Evotec
Annual Report 2013

Plain-text annual report

abn 51 000 005 103 abn 51 000 005 103 2013 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 3 A N N U A L R E P O R T C O N T E N T S Section Page Corporate Governance Statement Directors’ Report Directors’ Report: Message from the Chairman Regarding the Remuneration 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 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. Significant accounting policies Segment reporting Revenue and other income Profit before income tax Discontinued operations Auditors’ remuneration Taxation Dividends Earnings per share Cash and cash equivalents Trade and other receivables Inventories Prepayments and other current 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 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 2013 2 16 26 27 38 39 40 41 42 43 44 55 62 63 65 65 66 68 69 69 69 70 70 70 70 70 71 74 75 76 76 76 77 77 78 79 80 81 83 89 92 93 94 96 97 100 102 103 107 108 108 109 110 112 114 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 1. INTRODUCTION This 2013 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 2013. 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: • • • • • • • 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. • • • • • • • • • • • • 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 2013 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 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 eight 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: • • • 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. The Board currently has seven 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 at least every 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. • • • • 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 ASX 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 2013 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 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. There is one director who was in office prior to the suspension of the plan in May 2003 and is able to participate in the plan. Subject to the Corporations Act 2001, eligible directors with more than three years service were entitled to a retirement lump sum based on the length of service and the average of the fees paid. The benefit was capped at a maximum lump sum per eligible 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. The Chairman and Managing Director are not eligible to participate in the plan. The total accrued retirement benefits for non-executive directors other than superannuation, and further details on directors’ remuneration, are disclosed within the Remuneration Report. 4. AUDIT COMMITTEE 4.1 Role and responsibilities of the Audit Committee The Audit Committee Charter sets out the Committee’s roles and responsibilities. Its primary responsibilities are to: • • review and monitor the financial integrity of the Group’s financial reports and statements; review the adequacy and integrity of the Group’s 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. • • • 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 2013 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 4.2 Composition of the Audit Committee The Audit Committee consists of a minimum of three non-executive directors, the majority of whom are independent, and is chaired by an independent director who is not the Chairman of the Board. All Committee members are familiar with finance and accounting procedures. The members of the Audit Committee during the year were: • • • AJ Clark (Chairman) – independent non-executive director; 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: • • • • 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: • • • 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: • • • • • • 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 2013 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 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 2013. 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. 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 $939,000. 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 2013. 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 2013. 7. RISK MANAGEMENT 7.1 Risk profile and oversight of the risk management system The Board oversees the establishment, implementation and annual review of the Group’s risk management and internal control systems. Management has established and implemented the systems for identifying, assessing, monitoring and managing material operational, financial reporting, internal controls and compliance risks for the Group. The systems and processes implemented to manage material risks include: • • • • • • • • • • risk management framework; clearly defined management responsibilities and organisational structure; delegated limits of authority; treasury and accounting controls and reconciliations; comprehensive management reporting systems; budgeting and strategic planning processes; segregation of duties; 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 2013 was completed in July 2013. 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 2013 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 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 2013 were received in August 2013. 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. The policy is designed to support and protect any employees who report non-compliant, suspicious or unethical conduct by other employees of the Group, regardless of seniority of those involved in the alleged conduct. The Whistleblowing Policy formalises the Company’s commitment to protect the confidentiality and position of employees wishing to raise serious matters that affect the integrity of the Company and Group. The Board reviews the Whistleblowing Policy regularly and processes are in place to promote and communicate the Whistleblowing Policy’s contents. The Whistleblowing Policy is available from the Company’s website or upon request from the Company Secretary. 7.6 Legal compliance training All senior management personnel are required to complete legal compliance training at least once every two years. The training covers such topics as: • • • • • • • contract fundamentals; issues relating to the Competition and Consumer Act 2010 (previously 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 plan. 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 2013 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 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. • • • • • 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 Auditor’s 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 Group to the Board (set out in section 9.2 below); 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. 8 Amalgamated Holdings Limited – Annual Report 2013 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 9.1 Diversity in the workplace (continued) In July 2013, the Company announced that Mrs PM Mann will stand for election as an independent non-executive director at the 2013 Annual General Meeting. Mr AJ Clark has also announced his intention to retire at the Annual General Meeting. Following the Annual General Meeting, it is expected that there will be eight directors on the Board, with two directors being women, representing 25%. In addition, the Group appointed Ms TJ Alley to the position of Director of Marketing in November 2012. Ms Alley is a member of the key management personnel of the Group. 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 2013 30 June 2012 Female Male Female 14% 20% 25% 47% 86% 80% 75% 53% 14% 17% 25% 48% Male 86% 83% 75% 52% Alan Rydge Age 61. 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. Anthony Clark AM, FCA, FAICD Age 74. 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 50-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, comprise: • • • Carlton Investments Limited (appointed 2000); Ramsay Health Care Limited (appointed 1998); and Sphere Minerals Limited (appointed 2010). Kenneth Chapman MB BS, FAICD, FAIM, AFRACMA Age 51. Independent non-executive director and Board member since 2010. Experience A company director with 20-plus years senior executive experience in the tourism and real estate sectors. 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 (resigned 2012); chairman of Skyrail Rainforest Foundation Limited; director of GFB Fisheries Pty Limited (formerly GFB Fisheries Limited); and director of various entities associated with the privately held Chapman group of companies. 9 Amalgamated Holdings Limited – Annual Report 2013 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 67. 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, comprise: • • • • • Mr Coates was past chairman of the Minerals Council of Australia, the NSW Minerals Council and the Australian Coal Association. Minara Resources Limited (appointed director and chairman 2008 and resigned 2011); Santos Limited (appointed director 2008 and chairman 2009, retired as chairman 9 May 2013); Glencore International plc (appointed 2011 and resigned 2 May 2013); Glencore Xstrata plc (appointed executive director 12 June 2013); and Sphere Minerals Limited (appointed 24 May 2013). Valerie Davies FAICD Age 62. Independent non-executive director and Board member since 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, a Commissioner of Tourism Western Australia, and has previously served on the boards of Iluka Resources Limited and Tourism Australia. David Grant BComm, CA, GAICD Age 49. Independent non-executive director and Board member appointed 25 July 2013. Experience A company director with 20-plus years accounting and finance related experience. Mr Grant is a Chartered Accountant and previously held roles with Goodman Fielder Limited, Consolidated Rutile Limited and Iluka Resources Limited. Mr Grant was also a founding director of New Zealand- based Trans-Tasman Resources Ltd. Directorships Mr Grant is a director and Chairman of the Audit and Risk Committee of iiNet Limited. Richard Newton BBus (Marketing), FAICD Age 53. 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; 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 63. 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); BComm Bachelor of Commerce; CA Member of The Institute of Chartered Accountants in Australia; 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; GAICD Graduate Member of the Australian Institute of Company Directors; and MB BS Bachelor of Medicine and Bachelor of Surgery. 10 Amalgamated Holdings Limited – Annual Report 2013 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 Nomination and Remuneration Committee meetings Entitled to attend 9 Attended 9 Entitled to attend 4 Attended 4 Entitled to attend 6 Attended 6 9 9 9 9 – 9 9 8 9 9 9 – 9 9 4 – 4 – – – 4 4 – 3 – – – 4 6 – 6 – – – 6 6 – 6 – – – 4 AG Rydge AJ Clark KG Chapman PR Coates VA Davies DC Grant (a) RG Newton DC Seargeant (b) (a) (b) DC Grant was appointed to the Board on 25 July 2013 and was not entitled to attend directors’ meetings held during the financial year. 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 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 Comply Yes Companies should disclose the process for evaluating the performance of senior executives. 6.2 Yes 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 2013 – 6.2 3.1 3.3, 10.1 3.5, 10.1 3.3 3.2 6.1 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, that rights, responsibilities and membership requirements 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 2013 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 2013 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 Yes Yes Yes 3.1, 4.1, 7.1, 7.2, 7.3 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. Recommendation 7.4 Companies should provide the information indicated in the Guide to reporting on Principle 7. Guide to reporting on Principle 7 The following material should be included in the corporate governance statement in the annual report: • explanation of any departures from Recommendations 7.1, 7.2, 7.3 or 7.4; whether the board has received the report from management under Recommendation 7.2; and whether the board has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) under Recommendation 7.3. • • The following material should be made publicly available, ideally by posting it to the company’s website in a clearly marked corporate governance section: • a summary of the company’s policies on risk oversight and management of material business risks. Recommendation 8.1 The board should establish a remuneration committee. 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. 7.2 Yes – 7.1 7.2 7.1 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 2013 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 2013 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 2013 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: AG Rydge (Chairman) Director since 1978 AJ Clark (lead independent director) Director since 1998 KG Chapman Director since 2010 PR Coates Director since 2009 VA Davies Director since 2011 DC Grant Director appointed 25 July 2013 RG Newton Director since 2008 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 have been disclosed within the Corporate Governance Statement included within the Annual Report. COMPANY SECRETARIES 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. DI Stone ACA was appointed to the position of Company Secretary for Amalgamated Holdings Limited in 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 cinema equipment; and investment in shares in listed and unlisted companies. During the year, the Group disposed of its interest in the Featherdale Wildlife Park. Further details regarding the sale have been outlined within the financial statements. 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 2013 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 was $85,792,000 (2012: $79,742,000), an increase of $6,050,000 or 7.6% above the prior year result. The normalised result* before interest and income tax expense was $118,275,000 (2012: $105,416,000), an increase of $12,859,000 or 12.2% above the prior year result. The normalised result after tax was $82,859,000 (2012: $75,433,000), an increase of $7,426,000 or 9.8% above the prior year result. The individually significant items for the year included profits on the sale of both the Featherdale Wildlife Park and a Melbourne Investment Property. These profits were partially offset by redundancy costs and the pre-opening expenses relating to QT Sydney. The individually significant items were a net income item after tax of $1,575,000. A summary of the normalised result is outlined below: Entertainment Australia New Zealand Germany Hospitality and Leisure Hotels and Resorts 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 2013 2012 Normalised result * $’000 Discontinued operations $’000 Reconciliation to reported net profit $’000 Normalised result * $’000 Discontinued operations $’000 Reconciliation to reported net profit $’000 60,141 3,763 26,134 20,496 11,833 2,180 1,292 547 5,871 (13,982) 118,275 1,507 (7,342) 112,440 (29,581) 82,859 – – – – – 2,305 60,141 3,763 26,134 20,496 11,833 4,485 53,930 3,281 18,574 26,565 10,701 2,225 – 1,292 915 – – – 2,305 – – 2,305 (947) 1,358 547 5,871 (13,982) 120,580 1,507 (7,342) 114,745 (30,528) 509 3,186 (14,470) 105,416 2,450 (2,871) 104,995 (29,562) 84,217 75,433 1,575 85,792 – – – – – 1,569 – – – – 1,569 – – 1,569 (481) 1,088 53,930 3,281 18,574 26,565 10,701 3,794 915 509 3,186 (14,470) 106,985 2,450 (2,871) 106,564 (30,043) 76,521 3,221 79,742 * Normalised result is profit for the year before individually significant items (as outlined in Note 4(b) to the financial statements and in the table below) and discontinued operations. As outlined in Note 2 to the financial statements, this measure is used by the Board of Directors to allocate resources and in assessing the relative performance of the Group’s continuing operations. The normalised result is an unaudited non-IFRS measure. An analysis of the last five years is outlined below: Total revenue and other income ($’000) Basic earnings per share (cents) Dividends declared * ($’000) Dividends per share (cents) Special dividend per share (cents) 2013 2012 2011 2010 2009 807,228 54.3 67,435 42 – 790,285 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 – * Includes the interim dividend paid and the final dividend declared in relation to the financial year ended 30 June. 17 Amalgamated Holdings Limited – Annual Report 2013 Overview of the Group (continued) Individually significant items comprised the following: D I R E C T O R S ’ R E P O R T Pre-opening expenses relating to the launch and opening of QT Sydney Profit on sale of an Investment Property Redundancy costs incurred in relation to cinema digitalisation Profit on sale of the Featherdale Wildlife Park 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 Total individually significant items before income tax expense Income tax expense relating to individually significant items Total individually significant items after income tax expense 2013 $’000 (3,251) 1,439 (1,012) 5,024 – – – 2,200 (625) 1,575 2012 $’000 – – – – 18,799 1,966 (17,500) 3,265 (44) 3,221 Investments The Group acquired property, plant and equipment totalling $73,276,000 during the year. The acquisitions were primarily attributable to the 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. Property The Group’s interest in land and buildings and integral plant and equipment, including long term leasehold land and improvements, is independently valued by registered qualified valuers on a progressive three year cycle. The most recent valuations have been completed as at June 2013, February 2013 and June 2012. The total value of the Group’s interest in land and buildings, excluding investment properties, based on these independent valuations is $884,339,000 (refer Note 17) whilst the total written-down book value of these land and buildings including integral plant and equipment at 30 June 2013 is $650,396,000. Capital structure Cash and cash equivalents at 30 June 2013 totalled $92,768,000 and total debt outstanding was $78,543,000. 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 2013, the Group had no interest rate hedges (2012: no interest rate hedges) due to the low level of Group debt. Liquidity and funding The Group’s secured bank debt facilities comprise the following: • • • The above facilities mature on 15 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 decreased to $128,288,000 from $138,285,000 in the prior year to 30 June 2012. The lower trading cash flows were primarily due to a decrease in cash flows from other income and an increase in finance costs paid. 