A B N 5 1 0 0 0 0 0 5 1 0 3
EVENT HOSPITALITY & ENTERTAINMENT LIMITED
Annual
Report
2017
E V E N T H O S P I T A L I T Y & E N T E R T A I N M E N T L I M I T E D
A B N 5 1 0 0 0 0 0 5 1 0 3
2 0 1 7 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 – Audited
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 – 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
5.4 – Acquisition of additional interests in joint arrangements
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
1 EVENT Hospitality & Entertainment Limited – Annual Report 2017
2
16
17
31
32
33
34
35
36
37
37
38
39
40
41
46
46
49
50
51
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55
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58
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61
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97
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 EVENT Hospitality & Entertainment Limited, being the
Company and its controlled entities (“Group”), for the year ended 30 June 2017 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
JM Hastings (Chief Executive Officer)
Appointed 1 July 2017
PM Mann
Director since 2013
RG Newton
Director since 2008
DC Seargeant (Managing Director until 30 June 2017)
Director since 2001 and Managing Director since 2002, resigned 30 June 2017
Directors’ qualifications, experience and independent status
Alan Rydge
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.
Directorships
Mr Rydge is also a director of the listed company, Carlton Investments Limited (appointed 1980, chairman since 1980).
In addition, Mr Rydge is chairman of Alphoeb Pty Limited and Enbeear Pty Limited.
Kenneth Chapman MB BS, FAICD, FAIM, AFRACMA
Independent non-executive director and Board member since 2010.
Experience
A company director with 20-plus years senior executive experience in the tourism and real estate sectors. Currently, chief
executive officer of Skyrail-ITM and executive director of the Chapman group of companies.
Directorships
Positions held by Mr Chapman during the last three years include:
director of Aquis Entertainment Limited (appointed 14 August 2015, resigned 3 November 2016);
chairman of Skyrail Pty Ltd trading as Skyrail Rainforest Cableway;
chairman of Far North Queensland Hospital Foundation;
chairman of Skyrail Rainforest Foundation Limited; and
director of various entities associated with the privately held Chapman group of companies.
2 EVENT Hospitality & Entertainment Limited – Annual Report 2017
Directors’ qualifications, experience and independent status (continued)
D I R E C T O R S ’ R E P O R T
Peter Coates AO
Independent non-executive director and Board member since 2009. Mr Coates served as a member of the Audit and Risk
Committee and as a member and Chairman of the Nomination and Remuneration Committee until 22 October 2015.
Mr Coates is the lead independent director.
Experience
A 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 and non-executive chairman of
Glencore majority owned Sphere Minerals Limited. Mr Coates was formerly non-executive chairman of Xstrata Australia Pty
Limited and chief executive of Xstrata Coal.
Directorships
Positions held by Mr Coates during the last three years include:
director of Santos Limited (Chairman from 30 April 2016, Executive Chairman from August 2015 to January 2016);
director of Glencore plc; and
director of Sphere Minerals Limited (Chairman).
Valerie Davies FAICD
Independent non-executive director and Board member since 2011.
Experience
A company director with more than two decades of broad experience across diverse sectors, including tourism, property,
health and media. In parallel, Ms Davies has more than 20 years senior executive experience in corporate communications,
as Principal of her own consultancy One.2.One Communications Pty Ltd.
Directorships
Positions held by Ms Davies during the last three years include:
director of Cedar Woods Properties Limited;
director of HBF Health Limited; and
commissioner of Tourism Western Australia.
David Grant BComm, CA, GAICD
Independent non-executive director, Board member since 2013, Chairman of the Audit and Risk Committee and Chairman of
the Nomination and Remuneration Committee.
Experience
Mr Grant is a Chartered Accountant with 25-plus years accounting and finance 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.
Directorships
Positions held by Mr Grant during the last three years include:
director of iiNet Limited (resigned 7 September 2015); and
director of Stylematch Pty Limited.
Jane Hastings BComm (appointed 1 July 2017)
Managing Director and Chief Executive Officer (“CEO”) from 1 July 2017.
Experience
Ms Hastings has more than 20 years’ experience in the tourism, hospitality and entertainment sectors. Ms Hastings
previously held a number of senior positions with APN News & Media Limited, including CEO of The Radio Network (2012
2014) and CEO of New Zealand Media and Entertainment (NZME) (2014 2016). Ms Hastings was appointed as the Group’s
Chief Operating Officer with effect from 29 August 2016 and on 27 April 2017, the Group announced that Ms Hastings would
succeed Mr DC Seargeant as the Group’s Managing Director and CEO from 1 July 2017.
Directorships
Ms Hastings is also a New Zealand Film Commission board member.
3 EVENT Hospitality & Entertainment Limited – Annual Report 2017
Directors’ qualifications, experience and independent status (continued)
D I R E C T O R S ’ R E P O R T
Patria Mann BEc, CA, FAICD
Independent non-executive director and Board member since 2013. Member of the Audit and Risk Committee and Member
of the Nomination and Remuneration Committee.
Experience
A 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
Positions held by Mrs Mann during the last three years include:
director of Bellamy’s Australia Limited (appointed 10 March 2016, resigned 18 May 2017);
director of Ridley Corporation Limited;
director of First State Superannuation Trustee Corporation (resigned 2015);
director of Perpetual Superannuation Limited (resigned 31 October 2016); and
director of Allianz Australia Limited.
Richard Newton BBus (Marketing), FAICD
Independent non-executive director and Board member since 2008.
Experience
A company director with 20-plus years senior executive experience in property investment and development, specifically in
hotel operations.
Directorships
Positions held by Mr Newton during the last three years include:
chairman of Capricorn Village Joint Venture, WA;
chairman and director of Selpam (Australia) Pty Limited and a director of various companies wholly owned by Selpam
(Australia) Pty Limited; and
director of Bonsey Jaden Pte Ltd, a digital advertising agency.
David Seargeant (resigned 30 June 2017)
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).
Directorships
Mr Seargeant is also chairman of the National Association of Cinema Operators, deputy chair of Tourism Accommodation
Australia and 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.
COMPANY SECRETARIES
GC Dean CA, ACIS was appointed to the position of Company Secretary for EVENT Hospitality & Entertainment 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 EVENT Hospitality & Entertainment 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 Council’s Corporate Governance Principles and Recommendations,
3rd Edition. The Group has disclosed its 2017 Corporate Governance Statement in the Corporate Governance section on the
EVENT website (https://www.evt.com/investors/). As required, the Group has also lodged the 2017 Corporate Governance
Statement and Appendix 4G with the ASX.
4 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
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 year are set out below:
Directors’
meetings
Audit and Risk
Committee
meetings
Nomination and
Remuneration
Committee meetings
Entitled
to attend
Attended
Entitled
to attend
Attended
Entitled
to attend
Attended
10
10
10
10
10
10
10
10
10
10
10
9
10
10
10
10
4
–
–
–
4
4
–
4
4
–
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4
4
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4
4
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4
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3
4
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4
–
3
AG Rydge
KG Chapman
PR Coates
VA Davies
DC Grant
PM Mann
RG Newton
DC Seargeant (a)
(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 year, directors also visited various sites to improve their understanding of the Group’s locations and operations.
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; and
property development, 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 $110,819,000 (2016: $130,248,000), a decrease of $19,429,000 or 14.9% below the prior year result.
The normalised result before interest and income tax expense was $169,932,000 (2016: $185,945,000), a decrease of
$16,013,000 or 8.6% and the normalised result after tax was $113,684,000 (2016: $125,980,000), a decrease of $12,296,000
or 9.8% below the prior year result.
The individually significant items for the year are set out on page 7. The individually significant items were a net expense item
after tax of $2,865,000 (2016: net income item after tax of $4,268,000).
