ABN 51 000 005 103
2015
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 5 A N N U A L R E P O R T
C O N T E N T S
Section
Page
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
Section 1 – Basis of preparation
1.1 – Reporting entity
1.2 – Basis of preparation
1.3 – Foreign currency
1.4 – Change in significant accounting policies
1.5 – New standards and interpretations not yet adopted
Section 2 – Performance for the year
2.1 – Revenue
2.2 – Segment reporting
2.3 – Individually significant items
2.4 – Taxation
2.5 – Earnings per share
Section 3 – Operating assets and liabilities
3.1 – Trade and other receivables
3.2 – Inventories
3.3 – Property, plant and equipment
3.4 – Investment properties
3.5 – Goodwill and other intangible assets
3.6 – Trade and other payables
3.7 – Provisions
3.8 – Other liabilities
Section 4 – Capital structure and financing
4.1 – Share capital
4.2 – Dividends
4.3 – Reserves
4.4 – Loans, borrowings and financing arrangements
4.5 – Financial risk management
Section 5 – Group composition
5.1 – Business combinations
5.2 – Subsidiaries
5.3 – Interests in other entities
Section 6 – Employee benefits and related party transactions
6.1 – Share-based payments
6.2 – Director and executive disclosures
6.3 – Related parties
Section 7 – Other information
7.1 – Commitments and leases
7.2 – Contingent liabilities
7.3 – Reconciliation of profit for the year to net cash provided by operating activities
7.4 – Auditors’ remuneration
7.5 – Parent entity disclosures
7.6 – Events subsequent to reporting date
7.7 – Deed of Cross Guarantee
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Other Information
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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 2015 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
KG Chapman
Director since 2010
PR Coates
Director since 2009
VA Davies
Director since 2011
DC Grant
Director since 2013
PM Mann
Director since 2013
RG Newton
Director since 2008
DC Seargeant (Managing Director)
Director since 2001 and Managing Director since 2002.
Directors’ qualifications, experience and independent status
BAlan Rydge
Age 63. Non-executive Chairman, Board member since 1978, Chairman of the Board since 1980, Audit and Risk 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.
BDirectorships
BMr 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.
BKenneth Chapman MB BS, FAICD, FAIM, AFRACMA
Age 53. 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.
BDirectorships
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.
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Directors’ qualifications, experience and independent status (continued)
D I R E C T O R S ’ R E P O R T
BPeter Coates AO
Age 69. Independent non-executive director, Board member since 2009, Audit and Risk Committee member and Nomination and Remuneration
Committee member and Chairman of the Nomination and Remuneration Committee and the lead independent director.
Experience
BA company director with 40-plus years senior executive experience in the mining and commodities industries. Mr Coates is currently non-executive
chairman of Santos Limited, a non-executive director of Glencore plc, non-executive chairman of Glencore majority owned Sphere Minerals Limited,
and chairman of the NSW Government’s North West Rail Link Advisory Board. Mr Coates was formerly non-executive chairman of Xstrata Australia
Pty Limited and chief executive of Xstrata Coal.
BDirectorships
BDirectorships of other listed companies, held during the last three years, comprise:
•
•
•
•
Santos Limited (chairman from 30 April 2015);
Glencore International plc (resigned 2013);
Glencore plc (appointed 2013); and
Sphere Minerals Limited (appointed director and chairman 2013).
Valerie Davies FAICD
Age 64. 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.
BDirectorships
BPositions held by Ms Davies during the last three years include:
•
•
director of HBF Health Limited; and
commissioner of Tourism Western Australia.
David Grant BComm, CA, GAICD
Age 51. Independent non-executive director, Board member since 2013, Audit and Risk Committee member, Nomination and Remuneration
Committee member and Chairman of the Audit and Risk Committee.
Experience
BMr Grant is a Chartered Accountant with 25-plus years accounting and finance related experience spanning both the accounting profession and the
commercial sector. Mr Grant’s executive career included roles with Goodman Fielder Limited and Iluka Resources Limited as well as co-founding a
privately held resource exploration venture in New Zealand. Mr Grant was formerly a non-executive director of Consolidated Rutile Limited.
BDirectorships
BMr Grant is a director, and chairman of the Audit and Risk Committee, of iiNet Limited.
Patria Mann BEc, CA, FAICD
Age 53. Independent non-executive director and Board member since 2013.
Experience
BA company director with over 25 years experience. Mrs Mann is a Chartered Accountant and former partner of KPMG. She has been a professional
non-executive director for over 10 years. Mrs Mann has extensive audit, investigation, risk management and corporate governance experience.
Directorships
Mrs Mann held the following positions during the last three years:
•
•
•
•
•
director of Ridley Corporation Limited (and chair of the Audit and Risk Committee);
director of First State Superannuation Trustee Corporation (resigned 9 April 2015);
chairman of The Doctors’ Health Fund Pty Limited (resigned 2013);
director of Perpetual Superannuation Limited (and chair of the Audit and Risk Committee); and
director of Allianz Australia Limited.
BRichard Newton BBus (Marketing), FAICD
Age 55. 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.
BDirectorships
Mr Newton held the following positions during the last three years:
•
chairman of Capricorn Village Joint Venture, WA;
•
director of Carlton Football Club (resigned 2013); and
•
chairman and director of Selpam (Australia) Pty Limited and a director of various companies wholly owned by Selpam (Australia) Pty
Limited.
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Directors’ qualifications, experience and independent status (continued)
D I R E C T O R S ’ R E P O R T
BDavid Seargeant
Age 65. Managing Director, Board member since 2001 and appointed Managing Director in January 2002.
Experience
Managing Director with 40-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).
BDirectorships
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; AO Officer in the Order of
Australia; BBus (Marketing) Bachelor of Business (Marketing); BComm Bachelor of Commerce; BEc Bachelor of Economics; CA Member of Chartered Accountants
Australia and New Zealand; FAICD Fellow of the Australian Institute of Company Directors; FAIM Fellow of the Australian Institute of Management; GAICD Graduate
Member of the Australian Institute of Company Directors; and MB BS Bachelor of Medicine and Bachelor of Surgery.
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 are set out below:
AG Rydge
KG Chapman
PR Coates
VA Davies
DC Grant
PM Mann
RG Newton
DC Seargeant (a)
Directors’
meetings
Audit and Risk Committee
Meetings
Nomination and
Remuneration Committee
meetings
Entitled
to attend
8
Attended
8
Entitled
to attend
4
Attended
4
Entitled
to attend
5
Attended
5
8
8
8
8
8
8
8
8
7
8
8
8
8
8
–
4
–
4
–
–
4
–
4
–
4
–
–
4
–
5
–
5
–
–
3
–
5
–
5
–
–
3
(a)
DC Seargeant attended Audit and Risk Committee and certain Nomination and Remuneration Committee meetings by invitation. Other directors who are not members of a
Committee may attend meetings by invitation from time to time.
During the financial year, directors also visited various sites to improve their understanding of the Group’s locations and operations.
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 the Governance Institute of Australia.
DI Stone FCA, ACIS 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 Fellow of The Institute of Chartered Accountants in England and Wales and a member of
the Governance Institute of Australia.
CORPORATE GOVERNANCE
The Board endorses the ASX Corporate Governance Principles and Recommendations, 3rd Edition. The Group has taken the opportunity to disclose its
2015 Corporate Governance Statement in the Corporate Governance section on the AHL website (www.ahl.com.au/investor-centre/corporate-
governance/). As required, the Group has also lodged the 2015 Corporate Governance Statement with the ASX.
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D I R E C T O R S ’ R E P O R T
PRINCIPAL ACTIVITIES
The principal activities of the Group during the course of the year include the following:
•
•
•
•
•
•
•
cinema exhibition operations in Australia, including technology equipment supply and servicing, and the State Theatre;
cinema exhibition operations in New Zealand and Fiji;
cinema exhibition operations in Germany;
ownership, operation and management of hotels and resorts in Australia and overseas;
operation of the Thredbo resort including property development activities;
property development and investment properties; and
investment in shares in listed and unlisted companies.
There were no significant changes in the nature of the activities of the Group during the year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the year.
OPERATING AND FINANCIAL REVIEW
Overview of the Group
Net profit after tax was $108,890,000 (2014: $78,563,000), an increase of $30,327,000 or 38.6% above the prior year result. The normalised result* before
interest and income tax expense was $158,974,000 (2014: $115,196,000), an increase of $43,778,000 or 38.0% and the normalised result after tax was
$109,300,000 (2014: $75,160,000), an increase of $34,140,000 or 45.4% above the prior year result.
The individually significant items for the year included impairment charges booked against certain hotel properties and redundant plant and equipment,
offset by reversals of impairment charges booked in previous years. The prior year included a fair value gain of $4,905,000 arising from the acquisition of
the remaining interest in a joint operation and redundancies and other non-recurring costs of $2,146,000. The individually significant items were a net
expense item after tax of $410,000 (2014: net income item after tax of $3,403,000).
A summary of the normalised result is outlined below:
B2015
B2014
Normalised
result *
$’000
BReconciliation to
reported net profit
$’000
Normalised
result *
$’000
BReconciliation to
reported net profit
$’000
Entertainment
Australia
New Zealand
Germany
Hospitality and Leisure
Hotels and Resorts
Thredbo Alpine Resort
Property and Other Investments
Unallocated revenues and expenses
Finance revenue
Finance costs
Income tax expense
Individually significant items – net of tax
Profit for the year
78,576
8,264
25,126
41,400
13,410
7,440
(15,242)
158,974
1,290
(7,897)
152,367
(43,067)
109,300
66,457
4,230
14,867
32,759
6,525
6,734
(16,376)
115,196
1,360
(8,252)
108,304
(33,144)
75,160
78,576
8,264
25,126
41,400
13,410
7,440
(15,242)
158,974
1,290
(7,897)
152,367
(43,067)
109,300
(410)
108,890
66,457
4,230
14,867
32,759
6,525
6,734
(16,376)
115,196
1,360
(8,252)
108,304
(33,144)
75,160
3,403
78,563
* Normalised result is profit for the year before individually significant items (as outlined in Note 2.3 to the financial statements and in the table below). As outlined in Note 2.2 to the
financial statements, this measure is used by the Group’s Managing Director to allocate resources and in assessing the relative performance of the Group’s operations. The
normalised result is an unaudited non-IFRS measure.
5 Amalgamated Holdings Limited – Annual Report 2015
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D I R E C T O R S ’ R E P O R T
Overview of the Group (continued)
An analysis of the last five years is outlined below:
Total revenue and other income (a) ($’000)
Basic earnings per share (cents)
Dividends declared (b) ($’000)
Dividends per share (cents)
Special dividend per share (cents)
2015
2014
2013
2012
2011
1,174,662
68.9
85,097
45
8
1,097,138
49.7
67,435
42
–
1,039,535
54.3
67,435
42
–
790,285
50.6
62,618
39
–
784,949
88.7
65,518
37
4
(a) Total revenue and other income for 2013 to 2015 reflects the adoption of AASB 11 Joint Arrangements with effect from 1 July 2012.
(b) Includes the interim dividend paid and the final and special dividends declared in relation to the financial year ended 30 June.
Individually significant items comprised the following:
Impairments of land, buildings and plant and equipment
Reversal of impairment charges booked in previous years
Fair value gain on acquisition of an additional interest in a joint operation
Redundancy costs incurred in relation to cinema digitalisation and other non-recurring costs
Total individually significant items before income tax benefit
Income tax benefit relating to individually significant items
Total individually significant items after income tax benefit
2015
$’000
(11,900)
11,400
–
–
(500)
90
(410)
2014
$’000
–
–
4,905
(2,146)
2,759
644
3,403
Investments
The Group acquired property, plant and equipment totalling $109,437,000 during the year. The significant acquisitions and capital additions include the
following:
•
•
•
•
•
•
refurbishment requirements for the cinemas, hotels and resorts;
infrastructure and operational requirements for the Thredbo Alpine Resort;
purchase of two cinemas in the Bay of Plenty region (New Zealand);
cinema developments at Townsville, Pacific Fair and Springfield (Queensland) and Miranda (New South Wales);
a hotel development in the central business district of Melbourne (Victoria); and
development of properties located in Double Bay (New South Wales) and Sydney (New South Wales).
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 total value of the Group’s interest in land and buildings, excluding investment
properties, based on independent valuations is $1,120,879,000 (refer to Note 3.3 to the financial statements) whilst the total written-down book value of
these land and buildings including integral plant and equipment at 30 June 2015 was $715,014,000. The total value of the investment properties at 30
June 2015 was $71,050,000.
Capital structure
Cash and term deposits at 30 June 2015 totalled $133,680,000 and total bank debt outstanding was $115,448,000.
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 2015, the
Group had no interest rate hedges (2014: 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:
• 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 limit to support its transactional banking facilities.
The above facilities were extended during the year and mature on 12 September 2017 and are supported by interlocking guarantees from most Group
entities and are secured by specific property mortgages (refer to Note 3.3 to the financial statements).
6 Amalgamated Holdings Limited – Annual Report 2015
D I R E C T O R S ’ R E P O R T
Cash flows from operations
Net operating cash inflows increased to $213,310,000 from $122,746,000 recorded in the prior comparable year. The increase in net operating cash flows
was predominately due to the increased trading and revenues from all the Group’s major operating businesses and general working capital movements.
Impact of legislation and other external requirements
There were no changes in environmental or other legislative requirements during the year that have significantly impacted the results of operations of the
Group.
REVIEW OF OPERATIONS BY DIVISION
ENTERTAINMENT
Cinema Exhibition – Australia
As at 30 June
Cinema locations *
Cinema screens *
2015
67
628
2014
67
633
Movement
–
(5)
* Managed and joint venture cinema sites (excludes Moonlight Cinema sites and screens).
The normalised profit before interest and income tax expense was $78,576,000 or 18.2% above the prior comparable year. The result was driven by a
generally strong film line up which predominately occurred in the second half of the year. Box office revenues increased 7.7%.
The three titles that grossed in excess of $40 million at the Australian Box Office during the year were: Fast and Furious 7 ($43.3 million); Jurassic
World ($40.1 million); and The Avengers: Age of Ultron ($40.0 million). The other significant titles released during the year included: The Hobbit: The
Battle of Five Armies ($34.7 million); The Hunger Games: Mockingjay Part 1 ($33.8 million); Pitch Perfect 2 ($27.8 million); Gone Girl ($27.0 million);
and Guardians of the Galaxy ($26.6 million). Eight films grossed more than $25 million at the Australian Box Office compared to four films in the prior
comparable year.
Merchandising revenue spend per admission achieved positive growth across both the Gold Class and Scoop Alley Candy Bars. The increased
merchandising revenue, together with a strong cost focus and implementation of additional tight cost controls over the cost of goods sold assisted in
driving the profit growth.
One of the Group’s main areas of focus continues to be the Cinebuzz loyalty program. The program is used to build and maintain cinema visitation
loyalty to increase market share. The total number of active Cinebuzz members in Australia at 30 June 2015 totalled 1,027,000, an increase of 28.2%
over the prior comparable year.
During the year, the Group opened a new traditional five screen cinema complex at Townsville (Queensland) and a new 10 screen cinema at Miranda
(New South Wales) which includes two Vmax and two Gold Class screens. The Pacific Fair cinema on the Gold Coast (Queensland) has temporarily
closed and is undergoing refurbishment as part of the shopping centre redevelopment and is expected to reopen in October 2015. The cinema will
incorporate seven traditional, one Vmax and three Gold Class screens. Similarly, the cinema in Hurstville (New South Wales) has partially closed and is
undergoing refurbishment and will fully reopen in November 2015 with seven traditional and one Vmax screens.
Including the above, the cinema development pipeline for the Australian circuit includes a further seven sites (54 screens) that are expected to open
over the next two years.