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 2013 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 * 2013 56 486 2012 55 479 Movement 1 7 * Managed and joint venture cinema sites (excludes Moonlight Cinema sites and screens). The normalised profit before interest and income tax expense was $60,141,000, an increase of 11.5% on the prior year normalised result. Domestic Exhibition produced a strong result due to an increase in merchandising sales and other revenues, which offset a relatively flat Box Office. The Box Office was underpinned by three titles: Skyfall, The Dark Knight Rises, and The Hobbit: An Unexpected Journey which all achieved in excess of $40 million at the Australian Box Office. Other major contributors included Iron Man 3 and Ted, both achieving in excess of $30 million. Merchandising revenue continued to grow with an 8.6% improvement in revenue per admission over the prior year. This growth was driven by the rollout of a new Gold Class menu and the continued success of the self-serve Scoop Alley candy bar concept. During the year, the Group completed its digital rollout across the circuit, taking the total amount of digital projectors installed to 480. In addition, the Group continued to expand its successful big screen, big seat Vmax concept, with an additional three traditional auditoriums converted to the Vmax concept at Innaloo in Perth, Indooroopilly in Brisbane and Cairns Central in Far North Queensland. There are now a total of 33 Vmax screens across the Australian circuit. The Group opened a new eight screen cinema at the Toombul shopping complex in north Brisbane and also refurbished the eight screen cinema at Carindale in Brisbane’s east, which included converting two auditoriums to Gold Class and two auditoriums to Vmax and refurbishing the food and beverage offerings. The contribution from the Group’s 50% interest in the Village managed circuit in Victoria increased by 16.9% over the prior year. This improvement was driven primarily by an increase in merchandising sales, other revenue and a decrease in operating costs. Cinema Exhibition – New Zealand As at 30 June Cinema locations * Cinema screens * * Managed and joint venture cinema sites. 2013 16 116 2012 17 124 Movement (1) (8) The normalised profit before interest and income tax expense was $3,763,000, an increase of 14.7% on the prior year normalised result. The New Zealand business, which also includes the Fiji Cinema Joint Venture (66.7% share in two cinemas), experienced a marginal decrease in Box Office. Box Office was impacted by the Group’s decision to close the eight screen cinema complex at Highland Park in Auckland in January 2013. On a same screen basis, Box Office decreased by 0.3% over the prior year. Overall, the business produced a comparatively good result for the year, predominately due to the positive impact of the renegotiation of an existing lease and the closure of the Highland Park cinema. The Box Office result for the year was predominately driven by the strong performance of The Hobbit: An Unexpected Journey which grossed over NZ$11.5 million at the New Zealand Box Office, as well as Skyfall, The Dark Knight Rises, Iron Man 3 and The Twilight Saga: Breaking Dawn – Part 2, all of which grossed in excess of NZ$5 million. Merchandising revenue continued to grow with a 5.2% improvement in revenue per admission over the prior year. The growth was driven by a continued focused approach on merchandising, along with a number of successful Candy Bar Combo promotions. During the year, the Group completed its digital rollout of the Event Cinemas circuit in New Zealand, leaving only five screens in the Rialto Joint Venture to be converted to digital. 19 Amalgamated Holdings Limited – Annual Report 2013 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 2013 54 420 2012 59 441 Movement (5) (21) The normalised profit before interest and income tax expense was $26,134,000, an increase of $7,560,000 or 40.7% on the prior year normalised result. After a strong end to the first half of the year, the second half of 2013 included a record Box Office for the month of June, in sharp contrast to the negative impact on Box Office of the European Championships in the prior year. Germany-wide admissions were 127 million. Box Office for the German circuit increased 8.7% over the prior year with admissions increasing by 2.0% and average admission price showing an increase of 6.6%. The uplift in average admission price was partly due to the surcharge on increased 3D admissions. The top performing films at the German Box Office were the blockbuster films Skyfall, The Hobbit: An Unexpected Journey and Django Unchained. The performance was further underpinned by The Dark Knight Rises, Ted, The Twilight Saga: Breaking Dawn – Part 2, Madagascar 3, Ice Age 4, The Croods, Life of Pi, Iron Man 3, Fast & Furious 6, The Hangover Part 3 and the German film productions Kokowääh 2 and Schlussmacher. German film product was however disappointing with only 12.9% of the Box Office coming from German product as against an already low base of 16.4% in the prior year. The German films to break one million admissions were Schlussmacher, Kokowääh 2, Fünf Freunde 2 and Cloud Atlas. Live broadcasts of The Metropolitan Opera and other alternative content continued to grow in popularity contributing a share of 1.0% to total Box Office as against 0.7% in the prior year. Merchandising spend per admission increased by 7.7% over the prior year resulting from increased transaction rates and average values. During the year, there was an increased level of capital expenditure, arising from the rollout of digital projection systems in line with a virtual print fee agreement with Arts Alliance Media. The German circuit currently has installed 316 digital screens at 53 sites. There was no material profit impact from the translation to Australian dollars and the average month end A$/euro exchange rate for the financial year to 30 June 2013 was 77.5 cents against 76.9 cents for the prior financial year. Other achievements during the year were the conclusion of a labour agreement with Verdi, the hand back to landlords of five traditional marginal cinema sites, continuing renovation of auditoriums and foyers in well performing multiplexes and the reopening of a digital IMAX screen in Berlin. HOSPITALITY AND LEISURE Hotels and Resorts As at 30 June Locations * Rooms * * Owned and managed hotels. 2013 45 8,349 2012 44 8,139 Movement 1 210 The normalised profit before interest and income tax expense was $20,496,000, a decrease of $6,069,000 or 22.8% on the prior year normalised result. This was due to a significant decline in the performance at the Gladstone and Townsville hotels, and the operating loss over the first nine months trading at QT Sydney. Partially offsetting these impacts was the significant increase in performance of QT Gold Coast over the previous year. Occupancy in the Group’s owned hotels declined over the prior comparable period by 1.5 percentage points to 73.8%. Average room rate of $141.46 also fell marginally short of the prior year, resulting in revenue per available room of $104. Softening demand from resource related business negatively impacted the result. Tighter restrictions on both Federal and state government travel also impacted accommodation and conference revenues in several hotels, particularly those in regional locations. The aforementioned factors were partly offset by reasonable performances from hotels located in the major mainland capital cities. Demand from the wider corporate travel market was solid, albeit with some softening in the last quarter. The Group maintained a heavy promotional focus targeting leisure business. This produced good results and contributed to an increase in weekend occupancy levels across the group. Wages and other operating costs were generally well controlled. Energy costs were the major exception with significant increases across both the owned and managed portfolios. A 32% increase in room nights was generated from the promotional and sales activity related to Priority Guest Rewards which was relaunched in the last quarter of 2012. Rydges.com and other recently launched company branded websites continue to perform well with room nights sold increasing by 13.5%. 20 Amalgamated Holdings Limited – Annual Report 2013 D I R E C T O R S ’ R E P O R T Capital upgrade work in both owned and managed hotels was directed towards the refurbishment of guest rooms in the more competitive markets of Gladstone and Townsville. Bar and restaurant offerings were also upgraded in hotels including Brisbane, Gladstone, Townsville and Wellington. Conference space in World Square and Brisbane was significantly expanded. In February, the Group secured the management contract for the 300 room Esplanade Fremantle – by Rydges, one of Western Australia’s largest convention hotels. In addition, the 318 room Rydges Sydney Airport opened in May and is already attracting strong demand. The Group has continued to roll out the Rydges Rise breakfast product and has invested in high quality WiFi systems in the majority of hotels. During the year, the Rydges, QT and Art Series Hotels became members of the Global Hotel Alliance (“GHA”). This adds the marketing and distribution power of some 400 affiliate hotels located in over 54 countries. GHA will add value to the Group via greater global marketing power as well as adding additional benefits to Priority Guest Reward members travelling overseas. The much anticipated QT Sydney, located within the historic Gowings and State Theatre buildings, opened in mid-September 2012. Thredbo Alpine Resort The normalised profit before interest and income tax expense was $11,833,000, representing an increase of $1,132,000 or 10.6% on the prior year normalised result. Natural snowfalls during the 2012 season provided the best skiing conditions since 2004, with skier days increasing by 17% for the period from July to October. June 2013 saw a very patchy start to the 2013 snow season with few natural snowfalls and relatively few nights with temperatures conducive to snow making. Despite poor conditions, skier days in June grew by 2.4% on the prior June, enabling full year skier day volume to grow by 15.1% to 425,045 days. Lift pass yield for the year decreased by 8.3% due to increased discounted season pass sales and extended online discounting due to competitive pressures. The full year result was underpinned by a significant improvement in the second half result. In January, the busiest month for summer operations, strong profit was achieved with increased leisure visitation due to mountain biking activity. Leisure and Attractions The normalised profit before interest and income tax expense was $2,180,000, a slight decrease of $45,000 or 2.0% on the prior year normalised result. The State Theatre, despite being flat on the previous record year, produced another strong result. The Featherdale Wildlife Park was sold on 26 June 2013, with a pre-tax profit on sale of $5,024,000. As a result of the sale, Featherdale has been reclassified to discontinued operations. ENTERTAINMENT TECHNOLOGY The normalised profit before interest and income tax expense was $1,292,000, an increase of $377,000 or 41.2% on the prior year normalised result. STRATEGIC INVESTMENTS Property The normalised profit before interest and income tax expense was $5,871,000, representing an increase of $2,685,000 or 84.3% on the prior year normalised result. The increase was primarily due to the lease of the retail space in the Gowings Building to Topshop which commenced on 3 October 2012. The result also included a fair value increment of the investment properties of $16,000, compared to a fair value decrement in the prior year of $71,000. A property at Elsternwick, Melbourne, was sold during the year with a profit of $1,439,000 included as an individually significant item. 21 Amalgamated Holdings Limited – Annual Report 2013 D I R E C T O R S ’ R E P O R T BUSINESS STRATEGIES AND PROSPECTS FOR FUTURE FINANCIAL YEARS 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 the Australian, New Zealand and German cinema businesses. Cinema Exhibition 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 Cinemas brand; expansion of the Gold Class cinema concept to certain cinema locations within the Australian domestic circuit; expansion of the Vmax cinema concept which provides the ultimate big screen cinema experience through larger screens and seats than a traditional auditorium; continued improvement of food and beverage outlets within the cinemas to maximise food and beverage revenue opportunities; continued expansion of the 3D digital footprint within the Australian, New Zealand 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 the locations in which the Group currently operates, are considered to be mature markets with limited growth and expansion opportunity. The Group anticipates achieving growth primarily through further expansion of the premium cinema concepts of Gold Class and Vmax and building higher frequency through loyalty programs. Rationalising under-performing cinema sites The Group will continue to pursue the policy of rationalising under-performing cinema sites. All sites, in all territories, are reviewed periodically and, where it is assessed that there is limited profit or potential for performance turnaround, an exit strategy is formulated. Where the site (or group of sites) is subject to long term leases, the exit strategy may be over a protracted period of time. Industry developments The Group believes that there are certain current issues pertaining to the industry that have the capacity to impact the strategic plans and future direction of the cinema operations. The Group will continue to monitor developments in relation to the following issues: • increase in capital expenditure resulting from the deployment of a digital platform for film exhibition; • alternative film delivery methods and the rise in popularity of other forms of entertainment (including video on demand (“VOD”), DVD ownership and the increase of home entertainment systems); shortening of the release window of film to VOD and DVD; and increase in unauthorised recording (piracy) of audio and visual recordings for commercial sale and distribution via the internet. • • HOSPITALITY AND LEISURE Hotels and Resorts 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 the Group’s hotels and resorts; • maintenance of all hotels at an appropriate standard and when required, rejuvenation of key areas of hotels to ensure the Group’s reputation continues to be enhanced; specific focus on creating standout 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 In addition, the Group has recognised a market opportunity in the 4.5 star design hotel segment. This segment presents opportunities for an increased level of average room rate, with the level of operating costs not significantly greater than those for the 4 star segment of the Rydges brand. The segment requires an innovative approach to the operation of the hotel restaurant and bar, and again these operate at a higher margin level. 22 Amalgamated Holdings Limited – Annual Report 2013 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; continuing to improve snow making capability to mitigate risk in poor snow seasons; expanding the mountain bike trail network to appeal to a broader range of riders; increasing the number and quality of sporting and cultural events to increase visitation outside of the snow season; 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. 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 focusing on restructuring business processes to reduce the level of operating costs of the existing business and ensuring the appropriate structures are in place for the digital platform. Industry developments The Group is assessing potential income streams from digital content delivery platforms, including alternate content distribution. STRATEGIC INVESTMENTS Property Maximising returns from existing properties 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: Declared and paid during the year Final 2012 dividend Interim 2013 dividend Declared after the end of the year Final 2013 dividend Per share Cents Total amount $’000 Date of payment Tax rate for franking credit 25 15 27 40,140 24,084 64,224 20 September 2012 21 March 2013 30% 30% 43,351 19 September 2013 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 27 to 37 and has been audited as required by section 308(3C) of the Corporations Act 2001. 23 Amalgamated Holdings Limited – Annual Report 2013 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 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 DC Grant 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 10,000 – 66,000 16,000 Performance shares held directly – – – – – – – 1,035,000 (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 statements. 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, VA Davies, DC Grant, RG Newton and DC Seargeant, who is or who has been a director or alternate director of the Company or of any related body corporate of the Company. The indemnity also extends to such other officers or former officers, including executive officers or former executive officers, of the Company and of any related body corporate of the Company as the directors of the Company determine. In terms of the indemnity, the Company will indemnify the directors and other officers of the Company acting as such, to the full extent permitted by law, against any liability to another person (other than the Company or a related body corporate) incurred in acting as a director or officer of the Company, unless the liability arises out of conduct involving a lack of good faith. The indemnity includes any liability for costs and expenses incurred by such person in defending any proceedings, whether civil or criminal, in which judgement is given in that person’s favour, or in which the person is acquitted and in making an application in relation to any proceedings in which the court grants relief to the person under the law. The Company has provided directors’ and officers’ liability insurance policies that cover all the directors and officers of the Company and its controlled entities. The terms of the policies prohibit disclosure of details of the amount of the insurance cover, its nature and the premium paid. OFFICERS WHO WERE PREVIOUSLY PARTNERS OF THE AUDIT FIRM Mr AJ Clark was previously a partner of the current audit firm, KPMG, at a time when KPMG undertook an audit of the Group. AUDITOR INDEPENDENCE The lead auditor’s independence declaration is set out on page 38 and forms part of the Directors’ Report for the year ended 30 June 2013. 