares granted is determined by an external valuer using a monte carlo simulation model using the assumptions detailed in note 30. (aa) disContinued opeRAtions a discontinued operation is a component of the group’s business that represents a separate major line of business that has been disposed of or is held for sale. classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. when an operation is classified as a discontinued operation, the comparative income Statement is restated as if the operation had been discontinued from the start of the comparative period. note 2 – SeGment reportinG Segment information is presented in respect of the group’s operating segments. these are the group’s main strategic business segments and have differing risks and rewards associated with the business due to their different product or service and geographic markets. for each of these operating segments the group’s managing director regularly reviews internal management reports. information regarding the results of each reportable segment is included below. performance is measured based on segment profit before income tax as included in the internal management reports. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of segments relative to other businesses. inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. unallocated items mainly comprise interest bearing loans and borrowings and borrowing costs, interest income and corporate head office assets and expenses. opeRAting segments the group comprises the following main operating segments: CinemA exhibition AustRAliA includes the cinema exhibition operations in australia. CinemA exhibition new ZeAlAnd includes cinema exhibition operations in new Zealand as well as a joint venture interest in two cinema sites in fiji. these cinema exhibition operations were acquired on 18 february 2010. refer note 34 business combinations. CinemA exhibition geRmAny includes the cinema exhibition operations in germany. CinemA exhibition united ARAb emiRAtes includes the group’s 49% investment in cinema exhibition operations in the united arab emirates. enteRtAinment teChnology includes theatre equipment supply and servicing and the manufacture of film processors and related equipment. in the prior year, it also included, for part of the year, the group’s 50% investment in atlab holdings pty limited, which was sold on 26 September 2008. hotels includes the ownership, operation and management of hotels in australia and overseas. thRedbo Alpine ResoRt includes all the operations of the resort including property development activities. leisuRe/AttRACtions includes ancillary leisure and other activities including featherdale wildlife park and the State theatre. pRopeRty And otheR investments includes property rental, investment properties and available-for-sale investments. geogRAphiCAl inFoRmAtion also presented is information on the group’s split of revenue and non-current assets by geographic location. geographic revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets. the group operates in australia, new Zealand, germany and the united arab emirates. Amalgamated Holdings Limited notes to the Financial statements 41 notes to the financial Statements continued note 2 – SeGment reportinG (ContinueD) Cinema exhibition n e w Z e a a n d l u n i t e d A r a b e m i r a t e s g e r m a n y e n t e r t a n m e n t i t e c h n o o g y l A u s t r a l i a h o t e s l i l e s u r e / A t t r a c t i o n s o t h e r i n v e s t m e n t s p r o p e r t y a n d t o t a l t h r e d b o l i A p n e R e s o r t 2010 business segments Revenue and other income External segment revenue Inter-segment revenue Other income – external finance income other unallocated revenue Total revenue and other income elimination of inter-segment revenue Consolidated revenue and other income Result Segment result Share of net profit of equity accounted business undertakings unallocated revenue and expenses net financing costs Profit before related income tax expense income tax expense Profit after income tax expense Non-controlling (minority) interest Net profit $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 157,222 – – 21,970 348,730 – 986 – – – – – 33,454 150,069 – 3,533 52 – 51,433 – – 11,095 – – 26,043 800,016 3,533 11,903 – 10,865 858 63 816,373 (3,533) 812,840 18,323 419 27,432 – 1,767 22,191 15,046 2,424 17,505 105,107 37,918 56,241 275 1,519 9,005 13 (215) – – – 48,515 694 28,951 9,005 1,780 21,976 15,046 2,424 17,505 153,622 (13,431) (3,747) 136,444 (37,672) 98,772 – 98,772 Depreciation and amortisation (7,215) (1,945) (7,500) impairment write-downs of property, plant and equipment reversal of impairment write-down made in prior years – – – – – 986 – – – (75) (9,610) (3,682) (378) (3,242) (33,647) – (5,800) – – – – – (5,525) (11,325) – – 986 42 Amalgamated Holdings Limited Annual Report 2010 note 2 – SeGment reportinG (ContinueD) Cinema exhibition n e w Z e a a n d l u n i t e d A r a b e m i r a t e s g e r m a n y e n t e r t a n m e n t i t e c h n o o g y l A u s t r a l i a h o t e s l i l A p n e R e s o r t A t t r a c t i o n s i l e s u r e / i n v e s t m e n t s a n d o t h e r p r o p e r t y t h r e d b o t o t a l $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 2010 individuAlly signiFiCAnt items Income development gain on valuation and reclassification to an investment property of the redeveloped Canberra Civic property profit on sale of developed residential land lots reversal of prior years’ impairment write-downs of plant and equipment Expenses impairment write-down of freehold land and buildings impairment write-down in the carrying value of plant and equipment arising from the planned redevelopment of the gowings and State theatre office buildings in Sydney provision raised for onerous contract relating to lease of a closed cinema site in Germany Relating to jointly controlled entity Share of reversal of prior years’ impairment write-downs of plant and equipment Assets Reportable segment assets – – – – – – – – – – – – 986 – – – – (2,201) 3,262 3,262 – – – (1,215) – – – – – – – – – – – – – – – (5,800) – – – – – – – (5,800) – – – – – – – – – 10,163 10,163 – – – 8,304 8,304 – 986 – (5,800) – (5,525) (5,525) – – – – (2,201) – 3,262 12,942 9,189 110,174 54,091 74,753 – 11,730 333,675 44,748 5,536 184,811 819,518 Equity accounted investments 99,250 7,145 2,852 13,202 167 1,668 – – – 124,284 deferred tax assets unallocated corporate assets Consolidated total assets Liabilities Reportable segment liabilities deferred tax liabilities unallocated corporate liabilities Consolidated total liabilities 13,990 30,760 988,552 65,677 16,313 55,725 – 9,425 14,418 11,777 244 2,491 176,070 8,002 44,294 228,366 Acquisitions of non-current assets 27,071 53,207 5,378 – 22 48,889 2,683 – 17,873 155,123 geogRAphiCAl inFoRmAtion External segment revenue Reportable segment assets equity accounted investments Acquisitions of non-current assets Australia $’000 410,448 670,275 99,417 96,501 new Zealand and Fiji $’000 40,838 74,490 8,813 53,244 germany $’000 348,730 74,753 2,852 5,378 united Arab emirates $’000 total $’000 – 800,016 – 819,518 13,202 124,284 – 155,123 Amalgamated Holdings Limited notes to the Financial statements 43 notes to the financial Statements continued note 2 – SeGment reportinG (ContinueD) Cinema exhibition n e w Z e a a n d l u n i t e d A r a b e m i r a t e s g e r m a n y e n t e r t a n m e n t i t e c h n o o g y l A u s t r a l i a h o t e s l i l A p n e R e s o r t A t t r a c t i o n s i l e s u r e / i n v e s t m e n t s a n d o t h e r p r o p e r t y t h r e d b o t o t a l 2009 business segments Revenue and other income External segment revenue Inter-segment revenue Other income – external finance income other unallocated revenue Total revenue and other income elimination of inter-segment revenue Consolidated revenue and other income Result Segment result Share of net profit of equity accounted business undertakings unallocated revenue and expenses net financing costs Profit before related income tax expense income tax expense Profit after income tax expense non-controlling (minority) interest Net profit $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 127,940 – – – 353,310 – – 240 – – – – 22,640 132,876 – 3,288 31 – 52,712 – 6 10,948 – – 9,651 710,077 3,288 705 – 428 1,440 339 715,849 (3,288) 712,561 14,210 28,773 42,983 – – – 9,796 – (768) 21,398 16,012 1,574 243 62,465 2,220 11,085 7 104 – – – 42,189 12,016 11,085 (761) 21,502 16,012 1,574 243 104,654 (12,178) (3,672) 88,804 (19,327) 69,477 6 69,483 Depreciation and amortisation (6,139) – (9,496) impairment write-downs of property, plant and equipment impairment of plant and equipment reversals individuAlly signiFiCAnt items Impairment write-down – carrying value of land and buildings – – – – – – (281) 240 – – – – – (190) (7,867) (3,552) (423) (2,965) (30,632) – (3,218) – – – (3,028) – – – – (2,312) (5,811) – – 240 – (2,312) (5,340) Reconciliation of reportable segment revenues and income tax expense Revenues revenue and other income per segment reporting elimination of discounted operations revenue and other income per income Statement Income tax income tax per segment reporting income tax benefit relating to discontinued operations income tax expense per income Statement 44 Amalgamated Holdings Limited Annual Report 2010 712,561 (250) 712,311 (19,327) (3,605) (22,932) note 2 – SeGment reportinG (ContinueD) Cinema exhibition n e w Z e a a n d l u n i t e d A r a b e m i r a t e s g e r m a n y e n t e r t a n m e n t i t e c h n o o g y l A u s t r a l i a h o t e s l l i A p n e R e s o r t A t t r a c t i o n s i l e s u r e / i n v e s t m e n t s a n d o t h e r p r o p e r t y t h r e d b o t o t a l 2009 Assets Reportable segment assets Equity accounted investments deferred tax assets unallocated corporate assets Consolidated total assets Liabilities Reportable segment liabilities deferred tax liabilities unallocated corporate liabilities Consolidated total liabilities $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 91,656 98,347 – – 85,706 – 16,336 298,201 46,093 7,174 144,583 689,749 3,099 14,212 154 1,938 – – – 117,750 14,726 16,253 838,478 59,229 – 60,805 – 9,793 19,507 11,175 170 – 160,679 5,919 72,795 239,393 Acquisitions of non-current assets 11,920 – 2,568 – 219 86,414 2,620 – 11,666 115,407 geogRAphiCAl inFoRmAtion External segment revenue Reportable segment assets equity accounted investments Acquisitions of non-current assets Australia $’000 337,126 576,467 98,501 112,634 new Zealand and Fiji $’000 19,641 27,576 1,938 205 germany $’000 353,310 85,706 3,099 2,568 united Arab emirates $’000 total $’000 – 710,077 – 689,749 14,212 117,750 – 115,407 Amalgamated Holdings Limited notes to the Financial statements 45 notes to the financial Statements continued note 3 – revenue AnD otHer inCome Revenue Sale of goods rendering of services finance revenue: Interest income – bank deposits Interest income – other persons rental revenue: associates other persons dividends received and receivable from: available-for-sale financial assets other entities management and consulting fees received and receivable from: jointly controlled entities other persons note 2010 $’000 2009 $’000 231,373 527,488 758,861 194,244 475,616 669,860 39 37 751 107 858 41 22,811 22,852 428 51 479 5,676 11,649 17,325 1,041 10,163 275 – 986 11,424 1,278 162 1,440 97 21,896 21,993 428 25 453 5,554 12,113 17,667 646 – – 12 240 252 Sundry revenue otheR inCome Development gain on valuation and reclassification to an investment property of the Canberra Civic property Increase in fair value of investment properties Profit on sale of plant and equipment plant and equipment impairment reversal Total revenue and other income 812,840 712,311 Revenue And otheR inCome inCluding shARe oF sAles Revenue FoR Jointly ContRolled entities: revenue as listed above jointly controlled entities * 37 812,840 235,875 1,048,715 712,311 212,179 924,490 * to more fairly reflect the operations of the group, revenue disclosed includes the group’s share of the sales revenue earned by jointly controlled entities. the share of sales revenue of each jointly controlled entity is disclosed at note 37. 46 Amalgamated Holdings Limited Annual Report 2010 note 4 – profit Before inCome tAx (a) expenses And losses/(gAins) profit before income tax has been arrived at after charging/(crediting) the following items: cost of goods sold finance costs: bank interest and finance costs Ineffective interest rate hedges expensed Interest expense – associates Interest and finance costs – other persons finance charges on capitalised leases less: capitalised interest unwind of notional interest net bad and doubtful debts (write-back)/expense including (write-back)/increase in the doubtful debts allowance amortisation of: buildings and improvements subject to long term leases Leased plant and equipment intangible assets other depreciation impairment write-downs: freehold land and buildings plant and equipment Investments operating lease rental expense loss on sale of plant and equipment increase/(decrease) in provision for: onerous contracts insurance loss contingencies and other decommissioning of leasehold improvements employee expenses: Salaries and wages employee benefits provisions Share-based payments expense Superannuation contributions 2010 $’000 2009 $’000 65,922 61,060 4,618 331 55 2 214 (826) 4,394 211 4,605 (510) 8,574 – 2,511 331 11,416 22,231 33,647 5,800 5,525 – 11,325 4,619 – 125 16 665 (464) 4,961 151 5,112 101 7,647 157 1,855 219 9,878 20,754 30,632 5,340 281 190 5,811 103,048 106,134 1,047 366 1,892 (349) (137) 1,406 155,485 8,023 1,494 7,264 172,266 (1,251) 410 (126) (967) 150,975 8,137 1,258 6,627 166,997 net foreign exchange gains (105) (89) Amalgamated Holdings Limited notes to the Financial statements 47 notes to the financial Statements continued note 4 – profit Before inCome tAx (ContinueD) (b) individuAlly signiFiCAnt items profit before income tax includes the following income/(expense) items whose disclosure is relevant in explaining the financial performance of the group: inCome development gain on valuation and reclassification to an investment property of the redeveloped Canberra Civic property Profit on sale of developed residential land lots Reversal of prior years’ impairment write-downs of plant and equipment at certain cinema sites in Germany expenses impairment write-downs of freehold land and buildings impairment write-downs of plant and equipment arising from the planned redevelopment of the Gowings and State Theatre Office buildings in Sydney Provision for onerous contract relating to the lease of a closed cinema site in Germany RelAting to Jointly ContRolled entity Share of reversal of prior years’ impairment write-downs of plant and equipment 2010 $’000 2009 $’000 10,163 8,304 986 – – – (5,800) (5,340) (5,525) (2,201) 3,262 9,189 – – – (5,340) note 5 – DiSContinueD operAtionS 2010 there were no discontinued operations in the year ended 30 june 2010. 