Cinema Exhibition – New Zealand
As at 30 June
Cinema locations *
Cinema screens *
* Managed and joint venture cinema sites.
2015
19
132
2014
17
120
Movement
2
12
The normalised profit before interest and income tax expense was $8,264,000 or 95.4% above the prior comparable year. The result was achieved
through an increase in box office revenue and merchandising revenue, and significant cost saving initiatives particularly relating to payroll and cost of
goods sold.
Box office increased by 6.5% compared to the prior year with the main releases being Fast and Furious 7 (NZ$8.2 million); The Hobbit: The Battle of the
Five Armies (NZ$7.9 million); The Avengers: Age of Ultron (NZ$6.9 million); and The Hunger Games: Mockingjay Part 1 (NZ $6.0 million). The four films
achieved a combined total of NZ$29.0 million compared to the top four films in the prior year which collectively grossed NZ$26.9 million.
Merchandising revenue spend per admission increased by 7.5% over the prior year, driven by a continued focus on the candy bar offerings and a number
of successful Candy Bar Combo promotions. A strong cost focus and implementation of additional tight cost controls over the cost of goods sold also
assisted in driving the profit growth.
7 Amalgamated Holdings Limited – Annual Report 2015
D I R E C T O R S ’ R E P O R T
Cinema Exhibition – New Zealand (continued)
Similar to the Australian circuit, a focus area continues to be the Cinebuzz loyalty program. The program is used to build and maintain cinema visitation
loyalty to increase market share. The total number of active Cinebuzz members in New Zealand at 30 June 2015 totalled 146,500, an increase of 18.1%
over the prior comparable year.
The Group expanded its footprint of the New Zealand circuit during the year by acquiring two cinemas in the Bay of Plenty region. The cinemas included a
leasehold eight screen complex at Tauranga and a freehold four screen complex at Mount Maunganui. The acquisition was completed in December 2014.
The result includes the Fiji Cinema Joint Venture, which includes a 66.7% share in three cinemas located in Fiji.
Entertainment – Germany
As at 30 June
Cinema locations *
Cinema screens *
* Managed and joint venture cinema sites.
2015
53
411
2014
53
411
Movement
–
–
The normalised profit before interest and income tax expense was $25,126,000, an increase of 69.0% on the prior comparable year. The total Box Office
revenue increased by 7.3% compared to the previous year.
The year started slowly when cinema visitation in July 2014 was severely impacted by Germany’s success at the Football World Cup; however, an
improved release schedule from late July 2014 assisted in a box office recovery. The films which achieved in excess of 2 million admissions at the
German Box Office during the year included: the German production, Honig im Kopf (6.9 million admissions); The Hobbit: The Battle of Five Armies (6.0
million admissions); Fifty Shades of Grey (4.4 million admissions); Fast and Furious 7 (4.2 million admissions); The Hunger Games: Mockingjay Part 1
(3.8 million admissions); the French production, Monsieur Claude and his Daughters (3.7 million admissions); Jurassic World (2.9 million admissions);
How to Train Your Dragon 2 (2.7 million admissions); Transformers: Age of Extinction (2.4 million admissions); and The Avengers: Age of Ultron (2.4
million admissions). These 10 films achieved a combined total of 39.4 million admissions compared to the nine films during the prior comparable year
which collectively achieved 35.7 million admissions.
German produced films managed to attain a reputable 18.8% share of the total German Box Office compared to 20.0% achieved in the prior comparable
year; however, the previous year included the very successful Fack Ju Göhte. Alternative content, which included broadcasts of opera and other content,
maintained popularity and was marginally up on the prior year.
The normalised result also benefited from improved merchandising and the resulting merchandising revenue spend per admission was up 7.2%.
Similar to the Australian and New Zealand cinema businesses, the Group has commenced a loyalty program for the German cinema operations. The new
CineStarCARD loyalty program currently has in excess of 342,000 members and will be heavily promoted to further grow the membership base and
improve market share.
HOSPITALITY AND LEISURE
Hotels and Resorts
As at 30 June
Locations *
Rooms *
* Owned and managed hotels.
2015
54
8,877
2014
49
9,039
Movement
5
(162)
The normalised profit before interest and income tax expense was $41,400,000 or 26.4% above the prior comparable year. Each of the Group’s brands,
which include Rydges, QT and Atura, performed well and contributed to the profit growth. Occupancy in the Group’s owned hotels increased by 2.8
percentage points to 75% and average room rate increased 2.7% to $161, resulting in an increase in revenue per room (revpar) of 6.3%.
The performance of the Group’s QT Hotels (Sydney and Canberra) was driven predominately by QT Sydney, which continued to maintain its growth
trajectory with profit increasing by $2,392,000. QT Canberra also enjoyed a successful full year of trading following its launch in the 2014 year, and has
quickly established itself as the leading Canberra hotel for conferences and events. QT Canberra continues to attract strong corporate following and an
increasing amount of leisure business, despite increased competition within the Canberra market. The Group’s QT Resorts (Gold Coast, Port Douglas and
Falls Creek) all improved profitability, with QT Gold Coast in particular contributing an increase in profit of $1,475,000 on the prior year, driven by growth in
the conferencing and inbound markets. The new QT Bondi (69 rooms) at Bondi Beach is scheduled to open in November 2015.
The improved profitability from the Group’s Rydges Hotels reflected strong demand within key markets and improved operating efficiencies. The majority
of owned and managed hotels achieved growth, particularly those located in Sydney and Melbourne and throughout New Zealand. The corporate,
conference and leisure segments performed well throughout the year, albeit partly offset by noticeable weakness from the resource and mining related
business sectors. Inbound arrivals improved and this further underpinned the strong performance in the major cities and regional locations, such as
Cairns, Queenstown and Rotorua. In relation to managed hotels, The Thorndon Wellington (formerly The Kingsgate) and Rydges St Kilda (formerly Urban
St Kilda) joined the Group during the year and Rydges Palmerston Darwin (Northern Territory) and Rydges Fortitude Valley (Queensland), both of which
are currently under development, will open in September 2015 and February 2016 respectively.
8 Amalgamated Holdings Limited – Annual Report 2015
D I R E C T O R S ’ R E P O R T
Hotels and Resorts (continued)
Atura Hotels currently has three operating properties. Atura Blacktown, which opened in October 2013, continues to gain considerable traction and has
performed well within its market, contributing an increase in profit of $2,104,000 over the prior comparable year. The Group also acquired a 128 room
hotel in Doveton, Victoria during the year which was rebranded to Atura Dandenong. Rydges Albury has been also been rebranded as Atura Albury after
an extensive refurbishment of all guest rooms and public areas was completed in April 2015.
The Group remains focused on driving value from frequent travellers via the Priority Guest Rewards program. During the year, guest benefits were
upgraded and actively communicated to customers, resulting in a significant increase in the program membership and guest revenues.
Since the end of the year, the Group has completed the acquisition of the Museum Art Hotel, Wellington, which will be rebranded QT Wellington. The
development of QT Melbourne (188 rooms) is in progress with an expected opening around mid-2016. The development includes 24 residential
apartments, of which 21 apartments have been pre-sold.
Thredbo Alpine Resort
The normalised profit before interest and income tax expense was $13,410,000, an increase of 105.5% on the prior comparable year. The result reflects
the outstanding 2014 ski season.
Revenues increased by 22.5% over the prior comparable half year. Skier numbers improved by 13.0% to 438,000 and improved yields from lift ticket
sales, ski hire and retail revenues, together with growth of 28.3% in the ski school participation all contributed to the improved result. Reductions in
electricity rates together with improvements in snow making procedures and electricity demand management delivered a 19.9% reduction in energy costs
compared to the prior comparable year. Normalised summer operating revenue (not including property income) increased by 12.8%, with significant
contributions from food and beverage and mountain biking.
The outstanding success of the 2014 ski season was primarily due to two early major snowfalls followed by a series of very cold nights which allowed
excellent snow making production. This contrasts markedly to the 2013 ski season which was one of the worst on record where any material snowfall was
followed by warm wind and rain. The 2014 ski result highlights the significance and importance of the Group’s snow making ability and capacity.
PROPERTY AND OTHER INVESTMENTS
The normalised profit before interest and income tax expense was $7,440,000, an increase of 10.5% on the prior year normalised result. The result
included a fair value increment of the investment properties of $1,319,000 compared to $624,000 in the prior year.
The Group’s current significant property redevelopments include:
•
•
a redevelopment of the Group’s former cinema site at Double Bay (New South Wales). The development is expected to be completed in August
2015 and will include one level of retail and three levels of serviced office facilities; and
the 16 level redevelopment at 478 George Street in Sydney (New South Wales). The development is expected to be completed in October 2015 and
will accommodate the Group’s corporate office, which will relocate from the current leased premises. The development maximises the coveted
George Street position (fronting George Street and opposite the Queen Victoria Building) by also incorporating two levels of prime retail and four
levels of serviced office area.
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
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; and
enhanced customer communication and ticketing through online applications.
•
•
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:
•
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.
•
•
9 Amalgamated Holdings Limited – Annual Report 2015
D I R E C T O R S ’ R E P O R T
Entertainment Technology
The Group will continue to build knowledge in relation to evolving cinema systems, including immersive audio systems. 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. The Group is assessing potential income streams from digital content delivery platforms, including alternate content distribution.
HOSPITALITY AND LEISURE
Rydges 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 effective 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
The Group recognised a market opportunity in the 4.5 star design hotel segment, which 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.
The flagship QT Sydney opened in 2012 and has set new standards of style and vibrancy within the Australian hotel market and has received many local
and international awards and accolades. The Group currently has a total of five QT properties including QT Sydney, QT Canberra (formerly Rydges
Lakeside) and the QT resorts at Gold Coast, Port Douglas and Falls Creek. In addition, the Group recently acquired (August 2015) the Museum Art Hotel
in Wellington (New Zealand) which will be rebranded to QT Wellington, QT Bondi is scheduled to open in November 2015 and the development of the
former Russell Street cinema site in Melbourne to a new QT hotel with an expected opening around mid-2016.
Atura Hotels
The Group recognised a market opportunity in the 3.5 star design hotel segment which presents opportunities for a lower level of operating costs, whilst at
the same time delivering hotel guests with quality and service. Atura offers an experience and amenities currently unavailable in the mid-level market
including state-of-the-art technology and free WiFi. The Group intends to roll out the Atura brand across Australia in fringe city CBD suburbs and business
parks.
The Group currently has a total of three Atura Hotels, including Atura Blacktown which opened in 2013, Atura Albury (formerly Rydges Albury) which was
converted during the year, and Atura Dandenong (formerly the Chifley Doveton) which was acquired during the year. The Group is seeking to identify
other potential Atura hotel sites whether through redevelopment of existing hotels or freehold acquisitions.
Increasing the number of hotel rooms
The Group will continue to seek opportunities for future growth through gaining of new hotel management agreements and freehold acquisitions.
Maximising returns from existing locations
The Group anticipates achieving continuing improvements in results through growth in market share and initiatives that drive increased spend and capture
rates in all hotels.
THREDBO ALPINE RESORT
Premier holiday destination
The key strategy for the Thredbo Alpine Resort is to maintain the facility as one of the premier Australian holiday destinations. This strategy includes:
•
•
•
•
•
continuing to ensure the popularity, high-quality and ambience of the winter-time resort facility;
continuing to improve snow making capability to mitigate risk in poor snow seasons;
increasing the number and quality of sporting and cultural events to increase visitation outside of the snow season;
expanding the mountain bike trail network to appeal to a broader range of riders; 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.
10 Amalgamated Holdings Limited – Annual Report 2015
DIVIDENDS
Dividends paid or declared by the Company since the end of the previous year were:
D I R E C T O R S ’ R E P O R T
Declared and paid during the year
Final 2014 dividend
Interim 2015 dividend
Declared after the end of the year
Final 2015 dividend
Special dividend
Per share
Cents
Total amount
$’000
Date of payment
Tax rate for
franking credit
27
16
29
8
43,351
25,690
69,041
46,562
12,845
18 September 2014
19 March 2015
17 September 2015
17 September 2015
30%
30%
30%
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 14 to 26 and has been audited as required by section 308(3C) of
the Corporations Act 2001.
EVENTS SUBSEQUENT TO REPORTING DATE
The Group finalised the acquisition of the Museum Art Hotel, Wellington, New Zealand in August 2015. The total purchase price relating to the
acquisition was NZ$28.5 million (approximately A$25.9 million).
The Group finalised the acquisition of the Stade Family Entertainment Centre, Stade, Germany in August 2015. The total purchase price relating to
the acquisition was €6.7 million (approximately A$9.7 million).
Other than the matters identified above, there has not arisen in the interval between the end of the year and the date of this report, any item, transaction or
event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results
of those operations, or the state of affairs of the Group, in future years.
LIKELY DEVELOPMENTS
Likely developments in the operations of the Group are referred to in the Review of Operations by Division, set out within this report.
DIRECTORS’ INTERESTS
The relevant interest of each director of the Company in share capital of the Company, as notified by the directors to the ASX in accordance with section
205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Director
AG Rydge
KG Chapman
PR Coates
VA Davies
DC Grant
PM Mann
RG Newton
DC Seargeant
Ordinary shares held
directly
3,269,915
3,000
–
–
2,000
–
–
453,490
Ordinary shares held by
companies in which a
director has a beneficial
interest (a)
68,948,033
54,000
46,960
10,000
–
2,000
66,000
16,000
Performance shares held
directly
–
–
–
–
–
–
–
802,500
Performance rights held
directly
–
–
–
–
–
–
–
375,000
(a) Relevant interest under the Corporations Act 2001 differs from the disclosure required under Australian Accounting Standards as presented in the Remuneration Report.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company’s Constitution provides an indemnity to each person, including AG Rydge, KG Chapman, PR Coates, VA Davies, DC Grant, PM Mann, 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.
11 Amalgamated Holdings Limited – Annual Report 2015
D I R E C T O R S ’ R E P O R T
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS (continued)
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
Mrs PM Mann 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 27 and forms part of the Directors’ Report for the year ended 30 June 2015.
NON-AUDIT SERVICES PROVIDED BY KPMG
During the year, KPMG, the Group’s auditor, performed certain other services in addition to their statutory duties.
The Board has considered the non-audit services provided during the year by the auditor and in accordance with written advice provided by resolution of
the Audit and Risk 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 and Risk
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
2015
$
2014
$
1,091,640
123,208
335,920
40,254
1,591,022
332,004
85,388
417,392
331,655
749,047
1,097,170
35,710
348,490
17,470
1,498,840
303,329
84,027
387,356
284,162
671,518
ROUNDING OFF
The Company is of a kind referred to in Class Order 98/100 as issued by the 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 20th day of August 2015.
DC Seargeant
Director
12 Amalgamated Holdings Limited – Annual Report 2015
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 2015 Remuneration Report.
The Board continues to employ appropriate remuneration arrangements that achieve an alignment between the remuneration of employees and the
interests of shareholders. The remuneration levels of the Managing Director and other senior executives reflect the current flat organisational structure,
which is considered appropriate for the Group’s operations at this stage, and allows the Managing Director to maintain a strong personal focus on all the
Group’s operations.
Review of remuneration arrangements during the year
To ensure that the remuneration arrangements remain relevant and competitive, during the year the Nomination and Remuneration Committee, on behalf
of the Board, engaged the services of an external consultant to review the remuneration arrangements of the Managing Director. Following this review, the
Board resolved to increase the Managing Director’s fixed annual remuneration (inclusive of superannuation) from $1,890,000 to $1,970,000 with effect
from 1 July 2015. This amendment is the first change to the Managing Director’s fixed annual remuneration amount since being last amended in July
2011.
