abn 51 000 005 103
A M A L G A M A T E D H O L D I N G S L I M I T E D
A B N 5 1 0 0 0 0 0 5 1 0 3
2 0 1 2 A N N U A L R E P O R T
C O N T E N T S
Section
Corporate Governance Statement
Directors’ Report
Directors’ Report: Remuneration Report
Lead Auditor’s Independence Declaration
Statement of Financial Position
Income Statement
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
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Significant accounting policies
Segment reporting
Revenue and other income
Profit before income tax
Discontinued operations
Auditors’ remuneration
Taxation
Dividends
Earnings per share
Cash, cash equivalents and short term deposits
Trade and other receivables
Inventories
Prepayments and other sundry assets
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
Other non-current assets
Trade and other payables
Loans and borrowings
Financing arrangements
Provisions
Other liabilities
Share capital
Reserves and retained earnings
Parent entity disclosures
Financial risk management
Employee benefits
Commitments and leases
Contingent assets and liabilities
Deed of Cross Guarantee
Business combinations
Particulars in relation to consolidated entities
Investments in associates
Investments in jointly controlled entities
Director and executive disclosures
Related parties
Reconciliation of cash flows from operating activities
Events subsequent to reporting date
Directors’ declaration
Independent auditor’s report
Shareholder information
Other information
1 Amalgamated Holdings Limited – Annual Report 2012
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1. INTRODUCTION
This 2012 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 2012.
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 ensure 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 11 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.
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:
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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;
monitoring and assessing management’s performance in achieving any strategies and budgets approved by the Board;
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.
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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.
2 Amalgamated Holdings Limited – Annual Report 2012
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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 nine 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 have other opportunities, including visits to business operations, for contact with a wider group of
employees.
3.3 Composition of the Board
The composition of the Board is determined using the following principles:
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•
•
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, as well as taking into consideration other attributes including diversity, 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, experience and diversity 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 10.1
of this Statement.
Details of the number of Board meetings and the attendance of the directors have been included in section 10.2 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 director is a
director who is not a member of management (a non-executive director) and who:
•
•
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.
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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 Amalgamated Holdings Limited – Annual Report 2012
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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 non-executive Chairman since 1 January 2002.
As Mr AG Rydge is not considered an independent director due to the substantial shareholding clause, the Board has appointed a lead independent
director.
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. Directors are given access to
continuing education opportunities to update and enhance their skills and knowledge base.
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.
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:
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review and monitor the financial integrity of the Group’s financial reports and statements;
review the adequacy and integrity of the Group’s financial 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.
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The Committee reviews the performance of the external auditor 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 auditor 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 2011.
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 Amalgamated Holdings Limited – Annual Report 2012
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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:
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AJ Clark (Chairman) – independent non-executive director;
PR Coates – independent non-executive director; and
AG Rydge – non-executive director.
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 10.2 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:
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the composition, remuneration and performance evaluation of the Board;
the appointment of the Managing Director;
succession plans for the position of Managing Director; and
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:
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AJ Clark (Chairman) – independent non-executive director;
PR Coates – independent non-executive 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 10.2 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 Board Charter. The Chairman annually assesses the 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.
The Board also has in place an annual process to review its performance as well as the performance of the Board Committees. Each director
completes a performance evaluation questionnaire. The questionnaire covers topics including:
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the Board’s role;
composition and effectiveness;
procedures and practices;
behaviours;
Board administration; and
the conduct of the Chairman.
5 Amalgamated Holdings Limited – Annual Report 2012
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6.1 Board performance and remuneration (continued)
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 May 2012. 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 $1.5 million, which was approved by
shareholders at the 2010 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 $859,000.
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 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 2012. 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 2012.
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:
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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;
physical security over the Group’s assets;
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 2012 was completed in July 2012.
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.
6 Amalgamated Holdings Limited – Annual Report 2012
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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 is founded
on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board. The declarations for
the year ended 30 June 2012 were received in August 2012.
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 Ethics and Business Conduct
The Company has a Code of Ethics and Business Conduct (“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.
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:
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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 Company has a Share Trading Policy Guide. It is the policy of the Company that directors and senior executives can only buy or sell shares in the
Company in the six week period from (and including) the second business day following any price sensitive announcement including the half year and
full year results, and the Annual General Meeting. Trading outside of this period can only be conducted with prior written approval, which will only be
provided in certain exceptional circumstances. 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. The policy is also applicable to all other employees of the Group.
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 policy prohibits employees from using derivatives or entering into transactions that operate, or are intended to operate, to limit the economic risk
of unvested entitlements to shares, including unvested performance shares issued under the Group’s long term incentive scheme.
The Share Trading Policy Guide is available from the Company’s website or upon request from the Company Secretary.
7 Amalgamated Holdings Limited – Annual Report 2012
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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 provides the Chairman, Managing Director, Director Finance & Accounting and Company Secretary
with the responsibility 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 identified and all senior executives must
follow a set process, which involves monitoring all areas of the Group’s internal and external environment.
In addition:
•
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;
details of all meetings with investors and analysts are retained by the Group, including details of what was discussed, the persons present and
the time and location of the meeting;
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.
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The Company considers it has complied with all of its continuous disclosure obligations. 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 system
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. DIVERSITY
9.1 Diversity in the workplace
The Board is committed to an inclusive workplace that embraces and promotes diversity, including indigenous and disability employment, equal
opportunity and women in management. The Board has delegated management of diversity to the Nomination and Remuneration Committee.
The Group’s Diversity Policy formalises the Group’s commitment to diversity and seeks to promote an inclusive culture where people are encouraged
to succeed to the best of their ability. Progress in respect of the measurable objectives for the Group are reviewed on an annual basis by the
Nomination and Remuneration Committee. The Nomination and Remuneration Committee receives reports on the Group’s diversity related initiatives
and facilitates periodic reporting to the Board. The Group has adopted the following initiatives to progress the objectives of its diversity policy:
•
•
reporting on the gender diversity within the AHL Group to the AHL Board; and
aiming to increase (or at least maintain) the percentage of women in Board and senior management positions as vacancies arise, subject to
identification of candidates with appropriate skills.
The Group will report on progress in achieving its objectives on an annual basis.
8 Amalgamated Holdings Limited – Annual Report 2012
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
9.2 Gender representation
The gender representation profile for the Board, senior executives, and all employees of the Group is as follows:
Board
Other key management personnel
Other senior executives
All Group employees
10. DIRECTORS’ QUALIFICATIONS AND ATTENDANCE AT MEETINGS
10.1 Directors’ qualifications, experience and independent status
Gender representation
30 June 2012
30 June 2011
Female
%
14%
17%
27%
48%
Male
%
86%
83%
73%
52%
Female
%
14%
14%
23%
48%
Male
%
86%
86%
77%
52%
Alan Rydge
Age 60. 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 40-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 50. 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-ITM and
executive director of the Chapman group of companies.
Directorships
Mr Chapman held the following positions during the last three years:
•
•
•
•
•
chairman of Far North Queensland Hospital Foundation;
chairman of Far North Queensland Ports Corporation Limited;
chairman of Skyrail Rainforest 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 73. 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);
Ramsay Health Care Limited (appointed 1998); and
Sphere Minerals Limited (appointed 2010).
9 Amalgamated Holdings Limited – Annual Report 2012
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
10.1 Directors’ qualifications, experience and independent status (continued)
Peter Coates AO
Age 66. Independent non-executive director, Board member since 2009, Audit Committee member and Nomination and Remuneration Committee
member.
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.
Directorships
Directorships of other listed companies, held during the last three years, include:
•
•
•
•
Mr Coates was past chairman of the Minerals Council of Australia, the NSW Minerals Council and the Australian Coal Association.
Downer EDI Limited (appointed 2008 and resigned 2009);
Minara Resources Limited (appointed director and chairman 2008 and resigned 2011);
Santos Limited (appointed director 2008 and chairman 2009); and
Glencore International PLC (appointed 14 April 2011).
Valerie Davies, FAICD
Age 61. Independent non-executive director and Board member appointed 20 April 2011.
Experience
A company director with 20-plus years senior executive experience within the corporate communications area. Currently, managing director and
principal of One.2.One Communications Pty Limited, a consultancy firm that specialises in strategic communication and issues management.
Directorships
Ms Davies is a director of HBF Health Limited and The Youth Focus Foundation Pty Limited and has previously served on the boards of Iluka
Resources Limited and Tourism Australia.
Richard Newton BBus (Marketing), FAICD
Age 52. 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 last three years:
•
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 62. 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 the 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); 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;; and MB BS Bachelor of Medicine and
Bachelor of Surgery.
10 Amalgamated Holdings Limited – Annual Report 2012
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
10.2 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
Entitled
to attend
Attended
9
9
9
9
9
9
9
9
9
9
9
9
8
9
Entitled
to attend
4
–
4
4
–
–
4
Attended
4
–
4
3
–
–
4
Nomination and
Remuneration Committee
meetings
Entitled
to attend
5
Attended
5
–
5
5
–
–
5
–
5
4
–
–
3
AG Rydge
KG Chapman
AJ Clark
PR Coates
VA Davies
RG Newton
DC Seargeant (a)
(a)
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.
11. RECOMMENDATIONS
The following table outlines the compliance, or otherwise, with the ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations:
Recommendation 1.1
Recommendation 1.2
Recommendation 1.3
Companies should establish the functions reserved to the board and those
delegated to senior executives and disclose those functions.
Paragraph
Reference
3.1
Companies should disclose the process for evaluating the performance of
senior executives.
6.2
Companies should provide the information indicated in the Guide to
reporting on Principle 1.
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.
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.
11 Amalgamated Holdings Limited – Annual Report 2012
–
6.2
3.1
3.3, 10.1
3.5, 10.1
3.3
3.2
6.1
Comply
Yes
Yes
Not applicable
Yes
Yes
Yes
No
Yes
Yes
Yes
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
11. RECOMMENDATIONS (continued)
Paragraph
Reference
Comply
Recommendation 2.6
Companies should provide the information indicated in the Guide to
reporting on Principle 2.
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;
a statement as to whether there is a procedure agreed by the board
for directors to take independent professional advice at the expense
of the company;
a statement as to the mix of skills and diversity for which the board of
directors is looking to achieve in membership of the board;
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;
whether a performance evaluation for the board, its committees and
directors has 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
that
committee; and
the board’s policy for the nomination and appointment of directors.
•
•
for
Companies should establish a code of conduct and disclose the code or a
summary of the code as to:
•
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.
•
•
3.3, 10.1
3.4, 10.1
3.4
3.8
3.3
10.1
5.2, 10.2
6.1
3.3, 3.4, 3.5
3.3
5.1, 5.2
3.3
7.4, 7.5
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Companies should establish a policy concerning diversity and disclose the
policy or a summary of that policy. The policy should include requirements
for the board to establish measurable objectives for achieving gender
diversity for the board to assess annually both the objectives and progress
in achieving them.
Companies should disclose in each annual report the measurable
objectives for achieving gender diversity set by the board in accordance
with the diversity policy and progress towards achieving them.
Companies should disclose in each annual report the proportion of women
employees in the whole organisation, women in senior executive positions
and women on the board.
9.1, 9.2
Yes
9.1, 9.2
Yes
9.1, 9.2
Yes
Recommendation 3.1
Recommendation 3.2
Recommendation 3.3
Recommendation 3.4
12 Amalgamated Holdings Limited – Annual Report 2012
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
11. RECOMMENDATIONS (continued)
Recommendation 3.5
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, 3.3, 3.4
or 3.5 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 diversity policy or a summary of its main provisions.
Recommendation 4.1
The board should establish an audit committee.
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;
•
is chaired by an independent chair, who is not chair of the board; and
•
has at least three members.
Paragraph
Reference
Comply
–
Not applicable
7.4
9.1, 9.2
3.2, 4.1, 4.2
4.2
Yes
Yes
Yes
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.
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 5.1
Recommendation 5.2
Companies should provide the information indicated in the Guide to
reporting on Principle 5.
4.2, 10.1, 10.2
Yes
4.2, 10.2
–
Yes
Not applicable
4.1
4.1
8.1
Yes
Yes
Yes
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.
–
Not applicable
8.1
Yes
13 Amalgamated Holdings Limited – Annual Report 2012
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
11. RECOMMENDATIONS (continued)
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.
Recommendation 6.2
Companies should provide the information indicated in the Guide to
reporting on Principle 6.
Paragraph
Reference
8.1, 8.2
Comply
Yes
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.
–
Not applicable
Recommendation 7.1
Recommendation 7.2
Recommendation 7.3
The company should describe how
its
shareholders publicly, ideally by posting this information on the company’s
website in a clearly marked corporate governance section.
it will communicate with
8.1, 8.2
Companies should establish policies for the oversight and management of
material business risks and disclose a summary of those policies.
7.1
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.
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.
Yes
Yes
Yes
3.1, 4.1, 7.1,
7.2, 7.3
7.2
Yes
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.
•
•
–
7.1
7.2
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.
7.1
Recommendation 8.1
The board should establish a remuneration committee.
Recommendation 8.2
The remuneration committee should be structured so that it:
•
consists of a majority of independent directors;
•
is chaired by an independent chair; and
•
has at least three members.
3.2, 5.1, 5.2
5.2
Not applicable
Yes
Yes
Yes
Yes
Yes
Recommendation 8.3
Companies should clearly distinguish the structure of non-executive
directors’ remuneration from that of executive directors and senior
executives.
6.1, 6.2
Yes
14 Amalgamated Holdings Limited – Annual Report 2012
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
11. RECOMMENDATIONS (continued)
Paragraph
Reference
Comply
Recommendation 8.4
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
an explanation of any departures from Recommendations 8.1, 8.2,
8.3 or 8.4.
•
•
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 charter of the remuneration committee or a summary of the role,
rights, responsibilities and membership requirements
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.
for
•
5.2, 10.1, 10.2
Yes
3.9, 6.1
Yes
–
Not applicable
5.1, 5.2
7.7
Yes
Yes
15 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
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 2012 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
Mr AJ Clark (lead independent director)
Director since 1998
Mr KG Chapman
Director since 2010
Mr PR Coates
Director since 2009
Ms VA Davies
Appointed 20 April 2011
Mr RG Newton
Director since 2008
Mr DC Seargeant (Managing Director)
Director since 2001 and Managing Director since 2002
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 within 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 within the Annual Report.
COMPANY SECRETARIES
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.
Mr DI Stone BA ACA was appointed to the position of Company Secretary for Amalgamated Holdings Limited on 23 February 2012. Prior to this
appointment, DI Stone was an audit senior manager at KPMG. DI Stone is a member of the Institute of Chartered Accountants in England and Wales and
is undertaking Chartered Secretaries Australia’s Graduate Diploma in Applied Corporate Governance.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the course of the year were:
•
•
•
•
•
•
•
•
•
•
motion picture exhibition;
operation of hotels, resorts, bars 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.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the year.
16 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
OPERATING AND FINANCIAL REVIEW
Overview of the Group
Net profit after tax from continuing operations was $79,742,000 (2011: $77,549,000), an increase of $2,193,000 or 2.8% above the prior year result. The
normalised result before individually significant items and income tax expense was $106,564,000 (2011: $102,305,000), an increase of $4,259,000 or
4.2% above the prior year result. Net profit for the year was $79,742,000 (2011: $139,831,000), a decrease of $60,089,000 or 43.0% below the prior year
result, however the prior year included profit of $60,318,000 on the sale of the Group’s 49% interest in the cinema business located in the United Arab
Emirates.
The individually significant items for the year included an income item of $18,799,000 relating to interest and Value Added Tax (“VAT”) refunds in respect
of overpaid VAT dating back to 2005 and $1,966,000 profit relating to the finalised Bass Hill Drive-In development. These two items have been mostly
offset by impairment charges of $17,500,000 relating to four hotels.