24 Amalgamated Holdings Limited – Annual Report 2013 NON-AUDIT SERVICES PROVIDED BY KPMG During the year, KPMG, the Group’s auditor, 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 statements Other assurance services Overseas KPMG firms Audit and review of financial statements Other assurance services Other services: Auditors of the Group – KPMG Australia Tax compliance and advice Other services Overseas KPMG firms Tax compliance and advice 2013 $ 2012 $ 1,001,000 40,882 357,590 23,568 1,423,040 339,282 190,527 529,809 298,140 827,949 916,130 46,485 371,370 51,113 1,385,098 225,305 70,032 295,337 207,241 502,578 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 22nd day of August 2013. DC Seargeant Director 25 Amalgamated Holdings Limited – Annual Report 2013 D I R E C T O R S ’ R E P O R T MESSAGE FROM THE CHAIRMAN REGARDING THE REMUNERATION REPORT Dear Shareholder On behalf of the Board, I am pleased to introduce the Amalgamated Holdings Limited 2013 Remuneration Report. Response to the “first strike” received in 2012 At our 2012 Annual General Meeting, approximately 28% of the votes received1 did not support the 2012 Remuneration Report, and consequently the Company received a “first strike” under the Corporations Act 2001. Whilst no comments or questions were received from shareholders present at the meeting in respect of the Remuneration Report, the Nomination and Remuneration Committee, on behalf of the Board, has engaged with and sought feedback from key shareholders and stakeholder advisory groups to understand any current and existing concerns regarding the Group’s remuneration structure and Remuneration Report disclosures. Following this engagement process, the Board has agreed certain changes to the Managing Director’s remuneration, details of which are as follows: • the Managing Director’s fixed annual remuneration will remain at $1,890,000 (inclusive of the superannuation guarantee charge) for the years ending 30 June 2014 and 30 June 2015; and the Managing Director’s total potential short term incentive (“STI”) will be reduced from 150% to 100% with effect from 1 July 2013. • The Board remains confident that the Group’s remuneration policies, and the level and structure of its executive remuneration, are consistent with the Group’s strategies and performance, and are appropriately aligned with shareholder interests. Overview of the Group’s executive remuneration framework The Group’s executive remuneration framework is designed to attract, motivate and retain key executive talent. Executive remuneration consists of both fixed and variable remuneration components. The Group introduced a flat management structure following the Global Financial Crisis which allows the Managing Director to maintain a strong personal focus on all the Group’s operations. This flat structure is reflected in the level of fixed remuneration for the Managing Director and senior executives. Variable remuneration component consists of a STI plan and a long term incentive plan (“LTI”). Short term incentive Certain key shareholders raised concerns regarding the total potential STI for the Managing Director which, since 2010, has been set at 150% of the Managing Director’s fixed annual remuneration. In light of these concerns, the Managing Director’s total potential STI will be reduced from 150% to 100% with effect from 1 July 2013. To ensure that STI payments are closely aligned with overall Group strategy and improved financial performance, challenging specific and measurable hurdles are set at the beginning of each financial year by the Nomination and Remuneration Committee, and approved by the Board. An STI payment at the maximum level requires truly exceptional performance and, since 2010, the Managing Director’s STI achieved has averaged 64% of the maximum potential STI. The Board is evaluating the possibility of introducing a STI deferral plan for executives whereby a portion of any STI earned by an executive is deferred and delivered to executives after a two year period. The deferred component would be subject to any subsequent adjustments that the Board may consider necessary at its discretion, including in the event of a material misstatement in financial statements. Long term incentive The Group’s LTI consists of an Executive Performance Share Plan (“Plan”) which was approved by shareholders at the 2006 Annual General Meeting. A review of this Plan was conducted during the year and the key terms of the Plan, including the use of earnings per share and relative total shareholder return hurdles, were found to be consistent with current market practice. The Board has, however, determined that it would be appropriate to adopt new arrangements utilising performance rights, rather than performance shares, and the Company will seek shareholder approval at the 2013 Annual General Meeting for the proposed new LTI arrangements. Relationship between executive remuneration and Group performance The remuneration of the Managing Director and other key executives should be examined in context with the Group’s desire to maintain its current and historic financial performance, including strong growth in the share price and normalised earnings per share achieved over the past five years. Further details regarding the Group’s performance are set out on page 30. Given these significant achievements and the continuing strong performance of the Group, we remain confident that our approach to remuneration continues to be consistent with the Group’s policies and business strategies and is aligned with shareholder interests. The Remuneration Report provides further details regarding the above matters as well as important material on remuneration strategy, structure and outcomes. The Board commends the Remuneration Report to you. AG Rydge Chairman 1 Due to the exclusion of votes for shares held by key management personnel (including directors and associated parties) of the Group, votes against the resolution only represented approximately 9.7% of the issued share capital of the Company. 26 Amalgamated Holdings Limited – Annual Report 2013 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 statements. 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 (“AGM”) 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 are 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 31 in this report. 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 2014 are $120,000 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 2013 is detailed on page 33 in this report. The Company previously operated 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. The amount accrued in respect of the Directors’ Retirement Plan at 30 June 2013 is $165,000 (2012: $165,000) in respect of AJ Clark. The maximum benefit amount has been accrued for the participating director and no further plan expense accruals will occur in future years. There were no benefits paid under the plan during the year ended 30 June 2013 (2012: nil). 27 Amalgamated Holdings Limited – Annual Report 2013 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 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 composition of executive remuneration, the Nomination and Remuneration Committee obtains independent advice on the appropriateness of remuneration packages for executives, given remuneration trends in the market, 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 31 in this report. 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 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 are entitled to the payment or reimbursement of relocation costs, where applicable, at the commencement and termination of the contract. 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 to provide sufficient incentive to the executive to achieve the operational targets and such that the cost to the Group is reasonable in the circumstances. Structure Actual STI payments granted to each executive depend on the extent to which specific operating targets, set at the beginning of the year, are met. The operational targets consist of a number of KPIs, covering both financial and non-financial measures of performance. Typically, KPIs and assessment criteria include: • • • meeting of pre-determined growth in Group earnings over the prior year; meeting of strategic and operational objectives; and assessed personal effort and contribution. The Group has pre-determined benchmarks which must be met in order to trigger payments under the STI. The measures were chosen as they directly align the individual’s STI reward to the KPIs of the Group and to its strategies and performance. 28 Amalgamated Holdings Limited – Annual Report 2013 D I R E C T O R S ’ R E P O R T Structure (continued) 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 40% 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 TJ Alley NC Arundel PC Bourke GC Dean MR Duff HR Eberstaller JM Hastings (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% 50.0% 40.0% 50.0% 50.0% 50.0% 50.0% 60.0% 16.7% 16.7% 20.0% 25.0% 16.7% 16.7% 16.7% – – 16.7% – – – 16.7% 16.7% 25.0% – – 4.0% 10.0% 10.0% – – – 33.3% 16.6% 4.0% – 20.0% – 16.6% 65.0% – – 12.0% 15.0% 3.3% 16.6% – (a) Fixed annual remuneration is comprised of base salary, superannuation and benefits provided through salary sacrificing arrangements. (b) JM Hastings ceased employment with the Group on 24 August 2012. There are no future STI payments available to Mrs Hastings. 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 AGM. The Executive Performance Share Plan was designed to link employee reward with KPIs that drive sustainable growth in shareholder value over the long term. The objectives of the LTI plan are to: • • • align senior employees’ incentives with shareholder interests; balance the short term with the long term Group focus; and retain high calibre senior employees by providing an attractive equity-based incentive that builds an ownership of the Group mindset. Only senior employees who are able to directly influence the long term success of the Group participate in the Executive Performance Share Plan. Structure Executives are awarded performance shares which will only vest on the achievement of certain performance hurdles and service conditions. An offer is made under the Executive Performance Share Plan to senior employees each financial year and is based on individual performance as assessed by the annual appraisal process. If a senior employee does not sustain a consistent level of high performance, they will not be nominated for Executive Performance Share Plan participation. The Nomination and Remuneration Committee reviews all nominated senior employees with participation subject to final Board approval. In accordance with the ASX Listing Rules, approval from shareholders is obtained before participation in the Executive Performance Share Plan commences for the Managing Director. Each award of performance shares is divided into equal portions, with each portion being subject to a different performance hurdle. The performance hurdles are based on earnings per share (“EPS”) and total shareholder return (“TSR”) growth of Amalgamated Holdings Limited as determined by the Board over a three year period (“Performance Period”). The extent to which the performance hurdles have been met will be assessed by the Board at the expiry of the Performance Period. The performance hurdles for the awards of performance shares to executives in the financial year ended 30 June 2013 are based on Amalgamated Holdings Limited’s EPS and TSR growth over the Performance Period of the three years from 30 June 2012 (being the “Base Year”) to 30 June 2015. 29 Amalgamated Holdings Limited – Annual Report 2013 Structure (continued) The performance hurdles for the awards of performance shares to executives in the financial year ended 30 June 2013 are as follows: D I R E C T O R S ’ R E P O R T 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 4%, no shares will vest with the executive; if annual compound EPS growth over the Performance Period is equal to 4% but less than 6%, 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 is equal to or greater than 6%, 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 31 in this report) regarding the implementation of a revised LTI. Shareholder approval for the revised LTI arrangements will be sought at the forthcoming AGM. Full details of the revised LTI will be set out in the Notice of AGM. Group performance 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: 2013 $ 2012 $ 2011 $ 2010 $ 2009 $ Net profit before individually significant items, income tax and non-controlling interest (a) Dividends per share (cents) Special dividend per share (cents) Share price (year end) 114,745,000 106,564,000 104,269,000 127,255,000 (b) 94,144,000 42 – 8.27 39 – 6.45 37 4 5.80 37 – 5.70 32 – 4.30 (a) Refer page 17 in the Directors’ Report for a reconciliation to reported profit for the year. (b) The profit for the year ended 30 June 2010 included the record breaking performance of Avatar. 30 Amalgamated Holdings Limited – Annual Report 2013 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 The notice period is four weeks. TJ Alley (a) JM Hastings (b) 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. (a) TJ Alley commenced employment with the Group on 14 November 2012. (b) JM Hastings ceased employment with the Group on 24 August 2012. Not applicable, rolling contracts. Use of remuneration consultants During the year, 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 $8,000 for these services. GRG has confirmed all 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 2012 AGM At the Company’s 2012 AGM, approximately 28% of the votes received (representing approximately 9.7% of the issued share capital of the Company) did not support the 2012 Remuneration Report, and consequently the Company received a “first strike” under the Corporations Act 2001. No comments or questions were received from shareholders present at the meeting in respect of the Remuneration Report. The Company’s response to the “first strike” received in 2012 is set out on page 26. 31 Amalgamated Holdings Limited – Annual Report 2013 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 (a) Alan Rydge Chairman and non-executive director 1 July 2012 to 30 June 2013 Amalgamated Holdings Limited Anthony Clark Independent non-executive and lead director 1 July 2012 to 30 June 2013 Amalgamated Holdings Limited Kenneth Chapman Independent non-executive director 1 July 2012 to 30 June 2013 Amalgamated Holdings Limited Peter Coates Independent non-executive director 1 July 2012 to 30 June 2013 Amalgamated Holdings Limited Valerie Davies Independent non-executive director 1 July 2012 to 30 June 2013 Amalgamated Holdings Limited Richard Newton Independent non-executive director 1 July 2012 to 30 June 2013 Amalgamated Holdings Limited Executive director David Seargeant Executives Managing Director and Chief Executive Officer 1 July 2012 to 30 June 2013 Amalgamated Holdings Limited Tamsyn Alley Director of Marketing 14 November 2012 to 30 June 2013 Amalgamated Holdings Limited Norman Arundel Managing Director Rydges Hotels & Resorts 1 July 2012 to 30 June 2013 Rydges Hotels Limited Peter Bourke (b) Director of Information Technology 1 July 2012 to 22 November 2012 Amalgamated Holdings Limited Gregory Dean Director Finance & Accounting, Company Secretary 1 July 2012 to 30 June 2013 Amalgamated Holdings Limited Mathew Duff Director Commercial 1 July 2012 to 30 June 2013 Amalgamated Holdings Limited Hans Eberstaller Managing Director AHL Strategic Investments 1 July 2012 to 30 June 2013 Jane Hastings General Manager Entertainment – Australia and New Zealand 1 July 2012 to 24 August 2012 The Greater Union Organisation Pty Limited The Greater Union Organisation Pty Limited (a) David Grant was appointed to the Board on 25 July 2013 and was not a key management person at any time during the period from 1 July 2012 to 30 June 2013. (b) Peter Bourke ceased to be a key management person of the Group effective 22 November 2012. 32 Amalgamated Holdings Limited – Annual Report 2013 f o s t n e m e r i u q e r e h t h t i w e c n a d r o c c a n I . w o e b l t u o t e s e r a p u o r G e h t f o l e n n o s r e p t n e m e g a n a m y e k r e h t o d n a y n a p m o C e h t f o r o t c e r i d h c a e f o n o i t a r e n u m e r e h t f o t n e m e e l j r o a m h c a e f o t n u o m a d n a e r u t a n e h t f o s l i a t e D . n o s r e p t n e m e g a n a m y e k a s a w l i a u d v d n i i h c a e t a h t s d o i r e p t n a v e e r e h t l f o n o i t r o p e h t o t l g n i t a e r n o i t a r e n u m e r e d u c n l i l l y n o s e b a t n o i t a r e n u m e r e h t i l , s e r u s o c s D y t r a P d e t a e R 4 2 1 B S A A l T R O P E R ’ S R O T C E R I D n o i t a r e n u m e r ’ s e v i t u c e x e d n a ’ s r o t c e r i D d e t a l e r f o n o i t r o p o r P n o i t a r e n u m e r e c n a m r o f r e p $ l a t o T – – – – – – – – – – – – 0 0 0 , 5 9 2 0 0 0 , 0 7 2 0 0 0 , 4 5 1 0 0 0 , 0 4 1 0 0 0 , 8 1 1 0 0 0 , 8 0 1 0 0 0 , 6 3 1 0 0 0 , 5 2 1 0 0 0 , 8 1 1 0 0 0 , 8 0 1 0 0 0 , 8 1 1 0 0 0 , 8 0 1 % 2 . 9 4 % 9 . 7 5 1 8 5 , 0 5 6 , 3 4 4 1 , 6 5 2 , 4 $ – – – – – – – – – – – – – – s t i f e n e b t n e m e r i t e R g n o l d e u r c c A e v a e l e c i v r e s r e h t O r e h t O m r e t g n o l d e s a b - e r a h S t n e m y o p m e l - t s o P ) a ( e c n a r u s n I i s m u m e r p e v a e l l a u n n a d e u r c c A s t i f e n e b h s a c - n o N I T S s e s u n o b m r e t t r o h S $ – – – – – – – – – – – – – – – – – – – – – – – – – – 0 7 4 , 6 1 5 7 7 , 5 1 3 4 7 , 9 7 1 9 , 8 9 2 2 , 1 1 1 2 3 , 0 1 3 4 7 , 9 7 1 9 , 8 3 4 7 , 9 7 1 9 , 8 ) b ( $ y t i u q e I T L $ s n o i t u b i r t n o c n o i t a u n n a r e p u S $ – – – – – – – – – – – – $ – – – – – – – – – – – – 9 1 1 , 6 3 1 7 5 , 6 3 2 1 9 , 8 1 5 1 0 2 , 7 8 1 , 1 0 7 4 , 6 1 5 7 7 , 5 1 4 0 3 , 4 1 4 7 6 , 6 1 ) 4 0 5 , 4 8 ( ) 2 0 8 , 1 5 1 ( $ – – – – – – – – – – – – – – $ – – – – – – – – – – – – 0 5 7 , 5 7 2 , 1 0 0 5 , 7 7 2 , 1 l a u n n a d e x F i $ s e e f d n a n o i t a r e n u m e r 0 3 5 , 8 7 2 5 2 2 , 4 5 2 0 0 0 , 4 5 1 0 0 0 , 0 4 1 7 5 2 , 8 0 1 3 8 0 9 9 , 1 7 7 , 4 2 1 9 7 6 , 4 1 1 7 5 2 , 8 0 1 3 8 0 9 9 , 7 5 2 , 8 0 1 3 8 0 9 9 , , 0 3 5 3 7 8 1 , , 5 2 2 4 7 8 1 , 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 e v i t u c e x e - n o N S R O T C E R D I e g d y R G A n a m p a h C G K l k r a C J A s e t a o C R P i s e v a D A V t n a e g r a e S C D e v i t u c e x E n o t w e N G R 3 1 0 2 t r o p e R l a u n n A – d e t i i i l m L s g n d o H d e t a m a g a m A 3 3 l – % 0 . 6 % 7 . 6 1 % 7 . 0 3 % 9 . 1 3 % 6 . 7 1 % 7 . 2 2 % 3 . 2 2 % 4 . 5 2 % 6 . 3 3 % 2 . 7 2 % 0 . 4 4 – % 5 . 5 2 – % 2 . 