2009 on 26 September 2008, the group sold its 50% shareholding in an associate, atlab holdings pty limited. the comparative income Statement has been restated to show income relating to this discontinued investment separately from continuing operations. the consideration from the sale of the investment in atlab holdings pty limited was $1,500,000 which was equivalent to the group’s carrying value for the shareholding as at 30 june 2008. as a result, there was no profit or loss recognised on the sale during the year to 30 june 2009. the tax effect of a capital gains tax loss amounting to $3,680,000 was recognised in respect of this disposal in the year ended 30 june 2009. AnAlysis oF pRoFit And loss oF disContinued opeRAtions Management fees received from associate Total revenue Profit before income tax Income tax expense Profit after income tax for discontinued operations Gain on sale of discontinued operation Income tax benefit – sale of discontinued operations Profit for the period 2010 $’000 – – – – – – – – 2009 $’000 250 250 250 (75) 175 – 3,680 3,855 during the prior financial year to 30 june 2009, discontinued operations had cash inflows from operating activities of $250,000, cash inflows from investing activities on disposal of an interest in an associate of $1,500,000 and cash inflows from financing activities of $nil. 48 Amalgamated Holdings Limited Annual Report 2010 note 6 – AuDitorS’ remunerAtion audit services: Auditors of the Group – KPMG Australia audit and review of financial reports other assurance services overseas kpmg firms audit and review of financial reports other assurance services other services: Auditors of the Group – KPMG Australia income tax compliance indirect tax compliance advice overseas kpmg firms income tax compliance indirect tax compliance advice other taxation services note 7 – tAxAtion (a) inCome tAx expense the major components of income tax expense are: inCome stAtement income tax expense reported Income tax benefit attributable to discontinued operations Current income tax current income tax expense adjustments in respect of current income tax of prior year Deferred income tax relating to origination and reversal of temporary differences income tax expense reported in the income Statement inCome tAx ChARged/(CRedited) to eQuity Deferred income tax related to items charged or credited directly to equity: Relating to other comprehensive income net gain/(loss) on revaluation of cash flow hedges unrealised gain/(loss) on available-for-sale investments currency translation movements of deferred tax balances of foreign operations other foreign currency translation differences Net gain on hedge of net investment in overseas subsidiaries Relating to other equity balances Renounceable pro-rata entitlement offer costs amortised for tax adjustment to shared-based payments reserve income tax benefit/(expense) reported in equity 2010 $ 2009 $ 886,407 128,403 398,324 8,018 855,191 32,210 378,740 14,606 1,421,152 1,280,747 152,721 39,270 191,991 110,366 11,170 100,001 221,537 413,528 2010 $’000 37,672 – 37,672 31,736 (308) 6,244 37,672 425 325 165 614 335 156,492 108,129 264,621 100,502 13,572 132,176 246,250 510,871 2009 $’000 22,932 (3,605) 19,327 25,015 (376) (5,312) 19,327 (596) (375) (318) 12 – 1,864 (1,277) (403) (169) (572) – (110) (110) 1,292 (1,387) Amalgamated Holdings Limited notes to the Financial statements 49 notes to the financial Statements continued note 7 – tAxAtion (ContinueD) ReConCiliAtion between inCome tAx expense And pRe-tAx net pRoFit a reconciliation between income tax expense and accounting profit before income tax multiplied by the group’s applicable income tax rate is as follows: profit before tax from continuing operations Profit before tax from discontinued operations accounting profit before income tax expense prima facie income tax expense calculated at the group’s statutory income tax rate of 30% on the accounting profit increase in income tax expense due to: restatement of deferred tax balances in new Zealand arising from reduction of company tax rate and elimination of building depreciation for tax non-deductible items and losses in non-resident controlled entities impairment write-down of land and buildings depreciation and amortisation of buildings non-deductible acquisition and legal costs non-refundable franking credits grossed up dividends from equity accounted associates Sundry items decrease in income tax expense due to: tax losses from prior years now recognised or utilised Share of associates’ net profit Difference between book and tax values of developed residential lots recognised Difference between book and tax profit on disposal of an investment in an associate entity Difference between book and tax values for investment properties recognised Share of incorporated jointly controlled entities’ net profit investment allowance and research and development tax concession franking credits on dividends received Share of investment allowance and non-assessable items in jointly controlled entities’ income tax franking credits on dividends received from equity accounted associates Share-based payments deductible for tax income tax over provided in prior year (b) CuRRent tAx liAbilities pRovision FoR CuRRent inCome tAx movements during the year: balance at the beginning of the year income tax paid current year income tax provided Income tax provision within entities acquired tax refunds received over provision in prior year foreign currency differences in translation of foreign operations 2010 $’000 2009 $’000 136,444 – 136,444 40,933 2,957 2,733 1,740 328 438 66 21 314 8,597 5,272 2,640 1,714 – 589 456 471 183 158 37 30 11,550 (308) 37,672 11,906 (28,846) 32,805 56 778 (1,170) (1,320) 14,209 88,554 250 88,804 26,641 – 2,231 1,602 500 32 68 30 147 4,610 3,133 3,358 – 3,680 – 666 183 184 190 43 111 11,548 (376) 19,327 25,352 (38,532) 24,738 – 666 (434) 116 11,906 50 Amalgamated Holdings Limited Annual Report 2010 note 7 – tAxAtion (ContinueD) (c) deFeRRed inCome tAx deFeRRed tAx liAbilities deferred tax liabilities comprise: difference in depreciation and amortisation of property, plant and equipment for accounting and income tax purposes difference in treatment of property lease for accounting and tax purposes investment properties Available-for-sale investments interest and holding charges capitalised expenditure currently deductible for tax but deferred and amortised for accounting purposes prepayments Share-based payments deductible for tax but deferred and amortised for accounting purposes Share of jointly controlled entity timing differences Unrealised foreign exchange gains not currently assessable Sundry items less: deferred tax liabilities of the tax-consolidated group offset against deferred tax assets deFeRRed tAx Assets deferred tax assets comprise: provisions and accrued employee benefits not currently deductible unrealised foreign exchange losses not currently deductible Unrealised foreign exchange differences on cash flow hedges deferred revenue difference in depreciation and amortisation of property, plant and equipment and intangible assets for accounting and income tax purposes lease termination payment not currently deductible Share of jointly controlled entity timing differences tax losses carried forward capital losses offsetting unrealised capital gains Difference between book and tax values of developed residential land lots Renounceable pro-rata entitlement offer costs amortised for tax Sundry items less: deferred tax liabilities of the tax-consolidated group offset against deferred tax assets Deferred tax expense/(income) unReCognised deFeRRed tAx Assets Revenue losses – foreign Temporary differences – foreign Statement of Financial Position Income Statement 2010 $’000 2009 $’000 2010 $’000 2009 $’000 12,972 1,331 6,179 1,617 1,180 1,402 106 1,380 641 1,108 231 8,897 1,514 3,526 1,292 924 1,215 101 984 539 321 109 28,147 19,422 (20,145) (13,503) 8,002 5,919 10,302 364 239 2,568 8,423 210 6,194 2,023 1,031 1,834 323 624 5,546 219 588 2,474 6,955 420 6,657 1,177 3,680 – – 513 34,135 28,229 (20,145) 13,990 (13,503) 14,726 4,372 100 2,653 – 256 187 5 565 102 (30) 118 148 (264) (76) (94) (2,173) 210 463 (1,262) 2,649 (1,834) 80 69 1,110 (245) (234) – 184 108 (20) 212 (601) – 5 (889) 114 – (710) (298) 210 (226) (170) (3,680) – – (182) 6,244 (5,312) 24,047 1,350 25,397 36,463 1,050 37,513 deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the group can utilise the benefits. Amalgamated Holdings Limited notes to the Financial statements 51 notes to the financial Statements continued note 7 – tAxAtion (ContinueD) included in the deferred tax assets not recognised is the gross value of tax revenue losses arising in germany of $80,157,000 (2009: $121,542,000). the availability of these tax losses is subject to certain utilisation limits and ongoing availability tests under german tax law. at 30 june 2010, there is no recognised deferred income tax liability (2009: $nil) for taxes that would be payable on the unremitted earnings of certain of the group’s subsidiaries, associates or incorporated jointly controlled entities. tAx ConsolidAtion the company and its wholly owned australian resident subsidiaries have formed a tax-consolidated group. amalgamated holdings limited is the head entity for the tax-consolidated group. members of the group have entered into a tax sharing arrangement in order to allocate current and deferred tax amounts to the wholly owned subsidiaries using a “group allocation method approach”. the group recognises deferred tax assets arising from unused tax losses (including capital losses) of the tax-consolidated group to the extent that it is probable that future taxable profits (including capital gains) of the tax-consolidated group will be available against which the asset can be utilised. in addition, the agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. tAx Funding ARRAngement FoR membeRs oF the tAx-ConsolidAted gRoup members of the tax-consolidated group have entered into a tax funding arrangement which sets out the funding obligations of the tax-consolidated group in respect of tax amounts. the tax funding arrangements require payments to or from the company as head entity equal to the current tax liability or asset assumed by the head entity excluding any tax loss deferred tax asset assumed by the head entity. the members of the tax-consolidated group have also entered into a valid tax sharing agreement under the tax consolidation legislation which sets out the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations and the treatment of entities leaving the tax-consolidated group. note 8 – DiviDenDS dividends on ordinary shares paid during the year are: 2010 final 2009 dividend paid interim 2010 dividend paid 2009 final 2008 dividend paid interim 2009 dividend paid subseQuent events Since the end of the financial year, the directors declared the following dividend: final 2010 dividend per share total amount $’000 Cents date of payment tax rate for franking credit percentage franked 21 14 19 11 17 September 2009 29 march 2010 25 September 2008 19 march 2009 27,383 21,907 49,290 24,554 14,344 38,898 30% 30% 30% 30% 100% 100% 100% 100% 23 36,615 16 September 2010 30% 100% the financial effect of this final dividend in respect of the year has not been brought to account in the financial statements for the year ended 30 june 2010 and will be recognised in subsequent financial statements. a dividend reinvestment plan was available for the interim 2010 dividend paid on 29 march 2010. for details of shares issued under this plan, refer note 26. FRAnking CRedit bAlAnCe the amount of franking credits available are: franking account balance as at the beginning of the financial year at 30% (2009: 30%) franking credits from the payment of income tax and income tax payable franking debits from the payment of dividends franking credits from the receipt of dividends the amount of franking credits available for future reporting periods 2010 $’000 2009 $’000 138,872 23,632 (21,124) 183 141,563 134,419 20,897 (16,670) 226 138,872 the impact on the franking account of dividends proposed or declared before the financial report was authorised for issue but not recognised as a distribution to equity holders during the period is to reduce the balance by $15,692,000 (2009: $11,736,000). the ability to utilise franking credits is dependent upon the company being in a sufficient positive net asset position and also having adequate available cash flow liquidity. in accordance with the tax consolidation legislation, the company, as the head entity in the tax-consolidated group, has also assumed the benefit of the franking credits available. 52 Amalgamated Holdings Limited Annual Report 2010 note 9 – eArninGS per SHAre eARnings ReConCiliAtion profit after tax from continuing operations Add: Loss after tax attributable to minority interest Basic earnings – continuing operations Basic earnings – discontinued operations Earnings attributable to equity holders of the Company 2010 $’000 2009 $’000 98,772 – 98,772 – 98,772 65,622 6 65,628 3,855 69,483 number number weighted average number of ordinary shares used as the denominator number for basic earnings per share Effect of management share options on issue 148,762,958 – 136,287,264 – Number for diluted earnings per share 148,762,958 136,287,264 there were no management share options on issue at 30 june 2010 (2009: nil). note 10 – CASH AnD CASH equivALentS cash at bank and on hand 2010 $’000 2009 $’000 45,288 23,227 details relating to cash at bank and on hand and the group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 29. note 11 – reCeivABLeS CuRRent trade receivables less: impairment of trade receivables other receivables receivable from jointly controlled entities non-CuRRent trade receivables receivable from associates present value of loans provided under the employee share plan 2010 $’000 2009 $’000 34,757 (591) 34,166 14,679 1,631 50,476 93 43 269 405 27,347 (1,906) 25,441 10,911 2,018 38,370 143 43 330 516 trade receivables are non-interest bearing and are generally on 30-90 day terms. the group’s exposure to credit and currency risks related to trade and other receivables is disclosed in note 29. allowances are made for impairment losses until such time that the group is satisfied that no recovery of the amount owing is possible; at that point, the amount considered irrecoverable is written off against the asset directly. Amalgamated Holdings Limited notes to the Financial statements 53 notes to the financial Statements continued note 11 – reCeivABLeS (ContinueD) as at 30 june 2010, trade receivables with a value of $591,000 (2009: $1,906,000) were impaired and fully provided for. movements in the allowance for trade receivables are as follows: balance at the beginning of the year charge for the year provision no longer required net foreign currency differences on translation of foreign operations as at 30 june, the analysis of trade receivables for the group that were past due but not impaired is as follows: not past due nor impaired less than 30 days overdue more than 30 days overdue but less than 90 days overdue more than 90 days overdue 2010 $’000 2009 $’000 1,906 4 (1,291) (28) 591 26,502 4,900 1,796 968 34,166 2,223 1,264 (1,837) 256 1,906 13,291 6,105 3,165 2,880 25,441 other receivables of $14,679,000 (2009:$10,911,000) do not contain impaired assets and are not past due. based on the credit history of these other receivables, it is expected that these amounts will be recovered when due. note 12 – inventorieS raw materials and stores work in progress finished goods Developed residential land lots – held for sale 2010 $’000 2,797 3,870 7,673 3,784 2009 $’000 2,408 752 7,633 2,983 total inventories at the lower of cost and net realisable value 18,124 13,776 note 13 – otHer Current ASSetS prepayments Sundry note 14 – otHer finAnCiAL ASSetS investments (unquoted): other entities note 15 – AvAiLABLe-for-SALe finAnCiAL ASSetS investments in listed company 6,172 428 6,600 4,745 229 4,974 312 312 10,447 9,362 the group’s investment is in a company listed on the aSx. a 10% increase in the market price of the shares in this company at the reporting date would have increased equity by $731,000 after tax (2009: an increase of $655,000); an equal change in the opposite direction would have decreased equity by $731,000 after tax (2009: a decrease of $655,000). note 16 – inveStmentS ACCounteD for uSinG tHe equity metHoD associates jointly controlled entities note 36 37 2010 $’000 2009 $’000 15,037 109,247 124,284 16,304 101,446 117,750 the group accounts for investments in associates and jointly controlled entities using the equity method, refer note 1(c)(iii). 54 Amalgamated Holdings Limited Annual Report 2010 note 17 – property, pLAnt AnD equipment FReehold lAnd And buildings at cost less: accumulated depreciation lAnd subJeCt to long teRm leAses At cost – subject to long term lease At cost – subject to long term finance lease buildings And impRovements subJeCt to long teRm leAses At cost – on land subject to long term lease At cost – other leasehold improvements At cost – subject to long term finance lease less: accumulated amortisation ResoRt ApARtments And shARe oF Common pRopeRty at cost Less: Accumulated depreciation CApitAl woRk in pRogRess at cost plAnt And eQuipment at cost less: accumulated depreciation Total property, plant and equipment at net book value ReConCiliAtions Summaries of the movements in carrying amounts of each class of property, plant and equipment between the beginning and end of the year are set out below: FReehold lAnd And buildings at cost at the beginning of the year less: accumulated depreciation at the beginning of the year net balance at the beginning of the year additions transfer to investment properties transfer from capital work in progress Transfer to inventories disposals net foreign currency differences on translation of foreign operations depreciation impairment write-downs net balance at the end of the year 2010 $’000 2009 $’000 417,489 (63,368) 354,121 56 6,622 6,678 44,634 118,029 21,453 184,116 (112,981) 404,881 (53,682) 351,199 56 8,037 8,093 43,685 114,986 26,034 184,705 (112,858) 71,135 71,847 26,898 (278) 26,620 15,513 – 15,513 1,751 13,834 387,807 (249,030) 138,777 599,082 312,516 (211,251) 101,265 561,751 404,881 (53,682) 351,199 22,432 (9,776) 289 – (159) 178 (4,242) (5,800) 354,121 355,063 (49,646) 305,417 52,513 (1,838) 4,668 (535) (23) 276 (3,939) (5,340) 351,199 Amalgamated Holdings Limited notes to the Financial statements 55 notes to the financial Statements continued note 17 – property, pLAnt AnD equipment (ContinueD) lAnd subJeCt to long teRm leAses at cost at the beginning of the year Less: Accumulated depreciation at the beginning of the year net balance at the beginning of the year net foreign currency differences on translation of foreign operations net balance at the end of the year buildings And impRovements subJeCt to long teRm leAses at cost at the beginning of the year less: accumulated amortisation at the beginning of the year net balance at the beginning of the year additions Addition through entities acquired Transfer from capital work in progress net foreign currency differences on translation of foreign operations disposals amortisation net balance at the end of the year ResoRt ApARtments And shARe oF Common pRopeRty At cost at the beginning of the year Less: Accumulated depreciation at the beginning of the year Net balance at the beginning of the year additions Transfer to plant and equipment Depreciation net balance at the end