A summary of the normalised result is outlined below:
2012
2011
Normalised
result *
$’000
Discontinued
operations
$’000
Reconciliation
to reported
net profit
$’000
Normalised
result *
$’000
Discontinued
operations
$’000
Reconciliation
to reported
net profit
$’000
Entertainment
Australia
New Zealand
Germany
United Arab Emirates
Hospitality & Leisure
Hotels
Thredbo Alpine Resort
Leisure and Attractions
Entertainment Technology
Technology
Property and Other Investments
Available-for-sale investments
Property
Unallocated revenues and expenses
Finance revenue
Finance costs
Income tax expense ^
Individually significant items – net of tax
Profit for the year
53,930
3,281
18,574
–
26,565
10,701
3,794
915
509
3,186
(14,470)
106,985
2,450
(2,871)
106,564
(30,043)
76,521
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
53,930
3,281
18,574
–
26,565
10,701
3,794
46,553
2,279
15,627
–
28,221
15,168
2,842
915
892
509
3,186
(14,470)
106,985
2,450
(2,871)
106,564
(30,043)
446
5,060
(14,952)
102,136
4,393
(4,224)
102,305
(30,252)
76,521
72,053
3,221
79,742
–
–
–
1,964
–
–
–
–
–
–
–
1,964
–
–
1,964
–
1,964
46,553
2,279
15,627
1,964
28,221
15,168
2,842
892
446
5,060
(14,952)
104,100
4,393
(4,224)
104,269
(30,252)
74,017
65,814
139,831
* Normalised result is profit for the year before individually significant items (as outlined in Note 4(b) to the financial statements and in the table below) and discontinued operations. As
outlined in Note 2 to the financial statements, this measure is used by the Board of Directors to allocate resources and in assessing the relative performance of the Group’s
continuing operations. The normalised result is an unaudited non-IFRS measure.
^ There was no income tax applicable to discontinued operations.
An analysis of the last five years is outlined below:
Total revenue and other income ($’000)
Basic earnings per share (cents)
Dividends declared * ($’000)
Dividends per share (cents)
Special dividend per share (cents)
2012
2011
2010
2009
2008
797,854
50.6
62,618
39
–
784,949
88.7
65,518
37
4
812,840
66.4
58,522
37
–
712,311
48.2
41,727
32
–
619,028
77.3
38,738
30
–
* Includes the interim dividend paid and the final dividend declared in relation to the financial year ended 30 June 2012.
17 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
Overview of the Group (continued)
Individually significant items included the following:
VAT and interest receivable relating to overpaid tax
Profit on the sale of developed residential land lots from the Bass Hill Drive-in development land bank
Impairment write-downs of land, buildings and associated plant and equipment relating to certain hotel properties
Profit on sale of interest in United Arab Emirates cinema exhibition operations – MAF Greater Union LLC
Development gain on valuation and reclassification to an investment property of the redeveloped Canberra Civic
property
Total individually significant items before income tax expense
Income tax expense relating to individually significant items
Total individually significant items after income tax expense
2012
$’000
18,799
1,966
(17,500)
–
–
3,265
(44)
3,221
2011
$’000
–
5,600
–
60,318
2,251
68,169
(2,355)
65,814
Investments
The Group acquired property, plant and equipment totalling $118,831,000 during the year. The acquisitions were primarily attributable to the
redevelopment of the Gowings and State Theatre buildings, general routine capital expenditure, the refurbishment 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.
Capital structure
Cash and term deposits at 30 June 2012 totalled $63,309,000 and total debt outstanding was $46,981,000.
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 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. At 30 June 2012, the
Group had no interest rate hedges (2011: 17% of debt hedged) due to the low level of Group debt.
Liquidity and funding
The Group’s secured bank debt facilities comprise the following:
•
•
•
The above facilities were negotiated and finalised during the year. The facilities mature on 10 July 2015 and are supported by interlocking guarantees
from most Group entities and are secured by specific property mortgages (refer Note 17).
A$350,000,000 revolving multi-currency loan facility;
A$30,000,000 credit support facility (for the issue of letters of credit and bank guarantees); and
A$50,000 overdraft facility supports transactional banking facilities.
Cash flows from operations
Operating net cash inflows marginally decreased to $138,285,000 from $139,727,000 in the prior year to 30 June 2011. The lower trading cash flows
were primarily due to the hotel segment and Thredbo.
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.
18 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
REVIEW OF OPERATIONS BY DIVISION
ENTERTAINMENT
Cinema Exhibition – Australia
As at 30 June
Cinema locations *
Cinema screens *
2012
55
479
2011
55
479
Movement
–
–
* Managed and joint venture cinema sites (excludes Moonlight Cinema sites and screens).
The normalised profit before interest and income tax expense was $53,930,000, an increase of $7,377,000 or 15.8% on the prior year result.
The Australian cinema circuit experienced stronger trading conditions, achieving a 2.5% increase in Box Office. This increase was primarily due to an
improved second half, which was up on the prior comparable half year period by 6.2%. The full year result included standout results from The Avengers
and Harry Potter and the Deathly Hallows: Part 2, with both achieving in excess of $50 million at the Australian Box Office. Other major contributors
included Transformers 3: Dark of the Moon, The Hunger Games and The Twilight Saga: Breaking Dawn – Part 1, each achieving in excess of $25
million at the Box Office.
The Group has continued to expand its digital footprint with an additional 159 digital projectors installed, taking the total number of digital projectors to
441 representing some 92% of the total Australian circuit.
Merchandising revenue continued to grow with a 3.9% 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 and the ongoing success of the Gold Class cinema experience.
The Group continued to expand its successful big screen, big seat Vmax concept, with an additional two traditional auditoriums converted to the Vmax
concept at Tuggerah on the NSW Central Coast and at Indooroopilly in Brisbane. There are now a total of 28 Vmax screens across the Australian
circuit.
The Group increased the range of mobile channels available to book tickets and view session times, with new mobile and android apps launched during
the year.
The contribution from the Group’s 50% interest in the Village managed circuit in Victoria increased by 27.4% over the prior comparable year. The
increase was similarly due to the improved film line-up particularly, over the second half of the year.
Cinema Exhibition – New Zealand
As at 30 June
Cinema locations *
Cinema screens *
* Managed and joint venture cinema sites.
2012
17
124
2011
18
129
Movement
(1)
(5)
The normalised profit before interest and income tax expense was $3,281,000, an increase of $1,002,000 or 44.0% on the prior year result.
The New Zealand business, which also includes the Fiji Cinema Joint Venture (66.67% share in two cinemas), experienced a marginal increase in Box
Office. Box Office was impacted by the Group’s decision to close the seven-screen cinema complex at Centre Place in Hamilton in January 2012. On a
same screen basis, Box Office increased by 1.3% over the prior year.
The Box Office result for the year was predominately driven by the strong performances of The Avengers and Harry Potter and the Deathly Hallows:
Part 2 which grossed NZ$8.4 million and NZ$7.9 million respectively at the New Zealand Box Office. These titles were supported by The Hunger
Games, Transformers 3: Dark of the Moon, Adventures of Tintin: The Secret of the Unicorn, and The Best Exotic Marigold Hotel, all of which grossed in
excess of NZ$5 million.
During the year, merchandising revenue spend per admission increased by 6.9%. This growth was driven by a continued focussed approach on staff
awareness and competitions. The addition of variety into the candy bar range helped to drive incremental spend, along with a number of successful
Candy Bar Combo promotions.
The Group added two additional screens in the historic Embassy Theatre in Wellington. The cinemas, both with 70 seats, have access to an exclusive
platinum lounge.
19 Amalgamated Holdings Limited – Annual Report 2012
Cinema Exhibition – Germany
As at 30 June
Cinema locations *
Cinema screens *
* Managed and joint venture cinema sites.
D I R E C T O R S ’ R E P O R T
2012
59
441
2011
60
455
Movement
(1)
(14)
The normalised profit before interest and income tax expense was $18,574,000, an increase of $2,947,000 or 18.9% on the prior year result.
After a strong first half of the year, the second half of 2012 suffered from a lack of compelling film product and the negative impact of the European
Championships in June 2012. Nonetheless, Germany wide admissions were 127.5 million, an increase of 3.0 million over the prior year.
Box Office for the German circuit increased 3% over prior year with admissions flat but average admission price showing an increase of 3.2%. This
increase in average admission price was partly due to the surcharge on increased 3D admissions.
The top performing films at the German Box Office for the financial year were Harry Potter and the Deathly Hallows: Part 2, Puss in Boots, Transformers
3: Dark of the Moon, The Twilight Saga: Breaking Dawn – Part 1, The Avengers and, in the absence of any breakout German production, the French hit
film The Intouchables. A number of German films did however break 1 million admissions, such as Turkish for Beginners, What a Man and
Maennerherzen. German film share grew to 16.4% of Box Office compared with 10.6% in the prior year. Live broadcasts of The Metropolitan Opera and
other alternative content continued to grow in popularity.
Merchandising spend per admission increased by 6.7% over the prior year.
During the year there was an increased level of capital expenditure, arising from the rollout of digital projection systems in line with a virtual print fee
agreement with Arts Alliance Media. The German circuit currently has 220 digital screens at 55 sites.
The strengthening of the Australian dollar against the Euro continued to have a negative impact on the result when translated to Australian dollars. The
average month end A$/Euro exchange rate for the financial year to 30 June 2012 was 76.9 cents against 72.7 cents for the prior financial year.
As noted in the 2011 Annual Report, German controlled and joint venture entities have had a long running dispute with local tax authorities over the level
of VAT paid on a number of food products sold. A contingent asset was disclosed at 30 June 2011 relating to the disputed VAT and the potential interest
receivable thereon. The contingent asset has now been recognised as income in the reporting period and has been disclosed as an individually significant
item. The total VAT and interest receivable booked as income during the year totals $18,799,000.
HOSPITALITY AND LEISURE
Hotels and Resorts
As at 30 June
Locations *
Rooms *
* Owned and managed hotels.
2012
44
8,139
2011
45
8,189
Movement
(1)
(50)
The normalised profit before interest and income tax expense was $26,565,000, a decrease $1,656,000 or 5.9% on the prior year result.
Rydges
Occupancy in the Group’s like for like owned and managed hotels declined 0.8 percentage points to 68.1%. This was offset by an increase in average
rate of almost 6% to $143. With a cyclical upswing in hotel average rates underway in several key destinations, the Group moved to maximise the
opportunity by completing refurbishments of Rydges Lakeside and Rydges North Sydney. After accounting for the short term disruption of these
refurbishments, the Group’s occupancy held steady with the prior year’s result. Refurbishments have also been commenced in Gladstone and Townsville.
Individual hotel performance continued to be strongest in locations benefiting from mining related corporate travel, such as Gladstone, Perth, Darwin and
Kalgoorlie. The wider corporate market also performed well in most Australian mainland capital cities and major regional centres, albeit with some
softening in demand emerging in the fourth quarter. The corporate segments experienced some growth in demand enabling further growth in average
room rate but demand did soften in the fourth quarter.
Despite concerns with negative consumer sentiment, the domestic leisure market held up well. However, this segment remains price and time sensitive,
with the trend towards short city breaks and minimal upward movement in average rates evident throughout the year.
The year saw some signs of a recovery in the conference segment, however demand remains patchy. This factor, combined with lingering issues
impacting inbound arrivals resulted in a challenging year in regional leisure and conference destinations in Australia and New Zealand.
20 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
In a further effort to increase market share and profitability, the Group’s Sales, Marketing and Revenue departments were reoriented during the year to
have an increased focus on the corporate and conference segments, being the Group’s two highest yielding segments
Encouraging results were produced from the Group’s focus on the food and beverage department, with food and beverage revenues from owned hotels
increasing by 7.5%. New bar concepts, in both owned and managed hotels, such as those in place in Canberra, Cronulla, Cairns and Port Macquarie are
impacting favourably.
The re-launch of the hotel loyalty program as Priority Guest Rewards coincided with major upgrades of the Group’s branded websites. These assets
produced almost 350,000 room nights and some $55,000,000 in revenue to owned and managed hotels during the year.
In addition to the aforementioned renovation and rebranding activity, the Group stepped up the roll out of the Rise breakfast concept. Together with the
Rydges Dream Beds, this concept is proving to be a competitive advantage receiving positive guest reaction, particularly on various social networks such
as Trip Advisor. The Group also commenced a major upgrade of the Wi-Fi and Broadband internet services on offer to conference and in house guests.
QT Hotels
Redevelopment of the QT Gold Coast was completed at the end of December 2011 and was launched into the strong Gold Coast Christmas holiday
period. Outside this peak period however, visitor demand to the Gold Coast remains soft. Room rate is however strong and the Hotels restaurants and
bars continued to trade very successfully. Late in the final quarter, QT Port Douglas was also launched following a $5.5 million refurbishment.
The much anticipated QT Sydney, located within the historic Gowings and State Theatre buildings, is scheduled to open in mid-September 2012.
Thredbo Alpine Resort
The normalised profit before interest and income tax expense was $10,701,000, a decrease of $4,467,000 or 29.4% on the prior year result.
Despite a strong start with heavy early snowfall the 2011 season ended up being very disappointing with virtually no significant snowfalls occurring over
the peak August period and with conditions rarely suited for snowmaking. Overall skier numbers were almost 7% down on the 2010 season and this was
the major factor in the 29.4% decline in earnings.
The 2012 season began well with early snow and with a reinvigorated offering of family and social events over the opening weekend. The resort was
freshened up for the season with new branding identification, signage and the repainting of Valley Terminal and several other major buildings.
Non-winter visitation was encouraging with January experiencing a 15% lift in revenue over that of the prior year.
Leisure and Attractions
The normalised profit before interest and income tax expense was $3,794,000, an increase of $952,000 or 33.5% on the prior year result.
Featherdale achieved a strong result, with profit before interest and tax increasing by approximately 80% on the prior year. The domestic market segment
performed well, and the inbound tourist segment was stable following declines in previous years. The State Theatre also produced a strong result, with
profit before interest and tax increasing 15% on the prior year. The improvement was due to better overall attendance across all shows.
ENTERTAINMENT TECHNOLOGY
The normalised profit before interest and income tax expense was $915,000, an increase of $23,000 or 2.6% on the prior year result.
STRATEGIC INVESTMENTS
Property
The normalised profit before interest and income tax expense was $3,186,000, representing a decrease of $1,874,000 or 37% on the prior year result.
The result included a fair value decrement of the investment properties of $71,000, compared to a fair value increment in the prior year of $438,000. The
result was also impacted by the vacancy at the Forum building in Brisbane following the financial collapse of Border Books.
All remaining lots at the residential subdivision of the Bass Hill Drive-in site were sold during the year, with a profit of $1,966,000 booked as an
individually significant item in relation to those sales. The total accounting profit over the life of the Bass Hill project was $15,848,000.
21 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
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 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:
•
•
•
continued refurbishment of existing cinemas and expansion of the number of cinemas with the Event Cinema 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 and German 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 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:
•
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;
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 Priority Guest Rewards program and the sales
and revenue structure are important support functions for the online strategy.
QT Hotels and Resorts
•
The Group has recognised a market opportunity in the 4.5 star design hotel segment. This segment presents far greater opportunities for the level of
average room rate with the level of operating costs not significantly greater than the 4.0 star segment of the Rydges brand.
The segment requires an innovative approach to the operation of the hotel restaurant bar and again these operate at a higher margin level.
The Group will own and operate an initial core of 3 – 4 QT hotels and then seek further expansion largely through managed opportunities.
•
•
22 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
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 – Kosciuszko Thredbo
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 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 knowledge in relation to evolving cinema systems, and in particular digital projection systems.
Maximising returns from existing businesses
The Group is focussing 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 investment
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 2011 dividend
Special 2011 dividend
Interim 2012 dividend
Declared after the end of the year
Final 2012 dividend
Per share
Cents
Total amount
$’000
Date of payment
Tax rate for
franking credit
23
4
14
25
36,755
6,392
22,478
65,625
22 September 2011
22 September 2011
22 March 2012
30%
30%
30%
40,140
20 September 2012
30%
All the dividends paid or declared by the Company since the end of the previous year were 100% franked.
REMUNERATION REPORT
The Remuneration Report, which forms part of the Directors’ Report, is set out on pages 26 to 36 and has been audited as required by section 308(3C) of
the Corporations Act 2001.
23 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
EVENTS SUBSEQUENT TO REPORTING DATE
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
VA Davies
RG Newton
DC Seargeant
Ordinary shares held
directly
3,269,915
30,000
3,000
–
–
–
453,490
Ordinary shares held by
companies in which a director
has a beneficial interest (a)
68,948,033
35,000
54,000
36,500
8,000
66,000
16,000
Options held
directly
–
–
–
–
–
–
–
Performance shares
held directly
–
–
–
–
–
–
945,000
(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.
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, RG Newton, VA Davies 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).