3 d e t a l e r f o n o i t r o p o r P n o i t a r e n u m e r e c n a m r o f r e p $ l a t o T – 8 3 5 , 9 8 2 5 3 8 , 4 9 5 3 4 3 , 0 7 6 5 9 8 , 3 5 1 8 9 2 , 4 1 3 1 4 8 , 3 6 5 0 9 5 , 0 4 5 8 7 5 , 4 3 6 6 8 4 , 1 9 6 8 5 2 , 6 4 3 6 8 3 , 1 5 3 6 6 2 , 8 2 5 9 7 , 9 3 6 – $ – – – – – – – – – – – – – – – $ – – – – 2 9 5 , 8 8 9 4 , 9 3 1 6 , 2 1 1 4 9 , 3 3 9 8 7 , 3 1 4 6 5 , 1 1 6 4 4 , 6 4 8 6 , 4 – – – s t n e m y a p n o i t a n m r e T i g n o l d e u r c c A e v a e l e c i v r e s 7 0 7 , 7 2 5 0 0 0 , 3 7 3 5 1 4 , 5 – 8 0 5 , 7 1 0 0 3 , 6 7 7 3 7 , 7 1 1 2 3 0 , 9 1 1 0 2 , 8 2 6 1 9 , 6 6 5 1 6 , 8 7 7 2 1 , 2 7 5 7 4 , 1 1 1 7 3 6 , 1 3 6 0 9 , 4 4 7 1 8 , 5 1 1 ) 1 7 9 , 8 4 1 ( – ) 4 2 2 , 1 4 ( – 8 0 6 , 9 0 7 4 , 6 1 5 7 7 , 5 1 3 4 5 , 6 5 7 7 , 5 1 0 7 4 , 6 1 5 7 7 , 5 1 0 7 4 , 6 1 5 7 7 , 5 1 5 8 2 , 6 1 3 2 5 , 5 1 5 4 7 , 2 5 7 7 , 5 1 – 8 5 2 , 5 ) b ( $ y t i u q e I T L $ s n o i t u b i r t n o c n o i t a u n n a r e p u S r e h t O r e h t O m r e t g n o l d e s a b - e r a h S t n e m y o p m e l - t s o P $ – 8 2 2 3 9 0 , 7 5 7 2 , 1 0 6 4 4 4 9 2 4 1 , 3 8 7 0 , 2 0 5 0 , 2 6 8 6 , 1 1 4 5 , 1 5 7 2 , 1 9 6 1 0 6 6 – 0 2 9 , 2 ) a ( e c n a r u s n I i s m u m e r p $ e v a e l l a u n n a d e u r c c A – 9 0 3 , 9 1 0 0 1 , 6 1 ) 7 6 1 , 1 ( 0 1 9 , 1 0 7 0 , 8 4 1 1 , 8 1 3 5 , 7 1 1 5 2 , 3 1 7 4 7 , 6 1 4 2 7 , 2 1 8 1 8 , 2 8 1 8 6 9 1 , 1 – – m r e t t r o h S s t i f e n e b h s a c - n o N I T S s e s u n o b $ – – – – – – – – – – – – – – – 0 6 7 , 6 $ – – 0 5 7 , 2 2 0 0 0 , 8 8 0 0 0 , 0 3 3 8 0 , 7 2 6 5 0 , 1 6 3 8 8 , 1 4 1 6 3 , 9 8 4 1 0 , 1 2 1 0 6 6 , 2 6 3 0 7 , 9 0 1 3 3 9 , 2 0 1 0 0 5 , 7 4 – 0 2 9 , 7 5 l a u n n a d e x F i – 5 8 8 , 2 4 2 0 3 5 , 7 4 4 5 2 2 , 9 3 4 0 5 9 5 9 , 5 2 2 , 4 3 2 0 3 5 , 5 9 3 7 6 7 , 0 5 3 0 3 5 , 7 2 4 5 2 2 , 3 1 4 5 6 9 , 4 1 2 7 7 4 , 2 7 1 4 9 1 0 7 , 5 2 2 , 9 5 4 – 8 5 6 , 7 1 1 $ s e e f d n a n o i t a r e n u m e r 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 2 1 0 2 3 1 0 2 t r o p e R l a u n n A – I S E V T U C E X E ) c ( y e l l A J T l e d n u r A C N ) d ( e k r u o B C P n a e D C G f f u D R M r e l l a t s r e b E R H ) e ( s g n i t s a H M J ) f ( n o t r o H W P d e t i l i i m L s g n d o H d e t a m a g a m A 4 3 l T R O P E R ’ S R O T C E R I D ) d e u n i t n o c ( n o i t a r e n u m e r ’ s e v i t u c e x e d n a ’ s r o t c e r i 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. (b) Amounts disclosed above for remuneration relating to performance shares have been determined in accordance with the requirements of AASB 2 Share-based Payment. AASB 2 requires the measurement of the fair value of performance shares at the grant date and then to have that value apportioned in equal amounts over the period from grant date to vesting date. A value has been placed on the performance shares using a Monte Carlo simulation model. Details of performance shares on issue are set out within the Remuneration Report and further details on the terms and conditions of these performance shares is set out in Note 30 to the financial statements. TJ Alley commenced employment with the Group on 14 November 2012. (c) (d) PC Bourke ceased to be a key management person of the Group effective 22 November 2012. Amounts disclosed in the table above are in respect of the period for which PC Bourke was a key management person. JM Hastings ceased employment with the Group on 24 August 2012. PW Horton ceased employment with the Group on 28 October 2011. (e) (f) 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 shown below: Managing Director DC Seargeant Executives TJ Alley (c) NC Arundel PC Bourke GC Dean MR Duff HR Eberstaller JM Hastings (d) Included in remuneration (a) $ Awarded in year Not awarded in year (b) 1,275,750 – 22,750 30,000 61,056 89,361 62,660 102,933 45.0% – 10.0% 30.0% 41.3% 41.7% 66.7% 43.3% 55.0% – 90.0% 70.0% 58.7% 58.3% 33.3% 56.7% (a) Amounts included in remuneration for the year represent the amounts that were awarded in the year based on achievement of personal goals and satisfaction of specified performance criteria for the 30 June 2012 year. No amounts vest in future years in respect of the STI bonus schemes for the 2012 year. The amounts not awarded are due to the performance criteria not being met in relation to the assessment period. TJ Alley commenced employment with the Group on 14 November 2012. JM Hastings ceased employment with the Group on 24 August 2012. (b) (c) (d) 35 Amalgamated Holdings Limited – Annual Report 2013 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 shown below: D I R E C T O R S ’ R E P O R T Managing Director DC Seargeant Executives TJ Alley (b) NC Arundel PC Bourke (c) GC Dean MR Duff HR Eberstaller JM Hastings (d) Number Grant date 210,000 255,000 210,000 240,000 21 Feb 2013 23 Feb 2012 23 Feb 2011 28 Jun 2010 20,767 21 Feb 2013 23,502 28,539 23,547 18,987 15,681 9,174 20,868 25,089 14,717 11,889 22,489 26,908 22,209 17,947 9,876 11,792 9,740 7,866 29,793 50,000 21 Feb 2013 23 Feb 2012 23 Feb 2011 28 Jun 2010 23 Feb 2012 23 Feb 2011 21 Feb 2013 23 Feb 2012 23 Feb 2011 28 Jun 2010 21 Feb 2013 23 Feb 2012 23 Feb 2011 28 Jun 2010 21 Feb 2013 23 Feb 2012 23 Feb 2011 28 Jun 2010 23 Feb 2012 16 May 2011 Vested during the year Forfeited during the year (a) Year in which the grant vests Performance share – EPS $ Performance share – TSR $ Fair value – – – – – – 50% 50% – – – – – – – – 50% 50% – – – – – – – – – – 50% 50% – – – – – – 50% 50% – – – – – – 50% 50% 30 Jun 2016 30 Jun 2015 30 Jun 2014 30 Jun 2013 30 Jun 2016 30 Jun 2016 30 Jun 2015 30 Jun 2014 30 Jun 2013 30 Jun 2015 30 Jun 2014 30 Jun 2016 30 Jun 2015 30 Jun 2014 30 Jun 2013 30 Jun 2016 30 Jun 2015 30 Jun 2014 30 Jun 2013 30 Jun 2016 30 Jun 2015 30 Jun 2014 30 Jun 2013 – – 100% 100% – – 7.43 5.89 5.98 5.78 7.43 7.43 5.89 5.98 5.78 5.89 5.98 7.43 5.89 5.98 5.78 7.43 5.89 5.98 5.78 7.43 5.89 5.98 5.78 5.89 5.98 5.00 4.21 3.94 4.72 5.00 5.00 4.21 3.94 4.72 4.21 3.94 5.00 4.21 3.94 4.72 5.00 4.21 3.94 4.72 5.00 4.21 3.94 4.72 4.21 3.94 (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. TJ Alley commenced employment with the Group on 14 November 2012. No performance shares were granted to Ms Alley in previous financial years. PC Bourke commenced employment with the Group on 19 April 2010. No performance shares were granted to Mr Bourke in previous financial years. Mr Bourke ceased to be a key management person of the Group on 22 November 2012 and was not granted performance shares during the period from 1 July 2012 to 22 November 2012. JM Hastings ceased employment with the Group on 24 August 2012 and all performance shares were forfeited at that date. 36 Amalgamated Holdings Limited – Annual Report 2013 D I R E C T O R S ’ R E P O R T 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 TJ Alley NC Arundel PC Bourke (d) GC Dean MR Duff HR Eberstaller JM Hastings (e) Granted during the year (a) $ Exercised during the year (b) $ Forfeited during the year (c) $ Performance shares exercised Number Amount paid per share $ 1,305,150 129,068 146,067 – 129,696 139,770 61,379 – – – 190,956 – – 132,800 – – 805,200 – 63,698 – 39,884 60,209 26,390 543,390 – – 24,233 – – 20,000 – – – – 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. The value of performance shares forfeited 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 Board assessed the vesting, or otherwise, of performance shares due to performance criteria not being achieved. (d) PC Bourke was not granted performance shares during the period for which Mr Bourke was a key management person of the Group. JM Hastings ceased employment with the Group on 24 August 2012 and the performance shares were forfeited at that date. (e) There were no performance shares granted since the end of the year. End of Directors’ Report: Remuneration Report 37 Amalgamated Holdings Limited – Annual Report 2013 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 2013 there have been: no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. (i) (ii) KPMG Kenneth Reid Partner Sydney 22 August 2013 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation. 38 Amalgamated Holdings Limited – Annual Report 2013 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 3 Note 2013 $’000 2012 $’000 ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Prepayments and other current 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 current 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 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 92,768 45,879 14,577 6,151 159,375 1,185 1,387 13,374 119,428 759,565 69,500 39,284 8,227 9,077 1,021,027 1,180,402 87,768 452 9,633 17,518 58,749 3,681 177,801 78,469 6,585 8,046 5,347 4,511 102,958 280,759 899,643 219,126 23,031 657,486 899,643 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 The Statement of Financial Position is to be read in conjunction with the notes to the financial statements set out on pages 44 to 108. 39 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 2013 $’000 2012 $’000 3 3 4(a) 4(a) 4(a) 4(a) 36 37 7 5 9 9 9 9 9 9 759,028 48,200 807,228 (202,730) (182,574) (156,537) (85,396) (46,437) (40,552) (21,178) – (7,341) (742,745) (17) 45,150 45,133 109,616 (28,734) 80,882 722,263 68,022 790,285 (185,585) (179,292) (148,827) (82,331) (46,864) (37,260) (21,075) (18,228) (2,871) (722,333) 5 40,303 40,308 108,260 (29,606) 78,654 4,910 85,792 1,088 79,742 2013 Cents 2012 Cents 51.2 3.1 54.3 50.8 3.1 53.9 49.9 0.7 50.6 49.4 0.7 50.1 The Income Statement is to be read in conjunction with the notes to the financial statements on pages 44 to 108. 40 Amalgamated Holdings Limited – Annual Report 2013 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 3 Profit for the year Other comprehensive income/(expense) from continuing operations Items that may be reclassified subsequently to profit or loss Foreign currency translation differences for foreign operations – net of tax Net increase/(decrease) in fair value of available-for-sale financial assets – net of tax Revaluation increment on reclassification of property to investment properties Ineffective portion of change in fair value of cash flow hedges taken to the Income Statement – net of tax Other comprehensive income/(expense) for the year – net of tax Total comprehensive income for the year 2013 $’000 2012 $’000 85,792 79,742 14,330 2,339 1,300 25 17,994 (5,493) (511) – 451 (5,553) 103,786 74,189 The Statement of Comprehensive Income is to be read in conjunction with the notes to the financial statements on pages 44 to 108. 41 Amalgamated Holdings Limited – Annual Report 2013 Y T I U Q E N I S E G N A H C F O T N E M E T A T S 3 1 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F 2 9 7 , 5 8 3 7 8 , 8 5 8 5 2 9 3 3 , 2 0 3 3 , 4 1 0 0 3 , 1 4 9 9 , 7 1 6 8 7 , 3 0 1 8 4 0 6 1 , 1 ) 4 2 2 , 4 6 ( ) 6 1 0 , 3 6 ( 3 4 6 , 9 9 8 2 4 7 , 9 7 3 1 0 , 7 4 8 1 5 4 ) 1 1 5 ( ) 3 9 4 , 5 ( ) 3 5 5 , 5 ( 9 8 1 , 4 7 5 6 2 , 3 1 3 ) 5 2 6 , 5 6 ( ) 9 2 3 , 2 6 ( 3 7 8 , 8 5 8 0 0 0 ’ $ y t i u q e l a t o T 0 0 0 ’ $ 2 9 7 , 5 8 8 1 9 , 5 3 6 – – – – – – – 2 9 7 , 5 8 ) 4 2 2 , 4 6 ( ) 4 2 2 , 4 6 ( 6 8 4 , 7 5 6 2 4 7 , 9 7 1 0 8 , 1 2 6 – – – – – – 2 4 7 , 9 7 ) 5 2 6 , 5 6 ( ) 5 2 6 , 5 6 ( 8 1 9 , 5 3 6 i s g n n r a e d e n i a t e R 0 0 0 ’ $ s e v r e s e R – 9 2 8 , 3 5 2 9 3 3 , 2 0 3 3 , 4 1 0 0 3 , 1 4 9 9 , 7 1 4 9 9 , 7 1 0 6 1 , 1 – 8 4 8 0 2 , 1 1 3 0 , 3 2 – 6 8 0 , 6 1 5 4 ) 1 1 5 ( ) 3 9 4 , 5 ( ) 3 5 5 , 5 ( ) 3 5 5 , 5 ( 5 6 2 , 3 – 1 3 6 9 2 , 3 9 2 8 , 3 – – – – – – – – – – – – – – – – – – – – – 6 2 1 , 9 1 2 6 2 1 , 9 1 2 6 2 1 , 9 1 2 0 0 0 ’ $ l a t i p a c e r a h S 6 2 1 , 9 1 2 . 8 0 1 o t 4 4 s e g a p n o s t n e m e t a t s l i a c n a n i f e h t o t x a t f o t e n – s n o i t a r e p o n g e r o f i r o f s e c n e r e f f i d n o i t a s n a r t l y c n e r r u c n g e r o F i e m o c n i i e v s n e h e r p m o c r e h t O 2 1 0 2 y l u J 1 t a e c n a l a B r a e y e h t r o f t i f o r P x a t f o t e n – s t e s s a l i l a c n a n i f e a s - r o f - e b a l l i a v a f o e u a v l r i a f n i e g n a h c x a t f o t e n – s e g d e h w o l f h s a c f o e u a v l r i a f n i e g n a h c t e N t e N s e i t r e p o r p t n e m t s e v n i o t y t r e p o r p f o n o i t a c i f i s s a c e r n o t n e m e r c n l i n o i t a u a v e R l y t i u q e n i y l t c e r i d d e s i n g o c e r e m o c n i e v i s n e h e r p m o c r e h t o l a t o T x a t f o t e n – e s n e p x e s t n e m y a p d e s a b - e r a h s e e y o p m E l r a e y e h t r o f e m o c n i e v i s n e h e r p m o c l a t o T s n a o l e r a h s e e y o p m e l o t j t n e m t s u d a e u a v l t n e s e r p t e N i d a p s d n e d v D i i x a t f o t e n – s n o i t a r e p o n g e r o f i r o f s e c n e r e f f i d n o i t a s n a r t l y c n e r r u c n g e r o F i e m o c n i / ) e s n e p x e ( e v s n e h e r p m o c i r e h t O s r e n w o h t i w s n o i t c a s n a r t l a t o T 3 1 0 2 e n u J 0 3 t a e c n a l a B 1 1 0 2 y l u J 1 t a e c n a l a B r a e y e h t r o f t i f o r P x a t f o t e n – s t e s s a l i a c n a n i f l e a s - r o f - e b a l l i a v a f o e u a v l r i a f n i e g n a h c x a t f o t e n – s e g d e h w o l f h s a c f o e u a v l r i a f n i e g n a h c t e N t e N s e t o n e h t h t i w n o i t c n u n o c n j i d a e r e b o t s i y t i u q E n i s e g n a h C f o t n e m e t a t S e h T s r e n w o h t i w s n o i t c a s n a r t l a t o T 2 1 0 2 e n u J 0 3 t a e c n a l a B i d a p s d n e d v D i i y t i u q e n i y l t c e r i d d e s i n g o c e r e m o c n i e v i s n e h e r p m o c r e h t o l a t o T r a e y e h t r o f e m o c n i / ) e s n e p x e ( e v i s n e h e r p m o c l a t o T x a t f o t e n – e s n e p x e s t n e m y a p d e s a b - e r a h s e e y o p m E l s n a o l e r a h s e e y o p m e l o t j t n e m t s u d a e u a v l t n e s e r p t e N 3 1 0 2 t r o p e R l a u n n A – d e t i i l i m L s g n d o H d e t a m a g a m A 2 4 l 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 3 Note 2013 $’000 2012 $’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 Dividends received Interest received Finance costs paid Income tax refunds Income tax paid Net cash provided by operating activities Cash flows from investing activities Payments for property, plant and equipment and redevelopment of properties Purchase of management and leasehold rights, software and other intangible assets Payments for businesses acquired including goodwill and associated plant and equipment Net proceeds from disposal of discontinued operation Decrease in loans to associates and jointly controlled entities Proceeds from disposal of other non-current assets Increase in loans from other entities Proceeds from short term deposits Net cash used by investing activities Cash flows from financing activities Proceeds from borrowings Repayments of borrowings Payments for transaction costs related to loans and borrowings 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 838,065 (761,424) 76,641 41,858 43,757 569 1,507 (7,305) 735 (29,474) 128,288 814,610 (735,150) 79,460 39,325 50,324 535 2,968 (3,653) 3,068 (33,742) 138,285 (71,199) (118,831) (3,277) (2,317) (5,407) 9,800 565 459 201 – (68,858) 45,000 (17,000) – (64,224) (36,224) 23,206 63,309 6,253 92,768 – – – 390 618 65,000 (55,140) – – (2,088) (65,625) (67,713) 15,432 50,581 (2,704) 63,309 40 8 10 The Statement of Cash Flows is to be read in conjunction with the notes to the financial statements set out on pages 44 to 108. 43 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES Reporting entity (a) 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 2013 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 22 August 2013. (b) (i) (ii) (iii) Basis of preparation Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Accounting Interpretations) adopted by the Australian Accounting Standards Board and the Corporations Act 2001. The financial report also complies with International Financial Reporting Standards and interpretations adopted by the International Accounting Standards Board. 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). (iv) 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. (v) 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 2012, the Group has applied amendments to AASB 101 Presentation of Financial Statements outlined in AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income. The change in accounting policy only relates to disclosures and has had no impact on consolidated earnings per share or net income. The changes have been applied retrospectively and require the Group to separately present those items of other comprehensive income that may be reclassified to profit or loss in the future from those that will never be reclassified to profit or loss. These changes are included in the statement of profit or loss and other comprehensive income. 44 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued) (vi) New standards and interpretations not yet adopted AASB 11 Joint Arrangements will be effective for the Group’s 2014 consolidated financial statements. The Group has completed a preliminary assessment of the impact of AASB 11 on the Group’s interest in various jointly controlled entities, details of which are disclosed in Note 37. The results of that preliminary assessment indicate that the Group’s Australian, New Zealand and Fijian jointly controlled entities are likely to be classified as joint operations under AASB 11 and accounted for on a line-by-line basis. These operations are currently equity accounted under AASB 131 Interests in Joint Ventures. The Group’s assessment of the impact on the Group’s jointly controlled entities domiciled in Germany has yet to be completed; these are currently equity accounted under AASB 131, and may continue to be equity accounted under AASB 11. The likely impact of AASB 11 can be illustrated with reference to the Group’s financial statements for the year ended 30 June 2013. If AASB 11 were applied in 2013 (excluding the potential impact on the Group’s jointly controlled entities domiciled in Germany), it would result in an increase in revenue and other income of $236,187,000 to $1,043,415,000, an increase in expenses of $193,853,000, and a reduction in the share of net profit of equity accounted investees of $42,334,000. There would be no change to the reported profit. With regard to the Statement of Financial Position, the application of AASB 11 would result in the recognition of the Group’s share of assets and liabilities associated with the joint operations together with a goodwill balance associated with the Australian Theatres Joint Venture of approximately $30 million. There would be a reduction in the balance of investments accounted for using the equity method of $116,838,000. There would be no change to the reported net assets. A number of other new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2013, and have 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 (2010) which becomes mandatory for the Group’s 2016 financial statements and could change the classification and measurement of financial assets. The Group does not plan to adopt this new standard early and the extent of the impact has not been determined. (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 equity accounted investees, 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. 45 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued) (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. (d) (i) (ii) Unrealised gains arising from transactions with equity accounted investees 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. 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 jointly controlled entity 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. 46 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 remeasurement only to the extent it reverses a previous impairment loss on the property. 47 Amalgamated Holdings Limited – Annual Report 2013 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 3 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. 48 Amalgamated Holdings Limited – Annual Report 2013 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 3 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. 49 Amalgamated Holdings Limited – Annual Report 2013 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 3 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. 50 Amalgamated Holdings Limited – Annual Report 2013 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 3 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. 51 Amalgamated Holdings Limited – Annual Report 2013 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 3 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. 52 Amalgamated Holdings Limited – Annual Report 2013 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 3 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. (y) (i) (ii) (z) (aa) (i) 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. 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 Executive 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. Critical judgements, accounting estimates and assumptions 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. Critical judgements, 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: 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. 53 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued) (ii) (iii) (iv) (v) (vi) (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 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 is subject to risk and uncertainty; hence, the Group has not recognised all of the losses as a deferred tax asset. 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 liabilities Refer Note 32 for estimates and judgements made in relation to contingent 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. 54 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 comprise mainly corporate head office assets, head office expenses, and income tax assets and liabilities. 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. Cinema Exhibition Germany Includes the cinema exhibition operations in Germany. Entertainment Technology Includes theatre equipment supply and servicing. 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 the 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. 