of the year CApitAl woRk in pRogRess balance at the beginning of the year Net foreign currency differences on translation of foreign operations additions Transfer to investment properties transfer out on completion transfer to inventories net balance at the end of the year plAnt And eQuipment at cost at the beginning of the year less: accumulated depreciation at the beginning of the year net balance at the beginning of the year additions Addition through entities acquired transfer to investment properties transfer from capital work in progress Transfer from leased plant and equipment net foreign currency differences on translation of foreign operations disposals depreciation impairment write-back impairment write-downs net balance at the end of the year 56 Amalgamated Holdings Limited Annual Report 2010 2010 $’000 2009 $’000 8,093 – 8,093 (1,415) 6,678 7,638 – 7,638 455 8,093 184,705 (112,858) 184,858 (107,517) 71,847 3,179 9,556 – (4,662) (211) (8,574) 71,135 15,513 – 15,513 11,416 (31) (278) 26,620 13,834 – 155 (11,332) (906) – 1,751 312,516 (211,251) 101,265 27,758 34,796 (121) 238 – (1,513) (1,396) (17,711) 986 (5,525) 138,777 77,341 298 – 360 1,350 (56) (7,446) 71,847 – – – 15,513 – – 15,513 7,478 (7) 19,684 – (10,873) (2,448) 13,834 269,425 (185,208) 84,217 25,960 – (41) 5,817 509 1,976 (355) (16,815) 240 (243) 101,265 34 34 note 17 – property, pLAnt AnD equipment (ContinueD) leAsed plAnt And eQuipment At cost at the beginning of the year Less: Accumulated amortisation at the beginning of the year Net balance at the beginning of the year Transfer to plant and equipment Amortisation Net balance at the end of the year 2010 $’000 2009 $’000 – – – – – – 2,088 (1,422) 666 (509) (157) – independent vAluAtions oF inteRest in lAnd And buildings in assessing current values for the group’s interest in land and buildings and integral plant and equipment, including long term leasehold land and improvements, directors have relied upon independent valuations from registered qualified valuers. except for investment properties, which are revalued every half year (refer note 18), valuations are generally carried out on a progressive three year cycle. the last valuations were completed as at june 2010 and june 2009. most ReCent vAluAtions oF inteRest in lAnd And buildings, exCluding investment pRopeRties due to the diversity of the group’s operations, valuations have been prepared on a highest and best alternate use or existing use basis. a summary, by year of the last valuation, is set out as follows: highest And best AlteRnAte use Independent valuation existing use Independent valuation Independent valuation Independent valuation – 2010 – 2009 – 2007 – 2009 lAnd And buildings not independently vAlued acquisition cost of properties acquired since june 2009 not yet independently valued 2010 $’000 2009 $’000 54,500 61,250 203,798 416,906 – 675,204 56,620 731,824 – 426,514 219,559 707,323 20,050 727,373 the above valuations do not take into account the potential impact of capital gains tax. the written-down book value of plant and equipment which is deemed integral to land and buildings, has been determined to total approximately $73,500,000 as at 30 june 2010 (2009: $68,000,000). impAiRment losses ReCognised lAnd And buildings during the year ended 30 june 2010, the trading performance of certain hotel properties caused the group to reassess their recoverable amount. hotel properties are treated as separate cash-generating units and their recoverable values were estimated based on their value in use. in determining the estimated value in use, discount rates in the range of 10.8% to 11.5% (2009: 11.4% to 11.9%) per annum were used. cash flows were projected based on actual operating results, with longer term cash flows, after the initial forecast periods, extrapolated using average expected growth rates of 2% (2009: 1.5% to 2.5%) per annum. as a result of these assessments, impairment losses totalling $5,800,000 (2009: $3,028,000) were recognised in respect of hotel properties. given the long life nature of these assets, the estimates of their recoverable value in use are particularly sensitive to changes in certain key assumptions. although all assumptions used are considered to be appropriate at this time, an increase of 1 percentage point in the discount rate, for the hotel properties assessed, would increase the impairment loss by $5,046,000. a 1 percentage point decrease in the discount rate would reduce the impairment loss by $5,631,000. a 10% decrease in the forecast earnings would increase the impairment loss by $12,528,000 and a 10% increase in forecast earnings would decrease the impairment loss by $5,800,000. in the prior year to 30 june 2009, an impairment loss of $2,312,000 was also recognised for a retail property owned by the group. the assessed recoverable amount was determined using estimated current market rentals, actual costs and a capitalisation rate of 7%. Amalgamated Holdings Limited notes to the Financial statements 57 notes to the financial Statements continued note 17 – property, pLAnt AnD equipment (ContinueD) plAnt And eQuipment during the year ended 30 june 2010, impairment write-downs totalling $5,525,000 were booked in relation to plant and equipment at the gowings and State theatre office buildings in Sydney. these write-downs arose due to the planned redevelopment of the buildings and was determined by conducting a line-by-line assessment of the recoverable value of plant and equipment as detailed in the group’s asset registers. in the prior year to 30 june 2009, an impairment loss of $281,000 was recognised for plant and equipment at a cinema site in germany. during the year ended 30 june 2010, impairment write-downs made in prior years for a number of cinema sites in germany were reversed to the value of $986,000 (2009: impairment reversal of $240,000). these write-backs were deemed appropriate due to improved cash flow generated by the sites resulting from a general improvement in trading performance. in assessing the recoverable amount for plant and equipment at these cinema sites, a discount rate of 12.2% has been applied to projected future cash flows which included a growth rate of 2%. the impairment write-backs were only to the extent that the assets’ carrying amount does not exceed the carrying amount that would have been determined, net of depreciation to the date of the impairment reversal, had no impairment loss been recognised. seCuRity the following assets, whose carrying values are listed below, are subject to mortgage security to secure the group’s bank loan facilities. refer note 23. freehold land and buildings freehold land and buildings classified as investment properties 2010 $’000 163,480 27,750 191,230 2009 $’000 161,411 27,700 189,111 lAnd And buildings subJeCt to FinAnCe leAse the group leases a property under a finance lease agreement. at the end of the lease, the group has the option to purchase the property at no additional cost. if this option is not exercised, the group can occupy the premises for a further five year period rent-free. at 30 june 2010, the net carrying amount of the property was $23,768,000 (2009: $29,605,000). the leased property secures lease obligations. note 18 – inveStment propertieS FReehold lAnd And buildings at fair value Summary of movements: balance at the beginning of the year transfer from property, plant and equipment Additions Development gain on revaluation of Canberra Civic property Revaluation increment on transfer from property, plant and equipment fair value increments/(decrements) Other balance at the end of the year 2010 $’000 2009 $’000 78,875 29,600 29,600 21,229 17,608 10,163 – 275 – 78,875 28,500 1,879 – – 267 (1,030) (16) 29,600 the carrying amount of investment properties is the fair value of the property as determined by a registered qualified independent valuer. fair values were determined having regard to recent market transactions for similar properties in the same location as the group’s investment properties. valuers used capitalisation rates on reversionary rental yields in the range of 6.75% to 9.50% to determine fair values for the six investment properties held by the group. investment properties comprise a number of commercial properties that are leased to third parties and which are held to derive rental income or capital appreciation or both. each of the leases for investment properties contains an initial non-cancellable period of between five to 15 years. Subsequent renewals are negotiated with the lessee. no contingent rents are charged for these investment properties. during the financial year ended 30 june 2010, $4,911,000 (2009: $2,455,000) was recognised as rental income for investment properties in the income Statement with $1,281,000 (2009: $986,000) incurred in respect of direct costs, including $123,000 (2009: $135,000) for repairs and maintenance. 58 Amalgamated Holdings Limited Annual Report 2010 note 19 – GooDwiLL AnD otHer intAnGiBLe ASSetS goodwill construction rights liquor licences Management and leasehold rights – including initial contributions less: accumulated amortisation Film library Less: Accumulated amortisation Software less: accumulated amortisation 2010 $’000 10,649 1,388 185 12,222 20,361 (2,690) 17,671 380 (357) 23 7,489 (4,516) 2,973 32,889 2009 $’000 5,316 1,388 185 6,889 6,712 (1,771) 4,941 – – – 5,813 (2,787) 3,026 14,856 ReConCiliAtions Summaries of the carrying amount movements of each class of intangible assets between the beginning and end of the year are set out below: goodwill Construction rights liquor licences management and leasehold rights Film library software $’000 $’000 $’000 $’000 $’000 $’000 2010 Gross balance at the beginning of the year accumulated amortisation and impairment losses at the beginning of the year Net balance at the beginning of the year Acquisitions and initial contributions Amortisation Disposals net foreign currency differences on translation of foreign operations net balance at the end of the year 2009 Gross balance at the beginning of the year accumulated amortisation and impairment losses at the beginning of the year Net balance at the beginning of the year Acquisitions and initial contributions Amortisation net foreign currency differences on translation of foreign operations Net balance at the end of the year 5,316 – 5,316 5,894 – – (561) 10,649 5,064 – 5,064 – – 252 5,316 1,388 – 1,388 – – – – 1,388 1,388 – 1,388 – – – 1,388 185 – 185 – – – – 185 185 – 185 – – – 185 6,712 (1,771) 4,941 13,914 (925) (248) (11) 17,671 6,097 (1,129) 4,968 611 (642) 4 4,941 – – – 225 (208) – 6 23 – – – – – – – 5,813 (2,787) 3,026 1,659 (1,378) (394) 60 2,973 5,090 (1,846) 3,244 828 (1,213) 167 3,026 Amalgamated Holdings Limited notes to the Financial statements 59 notes to the financial Statements continued note 19 – GooDwiLL AnD otHer intAnGiBLe ASSetS (ContinueD) impAiRment losses ReCognised no impairment losses in relation to goodwill have been recognised in the year ended 30 june 2010 (2009: $nil). impAiRment tests FoR CAsh-geneRAting units ContAining goodwill the following units have carrying amounts of goodwill: Cinema Exhibition Germany – cinema joint venture Cinema Exhibition New Zealand multiple units without significant goodwill 2010 $’000 3,683 6,120 846 10,649 2009 $’000 4,470 – 846 5,316 the recoverable value of goodwill relating to the event cinemas exhibition business in new Zealand and goodwill relating to the group’s share of a cinema joint venture in germany has been determined by a value in use calculation. this calculation uses cash flow projections based on actual operating results and the three year plan, with cash flows beyond the three year period being projected using a 2% per annum growth rate, which is considered appropriate given economic indicators and the expected long term increase in revenue and operating costs in these markets. a pre-tax discount rate of 12.2% per annum has been used in discounting the projected cash flows. note 20 – otHer non-Current ASSetS Security deposits in respect of long term operating leases wildlife operating lease payments paid in advance Sundry note 21 – pAyABLeS CuRRent trade creditors other creditors and accruals non-CuRRent payables to associates the group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 29. 2010 $’000 4,034 640 1,083 2,023 7,780 2009 $’000 5,062 640 1,588 1,968 9,258 24,503 49,532 74,035 30,622 46,694 77,316 2 2 60 Amalgamated Holdings Limited Annual Report 2010 note 22 – intereSt BeArinG LiABiLitieS AnD BorrowinGS CuRRent inteRest beARing liAbilities And boRRowings Bank loans Loans from associates Lease liabilities deferred financing costs – secured – unsecured – secured non-inteRest beARing loAns Loans from other companies – unsecured non-CuRRent inteRest beARing liAbilities And boRRowings Bank loans Lease liabilities deferred financing costs – secured – secured non-inteRest beARing loAns Loans from other companies – unsecured note 2010 $’000 2009 $’000 23 31 23 31 – 916 3,934 (248) 4,602 391 4,993 40,624 – (242) 40,382 1,247 41,629 700 901 4,902 (248) 6,255 459 6,714 67,093 4,925 (490) 71,528 1,724 73,252 the group’s exposure to currency and liquidity risk related to interest bearing liabilities and borrowings is disclosed in note 29. note 23 – finAnCinG ArrAnGementS bAnk debt – seCuRed the group’s secured bank debt facilities comprise the following: • A$160,000,000 of revolving multi-currency loan facility; • A$70,000,000 of cash advance facility; • A$38,750,000 of credit support facility (for the issue of letters of credit and bank guarantees); and • a total of A$5,050,000 in overdraft limits to support its transactional banking facilities. the above facilities mature on 10 july 2012. these facilities are supported by interlocking guarantees from most group entities and are secured by specific property mortgages. debt drawn under these facilities bears interest at the relevant inter-bank benchmark reference rate plus a margin of between 0.45% and 0.90%. at 30 june 2010, the group had drawn $40,624,000 (2009: $67,093,000) under the debt facilities, of which 20% was subject to interest rate swaps used for hedging. otheR loAns – geRmAny in addition to the above facilities, wholly owned subsidiaries in germany have a working capital facility totalling €9,000,000 (a$12,896,000), secured by a letter of credit and bank guarantees drawn under the credit support facility in australia. debt drawn under this facility bears interest at the relevant inter-bank benchmark reference rate plus a margin of 0.85%. this facility is subject to annual review. at 30 june 2010, the group had no debt drawn under this facility (2009: debt of a$700,000). FinAnCe leAse liAbility – geRmAny a wholly owned subsidiary in germany also has a property finance lease with a balance outstanding of a$3,934,000 (2009: a$9,827,000). the lease bears interest at the relevant inter-bank benchmark reference rate plus a margin of 1.75% and as at 30 june 2010 had interest rate swaps used for hedging applying to 47.2% of the balance outstanding (also refer note 31). Amalgamated Holdings Limited notes to the Financial statements 61 notes to the financial Statements continued note 2010 $’000 2009 $’000 note 24 – proviSionS CuRRent employee benefits Onerous contracts insurance loss contingencies and other claims non-CuRRent employee benefits Onerous contracts decommissioning of leasehold improvements 30 30 movements in pRovisions movements in the carrying amounts of each class of provisions, except for employee benefits, are set out below: oneRous ContRACts Carrying amount at the beginning of the year Provisions assumed through entities acquired provisions utilised Provisions made Provisions for lease costs on closed cinema sites released Provisions for surplus leased space released net foreign currency differences on translation of foreign operations Carrying amount at the end of the year insuRAnCe loss ContingenCies And otheR ClAims carrying amount at the beginning of the year payments made provisions made reduction made carrying amount at the end of the year deCommissioning oF leAsehold impRovements carrying amount at the beginning of the year Provision assumed through entities acquired provisions reduced notional interest net foreign currency differences on translation of foreign operations carrying amount at the end of the year 34 34 13,566 2,766 311 16,643 2,085 1,344 7,480 10,909 – 2,163 (309) 2,201 – – 55 4,110 757 (97) 27 (376) 311 7,559 1,096 (137) 100 (1,138) 7,480 11,932 – 757 12,689 2,019 – 7,559 9,578 1,221 – (686) – (445) (120) 30 – 348 (1) 473 (63) 757 7,157 – (126) 151 377 7,559 oneRous ContRACts the onerous contracts provision relate to long term non-cancellable operating leases in respect of cinema sites in new Zealand and germany. provisions have been raised for the forecast net deficits resulting from obligations under the leases. for further detail on the basis of accounting, refer note 1(q)(ii). insuRAnCe loss ContingenCies And otheR ClAims the provision relates to estimated costs to be incurred in respect of various claims that are expected to be settled within 12 months of the balance date. deCommissioning oF leAsehold impRovements the decommissioning of leasehold improvements provision has been raised in respect of “make-good” obligations under long term lease contracts for cinema sites. in determining the provisions, an assessment has been made, for each location, of the likelihood that a decommissioning cost will be incurred in the future and, where applicable, the level of costs to be incurred. uncertainty exists in estimating the level of costs to be incurred in the future because of the long term nature of cinema leases. the basis of accounting is set out in note 1(q)(iii). 