A market benchmarking review was also conducted in June 2015 in relation to the fixed annual remuneration of other senior executives, and appropriate
adjustments were implemented.
Short term incentive (STI)
As outlined in the 2014 Remuneration Report, certain changes were made to the Group’s remuneration arrangements in 2013, including a reduction in the
Managing Director’s total potential STI from 150% to 100% of fixed annual remuneration with effect from the year ended 30 June 2014. This reduced total
potential STI is reflected in the bonus payment disclosed in this Remuneration Report. The Managing Director achieved 60% of the maximum potential
STI for the year ended 30 June 2014.
To reflect the outstanding effort of the Managing Director in a number of fields, which had led to the achievement of the result for the year ended 30 June
2015, an additional STI payment of 20% of fixed annual remuneration was made in June 2015.
In accordance with the principle of aligning the interests of shareholders and management, the Group has also determined that a special dividend of eight
cents per share will be paid for the year ended 30 June 2015, representing 19% of the prior year full dividend payment.
Long term incentive (LTI)
The Group’s current LTI is the Executive Performance Rights Plan, which was approved by shareholders at the 2013 Annual General Meeting. The
performance hurdles and other key aspects of the LTI are consistent with current market practice, together with the Board’s expectations of future market
segment growth, and the Board will continue to monitor industry trends in relation to both LTI and STI and amend the current arrangements if considered
appropriate.
New employment agreement with the Managing Director
The Group also entered into a new employment agreement with the Managing Director during the year ended 30 June 2015. The material terms of this
agreement are summarised in the Remuneration Report.
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
13 Amalgamated Holdings Limited – Annual Report 2015
REMUNERATION REPORT – AUDITED
This report outlines the remuneration arrangements in place for directors of the Company 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 policy and packages applicable
to the Board members and senior executives. 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 Rights Plan, and previously in the Executive Performance Share
Plan. The long term benefits of the Executive Performance Rights Plan and 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 6.1 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 Group’s remuneration policy for non-executive directors aims to ensure that the Group can attract, retain and appropriately remunerate suitably
skilled, experienced and committed individuals to serve on the Board and its committees.
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. The latest determination was at the Annual General Meeting held on 22 October 2010 when shareholders approved a maximum
aggregate remuneration of $1,500,000 per year. Non-executive directors do not receive any performance related remuneration nor are they issued
shares, performance shares or performance rights.
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 18 in this report.
Each director receives a fee for being a director of the Company. A Committee fee is also paid for being a member of the Audit and Risk Committee and
the Nomination and Remuneration Committee. The payment of the Committee fee recognises the additional time commitment required by directors who
serve on those Committees. Other Board Committees may be appointed from time to time to deal with issues associated with the conduct of the Group’s
various activities, and directors serving on such Committees may receive an additional fee in recognition of this additional commitment.
The Board has approved non-executive director fees for the year ending 30 June 2016 as follows:
Chairman
Other non-executive directors
Base fee
Committee fee
Additional fee for the Chairman of the Audit and Risk Committee
Additional fee for the Chairman of the Nomination and Remuneration Committee
2016
$
313,000
128,000
20,000
12,000
6,000
2015
$
304,000
124,000
19,000
12,000
6,000
The remuneration of non-executive directors for the year ended 30 June 2015 is detailed on page 20 in this report.
Directors’ fees cover all main Board activities. Non-executive directors are also entitled to be reimbursed for all reasonable business related expenses,
including travel, as may be incurred in the discharge of their duties.
14 Amalgamated Holdings Limited – Annual Report 2015
D I R E C T O R S ’ R E P O R T
Managing Director and executive remuneration
Objective
The Group’s remuneration policy aims to reward the Managing Director and other 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, based on remuneration trends in the market, from which recommendations are made to the
Board.
It is the Group’s policy that employment contracts are entered into with the Managing Director and other executives. Details of these employment
contracts are provided on page 18 in this report.
Remuneration consists of both fixed and variable remuneration components. The variable remuneration component includes a short term incentive plan
and a long term incentive plan. The proportion of fixed and variable remuneration (potential short term and long term incentives) is set and approved 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 responsibilities, 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. Fixed annual remuneration includes superannuation and all prescribed fringe benefits, including fringe benefits tax.
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 to each executive are determined based 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 to directly align
the individual’s STI to the KPIs of the Group and to its strategies and performance.
15 Amalgamated Holdings Limited – Annual Report 2015
D I R E C T O R S ’ R E P O R T
Structure (continued)
On an annual basis, an earnings performance rating for the Group and each division is assessed and approved by the Nomination and Remuneration
Committee. The individual performance of each executive is also assessed and rated and the ratings are taken into account when determining the
amount, if any, of the STI 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 50% to 100% of the executives’ fixed annual
remuneration. The target bonus range for the Managing Director and named executives is detailed below:
Maximum STI calculated on
fixed annual remuneration (a)
Group
earnings
Divisional
earnings
Special
projects
Quantitative
KPIs
Qualitative
KPIs
Allocated between:
Managing Director
DC Seargeant (b)
Executives
NC Arundel
GC Dean
MR Duff
HR Eberstaller
100%
40%
–
50%
50%
50%
50%
16.7%
25%
16.7%
16.7%
16.7%
–
–
16.7%
15%
–
–
6.7%
–
–
13.3%
10%
23.3%
–
45%
3.3%
15%
3.3%
16.6%
(a) Fixed annual remuneration is comprised of base salary, superannuation and benefits provided through salary sacrificing arrangements.
(b) The targets set for the Managing Director’s STI relate to the Group’s performance, the management of current property developments and other business
growth targets. The Board considers the specific targets to be commercially sensitive and accordingly further details of these targets have not been
disclosed.
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 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.
Structure
Executives are awarded performance rights which will only vest on the achievement of certain performance hurdles and service conditions. An offer is
made under the Executive Performance Rights 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 Rights 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 Rights Plan commences for the Managing Director.
Only senior employees who are able to directly influence the long term success of the Group participate in the Executive Performance Rights Plan.
Each award of performance rights 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.
Performance rights do not carry the right to vote or to receive dividends during the Performance Period.
The performance hurdles for the awards of performance rights to executives in the financial year ended 30 June 2015 are based on Amalgamated
Holdings Limited’s EPS and TSR growth over the Performance Period of the three years to 30 June 2017, with performance measured against the year
ended 30 June 2014 (being the base year).
16 Amalgamated Holdings Limited – Annual Report 2015
Structure (continued)
The performance hurdles for the awards of performance rights to executives in the financial year ended 30 June 2015 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 performance rights 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 rights 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 rights awarded (and attaching
to this hurdle) will vest with the executive.
•
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 trusts, infrastructure groups and mining companies). 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 performance rights 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 rights 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 the 75th percentile, all of the performance rights awarded
(and attaching to this hurdle) will vest with the executive.
•
After the Board has assessed the extent to which the above performance hurdles and criteria have been achieved, executives will be allocated ordinary
shares equal to the number of vested performance rights held.
The Board has retained the discretion to vary the performance hurdles and criteria.
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:
2015
2014
2013
2012
2011
Net profit before individually significant
items and income tax ($) (a)
Dividends per share (cents)
Special dividend per share (cents)
Share price at year end ($)
152,367,000
45
8
12.54
108,304,000
42
–
114,745,000
42
–
106,564,000
39
–
104,269,000
37
4
9.33
8.27
6.45
5.80
(a) Refer to page 5 in the Directors’ Report for a reconciliation to reported profit for the year.
17 Amalgamated Holdings Limited – Annual Report 2015
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, remuneration trends in the market, 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 Managing Director and named executives are summarised in the table below:
Expiry date of
contract
Not applicable, rolling
contracts.
Executives
DC Seargeant
Termination by the
executive
The notice period is
six months.
Termination by the Group
The notice period is six months.
On termination, the Group may at its discretion make a
payment in lieu of all or part of the notice period. Mr
Seargeant may also be entitled to a pro-rata STI bonus for
the portion of the performance period that Mr Seargeant has
worked, and any entitlement under the LTI (or pro-rata
thereof) according to the rules in operation at the termination
date. Mr Seargeant will also be entitled to a separation
payment of one year’s fixed annual remuneration, reduced by
any payment in lieu of notice, and to accrued annual leave
and long service leave benefits.
The Group may terminate the agreement immediately in
certain circumstances in which case there is no payment in
lieu of notice, no STI or LTI is payable, and the Board may
decide not to pay the separation payment.
The notice period 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 (or pro-rata thereof) is subject to the
rules in operation at the termination date and at the discretion
of the Board.
NC Arundel
GC Dean
MR Duff
HR Eberstaller
The notice period is
one month.
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 Managing Director. Under the terms of the
engagement, GRG provided remuneration recommendations as defined in section 9B of the Corporations Act 2001 and was paid $9,000 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 Chairman of the Nomination and Remuneration Committee. The agreement for the provision of
remuneration consulting services was executed by the Chairman 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 Chairman 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.
18 Amalgamated Holdings Limited – Annual Report 2015
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, and comprised for the year
ended 30 June 2015 the following directors of the Company and executives:
Name
Position
Period of responsibility
Employing company
Non-executive directors
Alan Rydge
Chairman and non-executive director
1 July 2014 to 30 June 2015
Amalgamated Holdings Limited
Kenneth Chapman
Independent non-executive director
1 July 2014 to 30 June 2015
Amalgamated Holdings Limited
Peter Coates
Independent non-executive director and lead
independent director
1 July 2014 to 30 June 2015
Amalgamated Holdings Limited
Valerie Davies
Independent non-executive director
1 July 2014 to 30 June 2015
Amalgamated Holdings Limited
David Grant
Independent non-executive director
1 July 2014 to 30 June 2015
Amalgamated Holdings Limited
Patria Mann
Independent non-executive director
1 July 2014 to 30 June 2015
Amalgamated Holdings Limited
Richard Newton
Independent non-executive director
1 July 2014 to 30 June 2015
Amalgamated Holdings Limited
Executive director
David Seargeant
Executives
Managing Director and Chief Executive
Officer
1 July 2014 to 30 June 2015
Amalgamated Holdings Limited
Norman Arundel
Managing Director Rydges Hotels & Resorts
1 July 2014 to 30 June 2015
Rydges Hotels Limited
Gregory Dean
Director Finance & Accounting, Company
Secretary
1 July 2014 to 30 June 2015
Amalgamated Holdings Limited
Mathew Duff
Director Commercial
1 July 2014 to 30 June 2015
Amalgamated Holdings Limited
Hans Eberstaller
Managing Director AHL Strategic Investments
1 July 2014 to 30 June 2015
The Greater Union Organisation
Pty Limited
19 Amalgamated Holdings Limited – Annual Report 2015
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l
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d
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r
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n
a
e
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G
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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 the 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 and performance rights 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 and performance rights at
the grant date and then to have that value apportioned in equal amounts over the period from grant date to vesting date. Details of performance
shares and performance rights on issue are set out within the Remuneration Report and further details on the terms and conditions of these
performance shares and performance rights are set out in Note 6.1 to the financial statements.
(c) DC Grant was appointed to the Board on 25 July 2013.
(d) PM Mann was appointed to the Board on 25 October 2013.
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 executives of the Group are shown below:
Managing Director
DC Seargeant (b)
Executives
NC Arundel
GC Dean
MR Duff
HR Eberstaller
Included in remuneration (a)
$
Awarded in year
Not awarded in year (c)
1,512,000
108,251
86,600
109,463
58,477
80.0%
46.7%
40.0%
47.0%
33.3%
20.0%
53.3%
60.0%
53.0%
66.7%
(b)
(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 2014 year. No amounts vest in future years in respect of the STI bonus schemes for the
2014 year.
The amount awarded to the Managing Director reflects the achievements discussed in the Review of Operations in the Directors’ Report, the Group’s
performance, management of current property developments and other business growth targets. The Board considers the specific targets to be
commercially sensitive and accordingly further details of these targets have not been disclosed. The Managing Director achieved 60% of the
maximum potential STI for the year ended 30 June 2014 and an additional payment of 20% of fixed annual remuneration was made in June 2015
reflecting the outstanding effort of the Managing Director in a number of fields which had led to the achievement of the result for the year ended 30
June 2015.
The amounts not awarded are due to the performance criteria not being met in relation to the assessment period.
(c)
Other transactions with key management personnel and their related parties
AG Rydge is a director 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 $23,432 (2014: $23,405). The
Company holds shares in Carlton Investments Limited. Dividends received during the year from Carlton Investments Limited totalled $673,291
(2014: $603,972).
AG Rydge paid rent, levies and other costs to Group entities during the year amounting to $96,714 (2014: $92,653). Rent is charged to AG Rydge
at market rates.
During the year ended 30 June 2013, a controlled entity signed a lease agreement for a cinema complex in Townsville with an entity related to KG
Chapman. The lease commenced on 9 December 2014 and rent paid during the year was at market rates.
During the prior year, a controlled entity signed a contract of sale with DC Seargeant in respect of an apartment at 131 Russell Street, Melbourne
(QT Melbourne). The sale price was based on the listed sale price and consistent with the market value.
Apart from the details disclosed in the Remuneration Report, 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.
22 Amalgamated Holdings Limited – Annual Report 2015
Executive Performance Rights Plan (current LTI plan)
D I R E C T O R S ’ R E P O R T
Analysis of LTI performance rights granted as remuneration
Details of the vesting profile of performance rights granted as remuneration to the Managing Director and named executives are shown below:
Managing Director
DC Seargeant
Number
Grant date
170,000
205,000
19 Feb 2015
20 Feb 2014
Executives
NC Arundel
GC Dean
MR Duff
HR Eberstaller
19,548
22,885
23,870
21,356
25,667
22,983
14,825
17,311
19 Feb 2015
20 Feb 2014
19 Feb 2015
20 Feb 2014
19 Feb 2015
20 Feb 2014
19 Feb 2015
20 Feb 2014
Vested during
the year
Forfeited
during the
year
Year in which
the grant vests
Performance
share – EPS
$
Performance
share – TSR
$
Fair value
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30 Jun 2018
30 Jun 2017
30 Jun 2018
30 Jun 2017
30 Jun 2018
30 Jun 2017
30 Jun 2018
30 Jun 2017
30 Jun 2018
30 Jun 2017
10.74
7.20
10.74
7.20
10.74
7.20
10.74
7.20
10.74
7.20
8.40
3.50
8.40
3.50
8.40
3.50
8.40
3.50
8.40
3.50
Analysis of movements in performance rights
The movement during the year, by value, of performance rights in the Company held by the Managing Director and each of the named executives is
detailed below:
Managing Director
DC Seargeant
Executives
NC Arundel
GC Dean
MR Duff
HR Eberstaller
Granted during
the year (a)
$
Exercised during
the year
$
Performance
rights exercised
Number
Amount paid per
right exercised
$
1,626,900
187,074
228,436
245,632
141,874
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(a)
The value of performance rights granted in the year is the fair value of the performance rights calculated at grant date, estimated using a Binomial
tree model for those rights that have EPS hurdles and a Monte Carlo model for those rights that have TSR hurdles. The total value of the
performance rights granted is included in the table above. This amount is allocated to remuneration over the vesting period.
There were no performance rights granted since the end of the year.
23 Amalgamated Holdings Limited – Annual Report 2015
Executive Performance Rights Plan (current LTI plan) (continued)
D I R E C T O R S ’ R E P O R T
Performance rights holdings and transactions
The movement during the year in the number of performance rights in Amalgamated Holdings Limited held, directly, indirectly or beneficially, by
each key management person, including their related parties, was as follows:
Managing Director
DC Seargeant
Executives
NC Arundel
GC Dean
MR Duff
HR Eberstaller
Held at
the beginning of
the year
Granted
Exercised
Forfeited
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
205,000
–
170,000
205,000
22,885
–
21,356
–
22,983
–
17,311
–
19,548
22,885
23,870
21,356
25,667
22,983
14,825
17,311
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Held at
the end of
the year
375,000
205,000
42,433
22,885
45,226
21,356
48,650
22,983
32,136
17,311
No performance rights have been granted since the end of the year. No performance rights are held by any related parties of key management
personnel.