55 Amalgamated Holdings Limited – Annual Report 2013 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 3 1 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F d e t a d i l o s n o C : s s e L 0 0 0 ’ $ i g n u n i t n o c s n o i t a r e p o 0 0 0 ’ $ s n o i t a r e p o d e u n i t n o c s i D 0 0 0 ’ $ 0 0 0 ’ $ d e t a d i l o s n o C s t n e m t s e v n I r e h t O d n a y t r e p o r P 0 0 0 ’ $ / e r u s i e L s n o i t c a r t t A i e n p A l o b d e r h T 0 0 0 ’ $ t r o s e R 0 0 0 ’ $ s l e t o H i n o i t i b h x E a m e n C i 0 0 0 ’ $ l y g o o n h c e T i t n e m n a t r e t n E 0 0 0 ’ $ y n a m r e G 0 0 0 ’ $ d n a l a e Z w e N 0 0 0 ’ $ a i l a r t s u A ) d e u n i t n o c ( I G N T R O P E R T N E M G E S – 2 E T O N e m o c n i r e h t o d n a e u n e v e R s t n e m g e s g n i t a r e p O 3 1 0 2 2 2 1 , 2 0 8 ) 7 7 2 , 8 ( 9 9 3 , 0 1 8 1 1 9 , 4 1 8 9 1 , 4 1 8 6 9 , 3 5 2 1 0 , 8 8 1 3 2 7 , 8 2 7 2 8 , 0 8 2 7 6 9 , 2 6 3 9 7 , 6 6 1 e u n e v e r t n e m g e s l a n r e t x E 3 3 9 , 9 2 5 5 , 3 7 0 5 , 1 7 4 – – – ) 4 0 6 , 5 ( 3 3 9 , 9 6 5 1 , 9 7 0 5 , 1 7 4 1 6 1 , 7 1 8 ) 1 8 8 , 3 1 ( 2 4 0 , 1 3 8 ) 3 3 9 , 9 ( 8 2 2 , 7 0 8 – ) 1 8 8 , 3 1 ( ) 3 3 9 , 9 ( 9 0 1 , 1 2 8 – – 2 0 0 , 2 4 0 6 , 5 – 2 6 6 8 4 1 , – – 3 3 9 9 , – – – 2 – – e u n e v e r t n e m g e s - r e t n I l a n r e t x e – e m o c n i r e h t O e u n e v e r e c n a n F i e m o c n i r e h t o d n a e u n e v e r e u n e v e r d e t a c o l l a n u r e h t O l a t o T e m o c n i r e h t o d n a e u n e v e r d e t a d i l o s n o C e u n e v e r t n e m g e s - r e t n i f o n o i t a n m i i l E 0 0 3 , 4 8 ) 9 2 3 , 7 ( 9 2 6 , 1 9 7 5 8 , 7 9 0 5 , 9 3 3 8 , 1 1 5 4 2 , 7 1 9 0 3 , 1 6 0 3 , 2 2 3 3 6 , 2 7 3 9 , 8 1 t l u s e r t n e m g e S t l u s e R 3 3 1 , 5 4 – 3 3 1 , 5 4 – 3 3 4 , 9 2 1 ) 9 2 3 , 7 ( 2 6 7 , 6 3 1 7 5 8 , 7 – 9 0 5 , 9 – – 3 3 8 , 1 1 5 4 2 , 7 1 ) 7 1 ( 2 9 2 , 1 6 1 8 , 2 2 2 1 , 5 2 0 3 1 , 1 3 6 7 , 3 4 0 2 , 1 4 1 4 1 , 0 6 s e e t s e v n i d e t n u o c c a y t i u q e f o ) s s o l ( / t i f o r p t e n f o e r a h S t l u s e r t n e m g e s l a t o T ) 2 8 9 , 3 1 ( ) 5 3 8 , 5 ( 6 1 6 , 9 0 1 ) 4 3 7 , 8 2 ( 2 8 8 , 0 8 ) 2 5 5 , 0 4 ( – – – – 9 1 4 , 2 ) 9 2 3 , 7 ( ) 0 1 9 , 4 ( 2 9 – – ) 2 8 9 , 3 1 ( ) 5 3 8 , 5 ( 5 4 9 , 6 1 1 ) 3 5 1 , 1 3 ( 2 9 7 , 5 8 e s n e p x e x a t e m o c n i d e t a l e r e r o f e b t i f o r P e s n e p x e e c n a n i f t e N e s n e p x e x a t e m o c n i r e t f a t i f o r P e s n e p x e x a t e m o c n I s e s n e p x e d n a e u n e v e r d e t a c o l l a n U ) 4 4 6 , 0 4 ( ) 4 4 8 , 1 ( ) 7 7 4 ( ) 7 9 7 , 3 ( ) 3 0 1 , 5 1 ( ) 2 2 4 ( ) 6 0 3 , 5 ( ) 6 3 7 , 4 ( ) 9 5 9 , 8 ( i n o i t a c e r p e d d n a n o i t a s i t r o m A – – – – – – – – – – – – – – – – – – t n e m p u q e i d n a t n a p l , y t r e p o r p f o s n w o d - e t i r w t n e m r i a p m I s r a e y r o i r p n i e d a m s n w o d - e t i r w t n e m r i a p m i f o l a s r e v e R 3 1 0 2 t r o p e R l a u n n A – d e t i i l i m L s g n d o H d e t a m a g a m A 6 5 l S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 3 1 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F d e t a d i l o s n o C : s s e L 0 0 0 ’ $ i g n u n i t n o c s n o i t a r e p o 0 0 0 ’ $ s n o i t a r e p o d e u n i t n o c s i D 0 0 0 ’ $ 0 0 0 ’ $ d e t a d i l o s n o C s t n e m t s e v n I r e h t O d n a y t r e p o r P 0 0 0 ’ $ / e r u s i e L s n o i t c a r t t A o b d e r h T i n o i t i b h x E a m e n C i i e n p A l 0 0 0 ’ $ t r o s e R 0 0 0 ’ $ s l e t o H 0 0 0 ’ $ l y g o o n h c e T i t n e m n a t r e t n E 0 0 0 ’ $ y n a m r e G 0 0 0 ’ $ d n a l a e Z w e N 0 0 0 ’ $ a i l a r t s u A ) d e u n i t n o c ( I G N T R O P E R T N E M G E S – 2 E T O N s m e t i t n a c i f i n g i s y l l a u d i v d n i I s t n e m g e s g n i t a r e p O 3 1 0 2 – ) 4 2 0 , 5 ( 4 2 0 , 5 ) 1 5 2 , 3 ( ) 2 1 0 , 1 ( 9 3 4 , 1 ) 4 2 8 , 2 ( – – – ) 4 2 0 , 5 ( ) 1 5 2 , 3 ( ) 2 1 0 , 1 ( 9 3 4 , 1 0 0 2 , 2 – – – 9 3 4 , 1 9 3 4 , 1 4 2 0 , 5 – – – 4 2 0 , 5 – – – – – – ) 1 5 2 , 3 ( – – ) 1 5 2 3 ( , – – – – – – – ) 2 1 0 , 1 ( – ) 2 1 0 1 ( , – – – – – – – – – – T Q f o i g n n e p o d n a h c n u a l e h t o t g n i t a e r l s e s n e p x e i g n n e p o - e r P y e n d y S k r a P e f i l l l i d W e a d r e h t a e F e h t f o l e a s n o t i f o r P n o i t a s i l a t i g d i a m e n c o t i n o i t a e r l n i d e r r u c n i s t s o c y c n a d n u d e R y t r e p o r P t n e m t s e v n I n a f o l e a s n o t i f o r P 3 1 0 2 t r o p e R l a u n n A – d e t i i i l m L s g n d o H d e t a m a g a m A 7 5 l 0 0 0 ’ $ 0 0 0 ’ $ d e t a d i l o s n o C s t n e m t s e v n I r e h t O d n a y t r e p o r P 0 0 0 ’ $ / e r u s i e L s n o i t c a r t t A i e n p A l o b d e r h T 0 0 0 ’ $ t r o s e R 0 0 0 ’ $ s l e t o H 0 0 0 ’ $ l y g o o n h c e T i t n e m n a t r e t n E 0 0 0 ’ $ y n a m r e G 0 0 0 ’ $ d n a l a e Z w e N 0 0 0 ’ $ a i l a r t s u A i n o i t i b h x E a m e n C i 7 2 2 , 8 4 6 8 , 5 3 2 0 4 , 0 8 1 , 1 3 8 8 , 6 1 0 , 1 8 1 2 , 6 6 1 1 8 9 , 6 2 6 3 , 4 4 1 8 3 , 8 7 4 8 3 1 , 9 0 5 4 , 4 4 1 3 9 3 , 6 5 0 6 9 , 0 1 1 8 2 4 , 9 1 1 – – – – 9 3 1 1 5 4 2 , 9 7 2 7 , 9 5 5 , 9 0 1 1 1 3 , 6 3 1 , 1 8 1 2 , 6 6 1 1 8 9 , 6 2 6 3 , 4 4 1 8 3 , 8 7 4 7 7 2 , 9 1 0 9 , 6 4 1 2 7 6 , 3 6 9 1 5 , 0 2 2 5 8 5 , 6 2 1 4 , 1 9 9 5 7 , 0 8 2 2 6 7 , 2 8 1 – 3 8 8 9 2 1 , 2 1 1 6 7 5 2 , 6 9 9 , 6 2 8 9 , 6 5 7 3 3 , 4 1 4 7 6 , 5 6 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 3 1 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F ) d e u n i t n o c ( I G N T R O P E R T N E M G E S – 2 E T O N s t n e m t s e v n i d e t n u o c c a y t i u q E s t e s s a t n e m g e s l e b a t r o p e R s t n e m g e s g n i t a r e p O 3 1 0 2 s t e s s A s t e s s a x a t d e r r e f e D s t e s s a e t a r o p r o c d e t a c o l l a n U s e i t i l i b a i l t n e m g e s l e b a t r o p e R s e i t i l i b a i L s t e s s a l a t o t d e t a d i l o s n o C s e i t i l i b a i l e t a r o p r o c s e i t i l i b a i l x a t d e r r e f e D d e t a c o l l a n U s e i t i l i b a i l l a t o t d e t a d i l o s n o C 1 9 2 , 0 8 2 9 0 , 8 4 9 6 0 4 7 , 3 7 9 1 , 0 4 8 4 6 9 3 1 , 8 1 7 5 2 , 6 4 2 5 , 2 s t e s s a t n e r r u c - n o n f o s n o i t i s i u q c A 0 0 0 ’ $ i g n u n i t n o c s n o i t a r e p o 2 2 1 , 2 0 8 3 8 8 , 6 1 0 , 1 8 2 4 , 9 1 1 0 5 9 , 9 7 d e t a d i l o s n o C 0 0 0 ’ $ : s s e L s n o i t a r e p o d e u n i t n o c s D i – – ) 1 4 3 ( ) 7 7 2 , 8 ( 0 0 0 $ ’ 9 9 3 , 0 1 8 3 8 8 6 1 0 , , 1 8 2 4 , 9 1 1 1 9 2 , 0 8 d e t a d i l o s n o C 0 0 0 $ ’ y n a m r e G 7 2 8 , 0 8 2 0 5 4 , 4 4 1 1 5 4 , 2 9 3 1 , 8 1 i j i F 0 0 0 $ ’ 6 8 5 , 5 8 8 1 3 , 8 9 9 7 2 , 7 8 3 7 , 6 l d n a d n a a e Z w e N 0 0 0 ’ $ a i l a r t s u A 6 8 9 , 3 4 4 5 1 1 , 4 7 7 8 9 6 , 9 0 1 4 1 4 , 5 5 s t n e m t s e v n i d e t n u o c c a y t i u q E s t e s s a t n e m g e s l e b a t r o p e R e u n e v e r t n e m g e s l a n r e t x E s t e s s a t n e r r u c - n o n f o s n o i t i s u q c A i n o i t a m r o f n i l a c i h p a r g o e G 3 1 0 2 3 1 0 2 t r o p e R l a u n n A – d e t i i i l m L s g n d o H d e t a m a g a m A 8 5 l 2 6 2 , 1 1 8 5 0 , 1 2 7 7 7 1 0 , 4 7 4 5 , 1 0 8 ) 2 6 2 , 1 1 ( 5 8 2 , 0 9 7 6 7 2 , 1 8 8 0 3 , 0 4 4 8 5 , 1 2 1 6 4 1 , 1 ) 0 7 4 , 4 1 ( 0 6 2 , 8 0 1 ) 6 0 6 , 9 2 ( 4 5 6 , 8 7 8 5 2 ) 0 6 2 , 7 3 ( ) 8 2 2 , 8 1 ( – – – – ) 9 6 5 , 7 ( – ) 9 6 5 , 7 ( – ) 9 6 5 , 1 ( ) 9 6 5 , 1 ( – – 1 8 4 ) 9 6 5 , 1 ( ) 8 8 0 , 1 ( 0 9 – – 2 6 2 , 1 1 8 5 0 , 1 2 7 7 7 1 0 , 4 6 1 1 , 9 0 8 ) 2 6 2 , 1 1 ( 4 5 8 , 7 9 7 5 4 8 , 2 8 8 0 3 , 0 4 3 5 1 , 3 2 1 6 4 1 , 1 ) 0 7 4 , 4 1 ( 9 2 8 , 9 0 1 ) 7 8 0 , 0 3 ( 2 4 7 , 9 7 8 5 2 ) 0 5 3 , 7 3 ( ) 8 2 2 , 8 1 ( S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 3 1 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F d e t a d i l o s n o C : s s e L 0 0 0 ’ $ i g n u n i t n o c s n o i t a r e p o 0 0 0 ’ $ s n o i t a r e p o d e u n i t n o c s i D 0 0 0 ’ $ 0 0 0 ’ $ d e t a d i l o s n o C s t n e m t s e v n I r e h t O d n a y t r e p o r P 0 0 0 ’ $ / e r u s i e L s n o i t c a r t t A i e n p A l o b d e r h T 0 0 0 ’ $ t r o s e R 0 0 0 ’ $ s l e t o H 3 3 1 , 5 6 7 ) 9 6 5 , 7 ( 2 0 7 , 2 7 7 6 3 0 , 5 1 7 3 3 , 3 1 8 8 9 , 1 5 3 7 2 0 7 1 , – 1 2 6 – – – 0 5 – 7 9 8 2 , i n o i t i b h x E a m e n C i 0 0 0 ’ $ l y g o o n h c e T i t n e m n a t r e t n E 0 0 0 ’ $ y n a m r e G 0 0 0 ’ $ d n a l a e Z w e N 0 0 0 ’ $ a i l a r t s u A ) d e u n i t n o c ( I G N T R O P E R T N E M G E S – 2 E T O N e m o c n i r e h t o d n a e u n e v e R s t n e m g e s g n i t a r e p O 2 1 0 2 – 0 2 5 0 3 , 2 6 2 1 1 , 0 6 2 5 6 2 , 3 7 3 2 6 , 5 1 9 , 3 6 1 e u n e v e r t n e m g e s l a n r e t x E – 2 3 2 7 1 , – 8 5 2 – – e u n e v e r t n e m g e s - r e n I t l a n r e t x e – e m o c n i r e h t O e u n e v e r e c n a n F i e m o c n i r e h t o d n a e u n e v e r e u n e v e r d e t a c o l l a n u r e h t O l a t o T e u n e v e r t n e m g e s - r e t n i f o n o i t a n m i i l E – 1 6 6 , 5 1 6 6 , 5 – 4 9 7 , 3 4 9 7 , 3 – 1 0 7 , 0 1 1 0 7 , 0 1 – 5 6 0 9 , 5 6 0 9 , 5 0 1 9 5 1 9 2 7 1 3 3 , 4 3 6 2 , 6 0 8 5 3 , 2 2 4 2 , 9 5 8 1 8 2 3 , 0 2 1 , 7 1 0 1 8 , 6 3 0 3 9 , 3 5 s e e t s e v n i d e t n u o c c a y t i u q e f o t i f o r p t e n f o e r a h S t l u s e r t n e m g e s l a t o T t l u s e r t n e m g e S t l u s e R e m o c n i r e h t o d n a e u n e v e r d e t a d i l o s n o C – – – – – – ) 1 5 1 , 2 ( ) 8 9 3 ( ) 0 6 6 , 3 ( – ) 8 3 6 2 1 ( , ) 0 0 5 7 1 ( , ) 5 0 3 ( ) 3 5 5 5 ( , ) 4 7 6 4 ( , ) 1 7 9 , 7 ( i n o i t a c e r p e d d n a n o i t a s i t r o m A e s n e p x e x a t e m o c n i d e t a l e r e r o f e b t i f o r P e u n e v e r e c n a n i f t e N e s n e p x e x a t e m o c n i r e t f a t i f o r P e s n e p x e x a t e m o c n I s e s n e p x e d n a e u n e v e r d e t a c o l l a n U – – – ) 8 2 7 ( – 8 5 2 – – t n e m p u q e i d n a t n a p l , y t r e p o r p f o s n w o d - e t i r w t n e m r i a p m I s r a e y r o i r p n i e d a m s n w o d - e t i r w t n e m r i a p m i f o l a s r e v e R 3 1 0 2 t r o p e R l a u n n A – d e t i i i l m L s g n d o H d e t a m a g a m A 9 5 l S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 3 1 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F d e t a d i l o s n o C : s s e L 0 0 0 ’ $ i g n u n i t n o c s n o i t a r e p o 0 0 0 ’ $ s n o i t a r e p o d e u n i t n o c s i D 0 0 0 ’ $ 0 0 0 ’ $ d e t a d i l o s n o C s t n e m t s e v n I r e h t O d n a y t r e p o r P 0 0 0 ’ $ / e r u s i e L s n o i t c a r t t A o b d e r h T i n o i t i b h x E a m e n C i i e n p A l 0 0 0 ’ $ t r o s e R 0 0 0 ’ $ s l e t o H 0 0 0 ’ $ l y g o o n h c e T i t n e m n a t r e t n E 0 0 0 ’ $ y n a m r e G 0 0 0 ’ $ d n a l a e Z w e N 0 0 0 ’ $ a i l a r t s u A ) d e u n i t n o c ( I G N T R O P E R T N E M G E S – 2 E T O N s m e t i i t n a c i f i n g s y l l a u d i v i d n I s t n e m g e s g n i t a r e p O 2 1 0 2 9 9 7 , 8 1 6 6 9 , 1 5 6 2 , 3 ) 0 0 5 , 7 1 ( – – – – 9 9 7 , 8 1 ) 0 0 5 , 7 1 ( 6 6 9 , 1 5 6 2 , 3 – – 6 6 9 , 1 6 6 9 , 1 – – – – – – – – – ) 0 0 5 , 7 1 ( – ) 0 0 5 , 7 1 ( – – – – 9 9 7 , 8 1 – – 9 9 7 8 1 , – – – – – – – – s e i t r e p o r p l e t o h i n a t r e c o t g n i t a e r l t n e m p u q e i d n a t n a p l s t o l d n a l l a i t n e d s e r i d e p o e v e d l f o l e a s n o t i f o r P 3 1 0 2 t r o p e R l a u n n A – d e t i i i l m L s g n d o H d e t a m a g a m A 0 6 l i d e t a c o s s a d n a s g n d i l i u b , d n a l f o s n w o d - e t i r w t n e m r i a p m I a n o x a t i d a p r e v o o t g n i t a e r l l e b a v e c e r i t s e r e t n i d n a T A V 1 e c n s i d o i r e p e h t g n i r u d l d o s s t c u d o r p d o o f f o r e b m u n e c n a n i f d n a e u n e v e r r e h t o n i d e d u c n i ( l 5 0 0 2 y r a u n a J ) 3 e t o N n i e u n e v e r d e t a d i l o s n o C : s s e L 0 0 0 ’ $ i g n u n i t n o c s n o i t a r e p o 0 0 0 ’ $ s n o i t a r e p o d e u n i t n o c s i D 0 0 0 ’ $ 0 0 0 ’ $ d e t a d i l o s n o C s t n e m t s e v n I r e h t O d n a y t r e p o r P 0 0 0 ’ $ / e r u s i e L s n o i t c a r t t A i e n p A l o b d e r h T 0 0 0 ’ $ t r o s e R 0 0 0 ’ $ s l e t o H 0 0 0 ’ $ l y g o o n h c e T i t n e m n a t r e t n E 0 0 0 ’ $ y n a m r e G 0 0 0 ’ $ d n a l a e Z w e N 0 0 0 ’ $ a i l a r t s u A i n o i t i b h x E a m e n C i S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 3 1 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F 8 1 7 , 2 4 9 0 9 3 , 5 1 1 – ) 9 5 4 , 4 ( 7 7 1 , 7 4 9 0 9 3 , 5 1 1 – – – – 7 8 9 , 2 5 1 9 2 7 , 1 1 5 8 5 , 3 4 0 6 7 , 6 4 4 8 0 1 , 8 5 0 , 1 ) 9 5 4 , 4 ( 7 6 5 , 2 6 0 , 1 7 8 9 , 2 5 1 9 2 7 , 1 1 5 8 5 , 3 4 0 6 7 , 6 4 4 2 9 3 , 0 2 6 5 1 8 4 5 , 0 2 0 5 3 , 4 0 1 7 3 6 1 , 7 8 9 , 5 0 1 5 3 3 , 0 5 7 2 7 6 , 2 6 0 , 7 5 9 3 0 , 7 1 1 0 7 8 , 6 0 1 9 0 9 , 3 2 2 3 3 4 , 6 5 2 2 , 9 1 – – 3 3 4 , 6 5 2 2 , 9 1 6 6 7 , 3 8 0 , 1 ) 9 5 4 , 4 ( 5 2 2 , 8 8 0 , 1 2 4 4 , 5 5 9 7 , 5 6 1 2 8 3 , 7 5 – – ) 3 3 7 ( 9 1 6 , 8 2 2 ) 3 3 7 ( 2 4 4 , 5 8 2 5 , 6 6 1 2 8 3 , 7 5 2 5 3 , 9 2 2 – 8 5 8 4 2 7 , 2 1 9 6 9 4 2 , 8 1 9 , 4 2 3 2 , 6 4 0 8 7 , 2 1 7 4 0 , 4 6 ) d e u n i t n o c ( I G N T R O P E R T N E M G E S – 2 E T O N s t n e m t s e v n i d e t n u o c c a y t i u q E s t e s s a t n e m g e s l e b a t r o p e R s t n e m g e s g n i t a r e p O 2 1 0 2 s t e s s A s t e s s a x a t d e r r e f e D s t e s s a e t a r o p r o c d e t a c o l l a n U s e i t i l i b a i l t n e m g e s l e b a t r o p e R s e i t i l i b a i L s t e s s a l a t o t d e t a d i l o s n o C s e i t i l i b a i l e t a r o p r o c s e i t i l i b a i l x a t d e r r e f e D d e t a c o l l a n U s e i t i l i b a i l l a t o t d e t a d i l o s n o C 8 9 0 , 1 2 1 ) 1 2 1 ( 9 1 2 , 1 2 1 9 3 1 , 3 7 4 1 , 1 1 6 3 , 3 9 9 4 , 5 8 0 3 2 8 6 , 4 1 3 6 0 , 3 8 9 2 , 0 1 s t e s s a t n e r r u c - n o n f o s n o i t i s i u q c A 0 0 0 ’ $ i g n u n i t n o c s n o i t a r e p o 3 3 1 , 5 6 7 8 1 7 , 2 4 9 0 9 3 , 5 1 1 8 9 0 , 1 2 1 d e t a d i l o s n o C 0 0 0 ’ $ : s s e L s n o i t a r e p o d e u n i t n o c s i D ) 9 6 5 , 7 ( ) 9 5 4 , 4 ( – ) 1 2 1 ( 0 0 0 $ ’ 2 0 7 , 2 7 7 7 7 1 , 7 4 9 0 9 3 , 5 1 1 9 1 2 , 1 2 1 d e t a d i l o s n o C 0 0 0 $ ’ y n a m r e G 0 6 2 , 5 6 2 0 5 3 , 4 0 1 7 3 6 , 1 2 8 6 , 4 1 0 0 0 $ ’ 9 4 5 , 4 8 0 0 6 , 1 9 7 2 7 , 6 0 7 7 , 3 i j i F d n a d n a a e Z w e N l 0 0 0 $ ’ a i l a r t s u A 3 9 8 , 2 2 4 7 2 2 , 1 5 7 6 2 0 , 7 0 1 7 6 7 , 2 0 1 s t n e m t s e v n i d e t n u o c c a y t i u q E s t e s s a t n e m g e s l e b a t r o p e R e u n e v e r t n e m g e s l a n r e t x E s t e s s a t n e r r u c - n o n f o s n o i t i s u q c A i n o i t a m r o f n i l a c i h p a r g o e G 2 1 0 2 3 1 0 2 t r o p e R l a u n n A – d e t i i i l m L s g n d o H d e t a m a g a m A 1 6 l 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 3 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 investment property 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 and other income as listed above Jointly controlled entities * Note 2013 $’000 2012 $’000 237,795 521,233 759,028 222,361 499,902 722,263 39 37 821 – 686 1,507 47 21,831 21,878 547 22 569 6,177 14,609 20,786 477 – 1,464 – 16 1,439 64 – 2,983 48,200 807,228 2,382 1,567 68 4,017 45 19,967 20,012 509 26 535 5,977 16,229 22,206 728 17,232 2,872 112 – – 50 258 20,524 68,022 790,285 37 807,228 249,528 1,056,756 790,285 240,277 1,030,562 * Revenue disclosed above comprises 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. 62 Amalgamated Holdings Limited – Annual Report 2013 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 3 2013 $’000 2012 $’000 82,536 82,049 7,270 11 7,281 60 7,341 (97) 6,133 3,468 819 10,420 30,132 40,552 – – – – – 89,738 2,198 (466) 286 (21) (201) 181,552 10,367 1,478 9,333 202,730 (221) 2,655 49 2,704 167 2,871 538 6,485 3,255 428 10,168 27,092 37,260 6,700 917 10,000 611 18,228 93,187 1,022 (896) (99) (278) (1,273) 164,752 9,642 2,836 8,355 185,585 218 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 Interest and finance costs – other persons 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 Net foreign exchange (gains)/losses 63 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 Pre-opening expenses relating to the launch and opening of QT Sydney Profit on sale of an Investment Property Redundancy costs incurred in relation to cinema digitalisation 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 revenue in Note 3) Impairment write-downs of land and buildings and associated plant and equipment Profit on sale of developed residential land lots Relating to discontinued operations Profit on sale of the Featherdale Wildlife Park 2013 $’000 2012 $’000 (3,251) 1,439 (1,012) – – – (2,824) 5,024 5,024 – – – 18,799 (17,500) 1,966 3,265 – – 64 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 5 – DISCONTINUED OPERATIONS 30 June 2013 On 26 June 2013, the sale of the Featherdale Wildlife Park was concluded. This operation was not a discontinued operation at the end of the prior financial year (30 June 2012) and the comparative Income Statement for the year ended 30 June 2012 has been re-presented to show the discontinued operation separately from continuing operations. Revenue from sale of goods Revenue from rendering of services Total revenue and other income Advertising, commissions and marketing expenses Depreciation and amortisation Employee expenses Occupancy expenses Purchases and other direct expenses Other expenses Profit before income tax Income tax expense Profit after income tax Gain on sale of discontinued operations Income tax expense on gain on sale Profit 2013 $’000 2,238 6,057 8,295 (393) (92) (3,105) (336) (933) (1,131) (5,990) 2,305 (947) 1,358 5,024 (1,472) 4,910 2012 $’000 2,258 5,311 7,569 (352) (90) (3,162) (373) (913) (1,110) (6,000) 1,569 (481) 1,088 – – 1,088 During the 12 months to 30 June 2013, the discontinued operations had cash inflows from operating activities of $2,397,000 (2012: $1,659,000), cash inflows from investing activities on disposal of $9,800,000 (2012: nil) and cash flows from financing activities of $nil (2012: nil). 