5 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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6
D I R E C T O R S ’ R E P O R T
Overview of the Group (continued)
An analysis of the last five years is outlined below:
Total revenue and other income ($’000)
Basic earnings per share (cents)
Dividends declared (a) ($’000)
Dividends per share (cents)
Special dividend per share (cents)
2017
2016
2015
2014
2013
1,294,269
69.6
81,886
51
–
1,280,889
82.2
81,886
51
–
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
–
(a) 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:
Profit on sale of apartments
Profit on sale of an interest in a cinema circuit in Fiji
Write-back of expired voucher stock
Net proceeds from insurance
Pre-opening expenses relating to the launch and opening of hotels
Managing Director retirement and transition costs
Impairments or disposal of land, buildings and plant and equipment
Profit on sale of Mosman cinema site
Reversal of impairment charges booked in previous years
Total individually significant items before income tax benefit/(expense)
Income tax benefit/(expense) relating to individually significant items
Total individually significant items after income tax benefit/(expense)
2017
$’000
2016
$’000
2,105
3,729
5,184
5,457
(3,579)
(5,526)
(10,986)
(3,616)
751
(2,865)
(13,415)
19,615
1,712
7,912
(3,644)
4,268
Investments
The Group acquired property, plant and equipment totalling $281,325,000 during the year. The significant acquisitions and
capital additions include the following:
the acquisition of the properties located at 458 472 George Street, Sydney for $116 million;
the QT Melbourne, QT Queenstown and Atura Adelaide Airport hotel developments;
the redevelopment of QT Museum Wellington;
the acquisition of Rydges Geelong;
cinema developments at Smithfield (QLD), Palmerston (NT) and Whitford (WA); and
refurbishment requirements for the cinemas, hotels and resorts.
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
$1,515,612,000 (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 2017 was $1,044,822,000. The total value of the investment
properties at 30 June 2017 was $68,250,000.
Capital structure
Cash and term deposits at 30 June 2017 totalled $92,318,000 and total bank debt outstanding was $323,905,000.
7 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
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 2017, the Group had no interest rate hedges (2016: no interest rate hedges) due to the low level of
Group debt.
Liquidity and funding
As at 30 June 2017, the Group’s secured bank debt facilities comprised the following:
The above facilities were to mature on 12 September 2017 and were supported by interlocking guarantees from most Group
entities and were secured by specific property mortgages (refer to Note 3.3 to the financial statements).
$350,000,000 revolving multi-currency loan facility;
$30,000,000 credit support facility (for the issue of letters of credit and bank guarantees); and
$50,000 overdraft limit to support its transactional banking facilities.
$525,000,000 revolving multi-currency loan facility; and
$15,000,000 credit support facility (for the issue of letters of credit and bank guarantees).
Subsequent to 30 June 2017, the Group’s secured bank debt facilities were amended and restated on 15 August 2017 and
now comprise the following:
The above facilities mature on 15 August 2020 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 1.15% and 2.1% per annum.
Cash flows from operations
Net operating cash inflows decreased to $188,681,000 from $212,470,000 recorded in the prior comparable year.
This decrease was driven by a decrease in operating cash flow from the Group’s major operating businesses together with an
increase in income tax paid.
Impact of legislation and other external requirements
There were no changes in environmental or other legislative requirements during the year that have significantly impacted
the results of operations of the Group.
REVIEW OF OPERATIONS BY DIVISION
ENTERTAINMENT
Entertainment – Australia
As at 30 June
Cinema locations *
Cinema screens *
2017
73
674
2016
Movement
72
668
1
6
* Managed and joint venture cinema sites (excludes Moonlight Cinema sites and screens).
The normalised profit before interest and income tax expense was $78,957,000, a decrease of $9,558,000 or 10.8% below
the prior comparable year.
The normalised profit for the year was impacted by a number of factors including:
the cessation of the Virtual Print Fee arrangement which concluded during the year ended 30 June 2016;
the impact of a loyalty provision write-back which favourably impacted the prior comparable year;
the impact of the reopening of Hoyts Chadstone on the Melbourne market in Victoria; and
a less favourable mix of film product when compared to the prior comparable year.
The top four titles at the Australian Box Office during the year were: Rogue One: A Star Wars Story ($51.2 million); Beauty
and the Beast ($47.7 million); Suicide Squad ($34.2 million); and Guardians of the Galaxy Vol. 2 ($32.7 million). These four
titles collectively grossed $165.7 million; however, on a comparative basis the top four grossing titles from the prior year
grossed $206.3 million and included: Star Wars: The Force Awakens ($93.7 million); Deadpool ($43.2 million); Spectre
($35.7 million); and Captain America: Civil War ($33.7 million).
8 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
There was pleasing growth in the Group’s Gold Class offering, with an increase in admissions of 9%. Overall merchandising
revenue increased 4%, with merchandising revenue spend per admission 3.3% ahead of the prior year, whilst the cost of
goods sold for the year reduced to 17.7% from 18.3% in the prior comparable year.
Other revenue, including online booking fee income, sponsorship revenue and screen advertising, increased by 7% over the
prior comparable year.
The Group continued to pursue increased market share and visitation loyalty through the Cinebuzz loyalty program and there
were 1,546,000 active members at 30 June 2017.
The new GU Film House Adelaide located in Hindley Street opened in September 2016. In addition, the 12 screen BCC Cinema
at Maroochydore was fully refurbished during the year. The Group has a further three cinema developments (totalling
20 screens) scheduled to open in the second half of the 2017 calendar year, including new Event Cinemas in Smithfield
(Cairns) which will include one Vmax and five traditional screens, Palmerston (Darwin) which will include two Vmax and four
traditional screens and Whitford (Perth) which will include two Gold Class, two Vmax and four traditional screens.
Entertainment – New Zealand
As at 30 June
Cinema locations *
Cinema screens *
* Managed and joint venture cinema sites.
2017
18
124
2016
Movement
19
132
(1)
(8)
The normalised profit before interest and income tax expense was $10,787,000, an increase of $279,000 or 2.7% above the
prior comparable year.
Total New Zealand Box Office increased by 1.5% over the previous financial year. The Group’s Box Office revenues were
marginally above the prior year. The five highest-grossing titles within the New Zealand market included: Rogue One: A Star
Wars Story (NZ$7.4 million); Moana (NZ$7.3 million); Beauty and the Beast (NZ$ 6.5 million); Guardians of the Galaxy Vol. 2
(NZ$5.4 million); and Suicide Squad (NZ$5.3 million). These five titles achieved a combined total of NZ$31.6 million compared
to the top five titles in the prior year which collectively grossed NZ$42.2 million.
Similar to the Australian circuit, the Group’s New Zealand circuit experienced a decline in average admission price driven by a
reduced percentage of 3D admissions and pricing initiatives implemented to combat increased competition specifically within
the Auckland market. Conversely, merchandising spend per admission increased by 3.7%, driven by an ongoing focus on
merchandising sales and a number of successful candy bar combo promotions.
The New Zealand circuit continues to pursue market share through the Cinebuzz loyalty program and there were 242,000
active members in New Zealand at 30 June 2017.
The Group acquired the Downtown Cinemas circuit on 28 July 2016 for NZ$7.65 million and the circuit contributed a total of
NZ$7,148,000 in Box Office revenue and NZ$663,000 in earnings for the year. The circuit includes a total of 15 screens across
three cinemas located at Palmerston North, Havelock North and Paraparaumu, all located in the southern region of
New Zealand’s North Island.
The Group’s nine-screen Queensgate cinema complex in Wellington sustained damage from the earthquake in November 2016.
As a result of the damage, the cinema complex was closed and has been demolished. It is expected that the complex will be
rebuilt and the Group has appropriate insurance arrangements in place to cover the damage to property and the loss of profits
from business interruption (for a two year period). The Group has recognised a receivable at 30 June 2017 for the insurance
proceeds expected to be received in relation to property damage at the complex, and the net insurance amount has been
excluded from the segment result and disclosed as an individually significant item in the 2017 Annual Report.
The Group disposed of its two-thirds interest in the Fiji Cinema Joint Venture on 29 June 2017. Profit on disposal of
$3,729,000 has also been reported as an individually significant item. The normalised segment result includes the Group’s
share of earnings from the Fiji Cinema Joint Venture of $742,000.
9 EVENT Hospitality & Entertainment Limited – Annual Report 2017
Entertainment – Germany
As at 30 June
Cinema locations *
Cinema screens *
* Managed and joint venture cinema sites.
D I R E C T O R S ’ R E P O R T
2017
52
409
2016
Movement
53
411
(1)
(2)
The normalised profit before interest and income tax expense was $22,246,000, a decrease of $13,796,000 or 38.3% below
the prior comparable year.