Executive Performance Share Plan (previous LTI plan)
Analysis of LTI performance shares granted as remuneration
Details of vesting profile of the performance shares granted in previous years as remuneration to the Managing Director and named executives are
shown below:
Managing Director
DC Seargeant
Number
Grant date
210,000
255,000
21 Feb 2013
23 Feb 2012
Executives
NC Arundel
GC Dean
MR Duff
HR Eberstaller
23,502
28,539
20,868
25,089
22,489
26,908
9,876
11,792
21 Feb 2013
23 Feb 2012
21 Feb 2013
23 Feb 2012
21 Feb 2013
23 Feb 2012
21 Feb 2013
23 Feb 2012
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 2016
30 Jun 2015
30 Jun 2016
30 Jun 2015
30 Jun 2016
30 Jun 2015
30 Jun 2016
30 Jun 2015
7.43
5.89
7.43
5.89
7.43
5.89
7.43
5.89
7.43
5.89
5.00
4.21
5.00
4.21
5.00
4.21
5.00
4.21
5.00
4.21
(a)
The percentage forfeited during the year represents the reduction from the maximum number of performance shares available to vest due to the
performance criteria not being achieved.
24 Amalgamated Holdings Limited – Annual Report 2015
Executive Performance Share Plan (previous LTI plan) (continued)
D I R E C T O R S ’ R E P O R T
Performance shares exercised during the year
Details of performance shares in the Company exercised during the year by the Managing Director and each of the named executives is detailed
below:
Managing Director
DC Seargeant
Executives
NC Arundel
GC Dean
MR Duff
HR Eberstaller
Exercised during
the year (a)
$
Performance
shares exercised
Number
Amount paid per
share
$
–
–
129,049
–
–
–
–
13,304
–
–
–
–
Nil
–
–
(a)
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.
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 person, including their related parties, was as follows:
Managing Director
DC Seargeant
Executives
NC Arundel
GC Dean
MR Duff
HR Eberstaller
Held at
the beginning of
the year
Granted
Exercised
Forfeited (a)
Held at
the end of
the year
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
930,000
1,035,000
87,306
99,079
59,261
66,619
99,119
110,223
41,425
46,295
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(13,304)
–
–
–
–
–
(127,500)
(105,000)
802,500
930,000
(14,269)
(11,773)
(12,544)
(7,358)
(13,454)
(11,104)
(5,896)
(4,870)
73,037
87,306
33,413
59,261
85,665
99,119
35,529
41,425
(a)
The performance shares forfeited during the 2015 year were granted during the year ended 30 June 2012.
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.
25 Amalgamated Holdings Limited – Annual Report 2015
D I R E C T O R S ’ R E P O R T
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 each
key management person, including their related parties, is as follows:
Directors
AG Rydge (Chairman)
KG Chapman
PR Coates
VA Davies
DC Grant
PM Mann
RG Newton
DC Seargeant (Managing Director)
Executives
NC Arundel
GC Dean
MR Duff
HR Eberstaller
Held at
the beginning
of the year
72,234,355
72,234,355
57,500
57,500
36,500
36,500
10,000
10,000
1,000
–
2,000
–
66,840
68,340
469,490
469,490
10,246
32,246
54,791
54,791
–
–
–
–
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
Received on
release of
performance
shares
Purchases
Sales
–
–
–
–
10,460
–
–
–
1,000
1,000
–
2,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13,304
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,500)
–
–
–
(22,000)
–
–
–
–
–
–
Held at
the end of
the year
72,234,355
72,234,355
57,500
57,500
46,960
36,500
10,000
10,000
2,000
1,000
2,000
2,000
66,840
66,840
469,490
469,490
10,246
10,246
68,095
54,791
–
–
–
–
No shares were granted to key management personnel as compensation in the year ended 30 June 2015. Performance rights were granted to certain
key management personnel as disclosed on page 23.
End of Directors’ Report: Remuneration Report
26 Amalgamated Holdings Limited – Annual Report 2015
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 2015 there have been:
(i)
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit;
and
(ii)
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Kenneth Reid
Partner
Sydney
20 August 2015
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.
27 Amalgamated Holdings Limited – Annual Report 2015
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 5
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
Note
2015
$’000
2014
$’000
4.4
3.1
3.2
3.1
4.5
5.3
3.3
3.4
3.5
2.4
3.6
4.4
2.4
3.7
2.1
3.8
4.4
2.4
3.7
2.1
3.8
4.1
4.3
133,680
47,192
19,909
17,535
218,316
1,098
1,398
19,972
11,054
911,942
71,050
89,555
7,869
4,848
1,118,786
1,337,102
97,332
990
16,009
18,841
82,874
4,264
220,310
118,085
11,952
10,531
9,413
3,907
153,888
374,198
962,904
219,126
35,210
708,568
962,904
91,069
48,130
15,247
10,657
165,103
1,106
1,398
17,281
10,780
861,659
72,300
91,785
8,343
8,663
1,073,315
1,238,418
81,143
766
2,582
17,067
70,508
1,946
174,012
109,629
11,722
10,546
7,615
4,539
144,051
318,063
920,355
219,126
32,510
668,719
920,355
The Statement of Financial Position is to be read in conjunction with the notes to the financial statements on pages 33 to 81.
28 Amalgamated Holdings Limited – Annual Report 2015
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 5
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
Depreciation, amortisation and impairments
Other operating expenses
Advertising, commissions and marketing expenses
Finance costs
Equity profit
Share of net profit of equity accounted investees:
Associates
Joint ventures
Profit before tax
Income tax expense
Profit for the year
Earnings per share
Basic earnings per share
Diluted earnings per share
Note
2.1
2.1
5.3
5.3
2.4
2015
$’000
2014
$’000
1,113,728
60,934
1,174,662
(261,156)
(241,841)
(238,850)
(97,006)
(75,099)
(68,463)
(35,395)
(7,897)
(1,025,707)
10
2,902
2,912
151,867
(42,977)
108,890
1,046,579
50,559
1,097,138
(250,636)
(241,713)
(223,777)
(105,369)
(62,355)
(65,612)
(30,545)
(8,252)
(988,259)
–
2,184
2,184
111,063
(32,500)
78,563
2015
Cents
2014
Cents
2.5
2.5
68.9
67.9
49.7
49.1
The Income Statement is to be read in conjunction with the notes to the financial statements on pages 33 to 81.
29 Amalgamated Holdings Limited – Annual Report 2015
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 5
Profit for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Foreign currency translation differences for foreign operations – net of tax
Net change in fair value of available-for-sale financial assets – net of tax
Net change in fair value of cash flow hedges – net of tax
Other comprehensive income for the year – net of tax
Total comprehensive income for the year
2015
$’000
2014
$’000
108,890
78,563
(1,139)
1,884
14
759
5,214
2,735
(17)
7,932
109,649
86,495
The Statement of Comprehensive Income is to be read in conjunction with the notes to the financial statements on pages 33 to 81.
30 Amalgamated Holdings Limited – Annual Report 2015
Y
T
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S T A T E M E N T O F C A S H F L O W S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5
Cash flows from operating activities
Cash receipts in the course of operations
Cash payments in the course of operations
Cash provided by operations
Dividends from associates and joint ventures
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
Investment in an associate
Payment for the acquisition of a joint venture
Payments for businesses acquired including management and leasehold rights
Proceeds from disposal of other non-current assets
Increase in loans from other entities
Net cash used by investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Dividends paid
Net cash used by financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the year
Note
2015
$’000
2014
$’000
1,259,854
(1,062,005)
197,849
3,256
45,983
684
1,290
(7,958)
7,755
(35,549)
213,310
(104,320)
(1,442)
(596)
–
(8,007)
280
1,435
(112,650)
86,000
(76,000)
(69,041)
(59,041)
41,619
91,069
992
133,680
7.3
4.2
1,163,801
(1,042,494)
121,307
2,886
42,150
614
1,360
(8,174)
1,346
(38,743)
122,746
(72,390)
(10,153)
–
(8,583)
(5,969)
157
1,249
(95,689)
73,113
(49,000)
(67,435)
(43,322)
(16,265)
105,592
1,742
91,069
The Statement of Cash Flows is to be read in conjunction with the notes to the financial statements on pages 33 to 81.
32 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 1 – B A S I S O F P R E P A R A T I O N
This section explains the basis of preparation for the Group’s financial statements, including information
regarding the impact of the adoption of new accounting standards.
1.1 – REPORTING ENTITY
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 2015 comprises the Company and its subsidiaries (collectively referred to as the “Group”) and the Group’s
interest in associates, joint ventures and joint operations.
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 2.2.
The financial report was authorised for issue by the Board of Directors of Amalgamated Holdings Limited on 20 August 2015.
1.2 – 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.
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.
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 Notes 2.4 (Taxation), 3.3 (Property, plant and equipment), 3.4 (Investment properties) and 3.5 (Goodwill and other intangible assets).
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial
assets and liabilities. When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair
values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included in 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).
•
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then
the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is
significant to the entire measurement. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in Notes 3.3 (Property, plant and equipment), 3.4
(Investment properties) and 4.5 (Financial risk management).
33 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 1 – B A S I S O F P R E P A R A T I O N
1.3 – FOREIGN CURRENCY
Functional and presentation currency
The financial report is presented in Australian dollars and the functional currency of the Group is Australian dollars.
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 dates of the transactions. 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 its entirety or partially such that control, significant influence or joint control is lost, the cumulative
amount in the foreign currency translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on
disposal. If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount
is reattributed to non-controlling interests. When the Group disposes of only part of an associate or joint venture whilst retaining significant
influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
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 nor 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.
1.4 – 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. The
Group has adopted the following new standards and amendments to standards, including any consequential amendments to other
standards, with a date of initial application of 1 July 2014:
•
•
The above have not had any significant impact on the Group’s consolidated financial statements.
AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets; and
AASB Interpretation 21 Levies.
The Group has early adopted AASB 2015-2 Amendments to Australian Accounting Standards − Disclosure Initiative: Amendments to AASB
101. These amendments removed certain minimum disclosure requirements from AASB 101 including the removal of reference to a
‘summary of significant accounting policies’, and allowed the reorganisation and grouping of notes to the financial statements to give
prominence to those areas most relevant to understanding the organisation. The amendments also encouraged entities to no longer disclose
information that is not material.
1.5 – NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
A number of other new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2015,
and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the
consolidated financial statements of the Group, except for:
•
•
•
AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations;
AASB 9 Financial Instruments; and
AASB 15 Revenue from Contracts with Customers.
The Group does not plan to adopt these standards early and the extent of their impact has yet to be determined.
34 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 2 – P E R F O R M A N C E F O R T H E Y E A R
This section focuses on the results and performance of the Group. On the following pages are disclosures
explaining the Group’s revenue, segment information, individually significant items, taxation and earnings
per share.
2.1 – REVENUE
•
•
Accounting policy
Revenue represents the total amount received or receivable, usually in cash, for goods sold or services provided to customers and excludes
sales related taxes, discounts and intra-Group transactions.
Revenue recognition criteria for the Group’s key classes of revenue are as follows:
Rendering of services
•
Box office ticket revenue is recognised on the date the customer views the relevant film. When tickets are sold in advance or gift
cards are sold to customers, this revenue is recorded as deferred revenue in the Statement of Financial Position until this date or
expiry, whichever is earlier;
Hotel room revenue is recognised when the room is occupied;
Ski pass revenue is recognised as the customer uses the service. For season and other passes, revenue is recorded as deferred
revenue in the Statement of Financial Position initially and is then recognised over the period that the pass is valid; and
Entertainment technology services revenue is recognised as the service is provided to the customer.
•
The Group also operates loyalty programs in its cinema exhibition and hotel businesses where customers earn points when they purchase
cinema tickets or stay at a qualifying hotel. These points can be redeemed by the customer at a later date for discounts on future purchases.
The consideration received from the customer who is a member of the loyalty program is allocated at the point of sale between the award
points earned and the respective Box Office or hotel room revenue. This is the fair value of the points, which is adjusted to take into account
the expected rates of forfeiture, and is recognised in deferred revenue in the Statement of Financial Position. The awards revenue is then
recognised when the points are redeemed or expire, whichever is earlier.
Sale of goods
•
Merchandise (including food and beverages) sold as part of the Group’s Entertainment, Hotel, and Thredbo Alpine Resort
businesses is recognised at the point of sale; and
Entertainment technology equipment sales are recognised when equipment is fully installed and ownership passes to the
customer.
Other revenue and income
•
•
Rental revenue is recognised on a straight-line basis over the term of the lease;
Management and consulting fees are earned from hotels managed by the Group, usually under long term contracts with the hotel
owner; and
Other revenue, including interest, dividends and profits on disposal of non-current assets, is recognised in the period to which it
relates.
•
•
Revenue
Rendering of services
Sale of goods
Other revenue
Rental revenue
Management and consulting fees
Finance revenue
Dividends
Sundry
Other income
Reversal of impairment charges booked in previous years
Fair value gain on acquisition of an additional interest in a joint operation
Insurance proceeds
Increase in fair value of investment properties
Profit on sale of plant and equipment
35 Amalgamated Holdings Limited – Annual Report 2015
2015
$’000
2014
$’000
775,584
338,144
1,113,728
726,144
320,435
1,046,579
22,992
22,352
1,290
684
640
47,958
11,400
–
129
1,319
128
12,976
1,174,662
22,603
19,006
1,360
614
541
44,124
–
4,905
746
624
160
6,435
1,097,138
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 5
S E C T I O N 2 – P E R F O R M A N C E F O R T H E Y E A R
2.2 – SEGMENT REPORTING
Accounting policy
An operating segment is a component of the Group that engages in business activities from which it earns revenues and incurs expenses,
including revenues and expenses from transactions with other Group segments. All segments’ operating results are regularly reviewed by
the Group’s Managing Director to make decisions about resources to be allocated to a segment and to assess its performance, and for
which discrete financial information is available.
Segment results that are reported to the Managing Director include items directly attributable to a segment, before individually significant
items, 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.
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 those of other businesses. Inter-segment pricing is
determined on an arm’s length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable
basis. Unallocated items mainly comprise interest bearing loans and borrowings and borrowing costs, interest income and corporate head
office assets and expenses.
Operating segments
The Group comprises the following main operating segments:
Entertainment Australia
Includes the cinema exhibition operations in Australia, technology equipment supply and servicing, and the State Theatre.
Entertainment New Zealand
Includes cinema exhibition operations in New Zealand and Fiji.
Entertainment Germany
Includes the cinema exhibition operations in Germany.
Hotels and Resorts
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.
Property and Other Investments
Includes property rental, investment properties and available-for-sale financial assets.
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, Fiji and Germany.
36 Amalgamated Holdings Limited – Annual Report 2015
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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5
S E C T I O N 2 – P E R F O R M A N C E F O R T H E Y E A R
2.3 – 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:
Impairments of land, buildings and plant and equipment
Reversal of impairment charges booked in previous years
Fair value gain on acquisition of an additional interest in a joint operation
Redundancy costs incurred in relation to cinema digitalisation and other non-recurring costs
2.4 – TAXATION
2015
$’000
(11,900)
11,400
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(500)
2014
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4,905
(2,146)
2,759
Accounting policy
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
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.
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.
Deferred tax
Deferred tax arises due to certain temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and those for taxation purposes. The following temporary differences are not provided for:
•
•
•
taxable temporary differences on the initial recognition of goodwill;
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.