2013 $ 2012 $ 1,001,000 40,882 357,590 23,568 1,423,040 339,282 190,527 529,809 298,140 827,949 916,130 46,485 371,370 51,113 1,385,098 225,305 70,032 295,337 207,241 502,578 NOTE 6 – AUDITORS’ REMUNERATION Audit services: Auditors of the Group – KPMG Australia Audit and review of financial statements Other assurance services Overseas KPMG firms Audit and review of financial statements Other assurance services Other services: Auditors of the Group – KPMG Australia Tax compliance and advice Other services Overseas KPMG firms Tax compliance and advice 65 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 attributable to continuing operations Income tax expense attributable to discontinued operations Current income tax Current income tax expense Adjustments in respect of current income tax of prior year Deferred income tax Relating to origination and reversal of temporary differences Income tax expense reported in the Income Statement Income tax charged/(credited) directly in equity Deferred income tax related to items charged/(credited) directly in equity: Relating to other comprehensive income Effective portion of changes in fair value of cash flow hedges Unrealised gain/(loss) on available-for-sale financial assets Currency translation movements of deferred tax balances of foreign operations Net movement on hedge of net investment in overseas subsidiaries Relating to other equity balances Adjustment to shared-based payments reserve Income tax (benefit)/expense reported in equity 2013 $’000 2012 $’000 28,734 2,419 31,153 31,871 (107) (611) 31,153 5 1,003 (386) (1,038) (416) 376 (40) 29,606 481 30,087 31,072 8 (993) 30,087 23 (219) 418 729 951 (325) 626 Reconciliation between income tax expense and pre-tax 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 109,616 7,329 116,945 108,260 1,569 109,829 Prima facie income tax expense calculated at the Group’s statutory income tax rate of 30% (2012: 30%) on accounting profit 35,084 32,949 Increase in income tax expense due to: Non-deductible items and losses in non-resident controlled entities Impairment write-downs Depreciation and amortisation of buildings Non-deductible acquisition and legal costs Non-refundable franking credits grossed up Share of associates’ net loss/(profit) Sundry items Decrease in income tax expense due to: Tax losses from prior years now recognised or utilised Share of incorporated jointly controlled entities’ net profit Franking credits on dividends received Income tax (over)/under provided in prior year 66 Amalgamated Holdings Limited – Annual Report 2013 4,063 – 668 152 70 5 270 5,228 7,972 845 235 9,052 (107) 31,153 1,339 2,011 300 139 66 (1) 371 4,225 6,086 791 218 7,095 8 30,087 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 3 NOTE 7 – TAXATION (continued) (b) Current tax liabilities Movements during the year: Balance at the beginning of the year Income tax paid Current year income tax provided Tax refunds received Under/(over) 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 Investment properties Available-for-sale investments Interest and deferred financing costs Expenditure currently deductible for tax but deferred and amortised for accounting purposes Accrued revenue 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 Accrued expenses Difference in depreciation and amortisation of property, plant and equipment and intangible assets for accounting and income tax purposes Share of jointly controlled entity timing differences Tax losses carried forward Capital losses offsetting unrealised capital gains Discounted long term lease liabilities 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 2013 $’000 2012 $’000 7,882 (29,474) 31,315 735 81 (906) 9,633 7,658 (33,742) 31,475 3,068 (276) (301) 7,882 Statement of Financial Position 2013 $’000 2012 $’000 Income Statement 2013 $’000 2012 $’000 1,750 141 – 239 (45) 859 192 (461) 16 620 (99) (383) (1,022) – (281) 142 826 (622) (4,107) 2,123 (382) – 80 (197) 992 112 – (293) 118 – (23) 544 (134) (201) 33 1,246 63 41 (564) (121) (2,022) (823) (159) – – 189 81 (72) 19,835 7,318 2,495 1,076 1,776 939 293 1,835 441 1,675 374 38,057 17,260 7,177 1,492 837 1,791 – 84 1,919 425 2,180 499 33,664 (31,472) 6,585 (28,222) 5,442 9,378 1,140 – 3,718 431 7,709 8,061 7,997 352 418 – 81 414 39,699 8,803 204 5 3,437 567 8,199 7,439 3,160 2,475 – – 161 205 34,655 (31,472) 8,227 (28,222) 6,433 Deferred tax benefit (611) (993) 67 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 7 – TAXATION (continued) Unrecognised deferred tax assets Revenue losses – foreign 2013 $’000 8,953 8,953 2012 $’000 14,655 14,655 Deferred tax assets have not been recognised in respect of these items because it is not currently considered 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 of $29,844,000 (2012: $48,852,000). The availability of these tax losses is subject to certain utilisation limits and ongoing availability tests under German tax law. At 30 June 2013, there was no recognised deferred income tax liability (2012: 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: 2013 Final 2012 dividend Interim 2013 dividend 2012 Final 2011 dividend Special 2011 dividend Interim 2012 dividend 25 15 23 4 14 40,140 24,084 64,224 36,755 6,392 22,478 65,625 20 September 2012 21 March 2013 22 September 2011 22 September 2011 22 March 2012 30% 30% 30% 30% 30% 100% 100% 100% 100% 100% Subsequent events Since the end of the financial year, the directors declared the following dividend: Final 2013 dividend 27 43,351 19 September 2013 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 2013 and will be recognised in subsequent financial statements. Franking credit balance The amount of franking credits available for future reporting periods 2013 $’000 2012 $’000 132,827 136,017 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 $18,579,000 (2012: $17,203,000). 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. 68 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 9 – EARNINGS PER SHARE Profit attributable to ordinary shareholders (basic and diluted) Profit after tax from continuing operations Profit after tax from discontinued operations Profit attributable to ordinary shareholders Weighted average number of ordinary shares (basic) Effect of performance shares Weighted average number of ordinary shares (diluted) Further details in relation to the Executive Performance Share Plan are provided in Note 30. NOTE 10 – CASH AND CASH EQUIVALENTS Cash at bank and on hand NOTE 11 – TRADE AND OTHER RECEIVABLES Current Trade receivables Less: Allowance for trade receivables Other receivables Receivable from jointly controlled entities Non-current Other receivables Receivable from associates Present value of loans provided under the Employee Share Plan 2013 $’000 80,882 4,910 85,792 2012 $’000 78,654 1,088 79,742 Number Number 157,858,509 1,249,386 159,107,895 157,702,738 1,553,275 159,256,013 2013 $’000 92,768 2013 $’000 24,064 (1,121) 22,943 20,695 2,241 45,879 1,029 43 113 1,185 2012 $’000 63,309 2012 $’000 21,840 (1,192) 20,648 15,840 2,806 39,294 1,000 43 177 1,220 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 2013, trade receivables with a value of $1,121,000 (2012: $1,192,000) were impaired and fully provided for. Movements in the allowance for trade receivables are as follows: 2013 $’000 1,192 245 (333) 17 1,121 2012 $’000 732 588 (121) (7) 1,192 Balance at the beginning of the year Charge Provision no longer required Net foreign currency differences on translation of foreign operations 69 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 11 – TRADE AND OTHER RECEIVABLES (continued) As at 30 June 2013, 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 2013 $’000 17,830 3,539 714 860 22,943 2012 $’000 16,652 2,393 909 694 20,648 Other current receivables of $20,695,000 (2012: $15,840,000) 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 Note Raw materials and stores Work in progress Finished goods Total inventories at the lower of cost and net realisable value NOTE 13 – PREPAYMENTS AND OTHER CURRENT ASSETS Prepayments Derivatives at fair value Other NOTE 14 – OTHER FINANCIAL ASSETS Unquoted investments in other entities NOTE 15 – AVAILABLE-FOR-SALE FINANCIAL ASSETS 29 2013 $’000 4,938 2,560 7,079 14,577 5,035 18 1,098 6,151 2012 $’000 3,625 7,951 10,453 22,029 3,936 – 968 4,904 1,387 315 Investment in a listed company 13,374 10,032 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 $936,000 after tax (2012: an increase of $702,000); an equal change in the opposite direction would have decreased equity by $936,000 after tax (2012: a decrease of $702,000). NOTE 16 – INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Associates Jointly controlled entities Note 36 37 2013 $’000 139 119,289 119,428 2012 $’000 156 115,234 115,390 The Group accounts for investments in associates and jointly controlled entities using the equity method – refer Note 1(c)(iii). 70 Amalgamated Holdings Limited – Annual Report 2013 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 3 2013 $’000 2012 $’000 540,473 (88,465) 452,008 56 56 56,721 123,614 180,335 (117,231) 63,104 31,898 (11,370) 20,528 471,827 (83,407) 388,420 56 56 53,335 115,624 168,959 (107,071) 61,888 29,600 (10,982) 18,618 33,492 80,339 480,006 (289,629) 190,377 759,565 416,661 (260,344) 156,317 705,638 471,827 (83,407) 388,420 863 9,300 (500) 57,980 (2,479) 4,072 (5,648) – 452,008 462,562 (72,231) 390,331 9,763 – – 1,059 (4) (1,669) (4,360) (6,700) 388,420 56 56 56 56 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 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 Net transfer from Investment Properties Transfer from buildings and improvements subject to long term leases 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 Net balance at the end of the year 71 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 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 Net foreign currency differences on translation of foreign operations 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 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 Net balance at the end of the year 72 Amalgamated Holdings Limited – Annual Report 2013 2013 $’000 2012 $’000 168,959 (107,071) 61,888 4,647 160 500 643 – 2,312 (913) (6,133) – – 63,104 29,600 (10,982) 18,618 1,808 489 (387) – 20,528 80,339 45,307 309 (92,463) 33,492 416,661 (260,344) 156,317 20,651 33,351 – 198 6,345 (2,305) (24,180) – – 190,377 176,028 (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 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 3 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 2013, February 2013 and June 2012. 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 Existing use Independent valuation – 2013 – 2012 – 2010 – 2009 Land and buildings not independently valued Acquisition cost of properties acquired since June 2012 not yet independently valued The above valuations do not take into account the potential impact of capital gains tax. 2013 $’000 2012 $’000 40,300 44,650 335,770 505,664 – – 881,734 2,605 884,339 – 499,834 191,698 84,000 820,182 – 820,182 The written-down book value of plant and equipment which is deemed integral to land and buildings, has been determined to total approximately $114,700,000 as at 30 June 2013 (2012: $93,200,000). Impairments Land and buildings, resort apartments and share of common property The trading performance of certain hotel properties caused the Group to assess their recoverable amount. There were no impairment losses, or reversal of prior year impairment losses, recognised in respect of land and buildings in the year to 30 June 2013 (2012: impairment losses totalling $16,700,000). Hotel properties are treated as separate cash-generating units and their recoverable values were estimated based on their value in use. In determining the estimated value in use, discount rates in the range of 10.54% to 11.88% (2012: 12.71% to 13.18%) per annum were used. Cash flows were projected based on operating forecasts, with longer term cash flows, after the initial forecast periods, extrapolated using average expected growth rates of 3.0% (2012: 3.0%) per annum. 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 result in an impairment loss of $2,802,000 being recognised. A 10% decrease in the forecast earnings would result in an impairment loss of $1,846,000 being recognised. 73 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 17 – PROPERTY, PLANT AND EQUIPMENT (continued) Leasehold improvements and plant and equipment The trading performance of leased hotel caused the Group to assess the recoverable amount for that property. There were no impairment losses, or reversal of prior year impairment losses, recognised in respect of leasehold improvements and plant and equipment in the year to 30 June 2013 (2012: impairment losses totalling $1,528,000 and an impairment reversal of $258,000 relating to certain leased hotel and cinema properties). 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, a discount rate of 12.23% (2012: 13.58%) per annum was used. Cash flows were projected based on operating forecasts, with longer term cash flows, after the initial forecast periods, extrapolated using average expected growth rates of 3.0% (2012: 3.0%) per annum. Given the long-life nature of this asset, the estimates of its 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 property assessed would result in an impairment loss of $1,880,000 being recognised. A 10% decrease in the forecast earnings would result in an impairment loss of $1,406,000 being recognised. Security The following assets, whose carrying values are listed below, are subject to mortgage security to secure the Group’s bank loan facilities (refer Note 23): Freehold land and buildings Freehold land and buildings classified as investment properties NOTE 18 – INVESTMENT PROPERTIES Freehold land and buildings At fair value Summary of movements: Balance at the beginning of the year Additions Net transfer to property, plant and equipment Revaluation increment on transfer from property, plant and equipment Disposals Fair value increments/(decrements) Balance at the end of the year 2013 $’000 221,580 17,700 239,280 2012 $’000 221,368 22,650 244,018 69,500 79,350 79,350 234 (9,300) 1,300 (2,100) 16 69,500 79,350 71 – – – (71) 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 four of the five investment properties held by the Group at 30 June 2013, the valuer used capitalisation rates on reversionary rental yields in the range of 7.50% to 9.50% (2012: 6.57% to 9.50%) 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 direct comparison method based on the current unimproved land value of the property. The valuation for that property has been adjusted by the estimated demolition costs associated with 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 2013, $5,727,000 (2012: $6,314,000) was recognised as rental income for investment properties in the Income Statement with $1,292,000 (2012: $2,048,000) incurred in respect of direct costs, including $205,000 (2012: $310,000) for repairs and maintenance. 74 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 19 – GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Construction rights Liquor licences Management and leasehold rights Less: Accumulated amortisation Software Less: Accumulated amortisation 2013 $’000 13,211 1,388 189 14,788 27,339 (7,385) 19,954 8,894 (4,352) 4,542 39,284 2012 $’000 12,493 1,388 189 14,070 23,215 (5,707) 17,508 7,996 (3,281) 4,715 36,293 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 Liquor licences $’000 2013 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 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 Adjustments Amortisation Disposals Net foreign currency differences on translation of foreign operations Net balance at the end of the year 12,493 – 12,493 300 – – (470) 888 13,211 12,707 – 12,707 – – – – (214) 12,493 1,388 – 1,388 – – – – – 1,388 1,388 – 1,388 – – – – – 1,388 189 – 189 – – – – – 189 189 – 189 – – – – – 189 Management and leasehold rights $’000 Software $’000 23,215 7,996 (5,707) 17,508 3,972 – (1,643) – 117 19,954 (3,281) 4,715 1,277 124 (1,825) – 251 4,542 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 Impairment losses recognised No impairment losses in relation to goodwill have been recognised in the year ended 30 June 2013 (2012: nil). 75 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 Multiple units without significant goodwill 2013 $’000 2012 $’000 6,258 3,622 3,331 13,211 5,818 3,176 3,499 12,493 The recoverable value of goodwill relating to the 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 operating forecasts 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 10.92% and 12.0% (2012: 11.24% and 12.0%) 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 the Featherdale Wildlife Park Operating lease payments paid in advance Sundry NOTE 21 – TRADE AND OTHER PAYABLES Trade payables Other payables and accruals 2013 $’000 5,653 – 677 2,747 9,077 2012 $’000 1,137 640 593 1,648 4,018 31,951 55,817 87,768 27,381 59,062 86,443 The Group’s exposure to liquidity and currency risk related to trade and other payables is disclosed in Note 29. NOTE 22 – LOANS AND BORROWINGS Current Non-interest bearing loans Loans from other companies – unsecured 452 184 Non-current Interest bearing liabilities and borrowings Bank loans Deferred financing costs – secured Non-interest bearing loans Loans from other companies – unsecured 23 78,543 (1,508) 77,035 1,434 78,469 46,981 (2,214) 44,767 1,850 46,617 The Group’s exposure to liquidity and currency risk related to interest bearing liabilities and borrowings is disclosed in Note 29. 76 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 23 – FINANCING ARRANGEMENTS Bank debt – secured The Group’s secured bank debt facilities comprise the following: • $350,000,000 revolving multi-currency loan facility; • $30,000,000 credit support facility (for the issue of letters of credit and bank guarantees); and • $50,000 overdraft facility supporting transactional banking facilities. The above facilities mature on 15 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 2013 the Group had drawn $78,543,000 (2012: $46,981,000) under the debt facilities, of which nil (2012: nil) was subject to interest rate swaps used for hedging, and had drawn $12,553,000 under the credit support facility (2012: $10,114,000). NOTE 24 – PROVISIONS Current Employee benefits Onerous contracts Insurance loss contingencies and other claims Non-current Employee benefits 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 Provisions utilised Net foreign currency differences on translation of foreign operations Carrying amount at the end of the year Note 30 30 2013 $’000 16,605 – 913 17,518 1,584 6,462 8,046 2012 $’000 15,351 456 123 15,930 1,487 5,876 7,363 456 (466) 10 – 1,338 (896) 14 456 77 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 24 – PROVISIONS (continued) Insurance loss contingencies and other claims Carrying amount at the beginning of the year 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 2013 $’000 2012 $’000 123 790 – 913 5,876 (105) 95 (116) 66 646 6,462 222 22 (121) 123 6,589 (121) – (278) 59 (373) 5,876 Onerous contracts The onerous contracts provision related to long term non-cancellable operating leases in respect of certain cinema sites in New Zealand. Provisions had 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 insurance loss contingencies and other claims 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 various 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 Non-current Lease incentives deferred Note 29 2013 $’000 – 3,280 401 3,681 4,511 4,511 2012 $’000 18 1,420 369 1,807 4,563 4,563 78 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 26 – SHARE CAPITAL Share capital Fully paid ordinary shares 2013 Shares 2012 Shares 2013 $’000 2012 $’000 157,902,929 157,798,418 219,126 219,126 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 157,798,418 104,511 157,902,929 157,643,568 154,850 157,798,418 219,126 – 219,126 219,126 – 219,126 Share capital consists of: Ordinary shares Tax Exempt Share Plan shares Employee Share Plan shares Treasury shares Performance shares 157,710,502 48,607 143,820 157,902,929 157,587,043 42,455 168,920 157,798,418 2,656,994 160,559,923 2,761,505 160,559,923 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 Executive Performance Share Plan. As at 30 June 2013, a total of 2,656,994 (2012: 2,761,505) shares were held in trust and classified as treasury shares. Employee and executive performance 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 2013 (2012: nil). 79 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 Revaluation increment on transfer from property, plant and equipment to investment properties 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 Other adjustments Balance at the end of the year Foreign currency translation reserve Balance at the beginning of the year Currency translation adjustment on controlled foreign entities’ financial statements Balance at the end of the year 2013 $’000 2012 $’000 9,406 5,121 13 13,084 (4,593) 23,031 7,067 3,821 (12) 11,876 (18,923) 3,829 7,067 2,339 9,406 3,821 1,300 5,121 (12) 25 13 7,578 (511) 7,067 3,821 – 3,821 (463) 451 (12) 11,876 1,536 (328) 13,084 8,580 2,940 356 11,876 (18,923) 14,330 (4,593) (13,430) (5,493) (18,923) 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. 