The result was impacted by a 4.0% fall in the total German market admissions which was predominately due to the release
disruption caused by the staging of the European Championships (held in June and July 2016) and the outstanding admission
result that was achieved in the prior comparable year. The top five titles at the German Box Office during the year were:
Rogue One: A Star Wars Story (3.9 million admissions); Finding Dory (3.8 million admissions); The Secret Life of Pets
(3.8 million admissions); Beauty and the Beast (3.4 million admissions); and Fantastic Beasts and Where to Find Them
(3.3 million admissions). These five films achieved a combined total of 18.2 million admissions compared to the top five films
of the prior comparable year which collectively achieved 30.6 million admissions.
Merchandising profit per admission increased by 5.6%, whilst screen advertising revenues declined by 5.4%, reflecting the
softening of content appeal comparative to the prior comparable year. German-produced films represented a 12.4% share of
the German Box Office compared to 16.8% achieved in the prior comparable year.
Similar to the Australian and New Zealand circuits, the Group has a loyalty program in place for the German cinema
operations and the current membership base totals 1,046,000 members.
The number of locations has been consistent over the last few years; however, the two-screen Mainz Residence site was
closed in January 2017. Three new leasehold sites are currently under development and are expected to open during the
2018 year. In addition, during the year the Group acquired a freehold retail property at Neumünster at a total acquisition
price of €7.1 million (A$10.3 million). The site includes a seven-screen cinema that will transfer to the Group’s control in
October 2017.
A write-back of expired voucher stock totalling $5,184,000 was recognised during the year. This has been reported as an
individually significant item and excluded from the normalised result.
HOSPITALITY AND LEISURE
Hotels and Resorts
As at 30 June
Locations *
Rooms *
* Owned and managed hotels.
2017
58
9,132
2016
55
8,871
Movement
3
261
The normalised profit before interest and income tax expense was $52,734,000, an increase of $1,137,000 or 2.2% above the
prior comparable year. The first half result was impacted primarily by redevelopments being undertaken of the Group’s
Queenstown (due to open December 2017) and QT Museum Wellington hotels. The second half result was $28,188,000,
an increase of 25% on the prior comparable half year period, reflecting favourable demand levels across key locations and
market segments.
Occupancy in the Group’s owned hotels (all brands) decreased by half a percentage point to 76.5%, principally due to the
factors which affected the first half result. The average room rate increased by 6.5% to $179, resulting in an increase in
revenue per room (“revpar”) of 5.7%.
Occupancy in the Group’s owned Rydges hotels decreased by a percentage point to 78.0%, whilst the average room rate
increased by 3.6% to $159, resulting in an increase in revpar of 2.5%. The result was materially impacted by the closure of
part of Rydges Queenstown for the development of QT Queenstown and, excluding Queenstown, the Rydges properties
experienced strong year-on-year growth.
10 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
Favourable demand levels prevailed across most key locations and market segments, particularly in Cairns, Sydney and
Melbourne, whilst Gladstone and Townsville continued to experience more challenging trading conditions.
The Group’s managed hotels generally performed well. The Rydges hotels at Sydney Airport, World Square, Sydney Central
and South Bank Brisbane continued to deliver strong performance, as did the hotels in New Zealand.
Occupancy in the Group’s QT hotels was consistent with the prior comparable year at 76.3%, whilst the average room rate
increased by 7.3% to $222, resulting in an increase in revpar of 7.1%. The QT result included a positive contribution from QT
Melbourne, which opened in September 2016 and is performing ahead of expectations. Pre-opening costs relating to the
initial launch of the hotel have been excluded from the segment result and disclosed as an individually significant item.
QT Sydney and QT Canberra both performed well and generated a material improvement in earnings over the prior
comparable year. QT Gold Coast experienced more challenging trading conditions due principally to a softening in food and
beverage revenues. QT Wellington’s underlying performance remained strong; however, the property was negatively
impacted by refurbishment works, and the November 2016 earthquake.
Occupancy in the Group’s Atura hotels was consistent with the prior comparable year at 70.1%, whilst the average room rate
increased by 3.3% to $139, resulting in an increase in revpar of 2.6%. Construction of the new 165-room Atura hotel at
Adelaide Airport is underway.
In March 2017, the Group acquired the former Mercure hotel in Geelong for $24.2 million. This property has since been
rebranded as Rydges Geelong. The Group also acquired a 39-hectare property in the Hunter Valley, known as Loggerheads,
for $6 million in January 2017.
Thredbo Alpine Resort
The normalised profit before interest and income tax expense was $18,187,000, an increase of $3,180,000 or 21.2% above
the prior comparable year.
The increase in normalised profit reflects an outstanding result from the 2016 snow season, which despite a late start was
able to achieve a 5.9% increase in skier visitations. The increased visitation together with the growth in the average ticket
price resulted in an increase in lift pass revenue of 13% for the 2016 season, whilst Snow Sports (ski school) also achieved
good revenue growth of 15.5% and food and beverage revenue increased by 11.9%. The prior year acquisition of Kareela
Hutte (an on-mountain food outlet) also contributed to the uplift in food and beverage revenues.
The Group has recently completed an additional mountain bike trail and associated revenues from that activity have
increased by 48% compared to the prior comparable year to $1,613,000.
PROPERTY AND OTHER INVESTMENTS
The normalised profit before interest and income tax expense was $9,343,000, an increase of $3,759,000 or 67.3% above the
prior comparable year. The improved result was primarily driven by the following:
improved earnings from the Edge serviced offices at 478 George Street (completed in October 2015) and Double Bay
(completed in August 2015); and
rental income from the Flight Centre tenancy at 478 George Street which commenced in July 2016.
In May 2017, the Group completed the acquisition of two properties located at 458-472 George Street, Sydney, adjacent to
EVENT’s existing QT Sydney, State Theatre and 478 George Street properties for a purchase price of $116 million.
The buildings are currently leased to several retail and commercial tenants. The acquisition increased the Group’s contiguous
footprint of Sydney’s central business district to approximately 4,700m2 including an 88-metre frontage on a prime section of
George Street that is currently being converted to a pedestrian zone as part of the light rail development.
Profit totalling $2,105,000 on the sale of 23 residential apartments at QT Melbourne has been excluded from the normalised
result and reported as an individually significant item.
UNALLOCATED REVENUES AND EXPENSES
The unallocated revenues and expenses include the Group’s corporate functions and various head office expenses.
The increase in the net expense predominately reflects a full year of additional depreciation and other costs relating to the
Group’s head office (completed in quarter 2 of the 2016 financial year). Costs associated with the departure of the Group’s
Managing Director, David Seargeant, have been excluded from the normalised result and disclosed as an individually
significant item.
11 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
BUSINESS STRATEGIES AND PROSPECTS FOR FUTURE FINANCIAL YEARS
The Group’s strategic plan, which includes future expansion, will depend on industry, economic and political conditions, the
potential impact of global events, the future financial performance and available capital, the competitive environment,
evolving customer needs and trends, and the availability of attractive opportunities. It is likely that the Group’s strategies will
continue to evolve and change in response to these and other factors, and there can be no absolute assurance that these
current strategies, as detailed below, will be achieved.
ENTERTAINMENT
The strategic plans for Entertainment are applicable to the Australian, New Zealand and German cinema businesses.
Cinema Exhibition
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 in
Australia and New Zealand;
expansion of the Gold Class cinema concept to certain cinema locations within the Australian 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 technology for greater efficiency.
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 over-the-top
(“OTT”) internet content, video on demand (“VOD”), DVD ownership and home entertainment systems);
shortening of the release window of film to other formats such as OTT, VOD and DVD;
increase in unauthorised recording (piracy) of audio and visual recordings for commercial sale and distribution via the
internet; and
pricing and product competition.
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.
12 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
QT Hotels and Resorts
QT Hotels and Resorts operates 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. QT Melbourne opened in September 2016. The Group
currently has a total of eight QT properties comprising QT Sydney, QT Melbourne, QT Canberra, QT Bondi, QT Museum
Wellington and the QT resorts at Gold Coast, Port Douglas and Falls Creek. In addition, QT Queenstown is expected to open in
late 2017, work has commenced on the new QT Perth and the Group has entered into a management agreement for
QT Parramatta.