AUDITOR INDEPENDENCE
The lead auditor’s independence declaration is set out on page 37 and forms part of the Directors’ Report for the year ended 30 June 2012.
24 Amalgamated Holdings Limited – Annual Report 2012
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.
D I R E C T O R S ’ R E P O R T
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:
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
Other services
Overseas KPMG firms
Income tax compliance
Indirect tax compliance advice
Other taxation services
2012
$
2011
$
916,130
46,485
371,370
51,113
1,385,098
132,809
92,496
70,032
295,337
131,105
19,137
56,999
207,241
502,578
871,580
50,836
350,338
7,527
1,280,281
128,650
34,555
34,973
198,178
104,487
–
116,280
220,767
418,945
ROUNDING OFF
The Company is of a kind referred to in Class Order 98/100 as issued by Australian Securities and Investments Commission (“ASIC”). In accordance with
that Class Order, amounts in the Directors’ Report and financial 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
Dated at Sydney this 23rd day of August 2012.
DC Seargeant
Director
25 Amalgamated Holdings Limited – Annual Report 2012
REMUNERATION REPORT – AUDITED
This report outlines the remuneration arrangements in place for directors and executives of the Group.
D I R E C T O R S ’ R E P O R T
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 plans:
•
•
Tax Exempt Share Plan; 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 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 22 October 2010 when shareholders approved an aggregate remuneration of $1,500,000 per year. Non-executive
directors do not receive any performance related remuneration nor are they issued 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. Further information regarding the use of remuneration consultants has been detailed on page 30.
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 for the financial year ending 30 June 2013 are $118,000 per annum (Chairman: $295,000 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 $18,000 per annum (Chairman of both the Audit Committee and the
Nomination and Remuneration Committee: $36,000 per annum).
The remuneration of non-executive directors for the year ended 30 June 2012 is detailed on page 32 in this report.
The Company had 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.
There were no benefits paid under the plan during the year ended 30 June 2012. During the year ended 30 June 2011, the Company paid $165,000 to
RM Graham under the plan. Mr Graham resigned as a director on 20 April 2011.
The amount accrued in respect of the Directors’ Retirement Plan at 30 June 2012 is $165,000 (2011: $165,000) in respect of Mr AJ Clark. The maximum
benefit amount has been accrued for the participating director and no further Directors’ Retirement Plan expense accruals will occur in future years.
26 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
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 30.
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.
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.
27 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
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:
Executives
DC Seargeant
NC Arundel
PC Bourke
GC Dean
MR Duff
HR Eberstaller
JM Hastings
PW Horton (b)
Maximum STI calculated on
fixed annual remuneration (a)
Group
earnings
divisional
earnings
special
projects
quantitative
KPIs
qualitative
KPIs
Allocated between:
150.0%
50.0%
40.0%
40.0%
50.0%
50.0%
50.0%
40.0%
60.0%
16.7%
20.0%
20.0%
16.7%
16.7%
16.7%
20.0%
–
16.7%
–
–
–
16.7%
16.7%
–
35.0%
–
4.0%
5.0%
11.1%
–
–
12.3%
–
16.6%
4.0%
2.0%
13.9%
–
16.6%
–
55.0%
–
12.0%
13.0%
8.3%
16.6%
–
7.7%
(a) Fixed annual remuneration is comprised of base salary, superannuation and benefits provided through salary sacrificing arrangements.
(b) PW Horton ceased employment with the Group on 28 October 2011. There are no future STI payments available to Mr Horton.
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.
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.
28 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
Structure (continued)
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 2012 are based on Amalgamated
Holdings Limited’s EPS and TSR growth over the Performance Period of the three years from 30 June 2011 (being the “Base Year”) to 30 June 2014.
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 and bonus issues and any capital reconstructions) measured from the time of issue to the time of vesting.
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:
•
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.
Review of LTI
During the year, the Board received advice from external consultants (refer page 30) regarding certain existing remuneration policies. As a consequence
of the advice received, and in accordance with best practice, the Board has determined that it will review the existing LTI plan, and suitable alternative
plans, during the 30 June 2013 year.
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:
2012
$
2011
$
2010
$
2009
$
2008
$
Net profit before individually significant
items, income tax and non-controlling
interest *
106,564,000
104,269,000
127,255,000
94,144,000
77,738,000
Share price (year end)
6.45
5.80
5.70
4.30
4.87
* Refer to page 17 for a reconciliation to reported profit for the year.
29 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
Employment contracts
It is the Group’s policy that employment contracts for the Managing Director and each senior executive are unlimited in term.
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
Expiry date of contract
DC Seargeant
The notice period is three
months.
NC Arundel
PC Bourke
GC Dean
MR Duff
HR Eberstaller
PW Horton (a)
JM Hastings
The notice period is four
weeks.
The notice period is one
month.
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.
Not applicable, rolling
contracts.
(a) PW Horton ceased employment with the Group on 28 October 2011.
Use of remuneration consultants
In May 2012, the Nomination and Remuneration Committee employed the services of Godfrey Remuneration Group Pty Limited (“GRG”) to review its
existing remuneration policies and to provide recommendations in respect of the remuneration of the executive and non-executive directors. Under the
terms of the engagement, GRG provided remuneration recommendations as defined in section 9B of the Corporations Act 2001 and was paid $16,500 for
these services.
GRG has confirmed that the above recommendations have been made free from undue influence by members of the Group's key management
personnel. The following arrangements were made to ensure that the remuneration recommendations were free from undue influence:
• GRG was engaged by, and reported directly to, the chair of the Nomination and Remuneration Committee. The agreement for the provision of
remuneration consulting services was executed by the chair of the Nomination and Remuneration Committee under delegated authority on
behalf of the Board;
The report containing the remuneration recommendations was provided by GRG directly to the chair of the Nomination and Remuneration
Committee; and
•
• GRG was permitted to speak to management throughout the engagement to understand company processes, practices and other business
issues. However, GRG was not permitted to provide any member of management with a copy of their draft or final report that contained the
remuneration recommendations.
As a consequence, the Board is satisfied that the recommendations were made free from undue influence from any members of the key management
personnel.
Voting and comments made at the 2011 Annual General Meeting
The Company received more than 95% of votes in favour of the Group remuneration report for the 2011 financial year. The Company did not receive any
specific feedback at the Annual General Meeting on its remuneration practices.
30 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
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
Period of responsibility
Employing company
Non-executive directors
Alan Rydge
Chairman and non-executive director
1 July 2011 to 30 June 2012
Amalgamated Holdings Limited
Anthony Clark
Independent non-executive and lead director
1 July 2011 to 30 June 2012
Amalgamated Holdings Limited
Kenneth Chapman
Independent non-executive director
1 July 2011 to 30 June 2012
Amalgamated Holdings Limited
Peter Coates
Independent non-executive director
1 July 2011 to 30 June 2012
Amalgamated Holdings Limited
Richard Newton
Independent non-executive director
1 July 2011 to 30 June 2012
Amalgamated Holdings Limited
Valerie Davies
Independent non-executive director
1 July 2011 to 30 June 2012
Amalgamated Holdings Limited
Executive director
David Seargeant
Managing Director and Chief Executive Officer
1 July 2011 to 30 June 2012
Amalgamated Holdings Limited
Executives
Norman Arundel
Managing Director Rydges Hotels & Resorts
1 July 2011 to 30 June 2012
Rydges Hotels Limited
Peter Bourke
Director of Information Technology
1 July 2011 to 30 June 2012
Amalgamated Holdings Limited
Gregory Dean (a)
Company Secretary, Director Finance &
Accounting
1 July 2011 to 30 June 2012
Amalgamated Holdings Limited
Mathew Duff
Director Commercial
1 July 2011 to 30 June 2012
Amalgamated Holdings Limited
Hans Eberstaller
Managing Director AHL Strategic Investments
1 July 2011 to 30 June 2012
Jane Hastings
General Manager Entertainment – Australia
and New Zealand
1 July 2011 to 30 June 2012
The Greater Union Organisation
Pty Limited
The Greater Union Organisation
Pty Limited
Peter Horton
Director Finance & Accounting
1 July 2011 to 28 October 2011
Amalgamated Holdings Limited
(a) GC Dean has held the position of Director Finance & Accounting with effect from 28 October 2011.
31 Amalgamated Holdings Limited – Annual Report 2012
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D
D I R E C T O R S ’ R E P O R T
Directors’ and executives’ remuneration (continued)
(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.
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. In the previous financial year, an amount of $165,000,
which had been accrued in prior years, was paid to RM Graham on his resignation from the Board. Further information regarding the Directors’
Retirement Plan has been included within the Remuneration Report.
VA Davies was appointed on 20 April 2011.
(d)
(e) RM Graham resigned on 20 April 2011.
(f)
JM Hastings was appointed to the position of General Manager Entertainment – Australia and New Zealand on 16 May 2011. Prior to the current
appointment, Mrs Hastings held the position of General Manager Entertainment – New Zealand and was based in Auckland, New Zealand. The
remuneration details above relate only to her current key management position.
PW Horton ceased employment with the Group on 28 October 2011.
KJ Kobishop ceased employment with the Group on 31 August 2010. Mr Kobishop is a citizen of the United States of America and, whilst employed
by the Group, was a 457 visa holder. Mr Kobishop’s employment arrangements satisfied certain exemption conditions as set out by the Australian
Taxation Office and, as a result, the Group did not have any superannuation obligations in relation to his employment.
(b)
(c)
(g)
(h)
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
Executives
NC Arundel
PC Bourke
GC Dean
MR Duff
HR Eberstaller (c)
JM Hastings
PW Horton (d)
Included in remuneration (a)
$
Awarded in year
%
Not awarded in year (b)
%
1,277,500
88,000
27,083
41,883
121,014
109,703
47,500
57,920
46.7%
40.0%
45.0%
38.1%
58.3%
100.0%
20.0%
45.7%
53.3%
60.0%
55.0%
61.9%
41.7%
–%
80.0%
54.3%
(a)
(b)
(c)
(d)
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 2011 year. No amounts vest in future years in respect of the STI bonus schemes for the
2011 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 $79,445 awarded as an additional bonus payment for exceptional performance.
PW Horton ceased employment with the Group on 28 October 2011.
34 Amalgamated Holdings Limited – Annual Report 2012
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:
D I R E C T O R S ’ R E P O R T
Vested during
the year
%
Forfeited
during the
year (a)
%
Year in which
the grant vests
Performance
share – EPS
$
Performance
share – TSR
$
Fair value
Number
Grant date
Managing
Director
DC Seargeant
Executives
NC Arundel
PC Bourke (b)
GC Dean
MR Duff
255,000
210,000
240,000
140,000
28,539
23,547
18,987
23,491
15,681
9,174
25,089
14,717
11,889
14,791
26,908
22,209
17,947
23,027
23 Feb 2012
23 Feb 2011
28 Jun 2010
23 Feb 2009
23 Feb 2012
23 Feb 2011
28 Jun 2010
23 Feb 2009
23 Feb 2012
23 Feb 2011
23 Feb 2012
23 Feb 2011
28 Jun 2010
23 Feb 2009
23 Feb 2012
23 Feb 2011
28 Jun 2010
23 Feb 2009
HR Eberstaller
11,792
23 Feb 2012
JM Hastings (c)
PW Horton (d)
9,740
7,866
29,793
50,000
19,373
15,822
22,099
23 Feb 2011
28 Jun 2010
23 Feb 2012
16 May 2011
23 Feb 2011
28 Jun 2010
23 Feb 2009
–
–
–
100%
–
–
–
100%
–
–
–
–
–
100%
–
–
–
100%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30 Jun 2015
30 Jun 2014
30 Jun 2013
30 Jun 2012
30 Jun 2015
30 Jun 2014
30 Jun 2013
30 Jun 2012
30 Jun 2015
30 Jun 2014
30 Jun 2015
30 Jun 2014
30 Jun 2013
30 Jun 2012
30 Jun 2015
30 Jun 2014
30 Jun 2013
30 Jun 2012
30 Jun 2015
30 Jun 2014
30 Jun 2013
30 Jun 2015
30 Jun 2014
100%
100%
30 Jun 2014
30 Jun 2013
100%
–
30 Jun 2012
5.89
5.98
5.78
4.34
5.89
5.98
5.78
4.34
5.89
5.98
5.89
5.98
5.78
4.34
5.89
5.98
5.78
4.34
5.89
5.98
5.78
5.89
5.98
5.98
5.78
4.34
4.21
3.94
4.72
3.80
4.21
3.94
4.72
3.80
4.21
3.94
4.21
3.94
4.72
3.80
4.21
3.94
4.72
3.80
4.21
3.94
4.72
4.21
3.94
3.94
4.72
3.80
35 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ R E P O R T
(a)
(b)
(c)
(d)
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. No performance shares were granted to Mr Bourke in previous financial years.
JM Hastings was appointed to the position of General Manager Entertainment – Australia and New Zealand on 16 May 2011. No performance shares
were granted to Mrs Hastings in previous financial years.
PW Horton ceased employment with the Group on 28 October 2011 and the performance shares granted on 28 June 2010 and 23 February 2011
were forfeited at that date.
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
JM Hastings
PW Horton (c)
Granted during
the year (a)
$
Exercised during
the year (b)
$
Forfeited during
the year
$
Performance
shares exercised
Number
Amount paid per
share
$
1,287,750
144,122
79,189
126,700
135,885
59,549
150,455
–
–
–
–
88,746
–
–
–
276,365
–
–
–
–
–
–
–
200,612
–
–
–
14,791
–
–
–
48,485
–
–
–
Nil
–
–
–
Nil
(a)
(b)
(c)
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.
PW Horton ceased employment with the Group on 28 October 2011 and the performance shares were forfeited at that date.
There were no performance shares granted since the end of the year.
End of Directors’ Report: Remuneration Report
36 Amalgamated Holdings Limited – Annual Report 2012
L E A D A U D I T O R ’ S I N D E P E N D E N C E D E C L A R A T I O N
U N D E R S E C T I O N 3 0 7 C O F T H E C O R P O R A T I O N S A C T 2 0 0 1
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 2012 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
Kenneth Reid
Partner
Sydney
23 August 2012
37 Amalgamated Holdings Limited – Annual Report 2012
S T A T E M E N T O F F I N A N C I A L P O S I T I O N
A S A T 3 0 J U N E 2 0 1 2
Note
2012
$’000
2011
$’000
ASSETS
Current assets
Cash and cash equivalents
Short term deposits
Trade and other receivables
Inventories
Prepayments and other sundry assets
Total current assets
Non-current assets
Trade and other 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 non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Loans and borrowings
Current tax liabilities
Provisions
Deferred revenue
Other liabilities
Total current liabilities
Non-current liabilities
Loans and borrowings
Deferred tax liabilities
Provisions
Deferred revenue
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained earnings
Total equity
10
10
11
12
13
11
14
15
16
17
18
19
7(c)
20
21
22
7(b)
24
1(t)
25
22
7(c)
24
1(t)
25
26
27
27
63,309
–
39,294
22,029
4,904
129,536
1,220
315
10,032
115,390
705,638
79,350
36,293
6,433
4,018
958,689
1,088,225
86,443
184
7,882
15,930
48,948
1,807
161,194
46,617
5,442
7,363
4,173
4,563
68,158
229,352
858,873
219,126
3,829
635,918
858,873
50,581
65,000
38,445
22,713
5,460
182,199
310
315
10,762
114,475
642,792
79,350
37,476
6,207
4,989
896,676
1,078,875
75,928
219
7,658
15,766
45,918
15,477
160,966
47,219
5,583
9,306
3,926
4,862
70,896
231,862
847,013
219,126
6,086
621,801
847,013
The Statement of Financial Position is to be read in conjunction with the notes to the financial statements set out on pages 43 to 107.
38 Amalgamated Holdings Limited – Annual Report 2012
I N C O M E S T A T E M E N T
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
Continuing operations
Revenue and other income
Revenue from sale of goods and rendering of services
Other revenue and income
Expenses
Employee expenses
Occupancy 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
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
Earnings per share
Basic earnings per share
Continuing operations
Discontinued operations
Total
Diluted earnings per share
Continuing operations
Discontinued operations
Total
Note
2012
$’000
2011
$’000
3
3
4(a)
4(a)
4(a)
4(a)
36
37
7
5
9
9
9
9
9
9
729,789
68,065
797,854
(188,747)
(179,665)
(148,827)
(83,244)
(47,974)
(37,350)
(21,427)
(18,228)
(2,871)
(728,333)
5
40,303
40,308
109,829
(30,087)
79,742
732,506
52,443
784,949
(184,594)
(178,866)
(152,689)
(83,772)
(47,032)
(36,340)
(20,098)
(655)
(4,224)
(708,270)
17
33,460
33,477
110,156
(32,607)
77,549
–
79,742
62,282
139,831
2012
Cents
2011
Cents
50.6
–
50.6
50.1
–
50.1
49.2
39.5
88.7
48.9
39.2
88.1
The Income Statement is to be read in conjunction with the notes to the financial statements on pages 43 to 107.