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). 80 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 27 – RESERVES AND RETAINED EARNINGS (continued) Retained earnings Balance at the beginning of the year Profit for the year Dividends paid Balance at the end of the year NOTE 28 – PARENT ENTITY DISCLOSURES 2013 $’000 635,918 85,792 (64,224) 657,486 2012 $’000 621,801 79,742 (65,625) 635,918 As at, and throughout the financial year ended, 30 June 2013, the parent entity of the Group was Amalgamated Holdings Limited. 2013 $’000 57,371 2,873 60,244 295 449,711 10,846 15,241 434,470 219,126 9,406 13,084 192,854 434,470 2012 $’000 51,426 1,534 52,960 226 516,732 9,101 78,956 437,776 219,126 7,067 11,876 199,707 437,776 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: Share capital Available-for-sale investments revaluation reserve Share-based payments reserve Retained earnings Total equity 81 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 28 – PARENT ENTITY DISCLOSURES (continued) Parent entity commitments Operating lease commitments – as lessee Future minimum operating lease rentals not provided for and payable are due: Not later than one year Later than one year but not later than five years Parent entity contingencies Details of contingent liabilities for the parent entity which, although considered remote, 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 2013 $’000 2012 $’000 2,053 1,066 3,119 1,949 3,119 5,068 63,543 120,335 107,554 291,432 56,446 121,523 119,007 296,976 The Company has guaranteed commitments in respect of financing and other arrangements of certain subsidiary entities 455 399 Jointly controlled entities The Company has guaranteed the obligations of some jointly controlled entities in respect of a number of operating lease commitments. 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 29,262 105,637 83,767 218,666 510,553 28,666 106,941 97,484 233,091 530,466 Parent entity guarantees 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. Bank debt facilities The Company is a guarantor under the Group’s secured bank debt facilities, as disclosed in Note 23. 82 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 and foreign exchange risks. 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. 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 its estimate of incurred losses in respect of trade and other receivables. The main component of this allowance relates to exposures for specific customers. 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 2013, 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 maximum exposure to credit risk at the reporting date was: Unquoted investments in other entities Available-for-sale financial assets Trade and other receivables Cash, cash equivalents and short term deposits Security deposits in respect of long term operating leases 83 Amalgamated Holdings Limited – Annual Report 2013 Note 14 15 11 10 20 2013 $’000 2012 $’000 1,387 13,374 47,064 92,768 5,653 160,246 315 10,032 40,514 63,309 1,137 115,307 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 3 NOTE 29 – FINANCIAL RISK MANAGEMENT (continued) The maximum exposure to credit risk for receivables by geographic region at the reporting date was: Australia New Zealand Germany and other eurozone countries United Kingdom The maximum exposure to credit risk for receivables by reportable segment at the reporting date was: Cinema Exhibition – Australia Cinema Exhibition – Germany Cinema Exhibition – New Zealand Entertainment Technology Hotels Thredbo Alpine Resort Leisure/Attractions Property and Other Investments Other 2013 $’000 31,937 4,717 10,410 – 47,064 9,704 10,249 1,279 4,285 11,723 481 182 4,717 4,444 47,064 2012 $’000 28,450 3,333 8,717 14 40,514 7,917 8,583 898 5,453 10,885 565 180 1,113 4,920 40,514 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 maintaining committed credit lines 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 2013 Non-derivative financial liabilities Secured bank loans Unsecured non-interest bearing loans from other companies Trade payables Other payables and accruals Derivative financial assets Forward exchange contracts 78,543 (86,536) (1,802) (1,923) (4,143) (78,668) 1,886 31,951 55,817 (1,886) (31,951) (55,817) (226) (31,951) (55,817) (226) – – (163) – – (519) – – (18) 18 18 168,179 (176,172) (89,778) – (2,149) – (4,306) – (79,187) – (752) – – – (752) 84 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 29 – FINANCIAL RISK MANAGEMENT (continued) 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 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 46,981 (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) For derivative financial assets and liabilities, maturities detailed in the table above approximate periods that cash flows and the 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 Board approved treasury policies. 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 the approval of the Board. At 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 2013 $’000 2012 $’000 – – – – – – 83,395 (78,543) 4,852 51,807 (46,981) 4,826 The Group manages interest rate risk in accordance with a Board approved treasury 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. Due to the current low level of Group debt, there were no outstanding interest rate hedges at 30 June 2013 (2012: no interest rate hedges). 85 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 of the major components relating to 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 fixed rate financial assets and liabilities at fair value. The Group had no fixed rate instruments for the year ended 30 June 2013 (2012: no fixed rate instruments). At 30 June 2013, if prevailing market interest rates had moved by +/– 1% (100 basis points) per annum from prevailing 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: 2013 Variable rate instruments 2012 Variable rate instruments 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) (34) (34) 34 34 34 34 – – – – – – – – 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 and debt. The movement (if any) 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 the US dollar (“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: 2013 EUR $’000 GBP $’000 USD $’000 NZD $’000 596 264 (46,981) (140) (46,261) – – 126 – – – 126 18 18 144 (46,261) 2012 EUR $’000 GBP $’000 117 – – – 117 – – 117 38 – – – 38 – – 38 USD $’000 234 – – – 234 (18) (18) 216 16 – – – 16 – – 16 20 – – – 20 – – 20 Cash and cash equivalents Trade receivables Secured bank loans Trade payables Gross balance sheet exposure Forward exchange contracts Net exposure NZD $’000 72 375 (50,543) (562) (50,658) – – (50,658) 86 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 29 – FINANCIAL RISK MANAGEMENT (continued) Sensitivity analysis A 10% strengthening/weakening of the Australian dollar against the following currencies at 30 June 2013 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. 2013 AUD/NZD +10% AUD/NZD -10% AUD/EUR +10% AUD/EUR -10% AUD/USD +10% AUD/USD -10% 2012 AUD/NZD +10% AUD/NZD -10% AUD/EUR +10% AUD/EUR -10% AUD/USD +10% AUD/USD -10% Equity $’000 4,595 (5,616) – – – – 4,271 (5,220) – – – – Profit or loss $’000 9 (14) (2) 1 (13) 17 (76) 67 (10) 13 (20) 24 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 2013 was $50,543,000 (2012: $46,981,000). A foreign exchange loss of $3,562,000 (2012: loss of $660,000) 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 denominated bank loan. This movement would have an opposite movement in the AUD holding value of the underlying hedged component of the investment in New Zealand. 87 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 29 – FINANCIAL RISK MANAGEMENT (continued) Fair values The fair values of financial assets and liabilities together with their carrying amounts shown in the Statement of Financial Position are as follows: Cash and cash equivalents Trade and other receivables Present value of loans provided under the Employee Share Plan Other financial assets Available-for-sale financial assets Security deposits – operating leases Bank loans Loans from other companies Trade and other payables Forward exchange contracts 2013 Carrying amount $’000 Fair value $’000 2012 Carrying amount $’000 Fair value $’000 92,768 46,951 113 1,387 13,374 5,653 (77,035) (1,886) (87,768) 18 (6,425) 92,768 46,951 113 1,387 13,374 5,653 (78,543) (1,886) (87,768) 18 (7,933) 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) Note 10 11 11 14 15 20 22 22 21 13, 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. 88 Amalgamated Holdings Limited – Annual Report 2013 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 3 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). • 2013 Available-for-sale financial assets Derivative financial assets 2012 Available-for-sale financial assets Derivative financial liabilities Level 1 $’000 13,374 – 13,374 10,032 – 10,032 Level 2 $’000 Level 3 $’000 – 18 18 – (18) (18) – – – – – – Total $’000 13,374 18 13,392 10,032 (18) 10,014 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 2013 $’000 2012 $’000 24 24 16,605 15,351 1,584 18,189 1,487 16,838 89 Amalgamated Holdings Limited – Annual Report 2013 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 3 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: Type of right 2013 Grant date Balance at the start of the year Granted Exercised Forfeited shares reallocated Balance at the end of the year (a) Performance shares 21 February 2013 – 661,650 Performance shares (b) 29 February 2012 Performance shares (c) 23 February 2012 Performance shares (d) 16 May 2011 Performance shares (d) 23 February 2011 Performance shares (e) 28 June 2010 Performance shares (f) 23 February 2009 Performance shares (g) 18 February 2008 Performance shares (h) 19 February 2007 2012 Performance shares 29 February 2012 Performance shares (c) 23 February 2012 Performance shares 16 May 2011 Performance shares (d) 23 February 2011 Performance shares (e) 28 June 2010 Performance shares (f) 23 February 2009 Performance shares (g) 18 February 2008 Performance shares (h) 19 February 2007 10,000 759,577 50,000 603,447 570,193 429,421 263,407 75,460 – – – – – – – – – – – – – (36,379) (16,199) (32,788) (19,145) – – – – (111,886) (314,321) (142,974) (75,207) (17,262) 661,650 10,000 759,577 50,000 491,561 219,493 270,248 155,412 39,053 2,761,505 661,650 (104,511) (661,650) 2,656,994 – – 50,000 603,447 570,193 525,051 298,515 109,572 10,000 759,577 – – – – – – – – – – – (95,630) (35,108) (24,112) 2,156,778 769,577 (154,850) – – – – – – – (10,000) (10,000) 10,000 759,577 50,000 603,447 570,193 429,421 263,407 75,460 2,761,505 (a) The balance at the end of the year includes a total of 117,931 shares (2012: 380,959 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 2013 performance share plan includes 5,463 forfeited shares. (c) The balance at the end of the year for the 2012 performance share plan includes 88,105 forfeited shares (2012: 22,289 forfeited shares). (d) The balance at the end of the year for the 2011 performance share plan includes 24,363 forfeited shares (2012: 66,223 forfeited shares). (e) The balance at the end of the year for the 2010 performance share plan includes no forfeited shares (2012: 57,004 forfeited shares). (f) The balance at the end of the year for the 2009 performance share plan includes no forfeited shares (2012: 142,974 forfeited shares). (g) The balance at the end of the year for the 2008 performance share plan includes no forfeited shares (2012: 75,207 forfeited shares). (h) The balance at the end of the year for the 2007 performance share plan includes no forfeited shares (2012: 17,262 forfeited shares). 90 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 30 – EMPLOYEE BENEFITS (continued) During the year to 30 June 2013, 661,650 performance shares were granted to employees under the plan and 255,872 shares, relating to the 2010 plan issue, vested with employees. Of the shares that have vested from the 2007, 2008, 2009 and 2010 plan issues, 104,511 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. 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 2013 was $7.43 (2012 issue: $5.89) for those shares that have EPS hurdles and $5.00 (2012 issue: $4.21) 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 21 Feb 2013 Granted 23 Feb 2012 Granted 23 Feb 2011 5.27% 20% 2.85% $7.43 3 years 6.9% 25% 3.65% $5.89 3 years 6.2% 25% 5.2% $5.98 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 7,755 shares (2012: 16,221 shares). Employee Share Plan At 30 June 2013, the total shares issued under the plan was 143,820 (2012: 168,920). 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 2013 was $8.27 (2012: $6.45). 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 employee expense in the Income Statement are detailed below: Superannuation contributions recognised as an employee expense 2013 $’000 9,333 2012 $’000 8,556 91 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 2013 $’000 2012 $’000 2,732 8,306 93,133 293,282 257,654 644,069 88,454 286,730 275,463 650,647 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 $2,863,000 (2012: $2,756,000). 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 2013 $’000 2012 $’000 9,565 33,308 248,754 291,627 10,498 34,346 46,552 91,396 9,369 33,025 249,169 291,563 10,045 33,182 53,993 97,220 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 or extension 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 premises. 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 lessee The Group does not have finance lease or hire purchase arrangements in place where it acts as a lessor or a lessee. 92 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 32 – CONTINGENT LIABILITIES Details of contingent liabilities which, although considered remote, 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 2013 $’000 2012 $’000 39,480 143,926 79,341 262,747 38,232 125,378 108,098 271,708 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 $492,000 (2012: $618,000), 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. 93 Amalgamated Holdings Limited – Annual Report 2013 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 3 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: Atura Hotels and Resorts Pty Limited (a) 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 QT Hotels and Resorts Pty Limited (a) QT Resort Port Douglas Pty Limited RQ Motels Pty Limited Rydges Bankstown Pty Limited Rydges Cronulla Pty Limited Rydges Hotels 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. Note (a) Atura Hotels and Resorts Pty Limited and QT Hotels and Resorts Pty Limited became parties to the deed during the year by virtue of an Assumption Deed signed on 25 June 2013. 94 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 33 – DEED OF CROSS GUARANTEE (continued) A consolidated Statement of Comprehensive Income 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 2013 are set out as follows: Statement of Comprehensive Income Profit before tax Income tax expense Profit after tax from continuing operations Profit after tax from discontinued operations Profit for the year 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 Current assets Cash and cash equivalents Trade and other receivables Inventories Prepayments and other current assets Total current assets Non-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 Current liabilities Trade and other payables Current tax liabilities Provisions Deferred revenue Other current liabilities Total current liabilities Non-current liabilities Loans from controlled entities Other loans and borrowings Provisions Deferred revenue Total non-current liabilities Total liabilities Net assets EQUITY Share capital Reserves Retained earnings Total equity 95 Amalgamated Holdings Limited – Annual Report 2013 2013 $’000 83,475 (25,201) 58,274 4,910 63,184 579,254 (64,224) 578,214 26,041 30,581 11,352 4,216 72,190 1,185 149,645 93,162 1,382 13,374 109,698 502,806 69,500 23,499 991 3,226 968,468 1,040,658 37,710 9,021 13,968 37,684 3,280 101,663 25,358 77,894 2,423 4,500 110,175 211,838 828,820 219,126 31,480 578,214 828,820 2012 $’000 74,751 (23,598) 51,153 1,088 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 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 3 NOTE 34 – BUSINESS COMBINATIONS 2013 The Group acquired the following businesses during the year: • Royal Cricketers Arms Hotel, Blacktown, NSW; • Horizons Resort, Jindabyne, NSW (now trading as Rydges Horizons Snowy Mountains); • Quay West Resort & Spa, Falls Creek, VIC (now trading as QT Falls Creek); and • South East Mountain Biking, Thredbo, NSW. Total cash consideration paid, assets acquired, liabilities assumed and goodwill arising on acquisition in respect of the above acquisitions are summarised below: Identifiable assets acquired and liabilities assumed Other financial assets Property, plant and equipment Management rights Other assets Deferred revenue Other liabilities Total net value of identifiable assets and liabilities Fair value at acquisition date $’000 1,072 2,471 1,972 179 (460) (127) 5,107 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 acquisitions as follows: Net cash consideration paid Less: net value of identifiable assets and liabilities Goodwill Goodwill was attributable to the acquisition of the South East Mountain Biking business. 2012 The Group made no significant acquisitions during the year. $’000 5,407 (5,107) 300 96 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 35 – PARTICULARS IN RELATION TO CONSOLIDATED ENTITIES Ownership interest Note 2013 % 2012 % 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 Atura Hotels and Resorts 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 Featherdale Farm & Aviaries Pty Limited Featherdale Holdings Pty Limited Filmlab Engineering Pty Limited Filmpalast am ZKM Karlsruhe Beteiligungs GmbH Filmpalast Konstanz Beteiligungs GmbH First Cinema Management BV 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 First Cinema BV and Co. KG 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 97 Amalgamated Holdings Limited – Annual Report 2013 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 (a)(d) (h) (a)(f) (a)(f) (a)(e) (g) (a)(d) (a)(d) (a)(d) (a)(d) (a)(d) (a)(f) (a)(f) (a)(e) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (b) (a)(e) (f) (c) (a)(f) (a)(f) (a)(f) (a)(f) 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 3 NOTE 35 – PARTICULARS IN RELATION TO CONSOLIDATED ENTITIES (continued) Subsidiaries (continued) 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 Movietimes Australia and New Zealand 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 Gold Coast Pty Limited QT Hotels and Resorts Pty Limited QT Resort Port Douglas Pty Limited Red Carpet Event GmbH RH Hotels Pty Limited RQ Motels Pty Limited Rydges Bankstown Pty Limited Rydges Cronulla 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 HPT Pty Limited Rydges Property Holdings Pty Limited Rydges Queenstown Hotel Limited Rydges Rotorua Hotel Limited Rydges Townsville Hotel Property Unit Trust 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 98 Amalgamated Holdings Limited – Annual Report 2013 Note (a)(f) (a)(f) (a)(f) (a)(f) (i) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(d) (a)(f) (a)(d) (a)(d) Ownership interest 2013 % 2012 % 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 3 Ownership interest 2013 % 2012 % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Note (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) (a)(f) NOTE 35 – PARTICULARS IN RELATION TO CONSOLIDATED ENTITIES (continued) Subsidiaries (continued) 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) These companies are audited by other member firms of KPMG International. This company was incorporated and domiciled in Jersey, and was dissolved on 7 June 2013. 