Atura Hotels
Atura Hotels operates 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 currently has a total of three Atura Hotels, comprising Atura Blacktown which opened in 2013, Atura Albury was
converted in 2015, and Atura Dandenong which was acquired in 2014. In addition, the Group has finalised an agreement for
the development of a new 165-room Atura hotel at Adelaide Airport, which is expected to open in late 2018. 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.
13 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 2016 dividend
Interim 2017 dividend
Declared after the end of the year
Final 2017 dividend
Per share
Cents
31
20
Total
amount
$’000
49,774
32,112
81,886
Date of payment
Tax rate for
franking
credit
22 September 2016
16 March 2017
30%
30%
31
49,774
21 September 2017
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 17 to 30 and has been audited as
required by section 308(3C) of the Corporations Act 2001.
EVENTS SUBSEQUENT TO REPORTING DATE
The Group’s secured bank debt facilities were amended and restated on 15 August 2017. Details of the new facilities are set
out in Note 4.4 to the financial statements. Other than the 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:
Ordinary shares held
directly
3,824,163
3,000
5,000
Ordinary shares held
by companies in which
a director has a
beneficial interest (a)
68,948,033
54,000
46,960
14,000
6,000
66,000
Director
AG Rydge
KG Chapman
PR Coates
VA Davies
DC Grant
JM Hastings
PM Mann
RG Newton
Performance shares
held directly
Performance rights
held directly
30,303
(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, JM Hastings, PM Mann and RG Newton, 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.
14 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
In terms of the indemnity, the Company will indemnify the directors and other officers of the Company acting as such, to the
full extent permitted by law, against any liability to another person (other than the Company or a related body corporate)
incurred in acting as a director or officer of the Company, unless the liability arises out of conduct involving a lack of good
faith. The indemnity includes any liability for costs and expenses incurred by such person in defending any proceedings,
whether civil or criminal, in which judgement is given in that person’s favour, or in which the person is acquitted and in
making an application in relation to any proceedings in which the court grants relief to the person under the law.
The Company has provided directors’ and officers’ liability insurance policies that cover all the directors and officers of the
Company and its controlled entities. The terms of the policies prohibit disclosure of details of the amount of the insurance
cover, its nature and the premium paid.
OFFICERS WHO WERE PREVIOUSLY PARTNERS OF THE AUDIT FIRM
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 31 and forms part of the Directors’ Report for the year ended
30 June 2017.
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 in Note 7.4 to the financial statements.
ROUNDING OFF
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 as
issued by the Australian Securities and Investments Commission (“ASIC”). In accordance with that Instrument, 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
JM Hastings
Director
Dated at Sydney this 24th day of August 2017.
15 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 EVENT Hospitality & Entertainment Limited 2017 Remuneration
Report. During the 2017 year, the Group’s long-serving Managing Director, David Seargeant, decided to step down after
more than 29 years with the Group, having made an extraordinary contribution to the growth of the Group.
The Remuneration Report reflects this CEO transition period, and I highlight below a number of important matters which
shareholders should be aware of.
Remuneration of the former Managing Director
Mr Seargeant held the position of Managing Director for the full financial year to 30 June 2017. Under the terms of his
employment agreement, after his departure Mr Seargeant was entitled to a separation payment of one year’s fixed
remuneration, equal to $2,020,000. This amount was adjusted to ensure compliance with the Corporations Act termination
benefits cap and the Remuneration Report includes the adjusted separation payment of $1,959,618.
The short term incentive (“STI”) amount disclosed for Mr Seargeant in the Remuneration Report includes an STI in respect of
the year ended 30 June 2016 of $1,970,000 that was paid in September 2016, representing 100% of the total potential STI for
the year. This reflects the outstanding performance for that year, and the full achievement by Mr Seargeant of the STI targets
set by the Board.
Mr Seargeant’s STI for the year ended 30 June 2017 will be $1,010,000, representing 50% achievement of hurdles for that
year and approved by the Board on 24 August 2017 for payment in September 2017. The remaining 50% will be forfeited.
As the payment will be made in September 2017, it would not normally be reported until next year’s remuneration report;
however, the Company has elected to disclose it early given Mr Seargeant’s departure.
Under the terms of the Executive Performance Rights Plan, unvested performance rights held by Mr Seargeant will remain
on-foot and will vest or lapse in accordance with the terms on which they were offered. In these circumstances, accounting
standards require the recognition of an accelerated share-based payment expense and this charge, totalling $1,911,486, has
been included in the performance rights charge disclosed for Mr Seargeant in the remuneration table on page 24. This does
not necessarily reflect the value (if any) that Mr Seargeant will receive from these unvested performance rights, because this
will depend on whether the hurdles are achieved and, if they are, the share price at the date of vesting.
Remuneration arrangements for the new CEO
Jane Hastings was appointed as the Group’s new CEO with effect from 1 July 2017 following an extensive search process
undertaken by the Board, with assistance from the specialist executive search firm, Hattonneale.
Ms Hastings’ fixed and variable components are below those of the long-serving outgoing Managing Director.
As disclosed on page 22, the Board obtained advice from remuneration consultants regarding Ms Hastings’ remuneration
arrangements. In approving these arrangements, the Board, with assistance from the remuneration consultants, considered
the market capitalisation of the Company and the size, diversity and complexity of the Group’s operations. By market
capitalisation, the Company is within the top 150 companies in the All Ordinaries index. Ms Hastings’ remuneration
arrangements have been set in this context. Ms Hastings’ remuneration arrangements were previously disclosed to the ASX
and have been summarised on page 21.
Review of incentive arrangements
An external review of the Group’s incentive arrangements will be conducted during the year ending 30 June 2018.
This review will include consideration of the current structure and long term incentive hurdles to ensure that they remain
appropriate for the Group and consistent with current market practice.
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
16 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
REMUNERATION REPORT – AUDITED
This report outlines the remuneration arrangements in place for the Group’s key management personnel (“KMP”) as defined
in AASB 124 Related Party Disclosures including non-executive directors, the Managing Director and CEO, and other senior
executives who have authority for planning, directing and controlling the activities of the Group. The KMP for the financial
year are set out on page 23.
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 CEO 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. The long term benefits of the Executive Performance Rights
Plan are conditional upon the Group achieving certain performance criteria, details of which are outlined below.
Further details in relation to the Group’s 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 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.
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 2018 as follows:
Chairman (including the Committee fee)
Other non-executive directors
Base fee
Committee fee
Additional fee for the Chairman of the Board committees
17 EVENT Hospitality & Entertainment Limited – Annual Report 2017
2018
$
2017
$
321,000
313,000
131,000
21,000
18,000
128,000
20,000
18,000
Structure (continued)
The remuneration of non-executive directors for the year ended 30 June 2017 is detailed on page 24.
D I R E C T O R S ’ R E P O R T
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.
CEO and other executive remuneration
Objective
The Group’s remuneration policy aims to reward the CEO 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 senior 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 CEO and other senior executives. Details of these
employment contracts are provided on pages 21 22.
Remuneration consists of both fixed and variable remuneration components. The variable remuneration component includes
a short term incentive (“STI”) plan and a long term incentive (“LTI”) 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 annual 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 – 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.
18 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 CEO and other executive KMP, the general target bonus opportunity range is from 50% to 100% of fixed annual
remuneration. The target bonus range for the CEO and other executive KMP is detailed below:
Maximum STI calculated
on fixed annual
remuneration (a)
Group
earnings
Allocated between:
Divisional
earnings
Special
projects
Other
KPIs
Managing Director and CEO
DC Seargeant (b)
Other executive KMP
NC Arundel
GC Dean
MR Duff
HR Eberstaller
JM Hastings
BA Sergeant
100%
(c) 40%
–
15%
45%
50%
50%
50%
50%
60%
50%
16.7%
25%
16.7%
16.7%
20%
15%
16.7%
–
–
16.7%
20%
–
–
–
6.7%
–
–
–
16.6%
25%
26.6%
16.6%
20%
35%
(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. These targets may include, for example, the identification of new hotel developments that will provide an acceptable return
and fit within the Group’s overall strategic objectives, the delivery of property development projects having regard to timing and budget, and the
identification, negotiation and delivery of new cinema sites. The Board considers the specific targets to be commercially sensitive and accordingly
further details of these targets have not been disclosed.