62 Amalgamated Holdings Limited Annual Report 2010 note 25 – otHer LiABiLitieS CuRRent derivatives at fair value contract deposits received in advance Lease incentives deferred non-CuRRent derivatives at fair value Lease incentives deferred note 26 – SHAre CApitAL shARe CApitAl fully paid ordinary shares movements in shARe CApitAl balance at the beginning of the year Shares issued under the Renounceable Pro-rata Entitlement Offer Shares issued under the Dividend Reinvestment Plan Shares issued under the Management Share Option Plan performance shares issued under the executive Performance Share Plan note 2010 $’000 2009 $’000 29 29 2010 shares 2009 shares 617 6,658 1,260 8,535 197 4,623 4,820 2010 $’000 1,221 7,252 – 8,473 840 – 840 2009 $’000 159,196,899 130,396,203 219,126 101,353 130,396,203 26,080,088 2,150,415 – 129,136,106 – – 733,500 101,353 105,987 11,786 – 98,809 – – 2,544 570,193 526,597 – – balance at the end of the year 159,196,899 130,396,203 219,126 101,353 shARe CApitAl Consists oF: ordinary shares employee Share plan tax exempt Share plan Performance shares – restricted and held in trust balance at the end of the year 157,266,021 174,620 14,478 1,741,780 128,987,262 176,520 18,455 1,213,966 159,196,899 130,396,203 oRdinARy shARes the company does not have authorised capital or par value in respect of its issued shares. ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held. on a show of hands, every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. shARe buy-bACk there is no current on-market buy-back. dividend Reinvestment plAn the dividend reinvestment plan was activated for the interim 2010 dividend paid on 29 march 2010. a total of 2,150,415 shares were issued under the dividend reinvestment plan at $5.48 per share. employee And exeCutive shARe plAns information relating to the plans is set out in note 30. options there are no share options on issue as at 30 june 2010. for information relating to the management Share option plan, including details of options exercised and lapsed in the prior year to 30 june 2009, refer note 30. RenounCeAble pRo-RAtA entitlement oFFeR during the year, amalgamated holdings limited issued 26,080,088 ordinary shares at $4.10 per share under a renounceable pro-rata entitlement offer to shareholders. the renounceable pro-rata entitlement offer was announced on 3 november 2009 and new shares were issued on 8 december 2009. net proceeds from this offer were $105,584,000, before recognition of a deferred tax asset of $403,000 relating to the future deductibility of issue costs. Amalgamated Holdings Limited notes to the Financial statements 63 notes to the financial Statements continued note 27 – reServeS AnD retAineD eArninGS ReseRves available-for-sale investments revaluation investment property revaluation hedging Share-based payments foreign currency translation movements in ReseRves AvAilAble-FoR-sAle investments RevAluAtion ReseRve balance at the beginning of the year Movement in fair value – net of tax balance at the end of the year investment pRopeRty RevAluAtion ReseRve balance at the beginning of the year Transfer on reclassification of property to investment property balance at the end of the year hedging ReseRve balance at the beginning of the year Movement in fair value of cash flow hedging instruments – net of tax balance at the end of the year shARe-bAsed pAyments ReseRve balance at the beginning of the year amount recognised in the income Statement as an employee expense Amount charged to related entities other adjustments balance at the end of the year FoReign CuRRenCy tRAnslAtion ReseRve balance at the beginning of the year currency translation adjustment on controlled foreign entities’ financial statements increment/(decrement) on foreign currency translation of share of associates’ net assets Transfer to retained earnings balance at the end of the year 2010 $’000 2009 $’000 7,357 3,820 (71) 6,339 (17,342) 103 6,598 759 7,357 3,820 – 3,820 (1,473) 1,402 (71) 4,581 1,541 – 217 6,339 (7,359) (7,744) (2,239) – (17,342) 6,598 3,820 (1,473) 4,581 (7,359) 6,167 7,471 (873) 6,598 3,553 267 3,820 380 (1,853) (1,473) 3,012 1,258 166 145 4,581 (9,239) (216) 2,154 (58) (7,359) AvAilAble-FoR-sAle investments RevAluAtion ReseRve this reserve includes the cumulative net change in the fair value of available-for-sale investments. amounts are recognised in the income Statement when the associated assets are sold or impaired. investment pRopeRty RevAluAtion ReseRve this reserve relates to property that has been reclassified as an investment property and represents the cumulative increase in fair value of the property at the date of reclassification. hedging ReseRve the hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred. shARe-bAsed pAyments ReseRve this reserve includes the cumulative fair value of management share options and the fair value of the executive performance shares which have been recognised as an employee expense in the income Statement. 64 Amalgamated Holdings Limited Annual Report 2010 note 27 – reServeS AnD retAineD eArninGS (ContinueD) FoReign CuRRenCy tRAnslAtion ReseRve the foreign currency translation reserve records the foreign currency differences arising from the translation of foreign operations, the translation of transactions that hedge the group’s net investment in a foreign operation or the translation of foreign currency monetary items forming part of the net investment in a foreign operation and the group’s share of associates’ increment or decrement in the foreign currency translation reserve. refer accounting policy note 1(d). 2010 $’000 2009 $’000 RetAined eARnings balance at the beginning of the year Transfer from foreign currency translation reserve profit attributable to equity holders of the company dividends paid balance at the end of the year 491,475 – 98,772 (49,290) 540,957 note 28 – pArent entity DiSCLoSureS as at, and throughout the financial year ended, 30 june 2010, the parent entity of the group was amalgamated holdings limited. Results oF pARent entity profit for the year other comprehensive income/(expense) total comprehensive income for the year FinAnCiAl position oF pARent entity At yeAR end current assets total assets current liabilities total liabilities net assets totAl eQuity oF pARent entity CompRises oF: Share capital reserves — available-for-sale investments revaluation — Share-based payments retained earnings pARent entity Commitments opeRAting leAse Commitments – As lessee future minimum operating lease rental not provided for and payable: within one year Later than one year but not later than five years 460,832 58 69,483 (38,898) 491,475 2009 $’000 59,962 (159) 59,803 2010 $’000 77,932 1,817 79,749 310 1,377 386,740 236,762 10,840 14,462 13,062 13,416 372,278 223,346 219,126 101,353 7,357 6,339 139,456 372,278 6,598 4,581 110,814 223,346 134 – 134 230 134 364 Amalgamated Holdings Limited notes to the Financial statements 65 notes to the financial Statements continued note 28 – pArent entity DiSCLoSureS (ContinueD) pARent entity ContingenCies details of contingent liabilities for the parent entity which although considered remote the directors consider should be disclosed, are as follows: ContRolled entities the company has guaranteed the obligations of some subsidiary entities in respect of a number of operating lease commitments. operating lease commitments of subsidiary entities that have been guaranteed are due: not later than one year later than one year but not later than five years later than five years the company has guaranteed the group’s share of other commitments in respect of financing and other arrangements of certain subsidiary entities the company has guaranteed finance lease commitments of a subsidiary Jointly ContRolled entities the company has guaranteed lease commitments of certain jointly controlled entities. operating lease commitments of jointly controlled entities guaranteed are due: not later than one year later than one year but not later than five years later than five years 2010 $’000 2009 $’000 63,582 136,582 167,629 367,793 924 537 29,076 107,221 143,537 279,834 649,088 66,449 120,968 148,738 336,155 2,382 2,608 29,585 110,641 172,044 312,270 653,415 pARent entity guARAntee in RespeCt oF debts oF its subsidiARies the company has entered into a deed of cross guarantee with effect that the company guarantees debts in respect of most of its australian incorporated subsidiaries. further details of the deed of cross guarantee and the subsidiaries subject to the deed, are disclosed in note 33. note 29 – finAnCiAL riSK mAnAGement FinAnCiAl Risk the group’s exposure to financial risks, objectives, policies and processes for managing the risks including methods used to measure the risks, and the management of capital are presented below. the group’s activities expose it to the following financial risks: • credit risk; • liquidity risk; and • market risk, including currency risk and interest rate risk. the board has overall responsibility for the oversight of the risk management framework. risk management policies are established to identify and analyse the risks faced by the group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. risk management policies and systems are reviewed regularly and modified as appropriate to reflect changes in market conditions and the group’s activities. the audit committee oversees how management has established and monitors internal compliance and control systems and to ensure the appropriate and effective management of the above risks. the audit committee is assisted in its oversight role by the internal auditor. the internal auditor undertakes reviews of risk management controls and procedures in accordance with an annual plan approved by the audit committee. the results of these internal audit reviews are reported to the audit committee. CRedit Risk credit risk arises from trade and other receivables outstanding, cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions. it is the risk of financial loss to the group if a customer or counterparty to the financial instrument fails to meet its contractual obligations, and arises principally from the group’s trade receivables from customers. tRAde And otheR ReCeivAbles the group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. the demographics of the group’s customer base, including the default risk of the industry and country in which customers operate, have less of an influence on credit risk. exposure to credit risk is monitored on an ongoing basis. management has established a credit policy under which each new customer requiring credit over a certain amount is analysed individually for creditworthiness before the group’s standard payment terms and conditions are offered. purchase limits are established for major customers, which represents the maximum open amount without requiring additional approval from management. the group has established an allowance for impairment that represents their estimate of incurred losses in respect of trade and other receivables. the main component of this allowance relates to exposures for specific debtors. 66 Amalgamated Holdings Limited Annual Report 2010 note 29 – finAnCiAL riSK mAnAGement (ContinueD) CRedit Risk (Continued) investments investments of surplus cash and deposits and derivative financial instruments are with banks with high credit ratings. given their high credit ratings, management does not expect any counterparty to fail to meet its obligations. at 30 june 2010, there were no significant concentrations of credit risk. the maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the Statement of financial position. guARAntees all guarantees are in respect of obligations of subsidiaries, associates or jointly controlled entities in which the group has an interest. details of guarantees given by the group are provided in note 32. details of guarantees given by the parent entity are provided in note 28. the gRoup’s exposuRe the group’s maximum exposure to credit risk at the reporting date was: available-for-sale financial assets receivables cash and cash equivalents Security deposits in respect of long term leases note 15 11 10 20 the maximum exposure to credit risk for receivables at the reporting date by geographic region was: australia new Zealand germany and other euro-zone countries united kingdom other the maximum exposure to credit risk for receivables by business segment at the reporting date was: Cinema Exhibition – Australia Cinema Exhibition – Germany Cinema Exhibition – New Zealand hotels thredbo alpine resort leisure/attractions property and other investments entertainment technology other 2010 $’000 10,447 50,881 45,288 4,034 110,650 39,386 5,955 5,388 26 126 50,881 5,443 5,286 678 9,315 359 204 16,215 4,822 8,559 50,881 2009 $’000 9,362 38,886 23,227 5,062 76,537 31,314 826 6,422 10 314 38,886 4,643 6,238 – 7,250 1,016 283 1,438 13,229 4,789 38,886 liQuidity Risk liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. the group manages liquidity risk by continuously monitoring forecast and actual cash flows. group treasury aims at maintaining flexibility in funding by keeping committed credit lines available with a number of counterparties. bank debt facilities available to the group are detailed in note 23. Amalgamated Holdings Limited notes to the Financial statements 67 notes to the financial Statements continued note 29 – finAnCiAL riSK mAnAGement (ContinueD) liQuidity FinAnCiAl Risk (Continued) the gRoup’s FinAnCiAl liAbilities the contractual maturities of the group’s financial liabilities, including interest payments and excluding the impact of netting agreements, are as follows: Carrying amount Contractual cash flows 6 months or less between 6 to 12 months between 1 to 2 years between 2 to 5 years over 5 years $’000 $’000 $’000 $’000 $’000 $’000 $’000 30 June 2010 non-deRivAtive FinAnCiAl liAbilities Secured bank loans unsecured loans from associates Finance lease liability unsecured non-interest bearing loans from other companies Trade payables Other creditors and accruals deRivAtive FinAnCiAl liAbilities /(Assets) interest rate swaps used for hedging (net) forward exchange contracts used for hedging (net) 30 June 2009 non-deRivAtive FinAnCiAl liAbilities Secured bank loans unsecured loans from associates Finance lease liability unsecured non-interest bearing loans from other companies Trade payables Other creditors and accruals deRivAtive FinAnCiAl liAbilities /(Assets) interest rate swaps used for hedging (net) forward exchange contracts used for hedging (net) 40,624 916 3,934 1,638 24,503 49,532 (44,696) (1,522) (4,056) (1,638) (24,503) (49,532) (742) (27) (2,180) (346) (24,503) (49,532) (952) (28) (1,876) (319) – – (2,141) (59) – (130) – – 763 51 (773) (51) (327) (51) (249) (197) – – (40,861) (188) – 16 – – – – – (1,220) – (859) – – – – 121,961 (126,771) (77,708) (3,424) (2,527) (41,033) (2,079) 67,793 901 9,827 2,183 30,622 46,694 (78,707) (1,542) (10,233) (2,183) (30,622) (46,694) (1,993) (29) (2,645) (176) (30,622) (46,694) (1,288) (30) (2,645) (176) – – (3,524) (63) (4,943) (361) – – (71,902) (199) – (611) – – 1,983 (2,005) 78 (78) (808) (78) (600) (527) – – (70) – – (1,221) – (859) – – – – 160,081 (172,064) (83,045) (4,739) (9,418) (72,782) (2,080) for derivative financial assets and liabilities, maturities detailed in the table above approximate periods that cash flows and impact on profit are expected to occur. mARket Risk market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the group’s income or the value of its holdings of financial instruments. the objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. the group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge exposures to fluctuations in foreign exchange rates and interest rates. derivatives are used exclusively for hedging purposes and are not traded or used as speculative instruments. this is carried out under treasury policies approved by the board. 