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. Atura Hotels and Resorts Pty Limited was incorporated on 9 April 2013. Movietimes Australia and New Zealand Pty Limited was incorporated on 12 December 2012. All companies, except those stated above, were incorporated in Australia. All trusts were established in Australia. 99 Amalgamated Holdings Limited – Annual Report 2013 5 – – 5 2 1 0 2 0 0 0 ’ $ 3 1 0 2 0 0 0 ’ $ ) 7 1 ( – – ) 7 1 ( 2 1 0 2 0 0 0 ’ $ 6 5 1 – – 6 5 1 3 1 0 2 0 0 0 ’ $ 9 3 1 – – 9 3 1 g n i t a r e p o o t n o i t u b i r t n o C g n i y r r a c t n e m t s e v n I ) s s o l ( / t i f o r p t n u o m a 2 1 0 2 3 1 0 2 t s e r e t n I % 0 5 8 4 0 6 % 0 5 8 4 0 6 ) a ( n o i t a r o p r o c n i f o y r t n u o C s e i t i v i t c a l a p c n i r P i e m a N l d n a a e Z w e N n o i t a r t s n m d A i i d e t i i m L y t P Z N s r e n t r a P n o i t a r g e t n I a m e n C i l a t i g D i a i l a r t s u A n o i t a r t s n m d A i i d e t i i m L y t P s r e n t r a P n o i t a r g e t n I a m e n C i l a t i g D i a i l a r t s u A i r o t u b i r t s d d n a r e n w o m l i F d e t i i m L y t P s n o i t c u d o r P e n o t e v o M d n u o s e n C i i . e n u J 0 3 s i i s e t a c o s s a t n e r r u c l l a f o e t a d e c n a a b e h T l . ) l i n : 2 1 0 2 ( l i n o t t n u o m a 3 1 0 2 e n u J 0 3 d e d n e r a e y e h t r o f i s e t a c o s s a m o r f d e v e c e r i s d n e d v D i i . s e c i i l o p g n i t a r e p o d n a l i a c n a n i f n r e v o g o t r e w o p e h t d n a l o r t n o c e v a h t o n s e o d p u o r G e h t s a d e a d t i l o s n o c t o n s i d e t i m L i y t P Z N s r e n t r a P n o i t a r g e t n I a m e n C i l a t i g D i ) a ( S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 3 1 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F I S E T A C O S S A N I S T N E M T S E V N I – 6 3 E T O N 3 1 0 2 t r o p e R l a u n n A – d e t i l i i m L s g n d o H d e t a m a g a m A 0 0 1 l 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 3 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, are as follows: Revenues – as reported by associates Net profit – as reported by associates Current assets Non-current assets Total assets – as reported by associates Current liabilities Non-current liabilities Total liabilities – as reported by associates Net assets – as reported by associates Group’s share of net assets of associates Carrying value of investments in associates Movements in carrying amount of associates Carrying amount of associates at the beginning of the year Share of net profit Carrying amount of associates at the end of the year 2013 $’000 2012 $’000 87 (34) 198 92 290 11 – 11 279 139 139 156 (17) 139 104 10 268 59 327 15 – 15 312 156 156 151 5 156 101 Amalgamated Holdings Limited – Annual Report 2013 2 1 0 2 0 0 0 $ ’ 3 1 0 2 0 0 0 $ ’ g n i t a r e p o o t n o i t u b i r t n o C ) s s o l ( / t i f o r p 2 1 0 2 0 0 0 $ ’ 3 1 0 2 0 0 0 $ ’ f o e r a h S e u n e v e r s e a s l 2 1 0 2 0 0 0 $ ’ 3 1 0 2 0 0 0 $ ’ t n e m t s e v n I t n u o m a g n y r r a c i % 2 1 0 2 % 3 1 0 2 t i f o r P e r a h s t s e r e t n i f o e r u t a N s e i t i v i t c a l a p i c n i r P e m a N S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 3 1 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F I I S E T T N E D E L L O R T N O C Y L T N O J N I I S T N E M T S E V N I – 7 3 E T O N 7 2 2 , 9 2 1 1 9 , 2 3 9 8 8 , 6 7 1 0 5 7 , 2 8 1 3 2 1 , 1 9 7 5 8 , 3 9 5 7 7 2 1 , 1 1 5 8 , 2 6 5 7 6 3 8 , 1 8 9 7 8 8 0 , 1 7 1 6 0 0 3 3 0 1 7 2 8 8 9 6 3 8 6 0 3 , 1 6 4 9 , 2 9 7 9 2 5 9 , 1 4 6 8 9 7 1 , 1 5 3 7 3 4 6 1 5 1 6 0 7 5 9 6 3 8 4 , 1 1 1 9 , 6 7 1 5 , 1 4 8 0 , 7 6 2 9 , 2 1 3 8 6 , 2 1 7 3 0 , 3 4 7 7 , 7 4 2 9 , 2 3 6 7 , 4 4 1 3 , 4 7 2 3 , 8 1 0 4 , 2 3 6 0 , 4 5 6 4 , 4 1 8 2 , 3 0 3 8 , 9 1 1 5 , 3 1 9 8 , 4 7 2 5 , 4 4 6 8 , 8 9 0 5 , 2 3 5 7 , 3 8 2 3 , 4 9 7 3 6 3 4 , 4 4 5 1 , 4 4 7 3 , 4 5 5 8 2 8 7 8 2 0 , 3 3 0 8 2 8 6 3 5 3 , 2 6 3 2 , 1 9 2 0 , 1 2 6 4 7 1 2 , 4 9 4 5 , 3 7 2 9 , 4 1 8 4 , 1 0 7 9 7 0 2 , 3 8 3 0 , 1 4 2 8 2 5 3 , 2 2 8 3 , 1 3 2 0 , 1 3 0 3 , 0 4 0 5 1 , 5 4 7 7 2 , 0 4 2 8 2 5 , 9 4 2 4 3 2 , 5 1 1 9 8 2 , 9 1 1 0 5 3 3 3 3 0 5 0 5 3 3 3 3 0 5 7 . 6 6 ) b ( ) a ( 7 . 6 6 ) b ( ) a ( 0 5 ) c ( 0 5 ) c ( 3 3 0 5 ) d ( 0 5 0 5 ) a ( 1 5 ) b ( 0 5 0 5 ) c ( 0 5 ) c ( 3 3 0 5 ) d ( 0 5 0 5 ) a ( 1 5 ) b ( 0 5 s t e s s a e r u t n e v s t e s s a e r u t n e v s t e s s a e r u t n e v s t e s s a e r u t n e v s t e s s a e r u t n e v s t e s s a e r u t n e v s t e s s a e r u t n e v s t e s s a e r u t n e v s t e s s a e r u t n e v s t e s s a e r u t n e v s t e s s a e r u t n e v t n o i j t n o i j t n o i j t n o i j t n o i j f o e r a h S n e e r c s i t l u m f o t r o a r e p O e r u t n e V i t n o J s e r t a e h T n a i l a r t s u A l s e x e p m o c a m e n c i f o e r a h S n e e r c s i t l u m a f o t r o a r e p O e r u t n e V i t n o J l x e p i t l u M s n a P s n w o r B i l l x e p m o c a m e n c i f o e r a h S n e e r c s i t l u m a f o t r o a r e p O t e r u n e V t i n o J i a m e n C x e p i t l u M l l l i H e l t s a C f o e r a h S n e e r c s i t l u m a f o t r o a r e p O e r u t n e V l x e p m o c a m e n c i t i n o J e r t n e C a m e n C a n i r a u s a C i l x e p m o c a m e n c i f o e r a h S n e e r c s i t l u m f o t r o a r e p O e r u t n e V i t n o J a m e n C i i j i F e r a h s y t i u q E n e e r c s i t l u m a f o t r o a r e p O G K l x e p m o c a m e n c i l s e x e p m o c a m e n c i . o C & H b m G e h u r s l r a K M K Z m a t s a a p m l l i F e r a h s y t i u q E n e e r c s i t l u m a f o t r o a r e p O G K . o C & H b m G z n a t s n o K l t s a a p m l i F t n o i j t n o i j t n o i j t n o i j t n o i j t n o i j l x e p m o c a m e n c i f o e r a h S n e e r c s i t l u m a f o t r o a r e p O e r u t n e V i t n o J a m e n C y t i i C n e d r a G l x e p m o c a m e n c i f o e r a h S n e e r c s i t l u m a f o t r o a r e p O e r u t n e V i t n o J a m e n C g n o e e G l i f o e r a h S n e e r c s i t l u m a f o t r o a r e p O t e r u n e V l x e p m o c a m e n c i t i n o J s n o i t a r e p O a m e n C y r o t c a F m a J i l x e p m o c a m e n c i f o e r a h S n e e r c s i t l u m f o t r o a r e p O e r u t n e V i t n o J o t l a R i l s e x e p m o c a m e n c i f o e r a h S n e e r c s i t l u m a f o t r o a r e p O e r u t n e V i t n o J s a m e n C 6 i t r o p h t u o S f o e r a h S n e e r c s i t l u m a f o t r o a r e p O t e r u n e V l x e p m o c a m e n c i l x e p m o c a m e n c i t i n o J e r t n e C a m e n C a b m o o w o o T i . s e c i i l o p g n i t a r e p o d n a l i a c n a n i f n r e v o g o t r e w o p e h t d n a l o r t n o c e v a h t o n s e o d p u o r G e h t s a d e t a d i l o s n o c t o n s i e r u t n e v t n o i j e h T . y n a m r e G n i d e t a r o p r o c n i e r e w G K . o C & H b m G z n a t s n o K l t s a a p m l i F d n a G K . o C & H b m G e h u r s l r a K M K Z m a t s a a p m l l i F . s r a e y r o i r p n i e d a m s a w t n e m t s e v n i i s h t f l o e u a v e h t n i n w o d - e t i r w A l . d n a a e Z w e N n i s e t a r e p o e r u t n e V t i n o J o t l i a R d n a i j i F n i s e t a r e p o e r u t n e V i t n o J a m e n C i i j i F ) a ( ) b ( ) c ( ) d ( 3 1 0 2 t r o p e R l a u n n A – d e t i i i l m L s g n d o H d e t a m a g a m A 2 0 1 l 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 3 NOTE 37 – INVESTMENTS IN JOINTLY CONTROLLED ENTITIES (continued) During the year, the cinema joint ventures purchased management and consulting services of $6,177,000 (2012: $5,977,000), capital equipment of $5,198,000 (2012: $10,284,000), block and artwork of $132,000 (2012: $132,000) and other services of $351,000 (2012: $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 Share of net 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 Note 32 for details of contingent liabilities. NOTE 38 – DIRECTOR AND EXECUTIVE DISCLOSURES 2013 $’000 2012 $’000 22,459 86,029 108,488 23,067 2,520 25,587 82,901 115,234 45,150 (41,858) 792 (29) – 119,289 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 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 27 28 28 28 29 31 32 33 103 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 2012 to 30 June 2013 AJ Clark Non-executive director and lead independent director 1 July 2012 to 30 June 2013 KG Chapman Non-executive director PR Coates Non-executive director VA Davies Non-executive director RG Newton Non-executive director 1 July 2012 to 30 June 2013 1 July 2012 to 30 June 2013 1 July 2012 to 30 June 2013 1 July 2012 to 30 June 2013 DC Seargeant Managing Director and Chief Executive Officer 1 July 2012 to 30 June 2013 DC Grant was appointed to the Board on 25 July 2013 and was not a key management person at any time during the period 1 July 2012 to 30 June 2013. 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 TJ Alley NC Arundel PC Bourke GC Dean MR Duff Position and employer Director of Marketing Amalgamated Holdings Limited Managing Director Rydges Hotels & Resorts Rydges Hotels Limited Director of Information Technology Amalgamated Holdings Limited Director Finance & Accounting, Company Secretary Amalgamated Holdings Limited Director Commercial Amalgamated Holdings Limited HR Eberstaller Managing Director AHL Strategic Investments The Greater Union Organisation Pty Limited Period of responsibility 14 November 2012 to 30 June 2013 1 July 2012 to 30 June 2013 1 July 2012 to 22 November 2012 1 July 2012 to 30 June 2013 1 July 2012 to 30 June 2013 1 July 2012 to 30 June 2013 JM Hastings General Manager Entertainment – Australia and New Zealand The Greater Union Organisation Pty Limited 1 July 2012 to 24 August 2012 All of the above persons were also key management personnel during the whole of the year ended 30 June 2012, with the exception of TJ Alley who commenced employment with the Group on 14 November 2012. 104 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 2013 $ 2012 $ 6,311,783 77,559 – 157,989 653,461 7,200,792 6,565,070 101,673 373,000 168,278 1,642,728 8,850,749 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 TJ Alley (a) NC Arundel PC Bourke (b) GC Dean MR Duff HR Eberstaller JM Hastings (c) PW Horton (d) 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 Held at the beginning of the year Granted Exercised Forfeited Other (b) 945,000 690,000 210,000 255,000 – – 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 20,767 – 23,502 28,539 – 15,681 20,868 25,089 22,489 26,908 9,876 11,792 – 29,793 – – – (14,791) (20,000) – – – – – – – – (48,485) – – – – (120,000) – – – (24,233) – (9,493) – – – – – – – – – (24,855) – (5,944) – (8,973) – (3,933) – (79,793) – – (35,195) – – – – – – – – – – Held at the end of the year 1,035,000 945,000 20,767 – 99,079 109,303 – 24,855 66,619 51,695 110,223 116,707 46,295 40,352 – 79,793 – – (a) TJ Alley commenced employment with the Group on 14 November 2012. (b) PC Bourke ceased to be a key management person effective 22 November 2012. The movement represents the balance of performance shares held at that date. (c) JM Hastings ceased employment with the Group on 24 August 2012. (d) PW Horton ceased employment with the Group on 28 October 2011. 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. 105 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 RG Newton DC Seargeant (Managing Director) Executives TJ Alley (b) NC Arundel PC Bourke (c) GC Dean MR Duff HR Eberstaller JM Hastings (d) PW Horton (e) Held at the beginning of the year Purchases Received on release of performance shares Sales Other (a) 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 72,234,355 71,834,355 – 400,000 65,000 65,000 57,500 54,500 36,500 36,500 8,000 – 66,840 66,840 469,490 869,490 – – 8,013 8,013 – – 54,791 108,137 – 25,892 3,584 3,584 – – – 63,697 – – – 3,000 – – 2,000 8,000 1,500 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 24,233 – – – – 14,791 20,000 – – – – – – – – – – – – – – – – – – – – (400,000) – – – – – – – (68,137) (20,000) (25,892) (3,584) – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – (63,697) Held at the end of the year 72,234,355 72,234,355 65,000 65,000 57,500 57,500 36,500 36,500 10,000 8,000 68,340 66,840 469,490 469,490 – – 32,246 8,013 – – 54,791 54,791 – – – 3,584 – – – – (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) TJ Alley commenced employment with the Group on 14 November 2012. (c) PC Bourke ceased to be a key management person effective 22 November 2012. (d) JM Hastings ceased employment with the Group on 24 August 2012. (e) PW Horton ceased employment with the Group on 28 October 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 2013. 106 Amalgamated Holdings Limited – Annual Report 2013 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 3 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 $23,752 (2012: $24,274). The Company holds shares in Carlton Investments Limited. Dividends received during the year from Carlton Investments Limited totalled $547,257 (2012: $509,447). AG Rydge paid rent, levies and other costs to Group entities during the year amounting to $87,539 (2012: $85,755). Rent is charged to AG Rydge at market rates. During the year, a controlled entity signed a lease agreement for a cinema complex in Townsville with an entity related to KG Chapman. The lease period will commence when construction of the site is completed, which is expected to be in 2015. 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 Other transactions were receipt of property rentals from associates of $47,000 (2012: $45,000) and costs of $52,000 (2012: $29,000), paid on behalf of an associate, $52,000 (2012: $29,000) of which is refundable by that associate. Refer also Notes 11, 16 and 36. Jointly controlled entities Refer Notes 11, 16, 32 and 37. Key management personnel Disclosures relating to directors and named executives are set out in Note 38. 107 Amalgamated Holdings Limited – Annual Report 2013 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 3 NOTE 40 – RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES Reconciliation of profit for the year to net cash provided by operating activities Profit for the year Adjustments for: Amortisation Depreciation Net loss on sale of non-current assets Profit on sale of discontinued operation Profit on sale of investment property Development gain on revaluation of the redeveloped Canberra Civic property Fair value (increment)/decrement of investment properties Equity accounted investment distributions Share of equity accounted investees’ net profit Asset impairment adjustments Share-based payments expense Receivables impairment adjustment Unrealised foreign exchange (gains)/losses Increase in income taxes payable Net cash provided by operating activities before change in assets and liabilities Change in assets and liabilities adjusted for effects of consolidation of controlled entities acquired/disposed during the year: Increase in trade and other receivables Decrease in inventories (Increase)/decrease in prepayments and other current assets Decrease/(increase) in deferred tax items (Decrease)/increase in trade and other payables Increase/(decrease) in provisions Increase in deferred revenue Decrease in deferred income – VAT dispute Decrease in other liabilities Increase/(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 2013, refer Note 8. 2013 $’000 2012 $’000 85,792 79,742 10,420 30,132 2,134 (5,024) (1,439) – (16) 41,858 (45,133) – 1,536 (88) (221) 2,657 122,608 (5,128) 7,815 (5,932) 452 (2,308) 2,782 10,175 – (2,213) 37 128,288 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) 138,285 108 Amalgamated Holdings Limited – Annual Report 2013 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 39 to 108 and the Remuneration Report in the Directors’ Report set out on pages 27 to 37, 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 2013 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 2013. The directors draw attention to Note 1(b) 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 22nd day of August 2013. DC Seargeant Director 109 Amalgamated Holdings Limited – Annual Report 2013 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 2013, 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 2013 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. KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation. 110 Amalgamated Holdings Limited – Annual Report 2013 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 27 to 37 of the directors’ report for the year ended 30 June 2013. 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 2013, complies with Section 300A of the Corporations Act 2001. KPMG Kenneth Reid Partner Sydney 22 August 2013 111 Amalgamated Holdings Limited – Annual Report 2013 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 23 AUGUST 2013) 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 Investors Mutual Limited IOOF Holdings Limited Number of ordinary shares held 56,598,377 * 56,588,377 18,448,940 11,280,675 9,962,378 * Includes Carlton Investments Limited holding. VOTING RIGHTS Ordinary shares There were 6,139 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) (2) on a show of hands, every member present has one vote; and 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 23 August 2013. 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 2,905 2,079 561 545 49 1,220,040 5,267,410 4,005,437 13,849,739 136,217,297 6,139 160,559,923 The number of shareholders holding less than a marketable parcel is 302. UNQUOTED ORDINARY SHARES There were 2,851,206 unquoted ordinary shares issued pursuant to the employee share plans. The shares were held by 670 holders. The unquoted ordinary shares have been included within the distribution of shareholders table above. 112 Amalgamated Holdings Limited – Annual Report 2013 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 JP Morgan Nominees Australia Limited National Nominees 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 Mr Alan Graham Rydge Citicorp Nominees Pty Limited (Colonial First State Inv Account) BNP Paribas Noms Pty Ltd (DRP) TN Phillips Investments Pty Ltd Australian United Investment Company Limited Argo Investments Limited Sandhurst Trustees Ltd (SISF Account) Australian Foundation Investments 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 12,119,730 10,358,380 9,092,778 6,087,938 6,027,315 5,732,812 5,276,103 4,795,785 4,652,634 3,269,915 2,052,216 1,941,582 1,346,000 1,200,000 1,040,151 935,989 775,000 740,667 20.01 12.32 7.55 6.45 5.66 3.79 3.75 3.57 3.29 2.99 2.90 2.04 1.28 1.21 0.84 0.75 0.65 0.58 0.48 0.46 129,356,798 80.57 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. 113 Amalgamated Holdings Limited – Annual Report 2013 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 25 October 2013 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 114 Amalgamated Holdings Limited – Annual Report 2013 abn 51 000 005 103 abn 51 000 005 103 2013 

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