(c) The STI payment to the Managing Director related to Group earnings is calculated on a sliding scale according to the annual growth in normalised
earnings. The maximum incentive will only be achieved if there is growth of 10% or more in the Group’s normalised profit before tax.
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 – LTI
Objective
The objectives of the LTI plan are to:
align executive incentives with shareholder interests;
balance the short term with the long term Group focus; and
retain high calibre executives 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 executives each financial year and is
based on individual performance as assessed by the annual appraisal process. If an executive 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 details of executives nominated for 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 CEO.
Only executives who are able to directly influence the long term success of the Group participate in the Executive
Performance Rights Plan.
19 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
Structure (continued)
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 EVENT
Hospitality & Entertainment 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 2017 are
based on EVENT Hospitality & Entertainment Limited’s EPS and TSR growth over the Performance Period of the three years to
30 June 2019, with performance measured against the year ended 30 June 2016 (being the base year).
The performance hurdles for the awards of performance rights to executives in the financial year ended 30 June 2017 are as follows:
EPS hurdle
The EPS hurdle requires that the Group’s EPS growth for the Performance Period must be greater than the target set by the
Board. The EPS hurdle was chosen as it provides evidence of the Group’s growth in earnings. The hurdle is as follows:
if annual compound EPS growth over the Performance Period is less than 4%, no performance rights will vest with
the executive;
if annual compound EPS growth over the Performance Period is equal to or greater than 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 Group’s relative TSR performance must be above the median of the Company’s comparator
group (“comparator group”). The comparator group is the S&P/ASX 200 (excluding trusts, infrastructure groups and mining
companies). TSR is defined as share price growth and dividends paid and reinvested on the ex-dividend date (adjusted for
rights, bonus issues and any capital reconstructions) measured from the beginning to the end of the Performance Period.
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 the Company’s TSR ranking relative to the comparator group over the Performance Period is less than the
51st percentile, no performance rights will vest;
if the Company’s TSR ranking relative to the comparator group over the Performance Period is equal to or exceeds the
51st percentile but is less than the 75th percentile, the proportion of performance rights vesting will be increased on a
pro-rata basis between 50% and 100%; or
if the Company’s TSR ranking relative to the comparator group over the Performance Period is equal to or greater than
the 75th percentile all of the performance rights awarded will vest.
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:
2017
2016
2015
2014
2013
Net profit before individually
significant items and income tax ($) (a)
Dividends per share (cents)
Special dividend per share (cents)
Share price at year end ($)
160,937,000
51
–
13.37
177,914,000
51
–
14.53
152,367,000
45
8
12.54
108,304,000
42
–
9.33
114,745,000
42
–
8.27
(a) Refer to page 6 in the Directors’ Report for a reconciliation to reported net profit for the year.
20 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
Employment contract for JM Hastings from 1 July 2017
JM Hastings was appointed Managing Director and CEO effective 1 July 2017. A summary of the key terms of Ms Hastings’
new employment agreement is set out in the table below:
Contract term Ms Hastings’ appointment is ongoing, and there is no fixed term.
Fixed annual
remuneration
A remuneration package to the value of $1,300,000 per annum gross, comprising base salary,
superannuation and, if applicable, any fringe benefits or additional superannuation contributions.
Incentives
Ms Hastings is eligible to participate in the Group’s incentive arrangements (including short term and long
term incentives).
Ms Hastings is eligible to receive an annual STI bonus payment of up to 80% of her fixed annual
remuneration, subject to the achievement of performance criteria determined by the Board.
Ms Hastings is also eligible to participate in the Group’s Long Term Incentive Plan (“LTIP”). The current
LTIP is the Performance Rights Plan approved by shareholders at the 2013 Annual General Meeting.
Subject to any required or appropriate shareholder approval, Ms Hastings’ allocation of performance
rights under the LTIP will be determined based on a face value of 80% of the fixed annual remuneration.
Termination
Either party may terminate the agreement at any time by giving six months’ notice.
On termination, the Group may at its discretion make a payment in lieu of all or part of the notice period
based on Ms Hastings’ fixed annual remuneration at the time of the notice of termination.
Ms Hastings may terminate immediately if there is a fundamental change in her responsibilities or
authority without her consent. In that case, Ms Hastings is entitled to a payment equivalent to six months’
fixed annual remuneration.
The Group may terminate the agreement immediately in circumstances of misconduct, or if Ms Hastings
breaches any material term of the agreement, in which case there is no payment in lieu of notice.
Restraint
The agreement contains non-solicitation and other restraints that apply for a restriction period of up to
12 months. Ms Hastings may receive a restraint payment for some or all of the restriction period,
calculated based on her fixed annual remuneration at the termination date.
Employment contracts in respect of KMP for the year ended 30 June 2017
It is the Group’s policy that employment contracts for the CEO and other senior executives are unlimited in term.
The employment contracts typically outline the components of remuneration paid to the CEO and other senior 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, any change in the scope of
the role performed by the executive and any changes required to meet the principles of the remuneration policy.
21 EVENT Hospitality & Entertainment Limited – Annual Report 2017
Employment contracts in respect of KMP for the year ended 30 June 2017 (continued)
Termination provisions in the employment contracts with other executive KMP are summarised in the table below:
D I R E C T O R S ’ R E P O R T
Executive
NC Arundel
GC Dean
MR Duff
HR Eberstaller
Termination by
the executive
The notice
period is one
month.
Termination by the Group
The notice period is one month. On termination, the
Group may make a payment in lieu of notice, equal to
the notice period.
Expiry date of
contract
Not applicable,
rolling contracts.
The Group retains the right to terminate the contract
immediately
conditions.
On termination, the executive is entitled to accrued
annual and long service benefits. There are no other
termination payments.
certain
under
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.
BA Sergeant
The notice
period is three
months.
The notice period is three months. 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
conditions.
On termination, the executive is entitled to accrued
annual and long service benefits. There are no other
termination payments.
certain
under
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.
Use of remuneration consultants
During the year, the Nomination and Remuneration Committee employed the services of Godfrey Remuneration Group Pty
Limited (“GRG”) to provide updated advice in respect of the remuneration of the role of the Managing Director and CEO.
Under the terms of the engagement, GRG provided remuneration recommendations as defined in section 9B of the
Corporations Act 2001 and was paid $2,500 for these services.
GRG has confirmed all recommendations have been made free from undue influence by members of the Group’s KMP.
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 Board. The agreement for the provision of
remuneration consulting services was executed by the Chairman on behalf of the Board;
the report containing the remuneration recommendations was provided by GRG directly to the Chairman; and
GRG was not required to speak to management in relation to the engagement and did not 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 KMP.
22 EVENT Hospitality & Entertainment Limited – Annual Report 2017
Key management personnel
The KMP for the financial year are set out in the table below:
D I R E C T O R S ’ R E P O R T
Name
Position
Period of responsibility
Employing company
Non-executive directors
Alan Rydge
Chairman and non-executive director
1 July 2016 to 30 June 2017
Kenneth Chapman
Independent non-executive director
1 July 2016 to 30 June 2017
Peter Coates
Independent non-executive director
and lead independent director
1 July 2016 to 30 June 2017
Valerie Davies
Independent non-executive director
1 July 2016 to 30 June 2017
David Grant
Independent non-executive director
1 July 2016 to 30 June 2017
Patria Mann
Independent non-executive director
1 July 2016 to 30 June 2017
Richard Newton
Independent non-executive director
1 July 2016 to 30 June 2017
Executive director
David Seargeant
Managing Director and CEO
1 July 2016 to 30 June 2017
EVENT Hospitality &
Entertainment Limited
EVENT Hospitality &
Entertainment Limited
EVENT Hospitality &
Entertainment Limited
EVENT Hospitality &
Entertainment Limited
EVENT Hospitality &
Entertainment Limited
EVENT Hospitality &
Entertainment Limited
EVENT Hospitality &
Entertainment Limited
EVENT Hospitality &
Entertainment Limited
Other executive KMP
Norman Arundel (a) Managing Director Rydges Hotels
and Resorts
1 July 2016 to 29 August 2016
Rydges Hotels Limited
Gregory Dean
Director Finance & Accounting,
Company Secretary
1 July 2016 to 30 June 2017
Mathew Duff
Director Commercial
1 July 2016 to 30 June 2017
Hans Eberstaller
Managing Director of Commercial,
UK and Europe
1 July 2016 to 30 June 2017
EVENT Hospitality &
Entertainment Limited
EVENT Hospitality &
Entertainment Limited
The Greater Union
Organisation Pty
Limited
Jane Hastings (b)
Chief Operating Officer
29 August 2016 to 30 June 2017 EVENT Hospitality &
Entertainment Limited
Brett Sergeant (c)
Director of Hospitality
15 August 2016 to 30 June 2017 EVENT Hospitality &
Entertainment Limited
(a)
(b)
(c)
Norman Arundel ceased to be a KMP of the Group effective 29 August 2016.