39 Amalgamated Holdings Limited – Annual Report 2012
S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
Profit for the year
Other comprehensive (expense)/income from continuing operations
Foreign currency translation differences for foreign operations – net of tax
Net (decrease)/increase 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 taken to the Income Statement – net of tax
Other comprehensive (expense)/income from discontinued operations
Transferred from foreign currency translation reserve to the Income Statement on sale of interest in
MAF Greater Union LLC – net of tax
Share of associates’ foreign currency translation reserve movements – net of tax
Other comprehensive (expense)/income for the period – net of income tax
2012
$’000
2011
$’000
79,742
139,831
(5,493)
(511)
–
451
–
–
(5,553)
(4,198)
221
(308)
(84)
9,657
(1,547)
3,741
Total comprehensive income for the year
74,189
143,572
The Statement of Comprehensive Income is to be read in conjunction with the notes to the financial statements on pages 43 to 107.
40 Amalgamated Holdings Limited – Annual Report 2012
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S T A T E M E N T O F C A S H F L O W S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
Note
2012
$’000
2011
$’000
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
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from disposal of investment in an associate – net of costs
Proceeds from/(amounts invested in) short term deposits
Payments for property, plant and equipment and redevelopment of properties
Payments for hotel assets in New Zealand – net of cash acquired
Payments for businesses acquired including goodwill and associated plant and
equipment in Australia
Payments for increase in investments in associates and jointly controlled entities
Purchase of management and leasehold rights, software and other intangible assets
Proceeds from disposal of other non-current assets
Increase/(decrease) in loans from other entities
Decrease in loans to associates and jointly controlled entities
Net cash used by investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Payment of transaction costs related to loans and borrowings
Repayments of finance lease
Dividends paid
Net cash used by financing activities
Net increase 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 the end of the year
814,610
(735,150)
79,460
39,325
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535
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(33,742)
138,285
–
65,000
(118,831)
–
–
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(2,317)
390
618
–
(55,140)
–
–
(2,088)
–
(65,625)
(67,713)
15,432
50,581
(2,704)
63,309
40
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(722,972)
98,632
33,159
43,292
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486
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261
(35,616)
139,727
78,451
(65,000)
(71,838)
(9,275)
(2,830)
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(5,349)
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(76,387)
15,451
(7,798)
–
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(58,987)
(55,050)
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45,288
(2,997)
50,581
The Statement of Cash Flows is to be read in conjunction with the notes to the financial statements set out on pages 43 to 107.
42 Amalgamated Holdings Limited – Annual Report 2012
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
Amalgamated Holdings Limited (“Company”) is a company domiciled in Australia. The consolidated financial report of the Company as at and for the
year ended 30 June 2012 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 for-profit 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 for issue by the Board of Directors of Amalgamated Holdings Limited on 23 August 2012.
(a)
(b)
(i)
(ii)
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 (AASB) and the
Corporations Act 2001.
The financial report also complies with International Financial Reporting Standards and interpretations adopted by the International
Accounting Standards Board.
Basis of preparation
Basis of measurement
The financial report is prepared on the historical cost basis except for the following material items in the Statement of Financial Position
which are measured at fair value: derivative financial instruments, financial assets classified as available-for-sale, liabilities for cash-settled
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.
Certain comparative amounts have been reclassified to conform with the current year’s presentation.
Use of estimates and judgements
The preparation of a financial report in conformity with AASBs requires management to make judgements, estimates and assumptions that
affect the application of accounting 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 and in any future periods if affected. 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(aa).
(iii)
Functional and presentation currency
The financial report is presented in Australian dollars and the functional currency of the Group is Australian dollars.
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 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.
(iv)
Change in significant accounting policies
The accounting policies described in this note have been applied consistently to all periods presented in this financial report and have been
applied consistently by all entities in the Group, except as explained in this note which addresses changes in accounting policies.
From 1 July 2011 the Group has applied the amendments outlined in AASB 2010-4 Further Amendments to Australia Accounting Standards
arising from the annual improvements project, AASB 2009-12 Amendments to Australia Accounting Standards and AASB 124 (2009)
Related Party Disclosures, which did not have a significant impact on the financial report of the Group. A number of new standards,
amendments to standards and interpretations are available for early adoption or are not yet ready for adoption and have therefore not been
applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated
financial statements of the Group, except for:
•
•
AASB 9 Financial Instruments (December 2010), which becomes mandatory for the Group's 2016 consolidated financial statements
and could change the classification and measurement of financial assets; and
AASB 11 Joint Arrangements, which becomes mandatory for the Group's 2014 consolidated financial statements and could result in
a change in the accounting treatment of the Group’s interest in various jointly controlled entities.
The Group does not plan to adopt the above standards early and the extent of the impact has not been determined.
43 Amalgamated Holdings Limited – Annual Report 2012
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(c)
(i)
Basis of consolidation
Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is
transferred to the Group. 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.
For acquisitions on or after 1 July 2009, the Group measures goodwill arising from the business combination at the acquisition date 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. If the consideration transferred is lower
than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised in profit or loss.
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.
(ii)
(iii)
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.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group 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.
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 profit or loss and other comprehensive income of associates and
jointly controlled entities, after adjustment to align the accounting policies with those of the Group, from the date that significant influence 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 equity. 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 legal or
constructive obligations to make payments on behalf of the investee.
(iv)
Transactions eliminated on consolidation
Intra-Group balances and transactions, and any unrealised gains and losses or income and expenses arising from intra-Group transactions,
are eliminated in preparing the consolidated financial report.
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.
44 Amalgamated Holdings Limited – Annual Report 2012
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(d)
(i)
(ii)
Foreign currency
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 profit or loss, except for differences arising on retranslation
of a financial liability designated as a hedge of the net investment in a foreign operation that is effective, which are recognised in other
comprehensive income. 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.
Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to
Australian dollars at foreign exchange rates ruling at the reporting date. The income 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 other comprehensive income, and presented in the foreign currency translation reserve in equity.
When a foreign operation is disposed of, in part or in full, the relevant amount in the reserve is transferred to profit or loss.
When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the
translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group
disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence
or joint control, the relevant portion of the cumulative amount is reclassified 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 other comprehensive income and presented in the foreign currency translation reserve in equity.
(e)
Derivative financial instruments
From time to time, the Group uses derivative financial instruments to hedge its exposure to interest rate and foreign exchange 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 reporting
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 reporting date, being the present value of the quoted forward price.
(f)
Hedge accounting
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. The Group makes an assessment, both at
inception of the hedge relationship as well as on an ongoing basis, whether such hedges are expected to be highly effective in achieving
offsetting changes in fair value or cash flows of the respective hedged items attributable to the hedged risk, and whether the actual results
of each hedge have been highly effective throughout the financial reporting periods for which they are designated.
45 Amalgamated Holdings Limited – Annual Report 2012
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(i)
(ii)
(g)
(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 portion of changes in the fair value of the derivative financial instrument is recognised in other
comprehensive income and presented 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. Any ineffective portion of change in the fair value of the
derivative is recognised immediately in profit or loss.
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
reclassified in profit or loss.
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 in other comprehensive income and presented in equity in the hedging reserve. The ineffective portion is recognised
immediately in profit or loss.
Property, plant and equipment
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
may also include:
•
•
•
•
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);
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;
transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and
equipment; and
the borrowing cost related to the acquisition or construction of qualifying assets (refer Note 1(v)).
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 of 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 in the ordinary course of business or for administration purposes. Initially, investment properties are measured at
cost including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value with any change therein
recognised in profit or loss. 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).
When the use of a property changes from owner occupied to investment property, the property is reclassified as an investment property.
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 an increase and to profit or loss if it is a decrease. A gain may be
recognised to profit on re-measurement only to the extent it reverses a previous impairment loss on the property.
46 Amalgamated Holdings Limited – Annual Report 2012
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(ii)
(iii)
(iv)
(v)
Investment properties (continued)
Transfers are made from investment properties to inventories when there is a change in use as evidenced by the commencement of
development with a view to sell. 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 profit or loss in the period of derecognition.
Leased assets
Leases for property, plant and equipment under which the Group assumes substantially all the risks and benefits of ownership are classified
as finance leases. Other leases are classified as operating leases.
Finance leases are capitalised. Upon initial recognition, a lease asset is measured at the lower of its fair value and the present value of
minimum lease payments. Contingent rentals are written off as an expense of the accounting period in which they are incurred. Subsequent
to initial recognition, the asset is accounted for in accordance with the accounting policy of the applicable asset. The interest component of
finance lease payments is charged to profit or loss.
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.
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 profit or loss as incurred.
Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component 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 methods, useful lives and residual values are reviewed at each reporting date and adjusted prospectively if appropriate.
(h)
(i)
Intangible assets
Goodwill
Goodwill that arises from a business combination is initially measured as described in Note 1(c)(i).
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 derecognised 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, with the impairment loss recorded in profit or loss.
47 Amalgamated Holdings Limited – Annual Report 2012
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(iii)
Other intangible assets
Other intangible assets, which largely comprise management and leasehold rights and software, 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 for major operating
systems is amortised over a four to five year period on a straight-line basis.
(i)
Impairment
The carrying amounts of the Group’s non-financial assets, other than investment properties, are reviewed at each reporting date to
determine whether there is any indication of impairment. Where an indicator of impairment exists, the Group makes a formal estimate of the
asset’s recoverable amount. For goodwill, the recoverable amount is estimated each year at the same time.
The recoverable amount of assets or cash-generating units is the greater of its fair value less costs to sell, and its 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 or cash-generating unit. 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. In
assessing fair value less costs to sell, the Group obtains market valuations for all properties on a triennial basis.
Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. Receivables are individually
assessed for impairment.
Where the carrying amount of an asset or its related cash-generating unit exceeds its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated first to
reduce the carrying value of any goodwill allocated to the cash-generating unit, and then to reduce the carrying amounts of the other assets
in the cash-generating unit on a pro-rata basis.
Impairment losses are recognised in profit or loss 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 in profit or loss.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are
assessed at each reporting date for any indications that the loss has decreased or no longer exists. 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.
(j)
Investments
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 profit or loss. An impairment loss recognised in profit or
loss in respect of an available-for-sale investment is reversed through profit or loss to the extent that the investment’s carrying amount does
not exceed the carrying amount that would have been determined if no impairment loss had been recognised.
(k)
Inventories
Inventories are measured 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. (See
Note 1(f)).
Transfers are made from investment properties to inventories when there is a change in use as evidenced by the commencement of
development with a view to sale. (See Note 1(g)).
(l)
Contract work in progress
For equipment build and cinema installation contracts, profit is brought to account on a percentage of completion basis.
48 Amalgamated Holdings Limited – Annual Report 2012
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(m)
(n)
(o)
(p)
(q)
(i)
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.
Receivables
Trade and other receivables are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, receivables are measured at amortised cost using the effective interest method, less any 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.
Payables
Trade and other payables are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, these financial liabilities are measured at amortised cost. Trade accounts payable are normally non-interest bearing and settled
within 30 days.
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 profit
or loss over the period of the borrowings using the effective interest method.
Provisions
Employee benefits
Provision is made for employee benefits including annual leave for employees and the retirement benefits for qualifying non-executive
directors. The provision is calculated as the present value of the Group’s net obligation to pay such benefits resulting from the employees’
services provided up to the reporting date. The provisions due or available 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 due 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 by the Group from a contract are lower than the
unavoidable costs of meeting the obligations under that contract. Before a provision is established, the Group recognises any impairment
loss on the assets associated with the contract.
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 recorded in profit or loss. 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.
(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. The unwinding of the discount is recognised as a finance cost.
49 Amalgamated Holdings Limited – Annual Report 2012
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(r)
(s)
(i)
(ii)
(t)
(i)
(ii)
(iii)
(iv)
(v)
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.
Share-based payment transactions – employee share plans
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. The trust is controlled by the Group and therefore its financial statements are
included in the consolidated financial statements. The shares in the Group held by the trust are therefore shown as treasury shares (see
note 26).
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 Group 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.
Employee Share Plan
The Group 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.
Revenue recognition
Revenues are recognised at fair value of the consideration received, net of the amount of goods and services tax (“GST”), or equivalent tax
in overseas jurisdictions.
Sale of goods
Revenue from the sale of goods comprises revenue earned (net of returns, discounts, allowances and GST or equivalent tax in overseas
jurisdictions) from the provision of products to entities outside the Group. Revenue from the sale of goods is recognised when the significant
risks and rewards of ownership of the goods have been transferred to the customer.
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. Revenues from advance movie ticket and gift card sales are recorded as deferred revenue and are recognised when
tickets or gift cards are redeemed.
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.
Rental income
Rental income is recognised in profit or loss 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.
Sale of non-current assets
The gain or loss on disposal of an item of property, plant and equipment is calculated as the difference between the carrying amount of the
asset at the time of disposal and the net proceeds from the disposal.
50 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(vi)
(u)
Customer loyalty programs
The Group 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. The fair value of the points is estimated based on the fair value of the goods and services received and adjusted to take into
account the expected forfeiture rate. Revenue from the award points is recognised when the points are redeemed or the options expire. The
amount of the revenue is based on the number of points redeemed relative to the total number expected to be redeemed.
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of GST, or equivalent tax in overseas jurisdictions, except where the
amount of GST or equivalent tax incurred is not recoverable from the local taxation authorities. In these circumstances, the tax 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 or equivalent tax included.
The net amount of the tax recoverable from, or payable to, taxation authorities 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 or equivalent tax components of cash flows arising
from investing and financing activities which are recoverable from, or payable to, taxation authorities are classified as operating cash flows.
(v)
Finance costs
Finance costs include interest, unwinding 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. Borrowing costs that are not directly attributable to the acquisition, construction or production of qualifying assets are
recognised in profit and loss using the effective interest method.
(w)
(i)
Taxation
Income tax
Income tax expense in the Income Statement for the periods presented comprises current and deferred tax. Income tax is recognised in
profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive
income.
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 recognised 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: taxable temporary difference arising from the 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. Deferred tax is measured 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 and its Australian wholly owned subsidiaries are part of a tax consolidated group. As a consequence, all members of the tax
consolidated group are taxed as a single entity. Amalgamated Holdings Limited is the head entity within the tax consolidated group.
51 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(x)
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)
(i)
(ii)
(z)
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction
from equity, net of any tax effects.
Treasury shares
Performance Share Plan Shares held by the Group’s employee share plan trust are recognised as treasury shares and deducted from
equity.
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.
(aa) 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.
Accounting estimates and assumptions
The estimates and assumptions 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:
(i)
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.
The Group has also previously recognised impairment write-downs for property, plant and equipment. Where trading circumstances
improve at the previously impaired 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 Notes 17 and 19 for details of key estimates and assumptions in respect of impairments.
52 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
(ii)
(iii)
(iv)
(i)
(ii)
(ab)
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 profit or loss. 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.
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.
Taxation
The Group has unrecognised deferred tax assets in respect of certain foreign tax revenue losses – refer to Note 7. The utilisation of the tax
revenue losses is dependent upon the generation of sufficient future taxable profits within the applicable foreign tax entities and a deferred
tax asset is only recognised to the extent that it is supported by sufficient forecast taxable profits. Assumptions regarding the generation of
future taxable profits relevant to those foreign tax entities has been based upon management’s budget estimates and forecasts.
Management considers that the forecast of taxable profits for the applicable foreign tax entities are subject to risk and uncertainty; hence,
the Group has not recognised all of the losses as a deferred tax asset.
Critical judgements
Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the
financial statements is:
Classification of properties
The Group holds three properties which were previously operating cinema sites. Pending completion and approval of plans for the long
term use of these properties, they have not been classified as investment properties. These properties continue to be accounted for using
the cost basis rather than the fair value basis which is applied to investment properties.
Contingent assets and liabilities
Refer Note 32 for estimates and judgements made in relation to contingent assets and liabilities.