Deferred tax assets and liabilities are disclosed net to the extent that they relate to taxes levied by the same authority and the Group has the
right of set off.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities. A deferred tax asset is recognised only to the extent that it is probable that sufficient taxable profit will be available to utilise the
temporary difference.
The Group has unrecognised deferred tax assets in respect of certain foreign tax revenue losses as disclosed on page 43. 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.
41 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 2 – P E R F O R M A N C E F O R T H E Y E A R
2.4 – TAXATION (continued)
Income tax expense
The major components of income tax expense are:
2015
$’000
2014
$’000
Income tax recognised in profit or loss
42,977
32,500
Current income tax
Current income tax expense
Income tax (over)/under provided in 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 on available-for-sale financial assets
Currency translation movements of deferred tax balances of foreign operations
Net loss on hedge of net investment in overseas subsidiaries
Relating to other equity balances
Adjustment to shared-based payments reserve
Income tax expense reported in equity
44,630
(1,410)
(243)
42,977
6
807
217
(110)
920
27
947
27,522
1,068
3,910
32,500
(2)
1,172
199
(207)
1,162
(51)
1,111
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:
Accounting profit before income tax expense
151,867
111,063
Prima facie income tax expense calculated at the Group’s statutory income tax rate of 30% (2014:
30%) on accounting profit
45,560
33,319
Increase in income tax expense due to:
Non-deductible items and losses in non-resident controlled entities
Amortisation of management rights and other intangible assets
Depreciation and amortisation of buildings
Adjustment of deferred tax balance relating to leasehold improvements
Non-deductible acquisition and legal costs
Non-refundable franking credits grossed up
Dividends from equity accounted joint venture
Decrease in income tax expense due to:
Tax losses from prior years now recognised or utilised
Share of incorporated joint venture net profit
Share of associates’ net profit
Franking credits on dividends received
Fair value adjustment on acquisition of a joint operation
Fair value adjustment on investment properties recognised
Loyalty scheme entitlements transferred from managed hotels
Effect of lower tax rate in New Zealand and Fiji
Sundry items
Income tax (over)/under provided in prior year
42 Amalgamated Holdings Limited – Annual Report 2015
1,284
807
354
600
128
215
300
3,688
2,429
871
3
717
–
15
408
206
212
4,861
(1,410)
42,977
2,785
821
369
–
44
78
–
4,097
2,464
741
–
259
1,471
360
481
87
121
5,984
1,068
32,500
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 5
S E C T I O N 2 – P E R F O R M A N C E F O R T H E Y E A R
2.4 – TAXATION (continued)
Unrecognised deferred tax assets
Revenue losses – foreign
2015
$’000
5,663
5,663
2014
$’000
8,044
8,044
Included in the deferred tax assets not recognised is the gross value of tax revenue losses arising in Germany of $18,878,000 (2014:
$26,813,000). The availability of these tax losses is subject to certain utilisation limits and ongoing availability tests under German tax law. At 30
June 2015, there was no recognised deferred income tax liability (2014: $nil) for taxes that would be payable on the unremitted earnings of
certain of the Group’s subsidiaries, associates or incorporated joint ventures.
Deferred tax assets and liabilities
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 financial assets
Share of joint arrangement timing differences
Expenditure deductible for tax but amortised for accounting purposes
Accrued revenue
Prepayments
Interest and deferred financing costs
Share-based payments deductible for tax but deferred and amortised
for accounting purposes
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:
Difference in depreciation and amortisation of property, plant and
equipment and intangible assets for accounting and income tax purposes
Share of joint arrangement timing differences
Provisions and accrued employee benefits not currently deductible
Deferred revenue
Accrued expenses
Discounted long term lease and non-interest bearing loan liabilities
Difference between book and tax values of residential apartment
development
Share-based payments not currently deductible for tax
Tax losses carried forward
Capital losses offsetting unrealised capital gains
Unrealised foreign exchange losses not currently deductible
Sundry items
Less: Deferred tax liabilities of the tax consolidated group offset against
deferred tax assets
Statement of Financial
Position
2015
$’000
2014
$’000
Income
Statement
2015
$’000
2014
$’000
1,518
555
–
422
(622)
630
(92)
(55)
84
(592)
140
580
(656)
(421)
(2,149)
(442)
933
(496)
(659)
116
424
790
(251)
1,268
7
–
(349)
2,135
(568)
(53)
(57)
(369)
668
237
2,409
23
801
(422)
227
(547)
–
(140)
101
(72)
(1,564)
175
23,020
7,880
4,474
157
3,235
1,079
160
964
1,526
1,431
787
44,713
21,906
7,325
3,667
89
3,890
444
251
1,019
1,415
2,133
634
42,773
(32,761)
11,952
(31,051)
11,722
4,858
8,230
9,221
6,276
652
34
496
799
7,504
–
1,911
649
40,630
5,413
7,928
8,895
4,144
213
965
–
140
8,172
424
2,701
399
39,394
(32,761)
7,869
(31,051)
8,343
Deferred tax (benefit)/expense
(243)
3,910
43 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 2 – P E R F O R M A N C E F O R T H E Y E A R
2.5 – 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.
Profit attributable to ordinary shareholders (basic and diluted)
Weighted average number of ordinary shares (basic)
Effect of performance shares and performance rights
Weighted average number of ordinary shares (diluted)
2015
$’000
2014
$’000
108,890
78,563
Number
Number
158,024,304
2,307,696
160,332,000
157,950,609
2,180,690
160,131,299
Further details in relation to the Executive Performance Share Plan and Executive Performance Rights Plan are provided in Note 6.1.
44 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 3 – O P E R A T I N G A S S E T S A N D L I A B I L I T I E S
This section shows the assets used to generate the Group’s trading performance and the liabilities incurred as
a result. Liabilities relating to the Group’s financing activities are addressed in section 4. Deferred tax assets
and liabilities are shown in Note 2.4.
On the following pages, there are sections covering working capital balances, property, plant and equipment,
investment properties, intangible assets and provisions.
3.1 – TRADE AND OTHER RECEIVABLES
Trade and other receivables are recognised initially at fair value, and subsequently at the amounts considered recoverable (amortised cost).
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.
Trade receivables are non-interest bearing and are generally on 30 to 90 day terms. The Group’s exposure to credit and foreign exchange risks
related to trade and other receivables is disclosed in Note 4.5.
Estimates are used in determining the level of receivables that will not be collected, and these estimates take into account factors such as
historical experience. Allowances are made for impairment losses when there is sufficient evidence that the Group will not be able to collect all
amounts due. These allowances are made 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.
The carrying value of trade and other receivables is considered to approximate fair value.
Receivables are stated with the amount of goods and services tax (“GST”) or equivalent tax included.
Current
Trade receivables
Less: Allowance for trade receivables
Other receivables
Receivable from joint ventures and joint operation partners
Non-current
Other receivables
Receivable from associates
Present value of loans provided under the Employee Share Plan
2015
$’000
27,028
(356)
26,672
20,520
–
47,192
1,000
43
55
1,098
2014
$’000
23,672
(447)
23,225
21,933
2,972
48,130
1,000
43
63
1,106
As at 30 June 2015, trade receivables with a value of $356,000 (2014: $447,000) were impaired and fully provided for. The movement in the
allowance is not considered material.
As at 30 June 2015, trade receivables for the Group that were past due but not impaired were $5,075,000 (2014: $4,516,000), of which
$2,847,000 (2014: $1,867,000) was less than 30 days overdue. The remainder is not considered material and consequently an ageing analysis
has not been provided.
Other current receivables of $20,520,000 (2014: $21,933,000) 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.
45 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 3 – O P E R A T I N G A S S E T S A N D L I A B I L I T I E S
3.2 – 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.
3.3 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment
Property, plant and equipment are the physical assets used by the Group to generate revenue and profits. These assets include land and
buildings, and plant and equipment. Property, plant and equipment are recognised at cost (which is the amount initially paid for them) less
accumulated depreciation (the estimate of annual wear and tear) and impairment losses.
The Group leases properties in the normal course of business, principally to conduct its cinema exhibition businesses. On inception of a lease,
the estimated cost of decommissioning any additions to these properties (known as leasehold improvements) is included within property, plant
and equipment and depreciated over the lease term. A corresponding provision is set up as disclosed in Note 3.7.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for separately.
Depreciation is charged to the Income Statement on a straight-line basis over the asset’s estimated useful life. The major categories of property,
plant and equipment are depreciated as follows:
•
•
•
•
Plant and equipment
Buildings and improvements subject to long term leases
Freehold buildings
Resort apartments and share of common property
3 – 20 years
Shorter of estimated useful life and term of lease
40 – 80 years
40 – 80 years
Freehold land and land subject to long term leases are not depreciated. Similarly, assets under construction (classified as capital work in
progress) are not depreciated until they come into use, when they are transferred to buildings or plant and equipment as appropriate.
Impairment of property, plant and equipment
Property, plant and equipment that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Indicators of impairment may include changes in technology and business
performance.
The process of impairment testing is to estimate the recoverable amount of the assets concerned, and recognise an impairment loss in the
Income Statement whenever the carrying amount of those assets exceeds the recoverable amount.
Impairment testing of property, plant and equipment is performed at an individual hotel or cinema site level, with the exception of cinema sites
within a single geographic location, which are tested as one cash-generating unit. Details regarding impairment testing performed at 30 June
2015 is set out below.
46 Amalgamated Holdings Limited – Annual Report 2015
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7
4
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 5
S E C T I O N 3 – O P E R A T I N G A S S E T S A N D L I A B I L I T I E S
3.3 – 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, the directors have relied upon independent valuations from registered qualified valuers. Except for investment properties,
which are revalued every half year (refer to Note 3.4), valuations are generally carried out on a progressive three year cycle. The last valuations
were completed as at June 2015, June 2013 and February 2013.
Measurement of fair values
Amounts disclosed below represent the fair value of the Group’s interest in land and buildings, excluding investment properties, as determined at
the time of the most recent independent valuation report. Independent registered qualified valuers are engaged to perform the valuations. The
values are determined based on the highest and best use of each property. In most cases, the existing use is the highest and best use and
values are determined on a going concern basis. For certain properties, the highest and best use may differ from the current use, and
consideration may be given to the development of such properties at an appropriate time in the future in order to realise the full value of the
property.
This fair value disclosure has been categorised as a Level 3 fair value based on the inputs to the valuation techniques used. Going concern
value is based on capitalisation and discounted cash flow methodologies, and significant unobservable inputs include the forecast net income for
each property, and the capitalisation and discount rates used in determining fair value. In the most recent valuations, capitalisation rates utilised
ranged from 6.00% to 14.00% and pre-tax discount rates utilised ranged from 9.75% to 13.75% per annum. For certain sites where the going
concern value was not the highest and best use, fair value was determined using a direct comparison methodology with reference to recent
sales of similar properties.
The fair values determined by the independent registered qualified valuers are sensitive to changes in these significant unobservable inputs.
Overall, however, the fair value of the Group’s interest in land and buildings, excluding investment properties, is significantly higher than the
book value of these interests as noted below.
Most recent valuations of interest in land and buildings, excluding investment properties
A summary of recent independent valuations, by year of the last valuation, is set out as follows:
Existing use is highest and best use
– 2015
Independent valuation
– 2013
– 2012
Alternate use is highest and best use
– 2015
Independent valuation
– 2012
Land and buildings not independently valued
Book value of land and buildings not independently valued
2015
$’000
2014
$’000
625,183
310,400
−
935,583
110,700
−
74,596
1,120,879
−
336,464
509,075
845,539
−
40,300
25,847
911,686
The book value of the above interests at 30 June 2015 was $715,014,000 (2014: $680,685,000). The written-down book value of plant and
equipment which is deemed integral to land and buildings, has been determined to total approximately $113,475,000 as at 30 June 2015 (2014:
$115,700,000).
The above valuations do not take into account the potential impact of capital gains tax.
48 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 3 – O P E R A T I N G A S S E T S A N D L I A B I L I T I E S
3.3 – PROPERTY, PLANT AND EQUIPMENT (continued)
Impairment considerations at 30 June 2015
The trading performance of certain hotel properties caused the Group to assess their recoverable amount. Hotel properties are treated as
separate cash-generating units and their recoverable values were estimated based on their value in use. In determining the estimated value in
use, discount rates in the range of pre-tax 10.36% to 11.46% (2014: 9.77% to 12.38%) 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 in the
range of 1.5% to 2.5% (2014: 3.0%) per annum. As a result of these assessments, impairment losses totalling $10,800,000 (2014: $nil) were
recognised in respect of hotel properties.
For hotels that had been subject to impairments in previous years, the trading performance and recoverable amount were also reviewed during
the year. For certain hotels, the trading performance, since an initial impairment was booked, has improved to the extent that the recoverable
amount was above the book value of the impaired hotel assets. As a result, the impairment charges booked in previous years were reversed to
the extent available. Impairment reversals totalling $11,400,000 (initial total impairment charges of $12,683,000) were recognised in respect of
hotel properties. The recoverable amount was based on the most recent independent valuation as outlined above.
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 one percentage point in the discount
rate, for the hotel properties assessed would increase the impairment loss by $4,579,000. A 10% decrease in the forecast earnings would
increase the impairment loss by $2,645,000.
The trading performance of certain cinema sites caused the Group to assess their recoverable amount. No impairment losses were recorded as
a result of this assessment (2014: $nil).
An impairment review was also undertaken for corporate assets and impairment losses totalling $1,100,000 (2014: $nil) were recognised in
relation to plant and equipment at the Company’s current registered office. These impairments arose due to the planned relocation of the
Group’s head office and the impairment was determined by conducting a line-by-line assessment of the recoverable value of plant and
equipment as detailed in the Group’s asset registers.
Security
The following assets, whose carrying values are listed below, are subject to mortgage security to secure the Group’s bank loan facilities (refer to
Note 4.4):
Freehold land and buildings
Freehold land and buildings classified as investment properties
Capital commitments
Capital expenditure commitments contracted but not provided for and payable
2015
$’000
234,397
18,650
253,047
2015
$’000
40,374
2014
$’000
229,636
18,650
248,286
2014
$’000
1,803
49 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 3 – O P E R A T I N G A S S E T S A N D L I A B I L I T I E S
3.4 – INVESTMENT PROPERTIES
Accounting policy
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.
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 derecognition of an
investment property are recognised in profit or loss in the period of derecognition.
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. The fair value of investment property has been categorised as a Level 3 fair value based on the inputs to the
valuation technique used. In assessing the fair value of investment 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, rental
capitalisation rates, and recent market transactions for similar properties.
The carrying amount of investment properties is the fair value of the properties as determined by an independent registered qualified valuer.
Significant unobservable inputs used in measuring the fair value of the properties are as follows. For three of the four investment properties held
by the Group at 30 June 2015, the valuer used capitalisation rates on reversionary rental yields in the range of 7.00% to 9.00% (2014: 6.75% to
9.00%) 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 those investment properties, the valuer has utilised a
direct comparison method based on the current unimproved land value of the properties. The valuation for those properties 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 and 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 2015, $6,343,000 (2014: $6,027,000) was recognised as rental income for investment properties in the
Income Statement with $1,422,000 (2014: $1,538,000) incurred in respect of direct costs, including $247,000 (2014: $212,000) for repairs and
maintenance.
Freehold land and buildings
At fair value (Level 3 fair values)
Summary of movements:
Balance at the beginning of the year
Additions
Net transfer to property, plant and equipment
Fair value increments recognised in other income
Balance at the end of the year
50 Amalgamated Holdings Limited – Annual Report 2015
2015
$’000
71,050
72,300
31
(2,600)
1,319
71,050
2014
$’000
72,300
69,500
2,176
–
624
72,300
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 5
S E C T I O N 3 – O P E R A T I N G A S S E T S A N D L I A B I L I T I E S
3.5 – GOODWILL AND OTHER INTANGIBLE ASSETS
Accounting policy
Goodwill
Goodwill arises from business combinations as described in Note 5.1 and represents the future economic benefits that arise from assets that are
not capable of being individually identified and separately recognised.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised, but instead is
reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.