Jane Hastings was appointed Managing Director and CEO effective 1 July 2017. Prior to this appointment, Ms Hastings held the position of Chief
Operating Officer from 29 August 2016.
Brett Sergeant commenced employment with the Group on 15 August 2016.
23 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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)
(b)
(c)
Amounts disclosed above for remuneration of directors and other executive KMP 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.
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.
DC Seargeant stepped down as Managing Director on 30 June 2017. The amount disclosed for Mr Seargeant’s STI bonus was paid during the year
ended 30 June 2017 based on achievement of personal goals and satisfaction of specified performance criteria for the 30 June 2016 year. A separate
amount of $1,010,000 based on achievement of personal goals and satisfaction of specified performance criteria for the year ended 30 June 2017 will
be paid in September 2017 (at the same time as STI payments for the year ended 30 June 2017 are made to other executive KMP). This represents
50% of the maximum possible award, and the remainder will be forfeited. Mr Seargeant’s share-based payment expense in relation to the Group’s
Executive Performance Rights Plan includes an accelerated charge of $1,911,486 on termination in relation to the 2015, 2016 and 2017 awards which,
in accordance with the Plan Rules, remain on-foot and will vest or lapse in accordance with the terms on which they were issued. This does not
necessarily reflect the value (if any) that Mr Seargeant will receive for these unvested performance rights, because this will depend on whether the
hurdles are achieved and, if they are, the share price at the date of vesting.
(d) NC Arundel ceased to be a key management person of the Group effective 29 August 2016. Amounts disclosed in the table above are in respect of the
period for which NC Arundel was a key management person.
JM Hastings commenced employment with the Group on 29 August 2016.
BA Sergeant commenced employment with the Group on 15 August 2016.
(e)
(f)
Analysis of STI bonuses included in remuneration
The bonus table below is calculated on the basis of including bonuses awarded during the year ended 30 June 2017. It only
includes remuneration relating to the portion of the relevant periods that each individual was a KMP. Details of the vesting
profile of the STI bonuses awarded as remuneration to the CEO and other executive KMP of the Group are shown below:
Included in remuneration (a)
$
Awarded in year
Not awarded in year (b)
1,970,000
100%
–
Managing Director and CEO
DC Seargeant (c)
Other executive KMP
NC Arundel
GC Dean
MR Duff
HR Eberstaller
JM Hastings (d)
BA Sergeant (e)
105,750
282,500
263,686
185,000
–
–
56.7%
–
6.7%
–
–
–
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 2016 year. No amounts vest in future years in respect of the STI bonus schemes for the
2016 year.
The amounts not awarded are due to the performance criteria not being met in relation to the assessment period.
The amount awarded to the Managing Director reflects the achievements discussed in the Review of Operations by Division 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.
JM Hastings commenced employment with the Group on 29 August 2016 and consequently was not eligible for an STI payment during the year ended
30 June 2017.
BA Sergeant commenced employment with the Group on 15 August 2016 and consequently was not eligible for an STI payment during the year ended
30 June 2017.
43.3%
100%
93.3%
100%
–
–
(a)
(b)
(c)
(d)
(e)
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 $20,240 (2016: $21,057). The Company holds shares in Carlton Investments Limited. Dividends received during the
year from Carlton Investments Limited totalled $780,420 (2016: $704,799).
AG Rydge paid rent, levies and other costs to Group entities during the year amounting to $98,527 (2016: $96,764). Rent is
charged to AG Rydge at market rates.
A controlled entity has entered into a lease agreement for a cinema complex in Townsville with an entity related to
KG Chapman. Rent paid under the lease is at market rates.
26 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
Other transactions with key management personnel and their related parties (continued)
Apart from the details disclosed in the Remuneration Report, no KMP 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, KMP 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.
Executive Performance Rights Plan current LTI plan
Analysis of LTI performance rights granted as remuneration
Details of the vesting profile of performance rights granted as remuneration to the CEO and other executive KMP are
shown below:
Managing Director and CEO
Number
Grant date
DC Seargeant
140,000
140,000
170,000
16 Feb 2017
18 Feb 2016
19 Feb 2015
Other executive KMP
NC Arundel (a)
13,650
19,548
18 Feb 2016
19 Feb 2015
GC Dean
MR Duff
HR Eberstaller
20,538
19,755
23,870
20,538
19,755
25,667
10,235
10,349
14,825
16 Feb 2017
18 Feb 2016
19 Feb 2015
16 Feb 2017
18 Feb 2016
19 Feb 2015
16 Feb 2017
18 Feb 2016
19 Feb 2015
JM Hastings
30,303
16 Feb 2017
BA Sergeant
17,508
16 Feb 2017
Vested during
the year
Forfeited
during the
year
Year in which
the grant
vests
Performance
right – EPS
$
Performance
right – TSR
$
Fair value
–
–
–
–
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30 Jun 2020
30 Jun 2019
30 Jun 2018
30 Jun 2019
30 Jun 2018
30 Jun 2020
30 Jun 2019
30 Jun 2018
30 Jun 2020
30 Jun 2019
30 Jun 2018
30 Jun 2020
30 Jun 2019
30 Jun 2018
11.09
14.01
10.74
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10.74
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14.01
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11.09
14.01
10.74
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10.74
30 Jun 2020
11.09
30 Jun 2020
11.09
3.92
11.40
8.40
11.40
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3.92
11.40
8.40
3.92
11.40
8.40
3.92
11.40
8.40
3.92
3.92
(a) NC Arundel ceased to be a KMP of the Group effective 29 August 2016. No performance rights were granted to Mr Arundel during the period
from 1 July 2016 to 29 August 2016.
27 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
Executive Performance Rights Plan current LTI plan (continued)
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 other
executive KMP is detailed below:
Managing Director and CEO
DC Seargeant
Other executive KMP
NC Arundel (b)
GC Dean
MR Duff
HR Eberstaller
JM Hastings
BA Sergeant
Granted during
the year (a)
$
Exercised during
the year
$
Performance
rights exercised
Number
Amount paid per
right exercised
$
1,050,700
2,913,050
205,000
–
154,138
154,138
76,810
227,420
131,398
–
303,469
326,588
245,989
–
–
–
21,356
22,983
17,311
–
–
–
–
–
–
–
–
–
(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.
(b) NC Arundel ceased to be a KMP of the Group effective 29 August 2016. No performance rights were granted to or exercised by Mr Arundel during the
period from 1 July 2016 to 29 August 2016.
No performance rights have been granted since the end of the year.
Performance rights holdings and transactions
The movement during the year in the number of performance rights in EVENT Hospitality & Entertainment Limited held by
the CEO and other executive KMP is detailed below:
Held at
the beginning of
the year
Granted
Exercised
Forfeited
Other (a)
Held at
the end of
the year
Managing Director and CEO
DC Seargeant
2017
2016
515,000
375,000
140,000
140,000
(205,000)
–
Other executive KMP
NC Arundel (a)
GC Dean
MR Duff
HR Eberstaller
JM Hastings
BA Sergeant
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
56,083
42,433
64,981
45,226
68,405
48,650
42,485
32,136
–
–
–
–
–
13,650
20,538
19,755
20,538
19,755
10,235
10,349
30,303
–
17,508
–
–
–
(21,356)
–
(22,983)
–
(17,311)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
450,000
515,000
(56,083)
–
–
–
–
–
–
–
–
–
–
–
–
56,083
64,163
64,981
65,960
68,405
35,409
42,485
30,303
–
17,508
–
(a)
NC Arundel ceased to be a KMP of the Group effective 29 August 2016. This movement represents the balance of performance rights held at that
date.