68 Amalgamated Holdings Limited Annual Report 2010 note 29 – finAnCiAL riSK mAnAGement (ContinueD) mARket Risk (Continued) inteRest RAte Risk the group manages interest rate exposures on borrowings in accordance with a board approved treasury policy that specifies parameters for hedging including hedging percentages and approved hedging instruments. the policy specifies upper and lower hedging limits set for specific time frames out to five years. at the reporting date, the interest rate profile of the group’s interest bearing financial instruments was: Fixed RAte instRuments Financial assets Financial liabilities vARiAble RAte instRuments financial assets financial liabilities 2010 $’000 2009 $’000 – – – – – – 39,918 (45,474) (5,556) 21,341 (78,521) (57,180) the group manages interest rate risk in accordance with a board approved policy covering the types of instruments, range of protection and duration of instruments. the financial instruments cover interest rate swaps and forward rate agreements. maturities of these instruments are up to a maximum of five years. interest rate swaps and forward rate agreements allow the group to raise long term borrowings including long term finance leases, at floating rates and swap a portion of those borrowings into fixed rates. the approved range of interest rate cover is based on the projected debt levels for each currency and reduced for each future year. the group currently hedges interest bearing debt in aud, eur and nZd with cover at 30 june 2010 extending to march 2012 in aud, to december 2010 in eur and to September 2011 in nZd. at 30 june 2010, due to the low level of group debt, the group had only 20% (2009: 64%) of debt hedged. the group classifies interest rate swaps as cash flow hedges and states them at fair value in the Statement of financial position. details on the major components of the group’s interest bearing liabilities are disclosed in notes 22 and 23. sensitivity AnAlysis sensitivity analysis for fixed rate instruments the group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. the group’s derivatives (interest rate swaps) qualify for hedge accounting and the movement in fair value of those effective interest rate swaps is accounted for in equity in the hedging reserve. therefore, a change in interest rates at the reporting date for those effective swaps would not affect the profit for the period. at 30 june 2010, if prevailing market interest rates had moved by +/- 1% (100 basis points) per annum from year end rates, the effect on the group’s post-tax profit and equity, assuming all other variables remain constant, would have been as illustrated below: 2010 Variable rate instruments interest rate swaps 2009 Variable rate instruments interest rate swaps Profit Equity (hedging reserve) 100 bp increase $’000 100 bp decrease $’000 100 bp increase $’000 100 bp decrease $’000 (1) 140 139 (382) 346 (36) 1 (140) (139) 382 (346) 36 – 155 155 – 490 490 – (158) (158) – (504) (504) the movement in profit is due to higher/lower interest costs from variable rate debt, net interest rate swaps, and cash balances. the movement in equity is due to an increase/decrease in the fair value of derivative instruments designated as cash flow hedges, net of tax. the sensitivity is higher in 2009 than in 2010 due to higher borrowings levels at 30 june 2009. Amalgamated Holdings Limited notes to the Financial statements 69 notes to the financial Statements continued note 29 – finAnCiAL riSK mAnAGement (ContinueD) mARket Risk (Continued) FoReign exChAnge Risk the group is exposed to currency risk on purchases, borrowings and surplus funds that are denominated in a currency other than the respective functional currencies of group entities, primarily the australian dollar (“aud”), but also the new Zealand dollar (“nZd”), euro (“eur”) and great british pound (“gbp”). transactions undertaken by group entities are primarily denominated in aud, nZd, eur and uS dollars (“uSd”). the group manages foreign currency exposures in accordance with a board approved treasury policy that specifies parameters for hedging, including hedging percentages and approved hedging instruments. at any point in time, the group hedges up to 60% of “highly probable” foreign currency exposures and 100% of confirmed foreign currency exposures. typically, foreign currency exposures are hedged with the utilisation of forward exchange contracts. the group’s exposure to foreign currency risk in aud equivalents at the reporting date was as follows, based on notional amounts: 30 June 2010 30 June 2009 cash and cash equivalents Trade receivables Secured bank loans Trade payables gross balance sheet exposure Interest rate swaps Forward exchange contracts euR $’000 nZd $’000 317 – – – 317 – – – 722 355 (40,624) (626) (40,173) (331) – (331) usd $’000 8,774 – – – 8,774 – (51) (51) net exposure 317 (40,504) 8,723 gbp $’000 euR $’000 nZd $’000 usd $’000 gbp $’000 33 – – – 33 – – – 33 51 – – – 51 – – – 306 166 (16,093) (66) (15,687) (638) – (638) 51 (16,325) 159 – – – 159 – (78) (78) 81 120 – – – 120 – – – 120 sensitivity AnAlysis a 10% strengthening/weakening of the australian dollar against the following currencies at 30 june would have (decreased)/increased group equity and profit (pre-tax) by the amounts shown below. this analysis assumes that all other variables, in particular interest rates, remain constant. 2010 aud/uSd +10% aud/uSd -10% aud/nZd +10% aud/nZd -10% AUD/EUR +10% AUD/EUR -10% AUD/GBP +10% AUD/GBP -10% 2009 aud/uSd +10% aud/uSd -10% aud/nZd +10% aud/nZd -10% AUD/EUR +10% AUD/EUR -10% AUD/GBP+10% AUD/GBP -10% equity profit or loss $’000 $’000 (767) 938 3,723 (4,551) – – – – 7 (8) 1,521 (1,859) – – – – (26) 31 (35) 57 (29) 35 (3) 4 (14) 18 (37) 45 (5) 5 (12) 12 hedging oF net investment in FoReign subsidiARies the group’s nZd denominated bank loan is designated as a hedge of the group’s investment in its subsidiaries in new Zealand. the carrying amount of the loan at 30 june 2010 was $40,624,000 (2009: $16,093,000). a foreign exchange loss of $1,175,000 (2009: loss of $42,000) was recognised in equity on translation of the loan to aud. the majority of the movement in the aud/nZd sensitivity analysis in the table above is attributed to movements in the holding value of this nZd bank loan (and associated interest rate swaps). this movement would have an opposite movement in the aud holding value of the underlying hedged investment in new Zealand. 70 Amalgamated Holdings Limited Annual Report 2010 note 29 – finAnCiAL riSK mAnAGement (ContinueD) FAiR vAlues the fair values of financial assets and liabilities together with their carrying amounts shown in the Statement of financial position are as follows: cash and cash equivalents trade and other receivables present value of loans provided under the employee share plan other financial assets available-for-sale financial assets Security deposits – operating leases bank loans finance lease liabilities loans from associates loans from other companies payables interest rate swaps forward exchange contracts: Carrying amount 2010 Fair value 2010 Carrying amount 2009 Fair value 2009 $’000 45,288 50,612 269 312 10,447 4,034 (40,134) (3,934) (916) (1,638) (74,037) (763) (51) (10,511) $’000 45,288 50,612 269 312 10,447 4,034 (40,624) (3,934) (916) (1,638) (74,037) (763) (51) (11,001) $’000 23,227 38,556 330 312 9,362 5,062 (67,055) (9,827) (901) (2,183) (77,318) (1,983) (78) (82,496) $’000 23,227 38,556 330 312 9,362 5,062 (67,793) (9,827) (901) (2,183) (77,318) (1,983) (78) (83,234) note 10 11 11 14 15 20 22 22 22 22 21 25 25 estimAtion oF FAiR vAlues the following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the table above: Quoted investments fair value is determined by reference to the securities exchange quoted market prices at close of business on 30 june, without any deduction for transaction costs. deRivAtives bank mark-to-market valuations have been used to determine the fair value of interest rate swaps and forward exchange contracts. these have been back tested against valuations generated by the group’s treasury system pricing module, using market quoted data as at 30 june. the system uses discounted cash flow techniques to value financial instruments. inteRest beARing loAns And boRRowings fair value is calculated based on discounted expected future principal and interest cash flows. FinAnCe leAse liAbilities the fair value is estimated as the present value of future cash flows, discounted at market interest rates for similar lease arrangements. the estimated fair value reflects the assessed current interest rate for a similar lease where this rate has been determined to be different from the rate charged. tRAde And otheR ReCeivAbles/pAyAbles for receivables/payables with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. all other receivables/ payables are discounted to determine the fair value where an appropriate rate of interest is not received/charged in respect of the amount. inteRest RAtes used FoR deteRmining FAiR vAlue the group uses a bank quoted interest rate swap curve as at 30 june plus assessed risk factors/credit spread to discount financial instruments. Amalgamated Holdings Limited notes to the Financial statements 71 notes to the financial Statements continued note 29 – finAnCiAL riSK mAnAGement (ContinueD) FinAnCiAl instRuments FAiR vAlue deteRminAtion method gRAdings the table below analyses financial instruments carried at fair value, by valuation method. the different levels have been defined as follows: • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and • Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). 30 June 2010 Available-for-sale financial assets Derivative financial liabilities 30 June 2009 Available-for-sale financial assets Derivative financial liabilities level 1 $’000 level 2 $’000 level 3 $’000 10,447 – 10,447 9,362 – 9,362 – (814) (814) – (2,061) (2,061) – – – – – – total $’000 10,447 (814) 9,633 9,362 (2,061) 7,301 CApitAl mAnAgement the group manages its capital with the objective of maintaining a strong capital base so as to maintain investor, creditor and market confidence and to have the capacity to take advantage of opportunities that will enhance the existing businesses and enable future growth and expansion. the board monitors the return on capital, which the group defines as operating profit after income tax divided by the total of shareholders’ equity and long term debt. the board also monitors the group’s gearing ratio, being net debt divided by the total of shareholders’ equity. it is recognised that the group operates in business segments in which operating results may be subject to volatility and the board continuously reviews the capital structure to ensure sufficient: • surplus funding capacity is available; • • funds are available for capital expenditure and to implement longer term business development strategies; and funds are available to maintain appropriate dividend levels. there were no changes in the group’s approach to capital management during the year. neither the company nor any of its subsidiaries is subject to externally imposed capital requirements. 72 Amalgamated Holdings Limited Annual Report 2010 note 30 – empLoyee BenefitS employee beneFits AggRegAte liAbility FoR employee beneFits inCluding on-Costs: CuRRent employee benefits provision non-CuRRent employee benefits provision note 2010 $’000 2009 $’000 24 24 13,566 11,932 2,085 15,651 2,019 13,951 mAnAgement shARe option plAn there were no options granted during the year to 30 june 2010 or the previous financial year. there are no unissued ordinary shares of the company under option at 30 june 2010. there were no options exercised to acquire ordinary shares during the year to 30 june 2010. during the prior year to 30 june 2009, employees exercised options to acquire 733,500 fully paid ordinary shares at a weighted average exercise price of $3.47. Set out below are summaries of options exercised or expired during the prior year to 30 june 2009: Grant date Expiry date Exercise price Balance at the start of the year Exercised Expired Balance at the end of the year Exercisable at the end of the year number number number number number 30 September 2008 11 December 2003 17 June 2004 30 September 2008 16 September 2004 30 September 2008 $3.35 $3.14 $3.72 Total 463,500 30,000 250,000 743,500 (453,500) (30,000) (250,000) (733,500) (10,000) – – (10,000) Weighted average exercise price $3.47 $3.47 $3.35 – – – – – – – – – – exeCutive peRFoRmAnCe shARe plAn the establishment of the executive performance Share plan was approved by shareholders at the 2006 annual general meeting. employees receiving awards under the executive performance Share plan are those of a senior level and above (including the managing director). an employee awarded performance shares is not legally entitled to shares in the company before the performance shares allocated under the plan vest. however, the employee can vote and receive dividends in respect of shares allocated to them. once the shares have vested, they remain in the trust (refer note 1(s)(i)) until the earliest of the employee leaving the group, the tenth anniversary of the date the performance shares were awarded or the board approving an application for their release. award, vesting and exercise under the plan are made for no consideration. the performance period is three years. Set out below are summaries of performance shares awarded under the plan: Type of right Grant date 2010 Performance shares Performance shares Performance shares performance shares 2009 Performance shares Performance shares performance shares 28 June 2010 23 February 2009 18 February 2008 19 february 2007 23 February 2009 18 February 2008 19 february 2007 Balance at start of year Granted Exercised Balance at end of year number number number number – 526,597 357,351 330,018 1,213,966 – 473,182 345,422 818,604 570,193 – – – 570,193 526,597 – – 526,597 – (1,546) – (40,833) 570,193 525,051 357,351 289,185 (42,379) 1,741,780 – (115,831) (15,404) 526,597 357,351 330,018 (131,235) 1,213,966 Amalgamated Holdings Limited notes to the Financial statements 73 notes to the financial Statements continued note 30 – empLoyee BenefitS (ContinueD) during the year to 30 june 2010, 570,193 performance shares were granted to employees under the plan and 330,018 shares, relating to the 2007 plan issue, vested with employees. of these shares that vested, 40,833 were exercised and withdrawn from the trust. during the year, 1,546 performance shares were released from performance hurdle requirements and transferred to a participant on an unrestricted basis. the board approved transfer was part of the negotiated settlement on termination of the employment of the employee participant. during the prior financial year to 30 june 2009, 131,235 performance shares were released from performance hurdle requirements and transferred to certain participants on an unrestricted basis. the board approved transfer was part of the negotiated settlement on termination of the employment of eight employee participants. other than as disclosed above, none of the performance shares awarded under the plan vested or became exercisable during the year. FAiR vAlue oF peRFoRmAnCe shARes gRAnted the assessed fair value at grant date of performance shares granted under the executive performance Share plan during the year ended 30 june 2010 was $5.78 (2009 issue: $4.34) for those shares that have earning per share hurdles and $4.72 (2009 issue: $3.80) for those shares that have total shareholder return hurdles. the fair value of each performance share is estimated on the date of grant using a monte carlo model with the following weighted average assumptions used for each grant: dividend yield (per annum) expected volatility risk-free rate (per annum) expected life of incentive granted 28 June 2010 granted 23 Feb 2009 granted 18 Feb 2008 6.60% 33% 4.50% 3 years 6.90% 38% 3.10% 3 years 5.48% 30% 6.89% 3 years the expected life of the performance shares is based on historical data and is not necessarily indicative of exercise patterns that may occur. the expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. tAx exempt shARe plAn all australian resident permanent employees (excluding directors) are eligible to participate in the tax exempt Share plan. the tax exempt Share plan enables participating employees to make salary sacrifice contributions to purchase shares on-market on a monthly basis. the shares in the tax exempt Share plan are restricted from being traded and must be held for a minimum of three years whilst the participant remains an employee of the group. trading restrictions are lifted on the cessation of employment. offers under the tax exempt Share plan are at the discretion of the company. all shares acquired under the tax exempt Share plan rank equally with all other ordinary shares. the tax exempt Share plan was suspended during the year and was reactivated in june 2010. there were no shares purchased during the year by employees under the tax exempt Share plan (2009: 5,655 shares). employee shARe plAn at 30 june 2010, the total shares issued under the plan was 174,620 (2009: 176,520). there were no shares issued during the year. the plan is closed to new members and no offers have been made under the plan since 1998. the market value of ordinary shares at 30 june 2010 was $5.70 (2009: $4.30). note 26 provides details of the movement in the ordinary share capital during the year. supeRAnnuAtion Group entities contribute to several defined contribution superannuation plans – refer also Note 1(r). The superannuation contributions recognised as an expense in the income Statement are detailed below: Superannuation contributions recognised as an expense 2010 $’000 7,264 2009 $’000 6,627 74 Amalgamated Holdings Limited Annual Report 2010 note 31 – CommitmentS AnD LeASeS CApitAl expendituRe Commitments contracted but not provided for and payable: within one year opeRAting leAse Commitments – As lessee future minimum operating lease rentals not provided for and payable: within one year later than one year but not later than five years later than five years 2010 $’000 2009 $’000 4,783 23,594 93,695 329,127 378,383 801,205 99,234 345,868 435,664 880,766 the group