Goodwill is allocated to cash-generating units, and 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 joint ventures is included in the carrying amount of the investment in the associate
or joint venture.
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.
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 and leasehold rights are amortised over the life of the agreements, which range from 10 to 20 years, on a straight-line basis.
Software for major operating systems is amortised over a four to five year period on a straight-line basis.
Impairment
The carrying amounts of the Group’s non-financial assets, other than investment properties (see Note 3.4), 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 their fair value less costs to sell, and their 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.
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 cannot be 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.
51 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 3 – O P E R A T I N G A S S E T S A N D L I A B I L I T I E S
3.5 – GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
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
Management
and leasehold
rights
$’000
Software
$’000
Total
$’000
2015
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
Transfer from property, plant and equipment
Amortisation
Disposals
Net foreign currency differences on translation of
foreign operations
Net balance at the end of the year
2014
Gross balance at the beginning of the year
Accumulated amortisation and impairment losses
at the beginning of the year
Net balance at the beginning of the year
Acquisitions and initial contributions
Amortisation
Net foreign currency differences on translation of
foreign operations
Adjustments
Net balance at the end of the year
50,807
–
50,807
651
–
–
–
(523)
50,935
49,697
–
49,697
–
–
1,110
–
50,807
1,388
–
1,388
–
–
–
–
–
1,388
1,388
–
1,388
–
–
–
–
1,388
189
–
189
7
–
–
–
–
196
189
–
189
–
–
–
–
189
Impairment losses recognised
No impairment losses in relation to goodwill have been recognised in the year ended 30 June 2015 (2014: $nil).
Impairment tests for cash-generating units containing goodwill
The following units have carrying amounts of goodwill:
Entertainment – Australia
Entertainment – New Zealand and Fiji
Entertainment – Germany
Multiple units without significant goodwill
41,466
29,663
123,513
(9,951)
31,515
1,868
–
(3,047)
(60)
(80)
30,196
(21,777)
7,886
1,435
206
(2,706)
–
(31,728)
91,785
3,961
206
(5,753)
(60)
19
6,840
(584)
89,555
27,304
9,648
88,226
(7,350)
19,954
13,892
(2,511)
180
–
31,515
(5,106)
4,542
5,875
(2,545)
(19)
33
7,886
(12,456)
75,770
19,767
(5,056)
1,271
33
91,785
2015
$’000
2014
$’000
33,260
10,938
3,743
2,994
50,935
33,263
10,830
3,721
2,993
50,807
The recoverable value of goodwill relating to the exhibition business in Australia and New Zealand, and goodwill relating to the Group’s share of
a cinema joint venture in Germany, has been determined by value in use calculations. 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 10.0% to 12.0% (2014: 11.25% to 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.
52 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 3 – O P E R A T I N G A S S E T S A N D L I A B I L I T I E S
3.6 – TRADE AND OTHER 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.
Payables are stated with the amount of GST or equivalent tax included.
The carrying value of trade and other payables is considered to approximate fair value.
Trade payables
Other payables and accruals
3.7 – PROVISIONS
Accounting policy
2015
$’000
23,492
73,840
97,332
2014
$’000
25,106
56,037
81,143
Employee benefits
Provision is made for employee benefits including annual leave and long service leave for employees. 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.
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
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 a finance cost 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.
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 3.3.
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.
53 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 3 – O P E R A T I N G A S S E T S A N D L I A B I L I T I E S
3.7 – PROVISIONS (continued)
Current
Employee benefits
Insurance loss contingencies and other claims
Decommissioning of leasehold improvements
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:
Insurance loss contingencies and other claims
Carrying amount at the beginning of the year
Payments
Provided
Reversed
Net foreign currency differences on translation of foreign operations
Carrying amount at the end of the year
Decommissioning of leasehold improvements
Carrying amount at the beginning of the year
Provided
Reversed
Notional interest
Net foreign currency differences on translation of foreign operations
Carrying amount at the end of the year
3.8 – OTHER LIABILITIES
2015
$’000
18,423
218
200
18,841
2,013
8,518
10,531
269
(12)
14
(50)
(3)
218
8,582
200
(103)
60
(21)
8,718
2014
$’000
16,798
269
–
17,067
1,964
8,582
10,546
913
(8)
12
(648)
–
269
8,563
–
(269)
59
229
8,582
Other liabilities include contract deposits received in advance and deferred lease incentive balances arising from operating leases. Refer to Note
7.1 for further details regarding operating lease arrangements.
54 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 4 – C A P I T A L S T R U C T U R E A N D F I N A N C I N G
This section outlines the Group’s capital structure, including how much is raised from shareholders (equity)
and how much is borrowed from financial institutions (debt).
On the following pages, there are sections on the Group’s share capital, dividends, reserves, loans and
borrowings, and financial risk management.
4.1 – SHARE CAPITAL
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.
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.
2015
Shares
2014
Shares
2015
$’000
2014
$’000
Share capital
Fully paid ordinary shares
158,106,883
157,985,750
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
157,985,750
121,133
158,106,883
157,902,929
82,821
157,985,750
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
Share buy-back
There is no current on-market buy-back.
Dividend Reinvestment Plan
The Dividend Reinvestment Plan was suspended in August 2010.
157,941,764
49,499
115,620
158,106,883
157,809,455
55,075
121,220
157,985,750
2,453,040
160,559,923
2,574,173
160,559,923
Treasury shares
Treasury shares consist of shares held in trust in relation to the Group’s Executive Performance Share Plan. As at 30 June 2015, a total of
2,453,040 (2014: 2,574,173) shares were held in trust and classified as treasury shares. Information relating to the Group’s share-based
payment arrangements is set out in Note 6.1.
Options
There are no share options on issue as at 30 June 2015 (2014: nil).
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.
55 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 4 – C A P I T A L S T R U C T U R E A N D F I N A N C I N G
4.1 – SHARE CAPITAL (continued)
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.
4.2 – DIVIDENDS
Dividends on ordinary shares paid during the year were:
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:
2015
Final 2014 dividend
Interim 2015 dividend
2014
Final 2013 dividend
Interim 2014 dividend
27
16
27
15
43,351
25,690
69,041
43,351
24,084
67,435
18 September 2014
19 March 2015
19 September 2013
20 March 2014
30%
30%
30%
30%
100%
100%
100%
100%
Subsequent events
Since the end of the financial year, the directors declared the following dividends:
Final 2015 dividend
Special dividend
29
8
46,562
12,845
17 September 2015
17 September 2015
30%
30%
100%
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 2015 and will be recognised in subsequent financial statements.
Franking credit balance
The amount of franking credits available for future reporting periods
2015
$’000
2014
$’000
134,365
125,092
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 $25,460,000 (2014: $18,579,000). 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.
56 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 4 – C A P I T A L S T R U C T U R E A N D F I N A N C I N G
4.3 – RESERVES
Available-for-sale financial assets revaluation reserve
This reserve includes the cumulative net change in the fair value of available-for-sale financial assets. 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 the 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 and performance rights which have been recognised as
an employee expense in the Income Statement. See Note 6.1 for further details regarding share-based payment arrangements.
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.
Movements in reserves during the year
At 1 July 2014
Movement in fair value of available-for-sale
financial assets – net of tax
Movement in fair value of cash flow hedging
instruments – net of tax
Amount recognised in the Income Statement
as an employee expense
Currency translation adjustment on
controlled entities’ financial statements
Other adjustments
Available-for-
sale financial
assets
revaluation
$’000
12,141
1,884
–
–
–
–
Investment
property
revaluation
$’000
5,121
–
–
–
–
–
At 30 June 2015
14,025
5,121
Hedging
$’000
Share-based
payments
$’000
Foreign
currency
translation
$’000
Total
$’000
(4)
–
14
–
–
–
10
14,847
405
32,510
–
–
1,890
–
51
–
–
–
1,884
14
1,890
(1,139)
–
(1,139)
51
16,788
(734)
35,210
57 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 4 – C A P I T A L S T R U C T U R E A N D F I N A N C I N G
4.4 – LOANS, BORROWINGS AND FINANCING ARRANGEMENTS
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.
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. The carrying value of loans and borrowings is considered to approximate
fair value.
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 or loss using the effective interest method.
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 limit to support its transactional banking facilities.
Bank debt – secured
The Group’s secured bank debt facilities comprise the following:
•
•
•
The above facilities were extended during the year and mature on 12 September 2017 and are supported by interlocking guarantees from
most Group entities and are secured by specific property mortgages. Debt drawn under these facilities bears interest at the relevant inter-bank
benchmark reference rate plus a margin of between 1.1% and 2% per annum. At 30 June 2015, the Group had drawn $113,126,000 (2014:
$105,757,000) under the debt facilities, of which $nil (2014: $nil) was subject to interest rate swaps used for hedging, and had drawn
$7,304,547 under the credit support facility (2014: $7,559,000).
€5,000,000 (A$7,282,000) revolving three year loan facility; and
€17,000,000 (A$24,760,000) five year guarantee facility (for the issue of letters of credit and bank guarantees).
Other loans – secured
Certain wholly owned German subsidiaries have arranged secured debt facilities comprising the following:
•
•
These facilities are supported by interlocking guarantees from certain (non-Australian based) Group entities and are secured against a specific
property in Germany. Debt drawn under these facilities bears interest at the relevant inter-bank benchmark rate plus a margin of between
0.75% and 2.75% per annum. At 30 June 2015, the Group had drawn €nil (A$nil) (2014: €nil (A$nil)) under the revolving three year loan facility
and €12,684,000 (A$18,473,000) (2014: €11,496,000 (A$16,646,000)) under the five year guarantee facility.
In addition, a Group entity based in Fiji and its joint operation partner have secured debt bank facilities, including a FJ$6,000,000
(A$3,753,000) five year advance facility. At 30 June 2015, the Group’s share of debt drawn under this facility was FJ$3,745,000 (A$2,322,000)
(2014: FJ$3,928,000 (A$2,270,000)). These facilities are secured against a specific property in Fiji.
Loans and borrowings
Current
Non-interest bearing loans
Loans from other companies
– unsecured
990
766
2015
$’000
2014
$’000
Non-current
Interest bearing loans and borrowings
Bank loans
Deferred financing costs
– secured
Non-interest bearing loans
Loans from other companies
– unsecured
58 Amalgamated Holdings Limited – Annual Report 2015
115,448
(943)
114,505
3,580
118,085
108,027
(767)
107,260
2,369
109,629
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S E C T I O N 4 – C A P I T A L S T R U C T U R E A N D F I N A N C I N G
4.5 – FINANCIAL RISK MANAGEMENT
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 within prepayments and other current assets. 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.
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.
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. The Group uses a bank quoted interest rate swap curve as at 30
June plus assessed risk factors/credit spread to discount financial instruments.
Available-for-sale financial assets
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 financial assets are recognised as a separate component of equity in the available-for-sale financial assets
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.
Available-for-sale financial assets
Investment in a listed company
2015
$’000
2014
$’000
19,972
17,281
The Group’s investment is in a company listed on the ASX. No reasonably possible change in the share price of this company would have a
material effect on the available-for-sale financial assets balance or the related revaluation reserve at the reporting date.
Financial risks
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.
59 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 4 – C A P I T A L S T R U C T U R E A N D F I N A N C I N G
4.5 – FINANCIAL RISK MANAGEMENT (continued)
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 and Risk 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 and Risk Committee is assisted in its oversight role by the Internal Audit
function. The Internal Audit function undertakes reviews of risk management controls and procedures in accordance with an annual plan
approved by the Audit and Risk Committee. The results of these Internal Audit reviews are reported to the Audit and Risk 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. Information regarding the Group’s trade receivable balances is
disclosed in Note 3.1. The Group’s exposure to credit risk is not considered material.
The Group’s maximum exposure to credit risk at the reporting date was considered to approximate the carrying value of receivables at the
reporting date.
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 2015, 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, joint ventures or joint operations in which the Group has an interest, and
principally relate to operating lease arrangements. The Group’s operating lease commitments are disclosed in Note 7.1, and details of
guarantees given by the parent entity are provided in Note 7.5.
Security deposits
Security deposits relate to the Group’s operating lease arrangements. Certain lease agreements require an amount to be placed on deposit,
which should then be returned to the Group at the conclusion of the lease term.
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. The Group’s treasury function aims to maintain flexibility in funding by maintaining
committed credit lines with a number of counterparties.
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
6 to 12
months
$’000
1 to 2 year(s)
$’000
2 to 5 years
$’000
Over 5
years
$’000
2015
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
115,448
(125,496)
(2,242)
(2,264)
(4,602)
(116,388)
−
4,570
23,492
73,840
(4,570)
(23,492)
(73,840)
(494)
(23,492)
(73,840)
(494)
(973)
(1,893)
−
−
−
−
−
−
(716)
−
−
(14)
14
14
–
–
–
–
217,336
(227,384)
(100,054)
(2,758)
(5,575)
(118,281)
(716)
60 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 4 – C A P I T A L S T R U C T U R E A N D F I N A N C I N G
4.5 – FINANCIAL RISK MANAGEMENT (continued)
2014
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
6 to 12
months
$’000
1 to 2 year(s)
$’000
2 to 5 years
$’000
Over 5
years
$’000
108,027
(114,269)
(2,806)
(2,933)
(106,146)
(2,384)
3,135
25,106
56,037
(3,135)
(25,106)
(56,037)
(383)
(25,106)
(56,037)
(383)
–
–
(542)
–
–
(1,247)
–
–
6
(6)
(6)
192,311
(198,553)
(84,338)
–
(3,316)
–
(106,688)
–
(3,631)
–
(580)
–
–
–
(580)
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 forward 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.
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.
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
2015
$’000
2014
$’000
−
−
−
–
–
–
127,310
(115,448)
11,862
85,407
(108,027)
(22,620)
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 interest rate hedges at 30 June 2015 (2014: no interest rate hedges).
61 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 4 – C A P I T A L S T R U C T U R E A N D F I N A N C I N G
4.5 – FINANCIAL RISK MANAGEMENT (continued)
The Group classifies interest rate swaps as cash flow hedges and recognises them at fair value in the Statement of Financial Position.
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 2015 (2014: no fixed rate instruments) and accordingly no sensitivity analysis has been prepared in the current or prior year.
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:
Cash and cash equivalents
Trade receivables
Secured bank loans
Trade payables
Gross balance sheet exposure
Forward exchange contracts
NZD
$’000
20
314
(53,126)
(862)
(53,654)
2015
EUR
$’000
3,673
–
–
–
3,673
–
–
–
–
GBP
$’000
60
–
–
–
60
–
–
USD
$’000
705
–
–
–
705
14
14
NZD
$’000
32
233
(55,757)
(679)
(56,171)
–
–
Net exposure
(53,654)
3,673
60
719
(56,171)
2014
EUR
$’000
GBP
$’000
15
–
–
–
15
–
–
15
19
–
–
–
19
–
–
19
USD
$’000
272
–
–
–
272
(6)
(6)
266
Sensitivity analysis
No reasonably possible change in prevailing foreign exchange rates would have a significant impact on the Income Statement or hedging
reserve in the current or prior year.
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 2015 was $53,126,000 (2014: $55,757,000). A foreign exchange gain
of $2,631,000 (2014: loss of $5,214,000) was recognised in equity on translation of the loan to AUD.
Financial instruments fair value determination method grading
Valuation methods for financial instruments carried at fair value are 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).
•
Available-for-sale financial assets are classified as Level 1 financial instruments. Derivative financial instruments are classified as Level 2
financial instruments.