No performance rights have been granted since the end of the year. No performance rights are held by any related parties
of KMP.
28 EVENT Hospitality & Entertainment Limited – Annual Report 2017
D I R E C T O R S ’ R E P O R T
Executive Performance Share Plan previous LTI plan
Performance shares exercised during the year
Details of performance shares in the Company exercised during the year by the CEO and other executive KMP are
shown below:
Managing Director and CEO
DC Seargeant
Other executive KMP
NC Arundel (b)
GC Dean
MR Duff
HR Eberstaller
JM Hastings
BA Sergeant
Exercised during
the year (a)
$
Performance
shares exercised
Number
Amount paid per
performance share
$
–
–
–
585,434
135,151
–
–
–
–
–
38,617
8,915
–
–
–
–
–
Nil
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.
(b) NC Arundel ceased to be a KMP of the Group effective 29 August 2016. No performance shares were exercised by Mr Arundel during the period from
1 July 2016 to 29 August 2016.
Performance share holdings and transactions
The movement during the year in the number of performance shares in EVENT Hospitality & Entertainment Limited held by
the Managing Director and other executive KMP is detailed below:
Held at
the beginning
of the year
Managing Director and CEO
Granted
Exercised
Forfeited
Other (a)
Held at
the end of
the year
DC Seargeant
Other executive KMP
NC Arundel (a)
GC Dean
MR Duff
HR Eberstaller
JM Hastings
BA Sergeant
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
402,500
802,500
23,502
73,037
–
33,413
85,665
85,665
35,529
35,529
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(400,000)
–
(49,535)
–
(33,413)
(38,617)
–
(8,915)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
402,500
402,500
(23,502)
–
–
23,502
–
–
–
–
–
–
–
–
–
–
–
–
47,048
85,665
26,614
35,529
–
–
–
–
(a)
NC Arundel ceased to be a KMP of the Group effective 29 August 2016. This movement represents the balance of performance shares held at that
date.
No performance shares have been granted since the end of the year. There were no performance shares held by the related
parties of KMP.
29 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 EVENT Hospitality & Entertainment Limited held, directly,
indirectly or beneficially, by each KMP, 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)
Other KMP
NC Arundel (a)
GC Dean
MR Duff
HR Eberstaller
JM Hastings
BA Sergeant
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Held at
the beginning of
the year
Purchases
72,788,603
72,234,355
–
554,248
57,500
57,500
46,960
46,960
10,000
10,000
3,000
2,000
6,000
2,000
66,840
66,840
469,490
469,490
59,781
10,246
101,508
68,095
–
–
–
–
–
–
–
–
–
–
–
–
4,000
–
2,000
1,000
142
4,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Received on
release of
performance
shares or
rights
Sales
Other (a)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
205,000
400,000
–
(400,000)
–
49,535
21,356
33,413
61,600
–
26,226
–
–
–
–
–
–
–
–
–
(38,401)
–
(15,126)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(59,781)
–
–
–
–
–
–
–
–
–
–
–
Held at
the end of
the year
72,788,603
72,788,603
57,500
57,500
46,960
46,960
14,000
10,000
5,000
3,000
6,142
6,000
66,840
66,840
674,490
469,490
–
59,781
122,864
101,508
23,199
–
11,100
–
–
–
–
–
(a) NC Arundel ceased to be a key management person of the Group effective 29 August 2016. This movement represents the balance of shares held
at that date.
No shares were granted to KMP as compensation in the year ended 30 June 2017. Performance rights were granted to
certain KMP as disclosed on page 28.
End of Directors’ Report: Remuneration Report – Audited
30 EVENT Hospitality & Entertainment Limited – Annual Report 2017
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To: the directors of Event Hospitality & Entertainment Limited:
I declare that, to the best of my knowledge and belief, in relation to the audit of Event
Hospitality & Entertainment Limited for the financial year ended 30 June 2017 there have been:
(i)
(ii)
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
Anthony Travers
Partner
Sydney
24 August 2017
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.
31 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
Note
2017
$’000
2016
$’000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and other current assets
Total current assets
Non-current assets
Trade and other receivables
Other financial assets
Available-for-sale financial assets
Investments accounted for using the equity method
Property, plant and equipment
Investment properties
Goodwill and other intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Loans and borrowings
Current tax liabilities
Provisions
Deferred revenue
Other current liabilities
Total current liabilities
Non-current liabilities
Loans and borrowings
Deferred tax liabilities
Provisions
Deferred revenue
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained earnings
Total equity
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
92,318
55,051
20,409
10,458
178,236
1,519
1,396
19,928
10,942
1,237,708
68,250
108,899
6,333
3,115
145,040
38,855
32,731
8,730
225,356
1,123
1,396
20,067
11,969
1,042,683
68,500
106,595
7,871
4,207
1,458,090
1,264,411
1,636,326
1,489,767
106,895
325,441
790
20,613
88,235
3,841
545,815
2,360
12,192
14,340
8,720
2,610
40,222
586,037
100,607
2,025
20,198
19,961
88,575
3,808
235,174
202,610
15,558
13,470
6,453
3,758
241,849
477,023
1,050,289
1,012,744
219,126
54,933
776,230
219,126
46,321
747,297
1,050,289
1,012,744
The Statement of Financial Position is to be read in conjunction with the notes to the financial statements on pages 37 to 89.
32 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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 associates and 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
2.4
2017
$’000
2016
$’000
1,217,058
77,211
1,211,447
69,442
1,294,269
1,280,889
(308,536)
(256,145)
(244,231)
(118,698)
(84,591)
(80,291)
(37,338)
(9,802)
(284,532)
(251,405)
(256,764)
(103,963)
(82,916)
(73,944)
(34,866)
(8,946)
(1,139,632)
(1,097,336)
2,684
2,273
157,321
(46,502)
110,819
185,826
(55,578)
130,248
2017
Cents
2016
Cents
2.5
2.5
69.6
68.7
82.2
81.0
The Income Statement is to be read in conjunction with the notes to the financial statements on pages 37 to 89.
33 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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
Transfer from foreign currency translation reserve to the Income Statement on sale
of interest in Fiji Cinema Joint Venture
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
2017
$’000
2016
$’000
110,819
130,248
381
306
(97)
(20)
570
6,054
66
6,120
Total comprehensive income for the year
111,389
136,368
The Statement of Comprehensive Income is to be read in conjunction with the notes to the financial statements on
pages 37 to 89.
34 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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 7
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
Proceeds from disposal of interest in joint operation
Proceeds from disposal of other non-current assets
Payments for property, plant and equipment and redevelopment of properties
Payments for businesses acquired, including intangible assets
Purchase of management and leasehold rights, software and other intangible assets
Payment for additional interests in joint arrangements, net of cash acquired
(Decrease)/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 provided/(used) by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the year
Note
2017
$’000
2016
$’000
1,366,585
(1,162,968)
1,372,026
(1,148,113)
203,617
3,692
56,745
795
807
(9,793)
(67,182)
188,681
9,088
5
(258,956)
(31,249)
(1,405)
(472)
(282,989)
275,765
(150,127)
(81,886)
43,752
(50,556)
145,040
(2,166)
92,318
223,913
2,415
45,667
715
915
(8,902)
863
(53,116)
212,470
22,000
(173,841)
(26,549)
(6,429)
(6,813)
288
(191,344)
193,858
(113,698)
(91,519)
(11,359)
9,767
133,680
1,593
145,040
7.3
4.2
The Statement of Cash Flows is to be read in conjunction with the notes to the financial statements on pages 37 to 89.