leases various properties, including cinema sites, under operating leases. the leases typically run for periods up to 20 years, with varying terms, escalation clauses and renewal or extension options. the head lease in respect of the thredbo village and ski area is for a longer period, being 50 years from 29 june 2007. a small number of leases have commitments in respect of contingent rental payments which arise when the operating performance of a site exceeds a pre-determined amount. also, there are rentals which are determined as the higher of a base rental and a fixed percentage of a defined amount reflecting the operating performance of a site or a base rental plus a fixed percentage of the net profit from the site. contingent rental payments recognised as an expense in the period for the group amounted to $5,125,000 (2009: $2,482,000). sub-leAse ReCeivAbles – As lessoR future lease receivables in relation to sub-leases of property space under operating leases not recognised and receivable: within one year later than one year but not later than five years later than five years opeRAting leAses – As lessoR future operating lease rentals for owned properties not recognised and receivable: within one year later than one year but not later than five years later than five years 2010 $’000 2009 $’000 8,918 29,951 243,572 282,441 10,692 31,079 52,340 94,111 9,482 32,816 252,543 294,841 8,073 27,768 57,588 93,429 the group receives rental income from a number of properties, both owned and leased. with exception to sub-leases under the thredbo head lease, leases are for periods ranging between one to 15 years and have varying terms, escalation clauses and renewal options. there are approximately 700 sub-leases under the thredbo head lease. thredbo sub-leases consist of long term accommodation sub-leases for holiday apartments, chalets and lodges and also retail sub-leases for shops. long term accommodation sub-leases are typically for periods mirroring the head lease, which was renewed for a further 50 year period on 29 june 2007. Amalgamated Holdings Limited notes to the Financial statements 75 notes to the financial Statements continued note 31 – CommitmentS AnD LeASeS (ContinueD) FinAnCe leAse Commitments – As lessee finance lease rentals are payable as follows: within one year Later than one year but not later than five years less: future lease finance charges the present value of lease payments is as follows: within one year Later than one year but not later than five years finance lease liabilities provided for in the accounts: current Non-current total finance lease liabilities note 2010 $’000 2009 $’000 4,001 – 4,001 (67) 3,934 3,934 – 3,934 3,934 – 3,934 5,290 4,876 10,166 (339) 9,827 4,902 4,925 9,827 4,902 4,925 9,827 22 22 of the above lease, $3,934,000 (2009: $9,827,000) is in respect of land and buildings. the initial lease term concludes in june 2011, at which time the controlled entity has an option to purchase the property at no additional cost. if the option was not exercised, a nominal value would be recovered over time in respect of the property. FinAnCe leAse Commitments – As lessoR the group does not have finance lease or hire purchase arrangements in place where they act as a lessor. note 32 – ContinGent ASSetS AnD LiABiLitieS details of contingent liabilities and contingent assets which, although considered remote, the directors consider should be disclosed, are as follows: Contingent liAbilities Jointly ContRolled entities certain subsidiaries have obligations in respect of the lease commitments for jointly controlled entities. operating lease commitments of jointly controlled entities not included in the group’s financial statements, for which a controlled entity has obligations, are due: not later than one year later than one year but not later than five years later than five years 2010 $’000 2009 $’000 38,940 134,658 161,297 334,895 39,052 142,166 192,878 374,096 ClAim AgAinst gRoup entity FoR AdditionAl ChARges a group entity has received a claim for the payment of additional charges covering the last five years, the basis of which is disputed by the group entity. it is estimated that the group’s maximum liability under this claim is $510,000, plus interest and legal costs. no provision has been established against this amount as it is currently not considered that the success of this claim is probable. ClAims FoR peRsonAl inJuRy the nature of the group’s operations results in claims for personal injury being received from time to time. the directors believe that the outcome of any current claims outstanding, which are not provided against in the financial statements, will not have a significant impact on the operating result of the group in future reporting periods. the directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement at balance date. ClAims Resolved in the group’s financial report for the year ended 30 june 2009, it was noted that a group entity had received a claim, resulting from a dispute over contract terms, seeking recovery of past payments made totalling $4,141,000 plus interest and legal costs. no provision was recorded for this claim at 30 june 2009. this claim was settled in the financial year to 30 june 2010, with no refund of past payments required. Contingent Assets tAxAtion – oveRseAs ContRolled entities a contingent asset exists at 30 june 2010 in the range of $10,317,000 to $12,896,000 (2009: $11,824,000) relating to disputed value-added tax provided for or paid by certain overseas controlled entities on a number of products sold during the period since 1 january 2005. 76 Amalgamated Holdings Limited Annual Report 2010 note 33 – DeeD of CroSS GuArAntee pursuant to aSic class order 98/1418 (as amended) dated 13 august 1998, the wholly owned subsidiaries listed below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports, and directors’ reports. it is a condition of the class order that the company and each of the subsidiaries enter into a deed of cross guarantee. the effect of the deed is that the company guarantees to each creditor, payment in full of any debt in the event of winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. if a winding up occurs under other provisions of the act, the company will only be liable in the event that after six months any creditor has not been paid in full. the subsidiaries have also given similar guarantees in the event that the company is wound up. the subsidiaries subject to the deed are: birch, carroll & coyle limited bryson hotel pty limited canberra theatres limited edge digital technology pty limited elsternwick properties pty limited featherdale farm & aviaries pty limited featherdale holdings pty limited filmlab engineering pty limited glenelg theatres pty limited greater entertainment pty limited greater occasions australia pty limited greater union international holdings pty limited greater union nominees pty limited greater union Screen entertainment pty limited greattheatre pty limited guo investments (wa) pty limited gutace holdings pty limited haparanda pty limited haymarket’s tivoli theatres pty limited kidsports australia pty limited kosciuszko thredbo pty limited kvarken pty limited lakeside hotel pty limited mamasa pty limited noahs limited northside gardens hotel pty limited pantami pty limited rq motels pty limited rydges bankstown pty limited rydges cronulla pty limited rydges hotels limited Sabaya port douglas pty limited Sonata hotels pty limited tannahill pty limited the geelong theatre company limited the greater union organisation pty limited thredbo resort centre pty limited tobeon pty limited tourism & leisure pty limited western australia cinemas pty limited Zollverein pty limited a consolidated income Statement and consolidated Statement of financial position, comprising the company and controlled entities which are a party to the deed, after eliminating all transactions between parties to the deed, at 30 june 2010 are set out as follows: inCome stAtement profit before tax income tax expense Profit after income tax but before discontinued operations Profit after tax from discontinued operations Profit after income tax and discontinued operations retained earnings at the beginning of the year Transfer from reserves dividends paid Retained earnings at the end of the year 2010 $’000 2009 $’000 112,482 (28,909) 83,573 – 83,573 476,332 – (49,290) 510,615 77,826 (20,846) 56,980 3,855 60,835 454,337 58 (38,898) 476,332 Amalgamated Holdings Limited notes to the Financial statements 77 notes to the financial Statements continued note 33 – DeeD of CroSS GuArAntee (ContinueD) 2010 $’000 2009 $’000 stAtement oF FinAnCiAl position Assets cash and cash equivalents receivables inventories other Total current assets receivables loans to controlled entities investments in controlled entities other financial assets available-for-sale financial assets investments accounted for using the equity method property, plant and equipment investment properties goodwill and other intangible assets deferred tax assets other Total non-current assets Total assets liAbilities payables current tax liabilities provisions deferred revenue other Total current liabilities payables loans from controlled entities interest bearing liabilities and borrowings provisions deferred revenue other Total non-current liabilities Total liabilities Net assets eQuity Share capital reserves retained earnings Total equity 78 Amalgamated Holdings Limited Annual Report 2010 25,667 34,676 15,162 3,781 79,286 405 127,572 96,712 310 10,447 99,417 403,177 78,875 19,216 3,649 3,530 843,310 922,596 35,119 10,359 11,674 30,471 7,275 94,898 2 29,669 40,993 2,821 2,937 197 76,619 171,517 751,079 219,126 21,338 510,615 751,079 14,175 26,638 11,273 506 52,592 516 52,252 73,960 310 9,362 98,501 424,378 29,600 9,606 8,467 4,196 711,148 763,740 33,627 10,533 10,972 26,184 8,473 89,789 2 7,991 67,214 2,854 2,503 797 81,361 171,150 592,590 101,353 14,905 476,332 592,590 note 34 –BuSineSS ComBinAtionS CinemA business in new ZeAlAnd And FiJi on 18 february 2010, a wholly owned subsidiary completed the transaction to purchase the Skycity cinema business based in new Zealand and fiji. the purchase price was nZd$61,100,000 (aud$47,817,000) before a recovery of nZd$5,009,000 (aud$3,920,000) for the working capital balances as at the acquisition date. the business includes 14 cinemas with 106 screens located throughout new Zealand, a 50% interest in rialto cinemas in new Zealand (three cinemas with 16 screens) and a 66.67% interest in Skycity cinemas fiji (two cinemas with 10 screens). all cinema properties in new Zealand are leasehold, whereas the sites in fiji are owned. the acquisition of this business is considered an appropriate strategic addition to the group’s existing cinema businesses. the wholly owned new Zealand based business has subsequently been renamed event cinemas. Since the date of acquisition to 30 june 2010, the new Zealand cinema business, including our interest in the rialto cinemas and fiji cinemas, has contributed revenue of $21,970,000 and a profit before tax of $694,000. if this business had been acquired on 1 july 2009, management estimates that revenue contributed would have been $76,000,000 and the profit before tax contributed for the period would have been $6,100,000. in determining the above estimated profit amount for the period from 1 july 2009, management has taken into account the impact of the fair value adjustments made at acquisition as if they had occurred on 1 july 2009. identiFiAble Assets ACQuiRed And liAbilities Assumed plant, equipment and leasehold improvements film library and software deferred tax assets deferred tax liabilities employee entitlements deferred lease costs deferred revenue provision for decommissioning of leasehold improvements provision for onerous contracts inventory, cash and prepayments trade and other receivables other liabilities interest in rialto cinema business interest in fiji cinema business total net value of identifiable assets and liabilities Fair value at acquisition date $’000 38,989 152 4,889 (172) (789) (5,790) (1,479) (1,096) (2,163) 1,271 614 (3,389) 2,498 4,468 38,003 the above fair values of identifiable assets and liabilities have been determined based upon the best information available as of the reporting date. the fair values of the group’s non-controlling interest in the rialto cinema business in new Zealand and the cinema business in fiji have been determined as the present value of the estimated future cash flows. pre-tax discount rates of 12.4% and 14.4% were used in determining the fair values. goodwill goodwill was recognised as a result of the acquisition as follows: total cash consideration paid less: recovery for net working capital balances less: value of identifiable assets and liabilities goodwill $’000 47,817 3,920 43,897 38,003 5,894 goodwill is attributable mainly to the established market position of cinema sites within the cinema business in new Zealand and synergies expected to be achieved through combining this business with the group’s existing cinema businesses. none of the goodwill recognised is expected to be deductible for income tax purposes. Amalgamated Holdings Limited notes to the Financial statements 79 notes to the financial Statements continued note 34 –BuSineSS ComBinAtionS (ContinueD) CinemA ACQuisitions – AustRAliA on 14 october 2009, a wholly owned subsidiary expanded its existing cinema operations by acquiring the beverly hills and cronulla cinema complexes in south-western and southern Sydney. effective 26 december 2009, a wholly owned subsidiary acquired the remaining 50% interest in the glendale cinema not already owned by the group. glendale is in the western suburbs of newcastle. on 17 june 2010, a wholly owned subsidiary acquired the leasehold interest in a cinema site in noosa, queensland. consideration paid for these sites including the additional 50% interest in the glendale site totalled $17,892,000 and consisted of cinema assets and liabilities and leasehold rights to the properties. Since the dates of acquisition to 30 june 2010, these cinema sites, including the additional 50% interest in the glendale site, have contributed revenue of $11,431,000 and profit of $2,125,000. if these sites had been acquired or 100% owned on 1 july 2009, management estimate that revenue contributed from these sites would have been $21,650,000 and the profit contributed for the period would have been $3,770,000. identiFiAble Assets ACQuiRed And liAbilities Assumed the group has provisionally recognised the fair value of the following identifiable assets and liabilities relating to these acquisitions: plant, equipment and leasehold improvements other assets deferred tax assets employee entitlements deferred revenue total net value of identifiable assets and liabilities Fair value at acquisition date $’000 5,363 144 8 (211) (106) 5,198 the above fair values of identifiable assets and liabilities have been determined based upon the best information available as of the reporting date. leAsehold And mAnAgement Rights leasehold and management rights recognised as an intangible asset in the Statement of financial position during the financial year to 30 june 2010 as a result of these acquisitions, was determined as follows: total cash consideration paid carrying value of 50% interest in glendale cinema already owned Subtotal less: value of identifiable assets and liabilities leasehold and management rights recognised $’000 17,892 1,220 19,112 5,198 13,914 leasehold and management rights are attributable to the existing goodwill arising from the market position of each site in their admissions catchment area and, for the beverly hills, cronulla and noosa cinemas, the management synergies expected to be achieved from integration of these sites with the group’s existing cinema operations systems. this asset will be amortised over the term of the lease for each of the sites, which range from 16 to 20 years. leasehold and management rights recognised are not deductible for income tax purposes. ACQuisition RelAted Costs inCuRRed the group incurred acquisition related costs of $979,000 in respect of the above acquisitions during the financial year to 30 june 2010, which related largely to legal fees and due diligence costs. these costs have been expensed within the cinema exhibition - australia segment during the period and have been included in the group’s income Statement. 