62 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 5 – G R O U P C O M P O S I T I O N
This section explains the composition of the Group.
On the following pages, there are sections on businesses acquired during the year, a list of
subsidiaries, investments in associates and joint ventures, and disclosures regarding interests in
other entities including cinema partnership interests.
5.1 – BUSINESS COMBINATIONS
Accounting policy
Business combinations are accounted for using the acquisition method as at the date when control is transferred to the Group. Under the
acquisition method, consideration transferred in a business combination is generally measured at fair value, as are the identifiable net assets
acquired. Consideration transferred includes the fair value of any contingent consideration, and share-based payment awards of the
acquiree that are required to be replaced in the business combination.
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. Any goodwill that arises is tested annually for impairment; see Note 3.5. 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.
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.
Business combinations in the year ended 30 June 2015
The Group acquired the following business during the year:
Bay City Cinemas
Effective 4 December 2014, Event Cinemas Limited, a wholly owned subsidiary in New Zealand, acquired two cinemas in the Bay of Plenty
region. The consideration paid was $8,007,000 (NZ$8,400,000).
The Group has provisionally recognised the fair value of the following identifiable assets and liabilities relating to this acquisition as follows:
Fair value at acquisition date
$’000
Plant and equipment
Other assets
Employee benefits
Deferred revenue
Sub-total
Goodwill, leasehold and management rights
Total net value of identifiable assets
Goodwill, leasehold and management rights
Goodwill, leasehold and management rights were recognised as a result of the acquisition as follows:
Total cash consideration paid
Less: net value of other identifiable assets and liabilities
Goodwill, leasehold and management rights
5,296
118
(29)
(64)
5,321
2,686
8,007
$’000
8,007
(5,321)
2,686
Leasehold and management rights will be amortised over the remaining term of the lease for the site. Amortisation of the leasehold and
management rights is not expected to be deductible for tax purposes.
63 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 5 – G R O U P C O M P O S I T I O N
5.1 – BUSINESS COMBINATIONS (continued)
The Group incurred direct costs relating to this acquisition of $87,000 which have been expensed in the Group’s Income Statement for the
period.
The Income Statement includes revenue and net profit for the year ended 30 June 2015 of $3,399,000 and $891,000 respectively as a result
of this acquisition. Had the acquisition occurred at the beginning of the year, it is estimated that the Income Statement would have included
additional revenue and net profit of approximately $1,813,000 and $325,000 respectively.
Business combinations in the year ended 30 June 2014
The Group acquired the following businesses during the prior year:
Southport cinema complex
Effective 13 November 2013, Birch, Carroll & Coyle Limited, a wholly owned subsidiary in Australia, acquired Pacific Cinemas (Southport)
Pty Limited, which owned the 49% interest in the Southport 6 Cinemas Joint Venture cinema complex not already owned by the Group
taking the ownership interest in this leasehold site to 100%. Southport is located in the Gold Coast, Queensland. The consideration paid for
this 49% interest was $5,969,000.
In accordance with AASB 3 Business Combinations, the Group’s existing 51% interest in the Southport 6 Cinemas Joint Venture was
remeasured to its fair value, resulting in a gain of $4,905,000 in the year ended 30 June 2014.
The Group has recognised the fair value of the following identifiable assets and liabilities relating to this acquisition as follows:
Fair value at acquisition date
$’000
Plant and equipment
Other assets
Deferred tax assets
Employee benefits
Deferred revenue
Sub-total
Leasehold and management rights
Total net value of identifiable assets
Leasehold and management rights
Leasehold and management rights were recognised as a result of the acquisition as follows:
Total cash consideration paid
Fair value of 51% interest in Southport already owned
Sub-total
Less: net value of other identifiable assets and liabilities
Leasehold and management rights
2,378
281
15
(51)
(59)
2,564
9,614
12,178
$’000
5,969
6,209
12,178
(2,564)
9,614
Leasehold and management rights will be amortised over the remaining term of the lease for the site. Amortisation of leasehold and
management rights is not expected to be deductible for income tax purposes.
The Group incurred direct costs relating to this acquisition of $59,000 which have been expensed in the Group’s Income Statement for the
period. The Income Statement includes revenue and net profit for the year ended 30 June 2014 of $5,770,000 and $683,000 respectively as
a result of this acquisition. Had the acquisition occurred at the beginning of the reporting period, it is estimated that the Income Statement
would have included additional revenue and net profit of approximately $1,130,000 and $121,000 respectively.
Loganholme Cinemas Pty Limited – acquisition of interest in joint venture
Loganholme Cinemas Pty Limited was incorporated on 23 August 2013 with Birch, Carroll & Coyle Limited holding 50% of the issued share
capital. This has been recognised as an interest in a joint venture and equity accounted. On 11 December 2013, Loganholme Cinemas Pty
Limited acquired the Loganholme cinema complex. The consideration for the acquisition was $17,166,000, of which the Group’s share was
$8,583,000. The impact of this acquisition on the Income Statement for the year is not material.
64 Amalgamated Holdings Limited – Annual Report 2015
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 5
5.2 – SUBSIDIARIES
S E C T I O N 5 – G R O U P C O M P O S I T I O N
Accounting policy
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
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.
Subsidiaries
AHL Administration Pty Limited
AHL Hotels (NZ) 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
Bay City Cinemas 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
Filmpalast am ZKM Karlsruhe Beteiligungs GmbH
Filmpalast Konstanz Beteiligungs GmbH
First Cinema Management BV
2015 First Holding GmbH
Flaggspelt Vermogensverwaltungsgesellschaft mbH
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
65 Amalgamated Holdings Limited – Annual Report 2015
Ownership
interest
2015
%
2014
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
−
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
−
−
100
100
100
100
100
100
100
100
100
Note
(a)(c)
(a)(c)
(c)
(a)(e)
(a)(e)
(a)(d)
(f)
(c)
(c)
(c)
(c)
(c)
(a)(e)
(a)(e)
(a)(d)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
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 5
S E C T I O N 5 – G R O U P C O M P O S I T I O N
5.2 – SUBSIDIARIES (continued)
Greater Union Filmpalast Rhein-Main GmbH
Greater Union First Cinema BV and Co. KG
Greater Union International BV
Greater Union International GmbH
Greater Union International Holdings Pty Limited
Greater Union Limited
Greater Union Media & Event GmbH
Greater Union Nominees Pty Limited
Greater Union Real Estate Mainz GmbH
Greater Union Screen Entertainment Pty Limited
Greater Union Theaters Beteiligungs GmbH
Greater Union Theaters Dritte GmbH & Co. KG
Greater Union Theaters Dritte Verwaltungs GmbH
Greater Union Theaters GmbH
Greater Union Theaters Management Mainz GmbH
Greater Union Theaters Verwaltungs GmbH
Greater Union Theaters Zweite GmbH & Co. KG
Greater Union Theaters Zweite Verwaltungs GmbH
Greattheatre Pty Limited
GU Real Estate Mainz Management GmbH
GUO Investments (WA) Pty Limited
Gutace Holdings Pty Limited
Haparanda Pty Limited
Haymarket’s Tivoli Theatres Pty Limited
Kidsports Australia Pty Limited
Kosciuszko Thredbo Pty Limited
KTPL Unit Trust
Kvarken Pty Limited
Lakeside Hotel Property Unit Trust
Lakeside Hotel Pty Limited
Lakeside International Hotel Unit Trust
Mamasa Pty Limited
Multiplex Cinemas Magdeburg GmbH
Multiplex Cinemas Oberhausen GmbH
Neue Filmpalast GmbH & Co. KG
Neue Filmpalast Management GmbH
NFP Erste GmbH & Co. KG
NFP Erste Verwaltungs GmbH
Noahs Hotels (NZ) Limited
Noahs Limited
Northside Gardens Hotel Property Unit Trust
Northside Gardens Hotel Pty Limited
Pacific Cinemas (Southport) Pty Limited
Pantami Pty Limited
203 Port Hacking Road 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
66 Amalgamated Holdings Limited – Annual Report 2015
Note
(a)(e)
(a)(e)
(a)(d)
(a)(e)
(b)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(c)
(a)(e)
Ownership
interest
2015
%
2014
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
−
100
100
100
100
100
100
100
100
100
100
100
100
−
100
100
100
−
100
100
100
100
100
100
100
100
−
100
100
100
100
100
100
100
100
100
100
100
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 5
S E C T I O N 5 – G R O U P C O M P O S I T I O N
5.2 – SUBSIDIARIES (continued)
Rydges Hobart Hotel Pty Limited
Rydges Hotels Limited
Rydges Hotels Property Unit Trust
Rydges HPT Pty Limited
Rydges Property Holdings Pty 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
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
Ownership
interest
2015
%
2014
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
−
−
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Note
(a)(c)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(a)
(b)
(c)
(d)
(e)
(f)
These companies are audited by other member firms of KPMG International.
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.
All companies, except those stated above, were incorporated in Australia. All trusts were established in Australia.
67 Amalgamated Holdings Limited – Annual Report 2015
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 5
S E C T I O N 5 – G R O U P C O M P O S I T I O N
5.3 – INTERESTS IN OTHER ENTITIES
Accounting policy
Interests in equity accounted investees
The Group’s interests in equity accounted investees comprise interests in associates and interests in joint ventures. Associates are those
entities in which the Group has significant influence, but not control or joint 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.
Interests in associates and joint ventures (see below) are accounted for using the equity method. They are recognised initially at cost, which
includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or
loss and other comprehensive income of equity accounted investees, until the date on which significant influence or joint control ceases.
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.
Joint arrangements
A joint arrangement is an arrangement of which two or more parties have joint control, in which the parties are bound by a contractual
arrangement, and the contractual arrangement gives two or more of those parties joint control of the arrangement.
The Group classifies its interests in joint arrangements as either joint operations or joint ventures depending on the Group’s rights to the
assets and obligations for the liabilities of the arrangements. When making this assessment, the Group considers the structure of the
arrangements, the legal form of any separate vehicles, the contractual terms of the arrangements and other facts and circumstances.
The Group’s interests in joint operations, which are arrangements in which the parties have rights to the assets and obligations for the
liabilities, are accounted for on the basis of the Group’s interest in those assets and liabilities. The Group’s interests in joint ventures, which
are arrangements in which the parties have rights to the net assets, are equity accounted.
Investments in associates and joint ventures
Associates
Joint ventures
2015
$’000
149
10,905
11,054
2014
$’000
139
10,641
10,780
68 Amalgamated Holdings Limited – Annual Report 2015
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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5
S E C T I O N 6 – E M P L O Y E E B E N E F I T S A N D R E L A T E D P A R T Y T R A N S A C T I O N S
This section explains the remuneration of executives and other employees, and transactions with
related parties including directors.
On the following pages, there are sections on share-based payments, director and executive
disclosures and related party transactions.
6.1 – SHARE-BASED PAYMENTS
The Group’s share-based payment arrangements include the Executive Performance Share Plan and the Executive Performance Rights Plan.
Grants were made under the Executive Performance Share Plan from 2007 to 2013 inclusive. The Group conducted a review of its long term
incentive (“LTI”) arrangements in 2013 and resolved that the existing performance share-based LTI should be replaced with a performance
rights-based LTI. Shareholders approved the Executive Performance Rights Plan at the 2013 Annual General Meeting. Grants have
subsequently been made under the Executive Performance Rights Plan in February 2014 and February 2015.
Accounting policy
The fair value of performance shares and rights granted under the Executive Performance Share Plan and the Executive Performance Rights
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 and rights
granted is measured at grant date.
To facilitate the operation of the Executive Performance Share Plan and Executive Performance Rights Plan, a third party trustee is used to
administer the trust which holds shares allocated under the Executive Performance Share Plan or otherwise held or acquired on market in
order to satisfy the Group’s future obligations under the Executive Performance Rights 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 4.1). 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.
Performance shares and performance rights 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. Performance rights are not recognised in the
Statement of Financial Position, but are included within the weighted average number of shares issued as the denominator for determining
diluted earnings per share.
The Group measures the cost of the Executive Performance Share Plan and Executive Performance Rights 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 rights granted is determined by an external
valuer using a Monte Carlo simulation model and Binomial tree model using the assumptions detailed below.
Executive Performance Rights Plan
The establishment of the Executive Performance Rights Plan was approved by shareholders at the 2013 Annual General Meeting. Employees
receiving awards under the Executive Performance Rights Plan are those of a senior level and above (including the Managing Director).
An employee awarded performance rights is not legally entitled to shares in the Company before the performance rights under the plan vest,
and during the vesting period the performance rights do not carry the right to vote or to receive dividends. Once the rights have vested, which
is dependent on the Group achieving its earnings per share (“EPS”) and total shareholder return (“TSR”) targets, participants are issued one
ordinary share in the Company for each vested performance right held. Award, vesting and the issue of ordinary shares under the plan are
made for no consideration. The performance period is three years.
Set out below are summaries of performance rights awarded under the plan:
Type of right
Grant date
2015
Balance at
the start of
the year
Granted
Exercised
Forfeited
Balance at
the end of the
year
Performance rights
20 February 2014
664,422
Performance rights
19 February 2015
–
664,422
–
721,878
721,878
–
–
–
(31,588)
(14,474)
(46,062)
632,834
707,404
1,340,238
71 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 6 – E M P L O Y E E B E N E F I T S A N D R E L A T E D P A R T Y T R A N S A C T I O N S
6.1 – SHARE-BASED PAYMENTS (continued)
Type of right
Grant date
2014
Balance at
the start of
the year
Granted
Exercised
Forfeited
Balance at
the end of the
year
Performance rights
20 February 2014
–
676,802
–
(12,380)
664,422
Fair value of performance rights granted
The assessed fair value at grant date of performance rights granted under the Executive Performance Rights Plan during the year ended 30
June 2015 was $10.74 (2014: $7.20) for those rights that have EPS hurdles and $8.40 (2014: $3.50) for those rights that have TSR hurdles. The
fair value of each performance right is estimated on the date of grant using a Binomial tree model for those rights that have EPS hurdles and a
Monte Carlo simulation model for those rights that have TSR hurdles, with the following weighted average assumptions used for each grant:
Dividend yield (per annum)
Expected volatility
Risk-free rate (per annum)
Share price
Expected life
Granted
19 February 2015
Granted
20 February 2014
4%
17%
1.83%
$11.93
3 years
5%
15%
2.87%
$8.20
3 years
The expected life of the performance rights 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.