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 and
Statement of Comprehensive Income are re-presented as if the operation had been discontinued from the start of the comparative period.
53 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 2 – SEGMENT REPORTING
Segment information is presented in respect of the Group’s reporting 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.
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. The Group’s interest in the United Arab
Emirates associate was sold on 25 October 2010. See Note 5.
Entertainment Technology
Includes theatre equipment supply and servicing and the manufacture of film processors and related equipment.
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 and Germany. The Group also operated in the United Arab Emirates until 25 October 2010.
54 Amalgamated Holdings Limited – Annual Report 2012
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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 3 – REVENUE AND OTHER INCOME
Revenue from continuing operations
Sale of goods
Rendering of services
Other revenue
Finance revenue:
Interest income – bank deposits
Interest income – relating to VAT refund (refer individually significant items below)
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
Sundry revenue
Other income:
VAT refund (refer individually significant item below)
Insurance proceeds
Development gain on valuation and reclassification to an investment property of the
redeveloped Canberra Civic property
Increase in fair value of investment properties
Profit on sale of plant and equipment
Plant and equipment impairment write-downs reversal
Total other revenue and income
Total revenue and other income
Revenue and other income including share of sales
revenue for jointly controlled entities:
Revenue as listed above
Jointly controlled entities *
Note
2012
$’000
2011
$’000
224,619
505,170
729,789
221,109
511,397
732,506
39
37
2,382
1,567
68
4,017
45
19,967
20,012
509
26
535
5,977
16,229
22,206
771
17,232
2,872
112
–
50
258
20,524
68,065
797,854
4,257
–
136
4,393
43
23,025
23,068
446
40
486
5,772
13,985
19,757
467
–
1,007
2,251
438
251
325
4,272
52,443
784,949
37
797,854
240,277
1,038,131
784,949
228,362
1,013,311
* Revenue disclosed above 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.
61 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
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
Unwind of notional interest
Net bad and doubtful debts expense
Amortisation of:
Buildings and improvements subject to long term leases
Intangible assets
Other
Depreciation
Impairment write-downs:
Freehold land and buildings
Buildings and improvements subject to long term leases
Resort apartments and share of common property
Plant and equipment
Operating lease rental expense
Loss on sale of plant and equipment
(Decrease)/increase in provision for:
Onerous contracts
Insurance loss contingencies and other
Decommissioning of leasehold improvements
Employee expenses:
Salaries and wages
Increase in employee benefits provisions
Share-based payments expense
Superannuation contributions
2012
$’000
2011
$’000
82,962
77,915
2,655
–
–
49
–
2,704
167
2,871
529
6,485
3,255
436
10,176
27,174
37,350
6,700
917
10,000
611
18,228
93,187
1,022
(896)
(99)
(278)
(1,273)
167,443
9,808
2,940
8,556
188,747
2,935
31
103
828
67
3,964
260
4,224
241
6,334
2,790
378
9,502
26,838
36,340
–
75
–
580
655
105,713
813
(3,181)
(29)
149
(3,061)
164,280
10,193
1,949
8,172
184,594
Net foreign exchange losses/(gains)
218
(115)
62 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 4 – PROFIT BEFORE INCOME TAX (continued)
(b) Individually significant items
Profit before income tax expense includes the following revenues/(expenses) whose disclosure is
relevant in explaining the financial performance of the Group:
Relating to continuing operations
VAT and interest receivable relating to overpaid tax on a number of food products
sold during the period since 1 January 2005 (included in other income in Note 3)
Impairment write-downs of land and buildings and associated plant and equipment
Development gain on valuation and reclassification to an investment property of
the redeveloped Canberra Civic property
Profit on sale of developed residential land lots
Relating to discontinued operations (refer Note 5)
Profit on sale of interest in United Arab Emirates cinema exhibition operations – MAF
Greater Union LLC
2012
$’000
2011
$’000
18,799
(17,500)
–
1,966
–
3,265
–
–
2,251
5,600
60,318
68,169
63 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 5 – DISCONTINUED OPERATIONS
There were no discontinued operations during the 2012 year.
During the 2011 year, the Group sold its 49% share in an associate, MAF Greater Union LLC. The consideration from the sale was $78,583,000
and the profit on the sale was $60,318,000. MAF Greater Union LLC operated a cinema circuit based in the United Arab Emirates which, at the
date of sale, consisted of five cinema sites and a total of 50 screens.
Profit attributable to discontinued operations was as follows:
Results of discontinued operations
Share of net profit accounted for using the equity method
Other costs
Profit before income tax
Income tax expense
Net profit before gain on sale of discontinued operations
Profit on sale of discontinued operations
Income tax expense – sale of discontinued operations
Profit after tax from discontinued operations
2012
$’000
–
–
–
–
–
–
–
–
2011
$’000
1,978
(14)
1,964
–
1,964
60,318
–
62,282
During the year to 30 June 2012, the discontinued operations had cash inflows from operating activities of $nil (2011: $4,400,000), cash inflows
from investing activities on disposal of $nil (2011: $78,583,000) and cash inflows from financing activities of $nil (2011: $nil).
2012
$
2011
$
916,130
46,485
371,370
51,113
1,385,098
132,809
92,496
70,032
295,337
131,105
19,137
56,999
207,241
502,578
871,580
50,836
350,338
7,527
1,280,281
128,650
34,555
34,973
198,178
104,487
–
116,280
220,767
418,945
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
Other services
Overseas KPMG firms
Income tax compliance
Indirect tax compliance advice
Other taxation services
64 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 7 – TAXATION
(a) Income tax expense
The major components of income tax expense are:
Income tax recognised in profit or loss
Income tax expense reported
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) directly in equity
Deferred income tax related to items charged or credited directly to equity:
Relating to other comprehensive income
Effective portion of changes in fair value of cash flow hedges
Unrealised (loss)/gain on available-for-sale financial assets
Currency translation movements of deferred tax balances of foreign operations
Net gain on hedge of net investment in overseas subsidiaries
Relating to other equity balances
Adjustment to shared-based payments reserve
Income tax benefit reported in equity
2012
$’000
2011
$’000
30,087
32,607
31,072
8
(993)
30,087
23
(219)
418
729
951
(325)
626
27,474
171
4,962
32,607
134
95
(116)
476
589
(189)
400
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
109,829
–
109,829
110,156
62,282
172,438
Prima facie income tax expense calculated at the Group’s statutory income tax rate of 30% (2011:
30%) on the accounting profit
32,949
51,731
Increase in income tax expense due to:
Non-deductible items and losses in non-resident controlled entities
Impairment write-downs of land and buildings
Depreciation and amortisation of buildings
Non-deductible acquisition and legal costs
Non-refundable franking credits grossed up
Sundry items
Decrease in income tax expense due to:
Non-assessable profit on sale of interest in United Arab Emirates cinema exhibition operations
Tax losses from prior years now recognised or utilised
Share of associates’ net profit
Share of incorporated jointly controlled entities’ net profit
Franking credits on dividends received
Income tax under provided in prior year
1,339
2,011
300
139
66
371
4,226
–
6,086
1
791
218
7,096
8
30,087
1,887
–
366
302
57
297
2,909
18,095
2,635
598
685
191
22,204
171
32,607
65 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 7 – TAXATION (continued)
(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
Tax refunds received
(Over)/under provision in prior year
Foreign currency differences in translation of foreign operations
(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 assets of the tax consolidated group offset against
deferred tax liabilities
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
2012
$’000
2011
$’000
7,658
(33,742)
31,475
3,068
(276)
(301)
7,882
14,209
(35,616)
28,134
261
1,037
(367)
7,658
Statement of Financial
Position
2012
$’000
2011
$’000
Income
Statement
2012
$’000
2011
$’000
992
–
112
–
(293)
118
(23)
544
(134)
(201)
33
1,007
63
41
(564)
(2,022)
–
(823)
(159)
–
189
81
46
3,975
(1,276)
886
–
(50)
291
1
509
(82)
10
249
431
154
36
(302)
1,748
210
(702)
(1,482)
(1,444)
1,645
80
75
17,260
–
7,177
1,492
837
1,791
84
1,919
425
2,180
499
33,664
16,358
–
7,065
1,711
1,130
1,693
107
1,700
559
1,593
461
32,377
(28,222)
5,442
(26,794)
5,583
9,059
204
5
3,437
8,199
–
7,439
3,160
2,475
–
161
516
34,655
10,005
209
69
2,868
6,472
–
6,616
3,311
2,475
189
242
545
33,001
(28,222)
6,433
(26,794)
6,207
Deferred tax (benefit)/expense
(993)
4,962
66 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 7 – TAXATION (continued)
Unrecognised deferred tax assets
Revenue losses – foreign
Temporary differences – foreign
2012
$’000
14,655
–
14,655
2011
$’000
22,234
1,861
24,095
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.
Included in the deferred tax assets not recognised is the gross value of tax revenue losses arising in Germany worth $48,852,000 (2011:
$74,109,000). The availability of these tax losses is subject to certain utilisation limits and ongoing availability tests under German tax law.
At 30 June 2012, there was no recognised deferred income tax liability (2011: $nil) for taxes that would be payable on the unremitted earnings of
certain of the Group’s subsidiaries, associates or incorporated jointly controlled entities.
NOTE 8 – DIVIDENDS
Per share
Cents
Total
amount
$’000
Date of payment
Tax rate for
franking credit
Percentage
franked
Dividends on ordinary shares paid during the year are:
2012
Final 2011 dividend
Special 2011 dividend
Interim 2012 dividend
2011
Final 2010 dividend
Interim 2011 dividend
Subsequent events
Since the end of the financial year, the directors
declared the following dividends:
Final 2012 dividend
23
4
14
23
14
36,755
6,392
22,478
65,625
36,615
22,372
58,987
22 September 2011
22 September 2011
22 March 2012
16 September 2010
24 March 2011
30%
30%
30%
30%
30%
100%
100%
100%
100%
100%
25
40,140
20 September 2012
30%
100%
The financial effect of the final dividend in respect of the year has not been brought to account in the financial statements for the year ended 30
June 2012 and will be recognised in subsequent financial statements.
Franking credit balance
The amount of franking credits available for future reporting periods
2012
$’000
2011
$’000
136,017
139,748
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 $17,203,000 (2011: $18,491,000). 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.
67 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 9 – EARNINGS PER SHARE
Earnings reconciliation
Profit after tax from continuing operations
Basic earnings – continuing operations
Basic earnings – discontinued operations
Earnings attributable to equity holders of the Company
2012
$’000
79,742
79,742
–
79,742
2011
$’000
77,549
77,549
62,282
139,831
Number
Number
Weighted average number of ordinary shares used as the denominator for basic earnings per share
Effect of performance shares
Number for diluted earnings per share
157,702,738
1,553,275
159,256,013
157,555,534
1,131,267
158,686,801
Further details in relation to the Executive Performance Share Plan are provided in Note 30.
NOTE 10 – CASH, CASH EQUIVALENTS AND SHORT TERM DEPOSITS
Cash at bank and on hand
Short term deposits
2012
$’000
63,309
–
2011
$’000
50,581
65,000
Short term deposits comprise deposits with banks with original maturities between three and six months. Details relating to cash at bank, on
hand and on short term deposit 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 – TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Less: Allowance for trade receivables
Other receivables
Receivable from jointly controlled entities
Non-current
Receivables
Other receivables
Receivable from associates
Present value of loans provided under the Employee Share Plan
2012
$’000
21,840
(1,192)
20,648
15,840
2,806
39,294
–
1,000
43
177
1,220
2011
$’000
25,237
(732)
24,505
12,282
1,658
38,445
45
–
43
222
310
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.
As at 30 June 2012, trade receivables with a value of $1,192,000 (2011: $732,000) were impaired and fully provided for. Movements in the
allowance for trade receivables are as follows:
Balance at the beginning of the year
Charge
Provision no longer required
Net foreign currency differences on translation of foreign operations
68 Amalgamated Holdings Limited – Annual Report 2012
2012
$’000
732
588
(121)
(7)
1,192
2011
$’000
591
236
(99)
4
732
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 11 – TRADE AND OTHER RECEIVABLES (continued)
As at 30 June 2012, 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
2012
$’000
16,652
2,393
909
694
20,648
2011
$’000
20,488
2,347
724
946
24,505
Other receivables of $15,840,000 (2011:$12,282,000) 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
Total inventories at the lower of cost and net realisable value
NOTE 13 – PREPAYMENTS AND OTHER SUNDRY ASSETS
Prepayments
Other
NOTE 14 – OTHER FINANCIAL ASSETS
Unquoted investments in other entities
NOTE 15 – AVAILABLE-FOR-SALE FINANCIAL ASSETS
2012
$’000
3,625
7,951
10,453
–
22,029
3,936
968
4,904
2011
$’000
3,105
6,989
11,908
711
22,713
4,699
761
5,460
315
315
Investments in listed company
10,032
10,762
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 $702,000 after tax (2011: an increase of $753,000); an equal change in the opposite direction would have
decreased equity by $702,000 after tax (2011: a decrease of $753,000).
NOTE 16 – INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Associates
Jointly controlled entities
Note
36
37
2012
$’000
156
115,234
115,390
2011
$’000
151
114,324
114,475
The Group accounts for investments in associates and jointly controlled entities using the equity method – refer Note 1(c)(iii).
69 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
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
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 from land subject to long term leases
Transfer from buildings and improvements subject to long term finance lease
Transfer from capital work in progress
Disposals
Net foreign currency differences on translation of foreign operations
Depreciation
Impairment write-downs
Net balance at the end of the year
Land subject to long term leases
At cost at the beginning of the year
Transfer to freehold land and buildings
Net foreign currency differences on translation of foreign operations
Net balance at the end of the year
70 Amalgamated Holdings Limited – Annual Report 2012
2012
$’000
2011
$’000
471,827
(83,407)
388,420
56
–
56
53,335
115,624
168,959
(107,071)
61,888
29,600
(10,982)
18,618
80,339
416,661
(260,344)
156,317
705,638
462,562
(72,231)
390,331
9,763
–
–
1,059
(4)
(1,669)
(4,360)
(6,700)
388,420
56
–
–
56
462,562
(72,231)
390,331
56
–
56
54,422
121,606
176,028
(110,687)
65,341
27,239
(628)
26,611
17,752
387,056
(244,355)
142,701
642,792
417,489
(63,368)
354,121
18,632
6,237
16,005
643
–
(931)
(4,376)
–
390,331
6,678
(6,237)
(385)
56
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 17 – PROPERTY, PLANT AND EQUIPMENT (continued)
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
Additions through entities acquired
Additional make-good asset
Transfer to freehold land and buildings
Transfer from capital work in progress
Transfer from plant and equipment
Net foreign currency differences on translation of foreign operations
Disposals
Amortisation
Impairment write-backs
Impairment write-downs
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 from capital work in progress
Depreciation
Impairment write-downs
Net balance at the end of the year
Capital work in progress
Balance at the beginning of the year
Additions
Transfer out on completion
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
Additions through entities acquired
Transfer from capital work in progress
Transfer to buildings and improvements subject to long term leases
Transfers
Net foreign currency differences on translation of foreign operations
Disposals
Depreciation
Impairment write-backs
Impairment write-downs
Adjustment to impairment provided on acquisition
Net balance at the end of the year
71 Amalgamated Holdings Limited – Annual Report 2012
2012
$’000
2011
$’000
176,028
(110,687)
65,341
3,593
–
–
–
231
603
(356)
(198)
(6,485)
76
(917)
61,888
27,239
(628)
26,611
2,352
8
(353)
(10,000)
18,618
17,752
73,317
(10,730)
80,339
387,056
(244,355)
142,701
29,806
–
9,432
(603)
(116)
(874)
(1,140)
(22,460)
182
(611)
–
156,317
184,116
(112,981)
71,135
6,363
10,720
57
(16,005)
825
577
(1,943)
–
(6,334)
21
(75)
65,341
26,898
(278)
26,620
253
86
(348)
–
26,611
1,751
18,974
(2,973)
17,752
387,807
(249,030)
138,777
27,656
987
1,355
(577)
–
(2,313)
(1,365)
(22,114)
304
(580)
571
142,701
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 17 – PROPERTY, PLANT AND EQUIPMENT (continued)
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 have
been completed as at June 2012, 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
– 2012
– 2009
Existing use
Independent valuation
– 2012
– 2010
– 2009
– 2009
Land and buildings not independently valued
Acquisition cost of properties acquired since June 2009 not yet independently valued
The above valuations do not take into account the potential impact of capital gains tax.