80 Amalgamated Holdings Limited Annual Report 2010 note 35 – pArtiCuLArS in reLAtion to ConSoLiDAteD entitieS Ownership interest 2010 % 2009 % note Ownership interest 2010 % 2009 % note (a)(d) CompAny (pARent entity) amalgamated holdings limited subsidiARies ahl administration pty limited Amalgamated Cinema Holdings Limited amalgamated holdings Superannuation fund pty limited ancona investments pty limited birch, carroll & coyle limited bln hotels property unit trust bryson centre unit trust bryson hotel property unit trust bryson hotel pty limited canberra theatres limited Cinema Facility Management GmbH cmS cinema management Services gmbh CMS Cinema Verwaltungs GmbH digital cinema integration partners pty limited edge digital technology pty limited edge investments bv elsternwick properties pty limited Event Cinemas (Fiji) Limited Event Cinemas Limited Event Cinemas New Plymouth Limited Event Cinemas Nominees Limited Event Cinemas (NZ) Limited event cinemas queen Street Nominees Limited Event Distribution Limited featherdale farm & aviaries pty limited featherdale holdings pty limited filmlab engineering pty limited filmpalast am Zkm karlsruhe beteiligungs gmbh filmpalast konstanz beteiligungs gmbh glenelg theatres pty limited greater entertainment pty limited greater occasions australia pty limited greater union betriebsmittel gmbh greater union filmpalast dortmund gmbh & co. kg greater union filmpalast gmbh greater union filmpalast rhein-main gmbh greater union holdings limited greater union international bv greater union international gmbh (a)(f)(i) (a)(f) (a)(f) (a)(e) (h) (a)(d) (a)(d) (a)(d) (a)(d) (a)(d) (a)(d) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (b) (a)(e) (f) (c) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) greater union international holdings pty limited greater union limited greater union nominees pty limited greater union Screen entertainment pty limited greater union theaters dritte gmbh & co. kg (a)(f) greater union theaters dritte verwaltungs gmbh greater union theaters gmbh greater union theaters mainz gmbh & co. kg greater union theaters management mainz gmbh greater union theaters verwaltungs gmbh greater union theaters Zweite gmbh & co. kg greater union theaters Zweite verwaltungs gmbh greattheatre pty limited guo investments (wa) pty limited gutace holdings pty limited haparanda pty limited haymarket’s tivoli theatres pty limited kidsports australia pty limited kosciuszko thredbo pty limited ktpl unit trust kvarken pty limited lakeside hotel property unit trust lakeside hotel pty limited lakeside international hotel unit trust mamasa pty limited multiplex cinemas magdeburg gmbh multiplex cinemas oberhausen gmbh neue filmpalast erste gmbh & co. kg neue filmpalast erste verwaltungs gmbh neue filmpalast gmbh & co. kg neue filmpalast management gmbh noahs hotels (nZ) limited noahs limited northside gardens hotel property unit trust northside gardens hotel pty limited pantami pty limited QT Hotels and Resorts Pty Limited red carpet event gmbh RH Hotels Pty Limited rq motels pty limited rydges bankstown pty limited (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(d) (a)(f) 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 – 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 51 100 – 100 100 100 100 – – – – – – – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Amalgamated Holdings Limited notes to the Financial statements 81 notes to the financial Statements continued note 35 – pArtiCuLArS in reLAtion to ConSoLiDAteD entitieS (ContinueD) Ownership interest 2010 % 2009 % note Ownership interest 2010 % 2009 % note rydges cronulla pty limited rydges gci pty limited Rydges Gladstone Hotel Property Unit Trust rydges hobart hotel property unit trust rydges hobart hotel pty limited rydges hotels limited Rydges Hotels Property Unit Trust rydges hotels resorts asia pte limited Rydges HPT Pty Limited Rydges Property Holdings Pty Limited rydges queenstown hotel limited Rydges Townsville Hotel Property Unit Trust Sabaya port douglas pty limited Sonata hotels pty limited Sunshine Cinemas Pty Limited (g) (a)(d) 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 – 100 – – 100 – 100 100 – tannahill pty limited the geelong theatre company limited the greater union organisation pty limited thredbo resort centre pty limited tobeon pty limited tourism & leisure pty limited turmpalast frankfurt gmbh & co. kg turmpalast frankfurt management gmbh vierte kinoabspielstatten gmbh & co. kg vierte kinoabspielstatten verwaltungs gmbh western australia cinemas pty limited Zollverein pty limited Zweite kinoabspielstatten gmbh & co. kg Zweite kinoabspielstatten verwaltungs gmbh 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) 100 100 (a) (b) (c) (d) (e) (f) (g) (h) (i) these companies are audited by other member firms of kpmg international. this company was incorporated and is domiciled in jersey. this company was incorporated in and carries on business in the united kingdom. these companies were incorporated in and carry on business in new Zealand. these companies were incorporated in and carry on business in the netherlands. these companies were incorporated in and carry on business in germany. this company was incorporated and is domiciled in Singapore. this company was incorporated and is domiciled in fiji. this company was placed into liquidation during the year. all companies, except those stated above, were incorporated in australia. note 36 – inveStmentS in ASSoCiAteS details of the group’s investments in associates are as follows: name principal activities cinesound movietone productions pty limited maf greater union llc rydges rotorua hotel limited film owner and distributor film exhibitor hotel owner Interest Investment carrying amount Contribution to operating profit/(loss) 2010 % 50 49 25 2009 % 50 49 25 2010 $’000 167 2009 $’000 154 2010 $’000 13 2009 $’000 7 13,202 14,212 9,005 11,085 1,668 1,938 (215) (d) 104 15,037 16,304 8,803 11,196 (a) dividends received from associates for the year ended 30 june 2010 amount to $7,831,000 (2009: $10,160,000). (b) cinesound movietone productions pty limited was incorporated in australia. maf greater union llc was incorporated in the united arab emirates. rydges rotorua hotel limited was incorporated in new Zealand. the balance date of all associates is 30 june, with the exception of maf greater union llc which has a balance date of 31 december. (c) (d) Share of loss for the year ended 30 june 2010 includes the negative impact, amounting to $294,000, arising from the restatement of deferred tax balances due to the reduction of the company tax rate and elimination of building depreciation for tax in new Zealand. 82 Amalgamated Holdings Limited Annual Report 2010 note 36 – inveStmentS in ASSoCiAteS (ContinueD) summARised FinAnCiAl inFoRmAtion RelAting to AssoCiAtes aggregate assets, liabilities, revenues and net profit of associates, not adjusted for the percentage ownership held by the group, is as follows: Revenues – as reported by associates Net profit – as reported by associates current assets non-current assets Total assets – as reported by associates current liabilities non-current liabilities Total liabilities – as reported by associates Net assets – as reported by associates Group’s share of net assets of associates Adjustments arising from equity accounting: foreign exchange translation Carrying value of investments in associates movements in carrying amount of associates: carrying amount of associates at the beginning of the year foreign currency translation movements Share of associates’ net profit distributions received from associates Disposal of associate carrying amount of associates at the end of the year Commitments Share of associates’ capital expenditure commitments contracted but not provided for or payable: Not later than one year Share of associates’ operating lease commitments contracted but not provided for or payable: not later than one year later than one year but not later than five years later than five years Contingent liAbilities there are no contingent liabilities within associate entities as at 30 june 2010 (2009: $nil). 2010 $’000 2009 $’000 62,633 17,603 24,816 33,162 57,978 10,388 5,240 15,628 42,350 19,161 (4,124) 15,037 16,304 (2,239) 8,803 (7,831) – 15,037 1,661 3,438 8,994 4,420 71,154 23,046 27,905 24,286 52,191 4,960 4,853 9,813 42,378 18,911 (2,607) 16,304 14,700 2,154 11,196 (10,160) (1,586) 16,304 – 2,802 6,901 1,027 16,852 10,730 Amalgamated Holdings Limited notes to the Financial statements 83 notes to the financial Statements continued note 37 – inveStmentS in JointLy ControLLeD entitieS Profit share Investment carrying amount Share of sales revenue Contribution to operating profit name australian theatres joint venture principal activities nature of interest operator of multiscreen cinema complexes Share of joint venture assets browns plains multiplex joint venture operator of a multiscreen cinema complex castle hill multiplex cinema joint venture operator of a multiscreen cinema complex casuarina cinema centre joint venture operator of a multiscreen cinema complex Share of joint venture assets Share of joint venture assets Share of joint venture assets 2010 % 50 33 33 50 2009 % 2010 $’000 2009 $’000 2010 $’000 2009 $’000 2010 $’000 2009 $’000 50 85,553 83,451 172,971 155,808 31,277 (e) 23,189 33 278 226 1,454 1,417 103 83 33 4,464 4,180 6,498 4,694 635 357 50 3,553 4,254 13,036 11,790 2,949 2,494 operator of multiscreen cinema complexes Share of joint venture assets (b)(d) 66.7 – 4,621 – 973 – 226 – equity share (a) 50 (a) 50 2,345 2,452 11,574 11,385 1,006 (f) 1,592 equity share (a) 50 (a) 50 507 647 3,581 3,608 513 (f) 628 fiji cinema joint venture filmpalast am Zkm karlsruhe gmbh & co. kg filmpalast konstanz gmbh & co. kg garden city cinema joint venture geelong cinema joint venture operator of a multiscreen cinema complex operator of a multiscreen cinema complex operator of a multiscreen cinema complex operator of a multiscreen cinema complex Share of joint venture assets Share of joint venture assets Share of joint venture assets jam factory cinema operations joint venture operator of a multiscreen cinema complex rialto joint venture Southport 6 cinemas joint venture toowoomba cinema centre joint venture operator of multiscreen cinema complexes Share of joint venture assets operator of a multiscreen cinema complex operator of a multiscreen cinema complex Share of joint venture assets Share of joint venture assets 33 33 2,810 2,972 4,854 4,517 1,118 1,016 (c) 50 (c) 50 (171) (284) 4,337 3,737 609 342 50 50 501 870 8,176 7,869 135 149 (b) 50 – 2,524 – 1,099 – 49 – (d) 51 (d) 51 1,303 1,516 2,852 3,375 195 509 50 50 959 1,162 4,470 3,979 897 634 109,247 101,446 235,875 212,179 39,712 30,993 filmpalast an Zkm karlsruhe gmbh & co. kg and filmpalast konstanz gmbh & co. kg were incorporated in germany. (a) (b) rialto joint venture operates in new Zealand and fiji cinema joint venture operates in fiji. (c) a write down in the value of this investment was made in prior years. (d) (e) the joint venture is not consolidated as the group does not have control and the power to govern financial and operating policies. the profit for the australian theatres joint venture for the year ended 30 june 2010 includes the reversal of impairment write-downs of plant and equipment made in prior years, increasing the group’s share of the operating profit by $3,262,000. the profit for filmpalast an Zkm karlsruhe gmbh & co. kg and filmpalast konstanz gmbh & co. kg for the year ended 30 june 2010 include a correction to prior years’ depreciation reducing the group’s share of the operating profit by $982,000 and $37,000 respectively. (f) 84 Amalgamated Holdings Limited Annual Report 2010 note 37 – inveStmentS in JointLy ControLLeD entitieS (ContinueD) during the year, the cinema joint ventures purchased management and consulting services of $5,676,000 (2009: $5,554,000), capital equipment of $7,505,000 (2009: $2,078,000), block and artwork of $133,000 (2009: $135,000) and other services of $304,000 (2009: $541,000) from the group. these transactions were on normal commercial terms. the group’s aggregate share of the jointly controlled entities’ assets and liabilities consists of: current assets non-current assets Total assets current liabilities non-current liabilities Total liabilities Net assets movements in CARRying Amount oF Jointly ContRolled entities carrying amount of jointly controlled at the beginning of the year net additional investments Additions through entity acquired Share of profit gross distributions Disposal of interest on acquisition of remaining ownership foreign currency translation movements amortisation of capitalised interest other carrying amount of jointly controlled entities at the end of the year refer to note 32 for details of contingent liabilities 2010 $’000 26,145 82,237 108,382 29,623 1,831 31,454 76,928 101,446 98 6,966 39,712 (37,526) (1,233) (170) (33) (13) 109,247 2009 $’000 17,752 76,445 94,197 18,667 1,592 20,259 73,938 103,978 196 – 30,993 (33,780) – 135 (33) (43) 101,446 note 38 – DireCtor AnD exeCutive DiSCLoSureS information regarding individual directors’ and executives’ compensation and some equity instruments disclosures, as permitted by the corporations regulations 2001, are provided in the remuneration report contained within the directors’ report. the relevant sections of the remuneration report are outlined below: Section of Remuneration Report non-executive director remuneration managing director and executive remuneration fixed annual remuneration Variable remuneration – short term incentive Variable remuneration – long term incentive employment contracts directors’ position and period of responsibility directors’ and executives’ remuneration Directors’ report page reference 24 24 24 25 26 23 23 24 Amalgamated Holdings Limited notes to the Financial statements 85 notes to the financial Statements continued note 38 – DireCtor AnD exeCutive DiSCLoSureS (ContinueD) diReCtoRs the following persons were directors of amalgamated holdings limited during the financial year: Name ag rydge aj clark kg chapman pr coates tc ford rm graham rg newton dc Seargeant Position non-executive director and chairman non-executive director and lead independent director non-executive director non-executive director non-executive director non-executive director non-executive director managing director Period of responsibility 1 july 2009 to 30 june 2010 1 july 2009 to 30 june 2010 18 february 2010 to 30 june 2010 10 july 2009 to 30 june 2010 1 july 2009 to 23 october 2009 1 july 2009 to 30 june 2010 1 july 2009 to 30 june 2010 1 july 2009 to 30 june 2010 otheR key mAnAgement peRsonnel the following persons also had authority and responsibility for planning, directing and controlling the activities of the group, directly or indirectly, during the financial year: Name nc arundel pc bourke gc dean mr duff hr eberstaller pw horton kj kobishop Position and employer managing director rydges hotels & resorts rydges hotels limited director of information technology amalgamated holdings limited company Secretary amalgamated holdings limited director commercial amalgamated holdings limited managing director ahl Strategic investments the greater union organisation pty limited director finance & accounting amalgamated holdings limited corporate director of food and beverage amalgamated holdings limited Period of responsibility 1 july 2009 to 30 june 2010 19 april 2010 to 30 june 2010 1 july 2009 to 30 june 2010 1 july 2009 to 30 june 2010 1 july 2009 to 30 june 2010 1 july 2009 to 30 june 2010 1 july 2009 to 30 june 2010 all of the above persons, with the exception of pc bourke, who commenced employment with the group on 19 april 2010, were also key management persons during the year ended 30 june 2009. key mAnAgement peRsonnel RemuneRAtion the key management personnel remuneration included in employee expenses is as follows: employee beneFits Short term other long term Termination benefits post-employment equity compensation 2010 $ 2009 $ 7,347,347 97,562 – 120,040 899,336 6,434,500 318,920 123,750 124,342 836,565 8,464,285 7,838,077 86 Amalgamated Holdings Limited Annual Report 2010 note 38 – DireCtor AnD exeCutive DiSCLoSureS (ContinueD) option holdings And tRAnsACtions there were no options over ordinary shares in amalgamated holdings limited held directly, indirectly or beneficially, by each key management personnel, including their related parties. movements in the number of options held by key management personnel in the prior year to 30 june 2009 is set out in the table below: held at the beginning of the year granted exercised held at the end of the year vested and exercisable at 30 June diReCtoR DC Seargeant exeCutives NC Arundel pc bourke (a) GC Dean MR Duff HR Eberstaller PW Horton kj kobishop (b) 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 – 500,000 – – – – – 30,000 – – – – – 45,000 – – – – – – – – – – – – – – – – – – – (500,000) – – – – – (30,000) – – – – – (45,000) – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – pc bourke commenced employment with the group on 19 april 2010. (a) (b) kj kobishop commenced employment with the group on 15 September 2008. there are no outstanding options at 30 june 2010 (2009: nil). no options have been granted since the end of the year. peRFoRmAnCe shARe holdings And tRAnsACtions the movement during the year in the number of performance shares in amalgamated holdings limited held, directly, indirectly or beneficially, by each key management personnel, including their related parties, is as follows: held at the beginning of the year granted exercised Forfeited held at the end of the year diReCtoR DC Seargeant exeCutives NC Arundel pc bourke (a) GC Dean MR Duff HR Eberstaller PW Horton kj kobishop (b) 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 340,000 200,000 240,000 140,000 44,202 20,711 – – 31,124 16,333 49,643 26,616 10,954 10,954 48,485 26,386 18,987 23,491 – – 11,889 14,791 17,947 23,027 7,866 – 15,822 22,099 100,000 – – 100,000 – – (5,972) – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 580,000 340,000 57,217 44,202 – – 43,013 31,124 67,590 