Executive Performance Share Plan
Employees that received awards under the Executive Performance Share Plan were 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 EPS and TSR targets, they remain in the trust until the earliest of the employee leaving
the Group, the 7th anniversary (for grants made from 2010) or the 10th anniversary (for grants made from 2007 to 2009) of the date the
performance shares were awarded, or the date Board approves an application for their release. Award, vesting and exercise under the plan are
made for no consideration. The performance period is three years. Set out below are summaries of performance shares awarded under the plan:
Type of right
Grant date
2015
Performance shares
21 February 2013
Performance shares
29 February 2012
Performance shares
23 February 2012
Performance shares
16 May 2011
Performance shares
23 February 2011
Performance shares
28 June 2010
Performance shares
23 February 2009
Performance shares
18 February 2008
Performance shares
19 February 2007
Balance at
the start of
the year
658,473
10,000
757,312
50,000
458,523
200,561
257,590
147,513
34,201
2,574,173
Granted
Exercised
Forfeited
shares
reallocated
Balance at
the end of
the year (a)
–
–
–
–
–
–
–
–
–
–
(1,859)
–
(38,420)
–
(24,830)
(20,655)
(17,135)
(6,396)
(11,838)
(121,133)
–
–
–
–
–
–
–
–
–
–
656,614
10,000
718,892
50,000
433,693
179,906
240,455
141,117
22,363
2,453,040
72 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 6 – E M P L O Y E E B E N E F I T S A N D R E L A T E D P A R T Y T R A N S A C T I O N S
6.1 – SHARE-BASED PAYMENTS (continued)
Type of right
Grant date
2014
Performance shares
21 February 2013
Performance shares
29 February 2012
Performance shares
23 February 2012
Performance shares
16 May 2011
Performance shares
23 February 2011
Performance shares
28 June 2010
Performance shares
23 February 2009
Performance shares
18 February 2008
Performance shares
19 February 2007
Balance at
the start of
the year
661,650
10,000
759,577
50,000
491,561
219,493
270,248
155,412
39,053
2,656,994
Granted
Exercised
Forfeited
shares
reallocated
Balance at
the end of
the year (a)
–
–
–
–
–
–
–
–
–
–
(3,177)
–
(2,265)
–
(33,038)
(18,932)
(12,658)
(7,899)
(4,852)
(82,821)
–
–
–
–
–
–
–
–
–
–
658,473
10,000
757,312
50,000
458,523
200,561
257,590
147,513
34,201
2,574,173
(a) The balance at the end of the year includes a total of 794,530 shares (2014: 451,149 shares) that have been forfeited by employees due to cessation of employment. The
forfeited shares are held within the trust and can be utilised in settlement of future obligations under the Group’s LTI plans, including the Executive Performance Rights
Plan.
No performance shares were granted during the year ended 30 June 2015 (2014: nil).
Share-based payment expense
Total share-based payment expense included within employee expenses for the year ended 30 June 2015 was $1,890,000 (2014: $1,646,000).
Tax Exempt Share Plan
The Tax Exempt Share Plan enabled participating employees to make salary sacrifice contributions to purchase shares on-market on a monthly
basis. The shares in the Tax Exempt Share Plan are restricted from being traded and must be held for a minimum of three years whilst the
participant remains an employee of the Group. Trading restrictions are lifted on the cessation of employment.
Offers under the Tax Exempt Share Plan are at the discretion of the Company. All shares acquired under the Tax Exempt Share Plan rank
equally with all other ordinary shares. The Tax Exempt Share Plan did not operate during the year ended 30 June 2015 and consequently no
shares were purchased during the year by employees under this plan (2014: 9,210 shares).
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.
At 30 June 2015, the total shares issued under the plan were 115,620 (2014: 121,220). 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 2015 was $12.54 (2014: $9.33). Note 4.1 provides details of the movement in the ordinary share
capital during the year.
Superannuation
Group entities contribute to several defined contribution superannuation plans. The superannuation contributions recognised as an employee
expense in the Income Statement are detailed below:
Superannuation contributions recognised as an employee expense
73 Amalgamated Holdings Limited – Annual Report 2015
2015
$’000
2014
$’000
13,817
11,704
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S E C T I O N 6 – E M P L O Y E E B E N E F I T S A N D R E L A T E D P A R T Y T R A N S A C T I O N S
6.2 – DIRECTOR AND EXECUTIVE DISCLOSURES
Information regarding individual directors’ and executives’ compensation and some equity instruments disclosures, as permitted by the
Corporations Regulations 2001, are provided in the Remuneration Report contained within the Directors’ Report. The relevant sections of the
Remuneration Report are outlined below:
Section of Remuneration Report
Non-executive director remuneration
Managing Director and executive remuneration
Fixed annual remuneration
Variable remuneration – short term incentive
Variable remuneration – long term incentive
Employment contracts
Directors’ and executives’ position and period of responsibility
Directors’ and executives’ remuneration
Performance rights holdings and transactions
Performance share holdings and transactions
Equity holdings and transactions
Key management personnel remuneration
The key management personnel remuneration included in employee expenses is as follows:
Employee benefits
Short term
Post-employment
Share-based compensation
Other long term
Termination payments
Directors’ Report page reference
14
15
15
15
16
18
19
20
23
24
26
2015
$
2014
$
6,440,105
182,104
757,882
162,358
–
7,542,449
7,507,493
174,976
848,417
86,734
316,500
8,934,120
Other transactions with the Company or its controlled entities
AG Rydge is a director 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 $23,432 (2014: $23,405). The
Company holds shares in Carlton Investments Limited. Dividends received during the year from Carlton Investments Limited totalled $673,291
(2014: $603,972).
AG Rydge paid rent, levies and other costs to Group entities during the year amounting to $96,714 (2014: $92,653). Rent is charged to AG
Rydge at market rates.
During the year ended 30 June 2013, a controlled entity signed a lease agreement for a cinema complex in Townsville with an entity related to
KG Chapman. The lease commenced on 9 December 2014 and rent paid during the year was at market rates.
During the prior year, a controlled entity signed a contract of sale with DC Seargeant in respect of an apartment at 131 Russell Street,
Melbourne (QT Melbourne). The sale price was based on the listed sale price and consistent with the market value.
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.
74 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 6 – E M P L O Y E E B E N E F I T S A N D R E L A T E D P A R T Y T R A N S A C T I O N S
6.3 – RELATED PARTIES
Relationships with associates
Transactions were receipt of property rentals from associates of $52,000 (2014: $49,000) and costs of $97,000 (2014: $47,000) paid on behalf
of an associate, $28,000 (2014: $47,000) of which is refundable by that associate.
Refer also to Notes 3.1 and 5.3.
Relationships with joint ventures and joint operation partners
Refer to Notes 3.1 and 5.3.
Key management personnel
Disclosures relating to directors of the Company and named executives are set out in the Remuneration Report contained within the Directors’
Report, and in Note 6.2.
75 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 7 – O T H E R I N F O R M A T I O N
This section contains other information required to be disclosed by accounting standards.
7.1 – COMMITMENTS AND LEASES
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 $12,405,000 (2014: $5,810,000).
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. Lease
incentives, for example a rent-free period on commencement of a lease, are deferred and recognised over the lease term on a straight-line
basis. Deferred lease incentives are recognised within other liabilities in the Statement of Financial Position.
The Group does not have finance lease or hire purchase arrangements either as a lessor or a lessee.
Operating lease rental expense (including contingent rent) for the year ended 30 June 2015 was $131,067,000 (2014: $127,927,000).
Lease commitments for future years are set out below:
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
2015
$’000
2014
$’000
94,829
282,308
261,981
639,118
93,219
281,148
224,673
599,040
The Group receives rental income from a number of properties, both leased and owned. With the exception of 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 from 29 June 2007.
Operating lease rental income for future years is set out below:
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
76 Amalgamated Holdings Limited – Annual Report 2015
2015
$’000
2014
$’000
9,803
34,163
244,511
288,477
10,962
37,713
31,865
80,540
10,044
36,327
249,529
295,900
11,475
38,822
43,509
93,806
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7.2 – CONTINGENT LIABILITIES
S E C T I O N 7 – O T H E R I N F O R M A T I O N
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.
7.3 – RECONCILIATION OF PROFIT FOR THE YEAR TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Reconciliation of profit for the year to net cash provided by operating activities
Profit for the year
Adjustments for:
Depreciation
Amortisation
Net loss on sale of non-current assets
Net impairment adjustment
Fair value gain on acquisition of additional interest in a joint operation
Fair value increment of investment properties
Equity accounted investment dividends
Share of equity accounted investees’ net profit
Share-based payments expense
Receivables impairment adjustment
Unrealised foreign exchange (gains)/losses
Increase/(decrease) in income taxes payable
Net cash provided by operating activities before change in assets and liabilities
Change in assets and liabilities adjusted for effects of consolidation of controlled entities
acquired/disposed during the year:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Increase in prepayments and other current assets
Decrease in deferred tax items
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Increase in deferred revenue
Increase/(decrease) in other liabilities
(Decrease)/increase in financing costs payable
Net cash provided by operating activities
2015
$’000
2014
$’000
108,890
78,563
56,301
6,898
1,683
500
−
(1,319)
3,256
(2,912)
1,890
(91)
(869)
13,477
187,704
(853)
(4,611)
(3,074)
109
16,277
1,788
1,938
14,092
(60)
213,310
56,223
6,132
422
−
(4,905)
(624)
2,886
(2,184)
1,646
(680)
189
(9,993)
127,675
9,903
1,241
(3,358)
4,245
(22,041)
(2,685)
9,896
(2,208)
78
122,746
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.
77 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 7 – O T H E R I N F O R M A T I O N
7.4 – AUDITORS’ REMUNERATION
2015
$
2014
$
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
7.5 – PARENT ENTITY DISCLOSURES
1,091,640
123,208
335,920
40,254
1,591,022
332,004
85,388
417,392
331,655
749,047
As at, and throughout the financial year ended, 30 June 2015, the parent entity of the Group was Amalgamated Holdings Limited.
2015
$’000
62,815
2,836
65,651
486
441,255
18,198
24,314
416,941
219,126
14,025
16,788
167,002
416,941
Results of parent entity
Profit for the year
Other comprehensive income for the year
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 financial assets revaluation reserve
Share-based payments reserve
Retained earnings
Total equity
78 Amalgamated Holdings Limited – Annual Report 2015
1,097,170
35,710
348,490
17,470
1,498,840
303,329
84,027
387,356
284,162
671,518
2014
$’000
47,809
3,858
51,667
3,518
431,118
6,586
11,776
419,342
219,126
12,141
14,847
173,228
419,342
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S E C T I O N 7 – O T H E R I N F O R M A T I O N
7.5 – 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
2015
$’000
2014
$’000
1,422
–
1,422
1,066
–
1,066
59,159
126,633
149,875
335,667
62,564
112,555
95,523
270,642
The Company has guaranteed commitments in respect of financing and other arrangements of certain
subsidiary entities:
157
467
Joint ventures and joint operations
The Company has guaranteed the obligations of some joint ventures and joint operations in respect of a
number of operating lease commitments. Operating lease commitments of joint ventures and joint
operations are due:
Not later than one year
Later than one year but not later than five years
Later than five years
33,304
108,829
116,978
259,111
594,935
30,600
106,514
71,885
208,999
480,108
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 7.7.
Bank debt facilities
The Company is a guarantor under the Group’s secured bank debt facilities, as disclosed in Note 4.4.
7.6 – EVENTS SUBSEQUENT TO REPORTING DATE
Acquisition of the Museum Art Hotel, Wellington, New Zealand
The Group finalised the acquisition of the Museum Art Hotel in August 2015. The total purchase price relating to the acquisition was
NZ$28.5 million (approximately A$25.9 million).
Acquisition of the Stade Family Entertainment Centre, Stade, Germany
The Group finalised the acquisition of the Stade Family Entertainment Centre in August 2015. The total purchase price relating to the
acquisition was €6.7 million (approximately A$9.7 million).
Dividends
For final dividends declared after 30 June 2015, refer to Note 4.2.
79 Amalgamated Holdings Limited – Annual Report 2015
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S E C T I O N 7 – O T H E R I N F O R M A T I O N
7.7 – 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
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
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
203 Port Hacking Road Pty Limited
QT Hotels and Resorts Pty Limited
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.
A consolidated Statement of Comprehensive Income and a 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, for the year ended, and as at,
30 June 2015 respectively is set out on the following page:
80 Amalgamated Holdings Limited – Annual Report 2015
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7.7 – DEED OF CROSS GUARANTEE (continued)
S E C T I O N 7 – O T H E R I N F O R M A T I O N
Statement of Comprehensive Income
Profit before tax
Income tax expense
Profit for the year
Retained earnings at the beginning of the year
Dividends paid
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
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 tax liabilities
Deferred revenue
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained earnings
Total equity
81 Amalgamated Holdings Limited – Annual Report 2015
2015
$’000
118,094
(36,156)
81,938
573,148
(69,041)
586,045
42,879
28,445
15,928
15,284
102,536
1,098
157,983
1,392
19,972
75,708
8,028
643,769
71,050
66,117
3,752
1,048,869
1,151,405
64,420
14,803
16,181
51,431
3,616
150,451
26,518
115,364
1,848
5,009
8,223
156,962
307,413
843,992
219,126
38,821
586,045
843,992
2014
$’000
88,584
(26,215)
62,369
578,214
(67,435)
573,148
28,706
32,975
11,548
8,272
81,501
1,106
153,750
75,708
1,392
17,281
8,658
596,874
72,300
68,796
4,178
1,000,043
1,081,544
43,381
6,638
14,773
43,772
1,162
109,726
23,331
108,119
4,899
2,152
6,876
145,377
255,103
826,441
219,126
34,167
573,148
826,441
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 28 to 81 and the Remuneration Report in the Directors’
Report set out on pages 14 to 26, 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 2015 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 7.7 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 2015.
The directors draw attention to Note 1.2 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 20th day of August 2015.
DC Seargeant
Director
82 Amalgamated Holdings Limited – Annual Report 2015
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 2015, and income statement and statement of comprehensive income, statement of changes in equity
and statement of cash flows for the year ended on that date, notes 1.1 to 7.7 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 1.2, 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 2015 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 1.2.
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.
83 Amalgamated Holdings Limited – Annual Report 2015
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 14 to 26 of the directors’ report for the year ended 30 June 2015. 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 2015, complies with Section 300A
of the Corporations Act 2001.
KPMG
Kenneth Reid
Partner
Sydney
20 August 2015
84 Amalgamated Holdings Limited – Annual Report 2015
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 21 AUGUST 2015)
SUBSTANTIAL SHAREHOLDERS
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:
Shareholder
Enbeear Pty Limited
Carlton Investments Limited
Perpetual Limited
IOOF Holdings Limited
* Includes Carlton Investments Limited holding.
Number of ordinary shares held
56,598,377*--
56,588,377
16,678,927
8,078,991
VOTING RIGHTS
Ordinary shares
There were 6,093 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 21 August 2015.
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
3,047
1,974
497
524
51
1,296,550
4,887,480
3,488,063
13,537,471
137,350,359
6,093
160,559,923
The number of shareholders holding less than a marketable parcel is 262.
UNQUOTED ORDINARY SHARES
There were 2,586,739 unquoted ordinary shares issued pursuant to the employee share plans. The shares were held by 432 holders. The
unquoted ordinary shares have been included within the distribution of shareholders table above.
85 Amalgamated Holdings Limited – Annual Report 2015
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:
Number of
shares held
Percentage of
capital held
Enbeear Pty Limited
Eneber Investment Company Limited
JP Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
Citicorp Nominees Pty Limited
Alphoeb Pty Limited
The Manly Hotels Pty Limited
Carlton Hotel Limited
RBC Investor Services Australia Nominees Pty Limited (Pipooled Account)
RBC Investor Services Australia Nominees Pty Limited (Bkcust Account)
Mr Alan Graham Rydge
BNP Paribas Noms Pty Ltd (DRP)
Citicorp Nominees Pty Limited (Colonial First State Inv Account)
Argo Investments Limited
Australian United Investment Company Limited
TN Phillips Investments Pty Ltd
RBC Investor Services Australia Nominees Pty Limited (WAM Account)
Australian Foundation Investment Company Limited
Milton Corporation Limited
ON-MARKET BUY-BACK
There is no current on-market buy-back.
32,134,031
19,777,772
12,516,161
8,143,658
7,564,565
6,161,365
6,027,315
5,732,812
5,276,103
4,185,970
4,119,965
3,269,915
3,245,074
2,491,765
1,634,721
1,500,000
1,346,000
1,286,477
1,030,258
867,921
20.01
12.32
7.80
5.07
4.71
3.84
3.75
3.57
3.29
2.61
2.57
2.04
2.02
1.55
1.02
0.93
0.84
0.80
0.64
0.54
128,311,848
79.92
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.
86 Amalgamated Holdings Limited – Annual Report 2015
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 23 October 2015 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.
87 Amalgamated Holdings Limited – Annual Report 2015
ABN 51 000 005 103