2012
$’000
2011
$’000
44,650
–
499,834
191,698
84,000
–
820,182
–
820,182
–
54,500
–
202,199
84,000
331,815
672,514
81,061
753,575
The written-down book value of plant and equipment which is deemed integral to land and buildings, has been determined to total approximately
$93,200,000 as at 30 June 2012 (2011: $83,200,000).
Impairments
Land and buildings, resort apartments and share of common property
During the year ended 30 June 2012, 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 12.71% to 13.18% (2011: 11.4% to 12.8%) 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 3.0% (2011: 2.5% to 3.2%) per annum. As a result of these assessments, impairment losses totalling $16,700,000
(2011: $nil) 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 $8,524,000. A 1 percentage point decrease in the discount rate
would reduce the impairment loss by $10,314,000. A 10% decrease in the forecast earnings would increase the impairment loss by $7,979,000
and a 10% increase in forecast earnings would decrease the impairment loss by $7,430,000.
72 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 17 – PROPERTY, PLANT AND EQUIPMENT (continued)
Leasehold improvements and plant and equipment
During the year ended 30 June 2012, impairment write-downs totalling $1,528,000 (2011: $655,000) were made in respect of plant and
equipment and leasehold improvements at certain hotel properties and at a small number cinema sites in Germany.
Also during the year ended 30 June 2012, impairment write-downs made in prior years for a cinema site in New Zealand were reversed to the
value of $258,000 (2011: impairment reversal of $325,000). These write-downs and write-backs were deemed appropriate, using the value in
use method, due to changes in cash flow generated by the sites resulting from a general improvement or decline in trading performance. Write-
downs were also made where there is a planned closure of a site. The impairment write-backs did not exceed the carrying amount of the assets
that would have been determined, net of depreciation, had no impairment loss been recognised.
In assessing the recoverable amount for plant and equipment and leasehold improvements at these cinema and hotel sites, a discount rate of
12.0% to 13.58% (2011:12.2% to 12.65%) per annum has been applied to projected future cash flows which included a growth rate of 2% to 3%
(2011: 2%) per annum.
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
NOTE 18 – INVESTMENT PROPERTIES
Freehold land and buildings
At fair value
Summary of movements:
Balance at the beginning of the year
Additions
Fair value (decrements)/increments
Balance at the end of the year
2012
$’000
221,368
22,650
244,018
2011
$’000
162,102
27,550
189,652
79,350
79,350
79,350
71
(71)
79,350
78,875
37
438
79,350
The carrying amount of investment properties is the fair value of the properties 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. For five of the six investment properties held by the Group, the valuer used capitalisation rates on reversionary rental yields in the
range of 6.57% to 9.5% (2011: 6.5% to 9.0%) to determine fair values. For the remaining investment property, the valuer concluded that the
appropriate fair value was best determined through categorising the property as a future development site. To derive the fair value for that
investment property, the valuer has utilised a discounted cash flow analysis over the term of the existing lease and applied a discount rate of
9.5% per annum with an escalated terminal value, based on the current land value of the property.
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 2012, $6,314,000 (2011: $7,004,000) was recognised as rental income for investment properties in the
Income Statement with $2,048,000 (2011: $1,431,000) incurred in respect of direct costs, including $310,000 (2011: $189,000) for repairs and
maintenance.
73 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 19 – GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Construction rights
Liquor licences
Management and leasehold rights – including initial contributions
Less: Accumulated amortisation
Software
Less: Accumulated amortisation
2012
$’000
12,493
1,388
189
14,070
23,215
(5,707)
17,508
7,996
(3,281)
4,715
36,293
2011
$’000
12,707
1,388
189
14,284
23,127
(4,088)
19,039
6,449
(2,296)
4,153
37,476
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
$’000
Construction
rights
$’000
Film
library
$’000
Liquor
licences
$’000
Management
and leasehold
rights
$’000
Software
$’000
2012
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
Transfers from plant and equipment
Amortisation
Disposals
Net foreign currency differences on translation of
foreign operations
Net balance at the end of the year
2011
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
Adjustments
Amortisation
Disposals
Net foreign currency differences on translation of
foreign operations
Net balance at the end of the year
12,707
–
12,707
–
–
–
–
(214)
12,493
10,649
–
10,649
2,653
(87)
–
–
(508)
12,707
1,388
–
1,388
–
–
–
–
–
1,388
1,388
–
1,388
–
–
–
–
–
1,388
–
–
–
–
–
–
–
–
–
380
(357)
23
–
–
(4)
(19)
–
–
189
–
189
–
–
–
–
–
189
185
–
185
4
–
–
–
–
189
23,127
6,449
(4,088)
19,039
70
–
(1,621)
–
20
17,508
(2,296)
4,153
2,247
103
(1,634)
(19)
(135)
4,715
20,361
7,489
(2,690)
17,671
2,771
–
(1,400)
–
(3)
19,039
(4,516)
2,973
2,578
–
(1,386)
(2)
(10)
4,153
Impairment losses recognised
No impairment losses in relation to goodwill have been recognised in the year ended 30 June 2012 (2011: $nil).
74 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 19 – GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
Impairment tests for cash-generating units containing goodwill
The following units have carrying amounts of goodwill:
Cinema Exhibition New Zealand
Cinema Exhibition Germany – cinema joint venture
Multiple units without significant goodwill
2012
$’000
2011
$’000
5,818
3,176
3,499
12,493
5,737
3,471
3,499
12,707
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 projected five year results, with cash flows beyond the five year period being projected using a per annum growth
rate of negative 2.5% to 2%, which is considered appropriate given economic indicators and the expected long term increase in revenue and
operating costs in these markets. Pre-tax discount rates of 11.24% and 12.0% (2011: 12.2% and 12.65%) per annum have been used in
discounting the projected cash flows. In management’s assessment, there are no reasonable possible changes in assumptions that would give
rise to an impairment.
NOTE 20 – OTHER NON-CURRENT ASSETS
Note
Security deposits in respect of long term operating leases
Wildlife at Featherdale Wildlife Park
Operating lease payments paid in advance
Sundry
NOTE 21 – TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
2012
$’000
1,137
640
593
1,648
4,018
2011
$’000
1,633
640
1,021
1,695
4,989
27,381
59,062
86,443
24,074
51,854
75,928
The exposure to liquidity and currency risk for trade and other payables is disclosed in Note 29.
NOTE 22 – LOANS AND BORROWINGS
Current
Non-interest bearing loans
Loans from other companies
– unsecured
184
219
Non-current
Interest bearing liabilities and borrowings
Bank loans
Deferred financing costs
– secured
Non-interest bearing loans
Loans from other companies
– unsecured
23
46,981
(2,214)
44,767
1,850
46,617
46,321
(299)
46,022
1,197
47,219
The Group’s exposure to liquidity and currency risk related to interest bearing liabilities and borrowings is disclosed in Note 29.
75 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 23 – FINANCING ARRANGEMENTS
A$350,000,000 revolving multi-currency loan facility;
A$30,000,000 credit support facility (for the issue of letters of credit and bank guarantees); and
A$50,000 overdraft facility supports transactional banking facilities.
Bank debt – secured
The Group’s secured bank debt facilities comprise the following:
•
•
•
The above facilities were negotiated and finalised during the year. The facilities mature on 10 July 2015 and are supported by interlocking
guarantees from most Group entities and are secured by specific property mortgages (refer Note 17). Debt drawn under these facilities bears
interest at the relevant inter-bank benchmark reference rate plus a margin of between 1.80% and 2.55% per annum. At 30 June 2012 the
Group had drawn $46,981,000 (2011: $46,321,000) under the debt facilities, of which nil (2011: 17%) was subject to interest rate swaps used
for hedging.
NOTE 24 – PROVISIONS
Current
Employee benefits
Onerous contracts
Insurance loss contingencies and other claims
Non-current
Employee benefits
Onerous contracts
Decommissioning of leasehold improvements
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
Adjustment to provisions assumed through entities acquired
Provisions utilised
Provisions for lease costs released
Net foreign currency differences on translation of foreign operations
Carrying amount at the end of the year
Note
30
30
2012
$’000
15,351
456
123
15,930
1,487
–
5,876
7,363
1,338
–
(896)
–
14
456
2011
$’000
14,683
861
222
15,766
2,240
477
6,589
9,306
4,110
647
(3,096)
(84)
(239)
1,338
76 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 24 – PROVISIONS (continued)
Insurance loss contingencies and other claims
Carrying amount at the beginning of the year
Payments
Provided
Provisions reversed
Carrying amount at the end of the year
Decommissioning of leasehold improvements
Carrying amount at the beginning of the year
Payments
Provided
Provisions reversed
Notional interest
Net foreign currency differences on translation of foreign operations
Carrying amount at the end of the year
2012
$’000
222
–
22
(121)
123
6,589
(121)
–
(278)
59
(373)
5,876
2011
$’000
311
(60)
53
(82)
222
7,480
–
524
(1,209)
168
(374)
6,589
Onerous contracts
The onerous contracts provision relate to long term non-cancellable operating leases in respect of certain cinema sites in New Zealand.
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 provision, 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).
NOTE 25 – OTHER LIABILITIES
Current
Derivatives at fair value
Contract deposits received in advance
Lease incentives deferred
Deferred income – VAT dispute
Non-current
Lease incentives deferred
Note
29
2012
$’000
18
1,420
369
–
1,807
4,563
4,563
2011
$’000
231
4,996
364
9,886
15,477
4,862
4,862
77 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 26 – SHARE CAPITAL
Share capital
Fully paid ordinary shares
2012
Shares
2011
Shares
2012
$’000
2011
$’000
157,798,418
157,643,568
219,126
219,126
Movements in share capital
Balance at the beginning of the year
Performance shares exercised and withdrawn from the trust
Balance at the end of the year
157,643,568
154,850
157,798,418
157,455,119
188,449
157,643,568
219,126
–
219,126
219,126
–
219,126
Share capital consists of:
Ordinary shares
Tax Exempt Share Plan
Employee Share Plan
Treasury shares
Performance shares
157,587,043
42,455
168,920
157,798,418
157,443,533
28,315
171,720
157,643,568
2,761,505
160,559,923
2,156,778
159,800,346
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 suspended in August 2010.
Treasury shares
Treasury shares consist of shares held in trust in relation to the Group’s Performance Share Plan. As at 30 June 2012 a total of 2,761,505
(2011: 2,156,778) shares were held in trust and classified as treasury shares.
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 2012 (2011: Nil).
78 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
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
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
Transfer to retained earnings on sale of interest in overseas associate
Currency translation adjustment on controlled foreign entities’ financial statements
Decrement on foreign currency translation of share of associates’ net assets
Balance at the end of the year
2012
$’000
2011
$’000
7,067
3,821
(12)
11,876
(18,923)
3,829
7,578
3,821
(463)
8,580
(13,430)
6,086
7,578
(511)
7,067
3,821
3,821
(463)
451
(12)
8,580
2,940
–
356
11,876
(13,430)
–
(5,493)
–
(18,923)
7,357
221
7,578
3,821
3,821
(71)
(392)
(463)
6,339
1,949
78
214
8,580
(17,342)
9,657
(3,372)
(2,373)
(13,430)
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
This 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 the executive performance shares which have been recognised as an employee expense in
the Income Statement.
79 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 27 – RESERVES AND RETAINED EARNINGS (continued)
Foreign currency translation reserve
This 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 their foreign currency translation reserve.
Refer accounting policy Note 1(d).
Retained earnings
Balance at the beginning of the year
Profit attributable to equity holders of the Company
Dividends paid
Balance at the end of the year
2012
$’000
621,801
79,742
(65,625)
635,918
2011
$’000
540,957
139,831
(58,987)
621,801
NOTE 28 – PARENT ENTITY DISCLOSURES
As at, and throughout the financial year ended, 30 June 2012, the parent entity of the Group was Amalgamated Holdings Limited.
2012
$’000
2011
$’000
51,426
133,437
1,534
1,431
52,960
134,868
226
516,732
9,101
78,956
437,776
430
476,823
9,953
27,634
449,189
219,126
219,126
7,067
11,876
199,707
437,776
7,578
8,581
213,904
449,189
Results of parent entity
Profit for the year
Other comprehensive income
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
80 Amalgamated Holdings Limited – Annual Report 2012
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F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 28 – PARENT ENTITY DISCLOSURES (continued)
Parent entity commitments
Operating lease commitments – as lessee
Future minimum operating lease rental not provided for and payable:
Not later than one year
Later than one year but not later than five years
Later than five years
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
2012
$’000
2011
$’000
1,949
3,119
–
5,068
1,828
5,009
–
6,837
56,446
121,523
119,007
296,976
59,081
127,119
144,559
330,759
The Company has guaranteed the Group’s share of other commitments in respect of financing and other
arrangements of certain subsidiary entities
399
871
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
28,666
106,941
97,484
233,091
530,466
28,179
107,504
120,658
256,341
587,971
Parent entity guarantees
In respect of debts of its subsidiaries
The Company has entered into a Deed of Cross Guarantee with the 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.
In respect of bank debt facilities
The Company is a guarantor under the Group’s secured bank debt facilities, as disclosed in Note 23.
81 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
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 interest rate risk and currency 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 represent 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.
Investments and derivatives
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 2012, 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 to credit risk
The Group’s maximum exposure to credit risk at the reporting date was:
Unquoted investment in other entities
Available-for-sale financial assets
Trade and other receivables
Cash and cash equivalents
Short term deposits
Security deposits in respect of long term operating leases
82 Amalgamated Holdings Limited – Annual Report 2012
Note
14
15
11
10
10
20
2012
$’000
2011
$’000
315
10,032
40,514
63,309
–
1,137
115,307
315
10,762
38,755
50,581
65,000
1,633
167,046
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 29 – FINANCIAL RISK MANAGEMENT (continued)
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 reportable segment at the reporting date was:
Cinema Exhibition – Australia
Cinema Exhibition – New Zealand
Cinema Exhibition – Germany
Entertainment Technology
Hotels
Thredbo Alpine Resort
Leisure/Attractions
Property and Other Investments
Other
2012
$’000
28,450
3,333
8,717
14
–
40,514
7,917
898
8,583
5,453
10,885
565
180
1,113
4,920
40,514
2011
$’000
28,534
3,808
6,376
9
28
38,755
5,043
585
5,500
5,174
10,556
1,328
228
3,962
6,379
38,755
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 to maintain 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.
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
$’000
Contractual
cash flows
$’000
6 months
or less
$’000
Between 6 to
12 months
$’000
Between 1 to
2 year(s)
$’000
Between 2 to
5 years
$’000
Over 5
years
$’000
2012
Non-derivative financial liabilities
Secured bank loans
Unsecured non-interest bearing loans
from other companies
Trade payables
Other payables and accruals
Derivative financial liabilities
Forward exchange contracts used for
hedging – net
46,981
(53,672)
(1,050)
(1,065)
(2,194)
(49,363)
–
2,034
27,381
59,062
(2,034)
(27,381)
(59,062)
(47)
(27,381)
(59,062)
(47)
–
–
(184)
–
–
(250)
–
–
(1,506)
–
–
18
(18)
(18)
–
–
–
–
135,476
(142,167)
(87,558)
(1,112)
(2,378)
(49,613)
(1,506)
83 Amalgamated Holdings Limited – Annual Report 2012
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F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 29 – FINANCIAL RISK MANAGEMENT (continued)
2011
Non-derivative financial liabilities
Secured bank loans
Unsecured non-interest bearing loans
from other companies
Trade payables
Other payables and accruals
Derivative financial liabilities
Interest rate swaps used for hedging – net
Forward exchange contracts used for
hedging – net
Carrying
amount
$’000
Contractual
cash flows
$’000
6 months
or less
$’000
Between 6 to
12 months
$’000
Between 1 to
2 year(s)
$’000
Between 2 to
5 years
$’000
Over 5
years
$’000
46,321
(47,927)
(719)
(765)
(46,443)
–
–
1,416
24,074
51,854
(1,416)
(24,074)
(51,854)
(64)
(24,074)
(51,854)
221
10
(213)
(10)
(176)
(10)
123,896
(125,494)
(76,897)
(64)
–
–
(37)
–
(866)
(186)
–
–
–
–
(243)
–
–
–
–
(859)
–
–
–
–
(46,629)
(243)
(859)
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 interest rates and foreign exchange 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, whilst optimising the return.