49,643 18,820 10,954 64,307 48,485 100,000 100,000 pc bourke commenced employment with the group on 19 april 2010. (a) (b) kj kobishop commenced employment with the group on 15 September 2008. Amalgamated Holdings Limited notes to the Financial statements 87 notes to the financial Statements continued note 38 – DireCtor AnD exeCutive DiSCLoSureS (ContinueD) no performance shares have been granted since the end of the year. no performance shares were held by the related parties of key management personnel. eQuity holdings And tRAnsACtions the movement during the year in the number of ordinary shares of amalgamated holding limited held, directly, indirectly or beneficially, by key management personnel, including their related parties, is as follows: e n t i t l e m e n t o f f e r R e n o u n c e a b e l p r o - r a t a p u r c h a s e s i R e n v e s t m e n t l p a n l h e d a t t h e i b e g n n n g o f i t h e y e a r i i d v d e n d i R e c e v e d o n e x e r c s e o f i o p t i o n s o f p e r f o r m a n c e s h a r e s i R e c e v e d o n r e e a s e l s a e s l o t h e r ( a ) l h e d a t t h e e n d o f t h e y e a r diReCtoRs AG Rydge (Chairman) 2010 2009 57,979,154 57,704,154 50,000 11,789,923 – 275,000 1,783,278 – AJ Clark kg chapman (b) pr coates (c) tc ford (d) RM Graham RG Newton 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 50,000 40,000 5,000 10,000 10,000 – – – – – – – 12,737 – 10,000 10,000 10,626 10,626 20,000 3,000 – – – – 43,000 17,000 – – 3,763 – – – 2,126 – 8,000 – – – – – – – – – – – – – – – – – – – – – – – – – – – DC Seargeant 2010 (Managing Director) 2009 720,500 470,500 exeCutives NC Arundel pc bourke (e) GC Dean MR Duff HR Ebertstaller PW Horton kj kobishop (f) 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 – – – – 75,500 45,500 30,000 30,000 – – 45,000 45,000 – – – – – – – – – – – – – – – – – – 265,125 – 33,865 – – 500,000 8,841 – – – 26,325 – 20,806 – 3,584 – 18,697 – 20,000 – – – – – – – – – 979 – – 30,000 – – – – – – 3,065 – – – – – – 45,000 – – – – – – – – – – – – – – – – – – 5,972 – – – – – – – – – – – – – – – – – – – – – – – – – (5,000) – – (250,000) – – – – – – – – – – – (45,000) – – – 71,602,355 – 57,979,154 – – 54,000 – 11,500 – (10,000) – – – – – – – – – – – – – – – – – – – – – 65,000 50,000 54,000 – 28,000 – – 10,000 12,752 10,626 66,000 20,000 1,019,490 720,500 14,813 – – – 102,804 75,500 50,806 30,000 3,584 – 63,697 45,000 23,065 – this movement represents the balance of ordinary shares held at the relevant date, being the date of commencement with the group or termination from the group. (a) (b) kg chapman was appointed on 18 february 2010. pr coates was appointed on 10 july 2009. (c) tc ford resigned 23 october 2009. (d) pc bourke commenced employment with the group on 19 april 2010. (e) kj kobishop commenced employment with the group on 15 September 2008. (f) no shares were granted to key management personnel during the financial reporting period as compensation in the year to 30 june 2010. 88 Amalgamated Holdings Limited Annual Report 2010 note 38 – DireCtor AnD exeCutive DiSCLoSureS (ContinueD) loAns And otheR tRAnsACtions with key mAnAgement peRsonnel And theiR RelAted pARties loAns to key mAnAgement peRsonnel And theiR RelAted pARties there were no loans above $10,000 outstanding at any time during the year with any key management personnel or their related parties. otheR tRAnsACtions with the CompAny oR its ContRolled entities ag rydge and aj clark are directors of carlton investments limited. carlton investments limited rents office space from a controlled entity. rent is charged to carlton investments limited at a market rate. rent received during the year was $33,462 (2009: $33,020). the company holds shares in carlton investments limited. dividends received during the year from carlton investments limited totalled $427,524 (2009: $427,524). ag rydge paid rent, levies and other costs to group entities during the year amounting to $78,834 (2009: $19,011). a company associated with rm graham paid rent and levies to a controlled entity during the year amounting to $5,564 (2009: $5,432). rent is charged to ag rydge and rm graham at market rates. during the year, a controlled entity purchased land and buildings from a vendor company associated with rg newton. the purchase was concluded in September 2009 and the consideration was $2,000,000. during the prior financial year to 30 june 2009, a company associated with rg newton paid hotel management fees to a controlled entity amounting to $178,563 and a controlled entity purchased management rights and an interest in the property known as rydges Sabaya resort from a vendor company associated with rg newton. the purchase was concluded in june 2009 for a consideration of $20,550,000. apart from the details disclosed in this note, no key management person has entered into a material contract with the group since the end of the previous year and there were no material contracts involving directors’ interests existing at reporting date. from time to time, key management personnel of the group, or their related parties, may purchase goods or services from the group. these purchases are usually on the same terms and conditions as those granted to other group employees. where the purchases are on terms and conditions more favourable than those granted to other group employees, the resulting benefits form part of the total remuneration outlined within the remuneration report. note 39 – reLAteD pArtieS AssoCiAtes interest received and paid on the loans to and from associates is shown in notes 3 and 4. other transactions were: • sale of management services to former associate Atlab Holdings Pty Limited of nil (2009: $250,000); • receipt of property rentals from associates of $41,000 (2009: $97,000); and • share-based payment costs of nil (2009: $166,000) recharged to an associate. RelAtionships with Jointly ContRolled entities refer to notes 11, 16, 32, 34 and 37. key mAnAgement peRsonnel disclosures relating to directors and named executives are set out in note 38. Amalgamated Holdings Limited notes to the Financial statements 89 notes to the financial Statements continued note 40 – reConCiLiAtion of CASH fLowS from operAtinG ACtivitieS Reconciliation of profit after related income tax expense to net cash provided by operating activities profit after income tax expense adjustments for: depreciation and carrying value adjustments amortisation and carrying value adjustments loss on sale of non-current assets Development gain on revaluation of Canberra Civic property fair value (increment)/decrement of investment properties equity accounted investment distributions Share of equity accounted investees’ net profit asset impairment adjustments Share-based payments expense Receivables impairment adjustment unrealised foreign exchange gains increase/(decrease) in income taxes payable Net cash provided by operating activities before change in assets and liabilities change in assets and liabilities adjusted for effects of consolidation of controlled entities acquired/disposed during the year: increase in receivables increase in inventories increase in other assets increase in deferred revenue increase/(decrease) in deferred tax items increase in provisions (decrease)/increase in creditors and accruals (decrease)/increase in other liabilities increase in financing costs payable 2010 $’000 2009 $’000 98,772 69,477 22,231 11,416 1,047 (10,163) (275) 45,357 (48,515) 10,339 1,494 (1,291) (105) 3,567 133,874 (7,749) (4,480) (702) 10,406 6,244 1,487 (1,320) (1,265) 91 21,331 9,301 366 – 1,030 43,744 (42,189) 5,811 1,258 – (89) (13,446) 96,594 (4,783) (1,738) (2,585) 4,631 (6,718) 759 8,343 7,252 236 Net cash provided by operating activities 136,586 101,991 note 41 – eventS SuBSequent to reportinG DAte dividends for final dividends declared after 30 june 2010, refer note 8. puRChAse oF moonlight CinemA on 28 july 2010, the group announced the acquisition of the moonlight cinema business for a purchase price of $1,750,000. moonlight cinema is an outdoor cinema operation with five sites screening films in melbourne, Sydney, perth, brisbane and adelaide during the three month summer season. 90 Amalgamated Holdings Limited Annual Report 2010 Directors’ Declaration 1. in the opinion of the directors: (a) the consolidated financial statements and notes, set out on pages 29 to 90, and the remuneration disclosures that are contained in the remuneration report in the directors’ report set out on pages 20 to 27, are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the group’s financial position as at 30 june 2010 and its performance for the financial year ended on that date; and (ii) complying with australian accounting Standards (including the australian accounting interpretations) and the corporations regulations 2001; and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. 2. there are reasonable grounds to believe that the company and the group subsidiaries identified in note 33 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the deed of cross guarantee between the company and those subsidiaries pursuant to aSic class order 98/1418. 3. the directors have received the declarations from the chief executive officer and the chief financial officer required by section 295a of the Corporations Act 2001 for the year ended 30 june 2010. 4. the directors draw attention to note 1(a) to the financial report, which includes a statement of compliance with international financial reporting Standards. Signed in accordance with a resolution of the directors: AG Rydge director DC Seargeant director dated at Sydney this 19th day of august 2010. Amalgamated Holdings Limited directors’ declaration 91 independent Auditor’s report to the membeRs oF AmAlgAmAted holdings limited report on tHe finAnCiAL report we have audited the accompanying financial report of the group comprising amalgamated holdings limited (the company) and the entities it controlled at the year’s end or from time to time during the financial year, which comprises the statement of financial position as at 30 june 2010, and income statement and statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies and other explanatory notes 1 to 41 and the directors’ declaration. diReCtoRs’ Responsibility FoR the FinAnCiAl RepoRt the directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with australian accounting Standards (including the australian accounting interpretations) and the Corporations Act 2001. this responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. in note 1, the directors also state, in accordance with australian accounting Standard aaSb 101 presentation of financial Statements, that the financial report, comprising the financial statements and notes, complies with international financial reporting Standards. AuditoR’s Responsibility our responsibility is to express an opinion on the financial report based on our audit. we conducted our audit in accordance with australian auditing Standards. these auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. the procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. in making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. an audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. we performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and australian accounting Standards (including the australian accounting interpretations), a view which is consistent with our understanding of the group’s financial position and of its performance. we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. independenCe in conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. AuditoR’s opinion in our opinion: (a) the 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 30 june 2010 and of its performance for the year ended on that date; and (ii) complying with australian accounting Standards (including the australian accounting interpretations) and the corporations regulations 2001. (b) the financial report also complies with international financial reporting Standards as disclosed in note 1. 92 Amalgamated Holdings Limited Annual Report 2010 independent Auditor’s report to the membeRs oF AmAlgAmAted holdings limited report on tHe remunerAtion report we have audited the remuneration report included in pages 20 to 27 of the directors’ report for the year ended 30 june 2010. 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 auditing standards. AuditoR’s opinion in our opinion, the remuneration report of amalgamated holdings limited for the year ended 30 june 2010, complies with Section 300a of the Corporations Act 2001. KPMG David Rogers partner 19 august 2010 Amalgamated Holdings Limited independent Auditor’s Report 93 Shareholder information additional information required by the aSx listing rules and not disclosed elsewhere in the annual report is set out below: SHAreHoLDinGS (AS At 20 AuGuSt 2010) substAntiAl shAReholdeRs the names of substantial shareholders who have notified the company in accordance with section 671b of the corporations act 2001 are: Shareholder enbeear pty limited carlton investments limited investors mutual limited ioof holdings limited * includes carlton investments limited holding. Number of ordinary shares held 56,598,377 * 56,588,377 14,396,349 17,843,425 voting Rights oRdinARy shARes there were 5,669 holders of ordinary shares of the company. the voting rights attaching to the ordinary shares, set out in clause 54 of the company’s constitution, are: “Subject to any rights or restrictions for the time being attached to any class or classes of shares: (a) at meetings of members or classes of members, each member entitled to vote may vote in person or by proxy or attorney; and (b) on a show of hands, every person present who is a member or a representative of a member has one vote, and on a poll, every member present in person or by proxy or attorney and every person who is a representative of a member has one vote for each share he holds or represents as the case may be.” options there were no outstanding options of the company as at 20 august 2010. distRibution oF shAReholdeRs 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Ordinary shares number of shareholders number of shares held 2,812 1,742 511 555 49 1,090,297 4,413,286 3,596,183 13,488,362 136,608,771 5,669 159,196,899 the number of shareholders holding less than a marketable parcel is 86. unQuoted oRdinARy shARes there were 1,930,878 unquoted ordinary shares issued pursuant to the employee share plans. the shares were held by 615 holders. the unquoted ordinary shares have been included within the distribution of shareholders table above. 94 Amalgamated Holdings Limited Annual Report 2010 Shareholder information continued twenty lARgest shAReholdeRs the names of the 20 largest shareholders of the quoted shares are: enbeear pty limited eneber investment company limited national nominees limited rbc dexia investor Services australia nominees pty limited (bkcust account) j p morgan nominees australia limited hSbc custody nominees (australia) limited the manly hotels pty limited alphoeb pty limited rbc dexia investor Services australia nominees pty limited (pipooled account) carlton hotel limited citicorp nominees pty limited mr alan graham rydge cogent nominees pty limited citicorp nominees pty limited (cfSil cwlth aust ShS 18 account) t n phillips investments pty ltd Sandhurst trustees ltd (SiSf account) australian united investment company limited citicorp nominees pty limited (cfSil cwlth aust ShS 14 account) argo investments limited rbc dexia investor Services australia nominees pty limited on-mARket buy bACk there is no current on-market buy back. Number of shares held Percentage of capital held 32,134,031 19,777,772 15,891,812 11,199,863 6,003,637 5,851,326 5,732,812 5,627,315 5,277,122 5,276,103 3,113,129 3,037,915 2,347,058 1,698,434 1,446,000 1,263,433 1,200,000 1,020,267 976,723 904,855 129,779,607 20.19 12.42 9.98 7.04 3.77 3.68 3.60 3.53 3.31 3.31 1.96 1.91 1.47 1.07 0.91 0.79 0.75 0.64 0.61 0.57 81.51 seCuRities exChAnge amalgamated holdings limited, incorporated and domiciled in australia, is a publicly listed company limited by shares. Shares are listed on the aSx under the code ahd. details of trading activity are published in most australian daily newspapers. Amalgamated Holdings Limited shareholder information 95 other information AnnuAl geneRAl meeting the annual general meeting will be held at 10am on friday 22 october 2010 at the State ballroom, State theatre, 49 market Street, Sydney nSw 2000. CompAny seCRetARy mr greg dean ca, aciS RegisteRed oFFiCe the registered office of the company is: level 10 49 market Street Sydney nSw 2000 telephone +61 2 9373 6600 facsimile +61 2 9373 6534 www.ahl.com.au shARe RegistRy computershare investor Services pty limited level 4, 60 carrington Street Sydney nSw 2000 gpo box 7045 Sydney nSw 2001 telephone 1300 855 080 facsimile +61 3 9415 4000 www.computershare.com for more information on amalgamated holdings limited please refer to our website at www.ahl.com.au 96 Amalgamated Holdings Limited Annual Report 2010 r o t s e v n I e t a n g i s e D y b d e c u d o r p d n a d e n g i s e D 2010 Amalgamated Holdings Limited Annual Report A H L A n n u A L R e p o R t 2 0 1 0 amalgamated holdings limited abn 51 000 005 103 abn 51 000 005 103