The Group uses derivative financial instruments such as interest rate swaps and foreign exchange contracts to hedge exposures to fluctuations
in interest rates and foreign exchange 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.
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
timeframes out to five years. These limits may be varied with approval of the Board.
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
2012
$’000
–
–
–
2011
$’000
–
–
–
51,807
(46,981)
4,826
110,495
(46,321)
64,174
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 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. At 30 June
2012, the Group had no interest rate hedges (2011: 17% of debt hedged) due to the low level of Group debt.
84 Amalgamated Holdings Limited – Annual Report 2012
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NOTE 29 – FINANCIAL RISK MANAGEMENT (continued)
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 accounts for any fixed rate financial assets and liabilities at fair value. The movement in fair value of interest rate swaps that have
been deemed ineffective, are accounted for through profit or loss. Where the Group’s derivatives (interest rate swaps) qualify for hedge
accounting, the movement in fair value of those effective interest rate swaps is accounted for in equity in the hedging reserve. Therefore, only
those interest rate swaps that have been deemed ineffective are exposed to market rate changes that would impact on profit or loss.
At 30 June 2012, 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:
2012
Variable rate instruments
Interest rate swaps
2011
Variable rate instruments
Interest rate swaps
Profit or loss
expense/(income)
100 bp
increase
$’000
100 bp
decrease
$’000
Hedging reserve
(gain)/loss
100 bp
increase
$’000
100 bp
decrease
$’000
(34)
–
(34)
(449)
(70)
(519)
34
–
34
449
70
519
–
–
–
–
(34)
(34)
–
–
–
–
33
33
The movement in profit is due to the higher or lower interest income or costs resulting from a change in rate receivable or payable on variable
rate deposits, debt and net interest rate swaps. The movement in equity in the hedging reserve is due to an increase or decrease in the fair
value of derivative instruments designated in cash flow hedges, net of tax.
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:
Cash and cash equivalents
Trade receivables
Secured bank loans
Trade payables
Gross balance sheet exposure
Interest rate swaps
Forward exchange contracts
NZD
$’000
596
264
(46,981)
(140)
(46,261)
–
–
–
Net exposure
(46,261)
117
85 Amalgamated Holdings Limited – Annual Report 2012
2012
EUR
$’000
GBP
$’000
USD
$’000
117
–
–
–
117
–
–
–
38
–
–
–
38
–
–
–
38
234
–
–
–
234
–
(18)
(18)
216
NZD
$’000
762
1,178
(46,321)
(890)
(45,271)
(85)
–
(85)
(45,356)
2011
EUR
$’000
GBP
$’000
24
–
–
–
24
–
–
–
24
6
–
–
–
6
–
–
–
6
USD
$’000
3,090
–
–
–
3,090
–
(10)
(10)
3,080
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 29 – FINANCIAL RISK MANAGEMENT (continued)
Sensitivity analysis
A 10% strengthening/weakening of the Australian dollar against the following currencies at 30 June 2012 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.
2012
AUD/NZD +10%
AUD/NZD -10%
AUD/EUR +10%
AUD/EUR -10%
AUD/USD +10%
AUD/USD -10%
2011
AUD/NZD +10%
AUD/NZD -10%
AUD/EUR +10%
AUD/EUR -10%
AUD/USD +10%
AUD/USD -10%
Equity
$’000
4,271
(5,220)
–
–
–
–
4,218
(5,157)
–
–
(270)
331
Profit or loss
$’000
(76)
67
(10)
13
(20)
24
(122)
84
(2)
3
(10)
12
Hedging of net investment in foreign subsidiaries
The Group’s NZD denominated bank loan is designated as a hedge of the foreign currency exposure to the Group’s net investment in its
subsidiaries in New Zealand. The carrying amount of the loan at 30 June 2012 was $46,981,000 (2011: $46,321,000). A foreign exchange loss
of $660,000 (2011: profit of $1,764,000) 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. This movement would have an opposite movement in the AUD holding value of the underlying hedged investment in New Zealand.
86 Amalgamated Holdings Limited – Annual Report 2012
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F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
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
Short term deposits
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
Loans from other companies
Payables
Interest rate swaps
Forward exchange contracts
2012
Carrying
amount
$’000
Fair value
$’000
2011
Carrying
amount
$’000
Fair value
$’000
63,309
–
40,337
177
315
10,032
1,137
(44,767)
(2,034)
(86,443)
–
(18)
(17,955)
63,309
–
40,337
177
315
10,032
1,137
(46,981)
(2,034)
(86,443)
–
(18)
(20,169)
50,581
65,000
38,533
222
315
10,762
1,633
(46,022)
(1,416)
(75,928)
(221)
(10)
43,449
50,581
65,000
38,533
222
315
10,762
1,633
(46,321)
(1,416)
(75,928)
(221)
(10)
43,150
Note
10
10
11
11
14
15
20
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:
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.
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.
Interest bearing loans and borrowings
Fair value is calculated based on discounted expected future principal and interest cash flows.
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 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.
87 Amalgamated Holdings Limited – Annual Report 2012
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F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 29 – FINANCIAL RISK MANAGEMENT (continued)
Financial instruments fair value determination method grading
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).
•
2012
Available-for-sale financial assets
Derivative financial liabilities
2011
Available-for-sale financial assets
Derivative financial liabilities
Level 1
$’000
10,032
–
10,032
10,762
–
10,762
Level 2
$’000
Level 3
$’000
–
(18)
(18)
–
(231)
(231)
–
–
–
–
–
–
Total
$’000
10,032
(18)
10,014
10,762
(231)
10,531
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 shareholders’ equity and long
term debt. The Board also monitors the Group’s gearing ratio, being net debt divided by 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.
No Group entity is subject to externally imposed capital requirements.
NOTE 30 – EMPLOYEE BENEFITS
Employee benefits
Aggregate liability for employee benefits including on-costs:
Current
Employee benefits provision
Non-current
Employee benefits provision
Note
2012
$’000
2011
$’000
24
24
15,351
14,683
1,487
16,838
2,240
16,923
88 Amalgamated Holdings Limited – Annual Report 2012
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F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 30 – EMPLOYEE BENEFITS (continued)
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
which is dependent on the Group achieving its earnings per share (“EPS”) and total shareholder return (“TSR”) targets, 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:
Balance at
the start of
the year
Number
Grant date
Granted
Number
Exercised
Number
Forfeited
shares
reallocated
Number
Balance at the
end of the year (a)
Number
Type of right
2012
Performance shares
29 February 2012
Performance shares (b)
23 February 2012
Performance shares
16 May 2011
Performance shares (c)
23 February 2011
Performance shares (d)
28 June 2010
Performance shares (e)
23 February 2009
Performance shares (f)
18 February 2008
Performance shares (g)
19 February 2007
2011
Performance shares
16 May 2011
Performance shares (c)
23 February 2011
Performance shares (d)
28 June 2010
Performance shares (e)
23 February 2009
Performance shares (f)
18 February 2008
Performance shares (g)
19 February 2007
–
–
10,000
759,577
50,000
603,447
570,193
525,051
298,515
109,572
–
–
–
–
–
–
–
–
–
–
–
(95,630)
(35,108)
(24,112)
2,156,778
769,577
(154,850)
–
–
50,000
603,447
570,193
525,051
357,351
289,185
–
–
–
–
–
–
–
–
(58,836)
(129,613)
1,741,780
653,447
(188,449)
–
–
–
–
–
–
–
(10,000)
(10,000)
–
–
–
–
–
(50,000)
(50,000)
10,000
759,577
50,000
603,447
570,193
429,421
263,407
75,460
2,761,505
50,000
603,447
570,193
525,051
298,515
109,572
2,156,778
(a) The balance at the end of the year includes a total of 380,959 shares (2011: 294,234 shares) that have been forfeited by employees due to cessation
of employment. The forfeited shares are held within the trust and can be utilised for future grants.
(b) The balance at the end of the year for the 2012 performance share plan includes 22,289 forfeited shares.
(c) The balance at the end of the year for the 2011 performance share plan includes 66,223 forfeited shares (2011: 16,604 forfeited shares).
(d) The balance at the end of the year for the 2010 performance share plan includes 57,004 forfeited shares (2011: 35,837 forfeited shares).
(e) The balance at the end of the year for the 2009 performance share plan includes 142,974 forfeited shares (2011: 139,324 forfeited shares).
(f) The balance at the end of the year for the 2008 performance share plan includes 75,207 forfeited shares (2011: 75,207 forfeited shares).
(g) The balance at the end of the year for the 2007 performance share plan includes 17,262 forfeited shares (2011: 27,262 forfeited shares).
During the year to 30 June 2012, 769,577 performance shares were granted to employees under the plan and 382,077 shares, relating to
the 2009 plan issue, vested with employees. Of the shares that have vested from the 2007, 2008 and 2009 plan issues, 154,850 shares
were exercised and withdrawn from the trust during the year.
Other than as disclosed above, none of the performance shares awarded under the plan vested or became exercisable during the year.
89 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 30 – EMPLOYEE BENEFITS (continued)
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 2012 was $5.89 (2011 issue: $5.98) for those shares that have EPS hurdles and $4.21 (2011 issue: $3.94) for those shares that have
TSR 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)
Share price (30 day volume weighted average price)
Expected life of incentive
Granted
23 Feb 2012
Granted
23 Feb 2011
Granted
28 Jun 2010
6.9%
25%
3.65%
$5.89
3 years
6.2%
25%
5.2%
$5.98
6.6%
33%
4.5%
$5.78
3 years
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 total number of shares purchased during the year by employees, under the Tax Exempt Share Plan, totalled 16,221 shares (2011:
15,378 shares).
Employee Share Plan
At 30 June 2012, the total shares issued under the plan was 168,920 (2011: 171,720). 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 2012 was $6.45 (2011: $5.80).
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
2012
$’000
8,556
2011
$’000
8,172
90 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 31 – COMMITMENTS AND LEASES
Capital expenditure commitments
Contracted but not provided for and payable
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
2012
$’000
2011
$’000
8,306
11,126
88,454
286,730
275,463
650,647
94,168
314,493
321,590
730,251
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 $2,756,000 (2011: $3,307,000).
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
2012
$’000
2011
$’000
9,369
33,025
249,169
291,563
10,045
33,182
53,993
97,220
9,734
33,047
254,547
297,328
8,757
24,738
44,748
78,243
The Group receives rental income from a number of properties, both leased and owned. 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.
Finance lease commitments – as lessor or lesee
The Group does not have finance lease or hire purchase arrangements in place where it acts as a lessor or a lesee.
91 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
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
2012
$’000
2011
$’000
38,232
125,378
108,098
271,708
37,939
130,661
134,883
303,483
Claim against Group entity for additional charges
A Group entity has received a claim for the payment of additional charges covering the last six years, the basis of which is disputed by the
Group entity. It is estimated that the Group’s maximum liability under this claim is $618,000 (2011: $668,000), 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.
92 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
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
Event Cinemas (Australia) 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
Tourism & Leisure Pty Limited
Western Australia Cinemas Pty Limited
Zollverein Pty Limited.
93 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 33 – DEED OF CROSS GUARANTEE (continued)
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 2012 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
Dividends paid during the year
Retained earnings at the end of the year
Statement of Financial Position
ASSETS
Cash and cash equivalents
Short term deposits
Trade and other receivables
Inventories
Prepayments and other sundry assets
Total current assets
Trade and other 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 non-current assets
Total non-current assets
Total assets
LIABILITIES
Trade and other payables
Current tax liabilities
Provisions
Deferred revenue
Other liabilities
Total current liabilities
Loans from controlled entities
Other loans and borrowings
Deferred tax liabilities
Provisions
Deferred revenue
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained earnings
Total equity
94 Amalgamated Holdings Limited – Annual Report 2012
2012
$’000
76,320
(24,079)
52,241
–
52,241
592,638
(65,625)
579,254
9,134
–
27,213
18,980
1,708
57,035
1,220
153,133
93,162
310
10,032
107,026
470,921
79,350
23,107
2,383
2,648
943,292
1,000,327
41,478
7,875
13,107
35,526
217
98,203
22,643
45,627
–
1,958
4,173
74,401
172,604
827,723
219,126
29,343
579,254
827,723
2011
$’000
169,983
(28,973)
141,010
–
141,010
510,615
(58,987)
592,638
17,983
65,000
21,762
18,665
2,354
125,764
310
152,707
93,397
310
10,762
106,209
415,220
79,350
24,098
–
1,595
883,958
1,009,722
24,222
5,261
12,463
32,559
15,113
89,618
29,669
46,881
62
2,941
3,926
83,479
173,097
836,625
219,126
24,861
592,638
836,625
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 34 – BUSINESS COMBINATIONS
2012
The Group made no significant acquisitions during the year.
2011
Businesses in Australia
On 28 July 2010, the Group acquired the Moonlight Cinema business for cash consideration of $1,750,000. The Group incurred acquisition
related costs of $27,000 related to external legal fees and due diligence. These costs have been expensed in the Group’s Income Statement.
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. This acquisition adds to the diversity of the Group’s Australian cinema circuit.
On 24 May 2011, the Group acquired Ducks Nuts Bar and Grill for consideration of $1,050,000. The Group incurred acquisition related costs
of $46,000 related to external legal fees and due diligence. These costs have been included in other operating expenses in the Group’s
Income Statement. Ducks Nuts Bar and Grill is a gaming and bar business situated in Darwin, Northern Territory.
Since the dates of acquisition to 30 June 2011, these two businesses contributed revenue of $4,523,000 and a profit before tax of $12,000. If
the businesses had been acquired on 1 July 2010, management estimates that revenue contributed would have been $8,650,000 and the
profit before tax contributed for the period would have been $348,000.
The combined fair value of net tangibles assets and liabilities acquired as part of the above acquisitions amounted to $209,000, which largely
comprised plant and equipment and inventories. As a result of the acquisitions, intangible assets, being goodwill, increased by $2,653,000.
Identifiable assets acquired and liabilities assumed
Cash and cash equivalents
Plant, equipment and leasehold improvements
Employee entitlements
Inventories and prepayments
Deferred revenue
Other liabilities
Total net value of identifiable assets and liabilities
Fair value at
acquisition date
$’000
33
224
(13)
131
(90)
(76)
209
The above fair values of identifiable assets and liabilities have been determined based upon the best information available as of the reporting
date.
Goodwill
Goodwill was recognised as a result of the acquisition as follows:
Total cash consideration paid
Add: Payment for net working capital balances
Subtotal
Less: Value of identifiable assets and liabilities
Goodwill
Goodwill was attributable mainly to market position and existing know how in the two businesses.
$’000
2,800
62
2,862
209
2,653
95 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 35 – PARTICULARS IN RELATION TO CONSOLIDATED ENTITIES
Company (parent entity)
Amalgamated Holdings Limited
Subsidiaries
AHL Administration Pty Limited
Albury Hotel Property Unit Trust
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
CMS Cinema Management Services GmbH & Co. KG
CMS Cinema Verwaltungs GmbH
Edge Digital Cinema Pty Limited
Edge Digital Technology Pty Limited
Edge Investments BV
Elsternwick Properties Pty Limited
Event Cinemas (Australia) 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
Ownership
interest
Note
2012
%
2011
%
(a)(d)
(a)(f)
(a)(f)
(a)(e)
(i)
(g)
(a)(d)
(a)(d)
(a)(d)
(a)(d)
(a)(d)
(a)(d)(j)
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
96 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 35 – PARTICULARS IN RELATION TO CONSOLIDATED ENTITIES (continued)
Subsidiaries
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 Cubix in Berlin GmbH
Greater Union Filmpalast Dortmund GmbH & Co. KG
Greater Union Filmpalast GmbH
Greater Union Filmpalast in der Kulturbrauerei GmbH
Greater Union Filmpalast in Hamburg GmbH
Greater Union Filmpalast Rhein-Main GmbH
Greater Union Holdings Limited
Greater Union International BV
Greater Union International GmbH
Greater Union International Holdings Pty Limited
Greater Union Limited
Greater Union Nominees Pty Limited
Greater Union Real Estate Mainz GmbH
Greater Union Screen Entertainment Pty Limited
Greater Union Theaters Dritte GmbH & Co. KG
Greater Union Theaters Dritte Verwaltungs GmbH
Greater Union Theaters GmbH
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 GmbH & Co. KG
Neue Filmpalast Management GmbH
NFP Erste GmbH & Co. KG
NFP Erste Verwaltungs 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
97 Amalgamated Holdings Limited – Annual Report 2012
Note
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(b)
(a)(e)
(f)
(c)
(a)(f)(k)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(d)
(a)(f)
Ownership
interest
2012
%
2011
%
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
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 35 – PARTICULARS IN RELATION TO CONSOLIDATED ENTITIES (continued)
Note
Ownership
interest
2012
%
2011
%
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
(l)
(m)
(a)(d)
(a)(d)
(h)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(a)(f)
(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
Subsidiaries
Rydges Bankstown Pty Limited
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 Rotorua Hotel Limited
Rydges Townsville Hotel Property Unit Trust
Sabaya Port Douglas Pty Limited
Sonata Hotels Pty Limited
Sunshine Cinemas Pty Limited
Tannahill Pty Limited
The Geelong Theatre Company Limited
The Greater Union Organisation Pty Limited
Thredbo Resort Centre 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
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
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 Fiji.
This company was renamed QT Resort Port Douglas Pty Limited on 5 July 2012.
Previously Tobeon Pty Limited.
This company was deregistered during the year.
Previously Greater Union Theaters Mainz GmbH & Co. KG.
This company was renamed QT Gold Coast Pty Limited on 5 July 2012.
This company was incorporated and was domiciled in Singapore. It was deregistered during the 2011 year.
All companies, except those stated above, were incorporated in Australia. All trusts were established in Australia.
98 Amalgamated Holdings Limited – Annual Report 2012
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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
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
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Net assets – as reported by associates
Group’s share of net assets of associates
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
Disposals
Carrying amount of associates at the end of the year
2012
$’000
2011
$’000
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(10,108)
151
100 Amalgamated Holdings Limited – Annual Report 2012
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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 37 – INVESTMENTS IN JOINTLY CONTROLLED ENTITIES (continued)
During the year, the cinema joint ventures purchased management and consulting services of $5,977,000 (2011: $5,772,000), capital
equipment of $10,284,000 (2011: $8,096,000), block and artwork of $132,000 (2011: $131,000) and other services of $328,000 (2011:
$328,000) 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 entities at the beginning of the year
Net additional investments
Share of profit
Distributions received
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.
NOTE 38 – DIRECTOR AND EXECUTIVE DISCLOSURES
2012
$’000
2011
$’000
23,017
86,179
109,196
26,784
2,177
28,961
80,235
114,324
–
40,303
(39,325)
(42)
(30)
4
115,234
21,925
87,183
109,108
26,186
2,156
28,342
80,766
109,247
1,000
33,460
(28,759)
(583)
(32)
(9)
114,324
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’ and executives’ position and period of responsibility
Directors’ and executives’ remuneration
Directors’ Report
page reference
26
27
27
27
28
30
31
32
102 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 38 – DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
Directors
The following persons were directors of Amalgamated Holdings Limited during the financial year:
Name
Position
AG Rydge
Non-executive director and Chairman
Period of responsibility
1 July 2011 to 30 June 2012
AJ Clark
Non-executive director and lead independent director
1 July 2011 to 30 June 2012
KG Chapman
Non-executive director
PR Coates
Non-executive director
VA Davies
Non-executive director
RG Newton
Non-executive director
1 July 2011 to 30 June 2012
1 July 2011 to 30 June 2012
1 July 2011 to 30 June 2012
1 July 2011 to 30 June 2012
DC Seargeant
Managing Director and Chief Executive Officer
1 July 2011 to 30 June 2012
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
Position and employer
NC Arundel
PC Bourke
GC Dean (a)
MR Duff
Managing Director Rydges Hotels & Resorts
Rydges Hotels Limited
Director of Information Technology
Amalgamated Holdings Limited
Company Secretary, Director Finance & Accounting
Amalgamated Holdings Limited
Director Commercial
Amalgamated Holdings Limited
HR Eberstaller
Managing Director AHL Strategic Investments
The Greater Union Organisation Pty Limited
JM Hastings
General Manager Entertainment – Australia and New Zealand
The Greater Union Organisation Pty Limited
PW Horton
Director Finance & Accounting
Amalgamated Holdings Limited
Period of responsibility
1 July 2011 to 30 June 2012
1 July 2011 to 30 June 2012
1 July 2011 to 30 June 2012
1 July 2011 to 30 June 2012
1 July 2011 to 30 June 2012
1 July 2011 to 30 June 2012
1 July 2011 to 28 October 2011
(a) GC Dean has held the position of Director Finance & Accounting with effect from 28 October 2011.
All of the above persons were also key management persons during the whole of the year ended 30 June 2011, with the exception of:
•
•
VA Davies who was appointed a director on 20 April 2011; and
JM Hastings who was appointed to the key management position on 16 May 2011.
103 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 38 – DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
Key management personnel remuneration
The key management personnel remuneration included in employee expenses is as follows:
Employee benefits
Short term
Other long term
Termination payments
Post-employment
Equity compensation
2012
$
2011
$
6,565,070
101,673
373,000
168,278
1,642,728
8,850,749
6,778,572
106,795
242,437
151,697
1,178,407
8,457,908
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:
Director
DC Seargeant
Executives
NC Arundel
PC Bourke
GC Dean
MR Duff
HR Eberstaller
JM Hastings (a)
PW Horton (b)
KJ Kobishop (c)
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
Held at
the beginning of
the year
Granted
Exercised
Forfeited
690,000
580,000
255,000
210,000
–
(100,000)
–
–
–
–
(14,791)
(16,333)
–
–
–
–
–
–
80,764
57,217
9,174
–
41,397
43,013
89,799
67,590
28,560
18,820
50,000
–
83,680
64,307
–
100,000
28,539
23,547
15,681
9,174
25,089
14,717
26,908
22,209
11,792
9,740
29,793
50,000
–
19,373
–
–
(48,485)
–
(35,195)
–
–
–
–
(100,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Held at
the end of
the year
945,000
690,000
109,303
80,764
24,855
9,174
51,695
41,397
116,707
89,799
40,352
28,560
79,793
50,000
–
83,680
–
–
(a)
(b)
(c)
JM Hastings was appointed to the key management position on 16 May 2011.
PW Horton ceased employment with the Group on 28 October 2011.
KJ Kobishop ceased employment with the Group on 31 August 2010.
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.
104 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 38 – DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
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:
Directors
AG Rydge (Chairman)
AJ Clark
KG Chapman
PR Coates
VA Davies (b)
RM Graham (c)
RG Newton
DC Seargeant
(Managing Director)
Executives
NC Arundel
PC Bourke
GC Dean
MR Duff
HR Eberstaller
JM Hastings (d)
PW Horton (f)
KJ Kobishop (e)
Held at
the beginning
of the year
Purchases
Received on
release of
performance
shares
Sales
Other (a)
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
71,834,355
71,602,355
400,000
232,000
65,000
65,000
54,500
54,500
36,500
28,000
–
–
–
12,752
66,000
66,000
869,490
1,019,490
8,013
14,813
–
–
108,137
102,804
25,892
50,806
3,584
3,584
–
–
63,697
63,697
–
23,065
–
–
3,000
–
–
8,500
8,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100,000
(400,000)
(250,000)
–
–
–
–
14,791
16,333
–
–
–
–
–
–
–
–
–
–
–
(6,800)
–
–
(68,137)
(11,000)
(25,892)
(24,914)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(12,752)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(63,697)
–
–
(23,065)
Held at
the end of the
year
72,234,355
71,834,355
65,000
65,000
57,500
54,500
36,500
36,500
8,000
–
–
–
66,000
66,000
469,490
869,490
8,013
8,013
–
–
54,791
108,137
–
25,892
3,584
3,584
–
–
–
63,697
–
–
(a) 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.
(b) VA Davies was appointed a director on 20 April 2011.
(c) RM Graham resigned as a director on 20 April 2011.
(d)
(e) KJ Kobishop ceased employment with the Group on 31 August 2010.
PW Horton ceased employment with the Group on 28 October 2011.
(f)
JM Hastings was appointed to the key management position on 16 May 2011.
No shares (other than performance shares) were granted to key management personnel during the financial reporting period as compensation in
the year to 30 June 2012.
105 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
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 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 and office service charges received during the year were $24,274
(2011: $33,997). The Company holds shares in Carlton Investments Limited. Dividends received during the year from Carlton Investments
Limited totalled $509,447 (2011: $446,430).
AG Rydge paid rent, levies and other costs to Group entities during the year amounting to $85,755 (2011: $82,179). During the prior year, a
company associated with RM Graham paid rent and levies to a controlled entity amounting to $5,729. Rent is charged to AG Rydge and RM
Graham at market rates.
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 paid on loans from associates is shown in Note 4.
Other transactions were receipt of property rentals from associates of $45,000 (2011: $43,000) and costs of $29,000 (2011: $55,000), paid on
behalf of an associate, $29,000 (2011: $55,000) of which is refundable by that associate.
Refer also to Notes 11, 16 and 36.
Relationships with jointly controlled entities
Refer to Notes 11, 16, 32 and 37.
Key management personnel
Disclosures relating to directors and named executives are set out in Note 38.
106 Amalgamated Holdings Limited – Annual Report 2012
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
NOTE 40 – RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Reconciliation of profit after related income tax expense for the year to net cash provided
by operating activities
2012
$’000
2011
$’000
Profit after related income tax expense for the year
79,742
139,831
Adjustments for:
Amortisation
Depreciation
Net loss on sale of non-current assets
Profit on sale of interest in United Arab Emirates cinema exhibition operations
Development gain on revaluation of the redeveloped Canberra Civic property
Fair value decrement/(increment) 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 losses/(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)/decrease in trade and other receivables
Decrease/(increase) in inventories
Decrease in prepayments and other sundry assets
(Increase)/decrease in deferred tax items
Increase in trade and other payables
Decrease in provisions
Increase in deferred revenue
(Decrease)/increase in deferred income – VAT dispute
Decrease in other liabilities
Decrease in financing costs payable
Net cash provided by operating activities
NOTE 41 – EVENTS SUBSEQUENT TO REPORTING DATE
Dividends
For final dividends declared after 30 June 2012, refer Note 8.
10,176
27,174
972
–
(112)
71
39,325
(40,308)
18,228
2,940
467
218
525
139,418
(2,870)
516
796
(558)
12,136
(1,075)
4,380
(9,886)
(3,790)
(782)
138,285
9,502
26,838
561
(60,318)
(2,251)
(438)
33,159
(35,455)
330
1,949
136
(115)
(6,232)
107,497
11,738
(4,585)
3,233
3,623
7,380
(1,748)
5,811
9,886
(3,025)
(83)
139,727
107 Amalgamated Holdings Limited – Annual Report 2012
D I R E C T O R S ’ D E C L A R A T I O N
1.
In the opinion of the directors of Amalgamated Holdings Limited:
(a)
the consolidated financial statements and notes that are set out on pages 38 to 107 and the Remuneration Report in the Directors’
Report set out on pages 26 to 36, are in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2012 and of its performance for the financial year
ended on that date; and
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.
3.
4.
There are reasonable grounds to believe that the Company and the Group entities 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.
The directors have received the declarations required by section 295A of the Corporations Act 2001 from the Chief Executive Officer and the
Director Finance & Accounting for the year ended 30 June 2012.
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
Dated at Sydney this 23rd day of August 2012.
DC Seargeant
Director
108 Amalgamated Holdings Limited – Annual Report 2012
I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O T H E M E M B E R S O F
A M A L G A M A T E D H O L D I N G S L I M I T E D
Report on the financial report
We have audited the accompanying financial report of Amalgamated Holdings Limited (the company), which comprises the statement of
financial position as at 30 June 2012, the income statement, statement of comprehensive income, statement of changes in equity and
statement of cash flows for the year ended on that date, notes 1 to 41 comprising a summary of significant accounting policies and other
explanatory information and the directors’ declaration of the Group comprising the company and the entities it controlled at the year’s
end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that is free from material misstatement whether due to fraud or error. In note 1, the directors
also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
statements of the Group comply 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 of the financial report that gives a true and fair view 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, a true and fair 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 2012 and of its performance for the year ended
on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in note 1.
109 Amalgamated Holdings Limited – Annual Report 2012
I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O T H E M E M B E R S O F
A M A L G A M A T E D H O L D I N G S L I M I T E D
Report on the remuneration report
We have audited the Remuneration Report included in pages 26 to 36 of the directors’ report for the year ended 30 June 2012. 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 2012, complies with Section 300A
of the Corporations Act 2001.
KPMG
Kenneth Reid
Partner
Sydney
23 August 2012
110 Amalgamated Holdings Limited – Annual Report 2012
S H A R E H O L D E R I N F O R M A T I O N
Additional information required by the ASX Listing Rules and not disclosed elsewhere in the Annual Report is set out below:
SHAREHOLDINGS (AS AT 24 AUGUST 2012)
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
Perpetual Limited
IOOF Holdings Limited
Investors Mutual Limited
Number of ordinary shares held
56,598,377 *
56,588,377
15,844,299
14,437,979
13,018,276
* Includes Carlton Investments Limited holding.
VOTING RIGHTS
Ordinary shares
There were 5,707 holders of ordinary shares of the Company. The voting rights attaching to the ordinary shares, set out in clause 7.8(a) of the
Company’s Constitution, are:
“Subject to this constitution and to any rights or restrictions attached to any shares or class of shares, at a general meeting:
(1) on a show of hands, every member present has one vote; and
(2) on a poll, every member present has one vote for each share held as at the Record Time by the member entitling the member to
vote, except for partly paid shares, each of which confers on a poll only the fraction of one vote which the amount paid (not credited)
on the shares bears to the total amounts paid and payable (excluding amounts credited) on the share. An amount paid in advance of
a call is disregarded for this purpose.”
Options
There were no outstanding options of the Company as at 24 August 2012.
DISTRIBUTION OF SHAREHOLDERS
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number of
shareholders
Number of
shares held
2,772
1,791
544
555
45
1,113,451
4,560,917
3,868,480
13,941,354
137,075,721
5,707
160,559,923
The number of shareholders holding less than a marketable parcel is 319.
UNQUOTED ORDINARY SHARES
There were 2,974,132 unquoted ordinary shares issued pursuant to the employee share plans. The shares were held by 772 holders. The
unquoted ordinary shares have been included within the distribution of shareholders table above.
111 Amalgamated Holdings Limited – Annual Report 2012
S H A R E H O L D E R I N F O R M A T I O N
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
JP Morgan Nominees Australia Limited
RBC Investor Services Australia Nominees Pty Limited (Bkcust Account)
RBC Investor Services Australia Nominees Pty Limited (Pipooled Account)
Alphoeb Pty Limited
The Manly Hotels Pty Limited
Carlton Hotel Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Citicorp Nominees Pty Limited (Colonial First State Inv Account)
Mr Alan Graham Rydge
BNP Paribas Noms Pty Ltd (Master Cust DRP)
TN Phillips Investments Pty Ltd
Australian United Investment Company Limited
Sandhurst Trustees Ltd (SISF Account)
Argo Investments Limited
Australian Foundation Investment Company Limited
Milton Corporation 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
13,267,024
9,903,364
8,802,863
6,765,453
6,027,315
5,732,812
5,276,103
4,221,108
3,761,189
3,524,583
3,269,915
2,688,151
1,346,000
1,200,000
1,090,989
1,040,151
775,000
740,667
20.01
12.32
8.26
6.17
5.48
4.21
3.75
3.57
3.29
2.63
2.34
2.20
2.04
1.67
0.84
0.75
0.68
0.65
0.48
0.46
131,344,490
81.80
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.
112 Amalgamated Holdings Limited – Annual Report 2012
O T H E R I N F O R M A T I O N
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at 10:00am on Friday 26 October 2012 at:
Event Cinemas
505-525 George Street
Sydney NSW 2000
REGISTERED OFFICE
Level 20
227 Elizabeth Street
Sydney NSW 2000
Telephone
Facsimile
+61 2 9373 6600
+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 2975
Melbourne VIC 3001
Telephone
Facsimile
1300 850 505
+61 3 9473 2500
www.computershare.com
For more information on Amalgamated Holdings Limited please refer to our website at www.ahl.com.au
113 Amalgamated Holdings Limited – Annual Report 2012
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