36 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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
EVENT Hospitality & Entertainment Limited (“Company”) is a company domiciled in Australia. The consolidated financial
report of the Company as at and for the year ended 30 June 2017 comprises the Company and its subsidiaries (collectively
referred to as the “Group”) and the Group’s interest in associates, joint ventures and joint operations.
EVENT Hospitality & Entertainment 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 EVENT Hospitality & Entertainment Limited on
24 August 2017.
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 Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
and in accordance with the Instrument, 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).
37 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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
1.2 – BASIS OF PREPARATION (continued)
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).
1.3 – FOREIGN CURRENCY
Functional and presentation currency
All amounts are expressed in Australian dollars, which is the Group’s presentation currency. Items included in the financial
statements of each of the Group’s entities are measured using the currency of the primary economic environment in which
the entity operates (“functional currency”). The functional currency of the Company 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.
38 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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
1.4 – 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 2017, 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 9 Financial Instruments;
AASB 15 Revenue from Contracts with Customers; and
AASB 16 Leases.
The Group does not plan to adopt these standards early and the Group’s initial assessment of the likely extent of their impact
is set out below.
AASB 9 Financial Instruments
The adoption of this standard is not expected to have a material impact on the amounts recognised in the Group’s financial
statements. However, the new standard introduces expanded disclosure requirements and changes in presentation which
are expected to change the nature and extent of the Group’s disclosures regarding its financial instruments.
AASB 15 Revenue from Contracts with Customers
The Group is assessing the impact on its consolidated financial statements resulting from the application of the new
standard. A majority of the Group’s revenue is received in cash from customers for the provision of services and sale of
goods, and there is not expected to be any impact of the new standard on these cash transactions. There may be an impact
on the Group’s accounting policies in relation to its loyalty programs, certain long-term sponsorship agreements, and hotel
management agreements; however, it is not anticipated that the impact of any changes in these policies will be material to
the Group’s financial statements.
AASB 16 Leases
This standard will have a material impact on the Group’s accounting for operating leases. The Group has extensive operating
lease arrangements, details of which are disclosed in Notes 5.3 and 7.1 in accordance with AASB 117 Leases. The new
standard requires the recognition of a right-of-use (“ROU”) asset and lease liability for each operating lease, with certain
limited exceptions. Rental expense will no longer be recognised in respect of operating leases. Instead, the ROU asset will be
depreciated over the lease term, whilst interest expense will be incurred in respect of the lease liability. These changes will
have the effect of materially increasing the Group’s earnings before interest, tax, depreciation and amortisation, and
materially increasing the Group’s depreciation and interest expenditure, whilst also potentially having a material impact on
net profit after tax, which will vary from year to year, and has yet to be quantified by the Group.
AASB 16 allows entities to apply certain transitional provisions on initial adoption of the standard. The Group has yet to
determine whether any of these transitional provisions will be applied on initial adoption in the Group’s financial statements
for the year ending 30 June 2020.
Further information regarding the likely impact of this new standard will be disclosed in the financial report for the year
ending 30 June 2018.
39 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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; and
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.
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
Other revenue and income
Merchandise (including food and beverages) is recognised at the point of sale.
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 profit 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
Apartment sales
Finance revenue
Dividends
Sundry
Other income
Reversal of impairment charges booked in previous years
Insurance proceeds
Increase in fair value of investment properties
Profit on sale of the Group’s interest in the Fiji Cinema Joint Venture
Profit on sale of property, plant and equipment
40 EVENT Hospitality & Entertainment Limited – Annual Report 2017
2017
$’000
2016
$’000
849,453
367,605
1,217,058
850,284
361,163
1,211,447
26,470
20,594
15,130
807
795
961
64,757
–
8,720
–
3,729
5
12,454
1,294,269
24,182
21,074
–
915
715
411
47,297
1,712
155
580
–
19,698
22,145
1,280,889
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 7
2.2 – SEGMENT REPORTING
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
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 CEO 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 CEO 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 CEO 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 and Germany.
41 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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 7
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:
Profit on sale of apartments
Profit on sale of an interest in a cinema circuit in Fiji
Write-back of expired voucher stock
Net proceeds from insurance
Pre-opening expenses relating to the launch and opening of hotels
Managing Director retirement and transition costs
Impairments or disposal of land, buildings and plant and equipment
Profit on sale of Mosman cinema site
Reversal of impairment charges booked in previous years
2.4 – TAXATION
2017
$’000
2,105
3,729
5,184
5,457
(3,579)
(5,526)
(10,986)
–
–
(3,616)
2016
$’000
–
–
–
–
–
–
(13,415)
19,615
1,712
7,912
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. EVENT Hospitality & Entertainment 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 48. 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.
46 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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:
Income tax recognised in profit or loss
Current income tax
Current income tax expense
Income tax over 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 (credited)/charged directly in equity
Deferred income tax related to items (credited)/charged 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/(gain) on hedge of net investment in overseas subsidiaries
Relating to other equity balances
Adjustment to shared-based payments reserve
Income tax benefit reported in equity
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:
2017
$’000
2016
$’000
46,502
55,578
49,958
(1,908)
(1,548)
46,502
(4)
(42)
(373)
32
(387)
–
(387)
56,109
(190)
(341)
55,578
–
29
395
(879)
(455)
19
(436)
Accounting profit before income tax expense
157,321
185,826
Prima facie income tax expense calculated at the Group’s statutory income tax rate of
30% (2016: 30%) on accounting profit
47,196
55,748
Increase in income tax expense due to:
Impairment write-down of land and buildings
Non-deductible items and losses in non-resident controlled entities
Amortisation of management rights and other intangible assets
Depreciation and amortisation of buildings
Other
Decrease in income tax expense due to:
Tax losses from prior years now recognised or utilised
Share of incorporated joint venture net profit
Non-assessable profit on disposal of interest in the Fiji Cinema Joint Venture
Other
Income tax over provided in prior year
Unrecognised deferred tax assets
Revenue losses – foreign
47 EVENT Hospitality & Entertainment Limited – Annual Report 2017
1,057
1,757
936
404
542
4,696
523
969
212
1,778
3,482
(1,908)
46,502
2,027
2,027
1,199
2,628
1,324
400
815
6,366
4,102
846
–
1,398
6,346
(190)
55,578
2,277
2,277
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 7
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)
Included in the deferred tax assets not recognised is the gross value of tax revenue losses arising in Germany of $6,757,000
(2016: $7,591,000). The availability of these tax losses is subject to certain utilisation limits and ongoing availability tests
under German tax law. At 30 June 2017, there was no recognised deferred income tax liability (2016: $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 liabilities and assets
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 immediately deductible for tax but amortised for
accounting purposes
Accrued revenue
Prepayments
Interest and deferred financing costs
Share-based payments immediately 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
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
2017
$’000
2016
$’000
Income
Statement
2017
$’000
2016
$’000
3,049
681
(1)
(26)
(267)
(375)
(4)
(323)
(1,111)
(147)
(310)
(1,879)
(898)
543
(200)
(1,037)
–
479
(1,288)
2,072
211
(719)
(1,076)
240
–
(82)
1,373
(462)
(67)
(78)
(113)
(426)
64
497
(977)
382
1,637
(331)
–
–
(1,385)
116
462
(115)
29,888
8,801
4,461
49
4,342
262
79
563
321
1,518
557
50,841
27,163
8,120
4,503
75
4,606
653
96
886
1,432
1,631
871
50,036
(38,649)
12,192
(34,478)
15,558
6,296
10,105
8,527
4,864
2,024
4,440
9,207
9,037
4,664
987
34
34
17
3,472
5,398
2,744
1,501
44,982
496
2,184
7,578
2,952
770
42,349
(38,649)
6,333
(34,478)
7,871
Deferred tax benefit
(1,550)
(341)
48 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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.
2017
$’000
2016
$’000
Profit attributable to ordinary shareholders (basic and diluted)
110,819
130,248
Weighted average number of ordinary shares (basic)
Effect of performance shares and performance rights
Weighted average number of ordinary shares (diluted)
Number
Number
159,162,961
2,076,392
161,239,353
158,516,676
2,212,859
160,729,535
Further details in relation to the Executive Performance Rights Plan and Executive Performance Share Plan are provided in
Note 6.1.
49 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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
Non-current
Other receivables
Receivable from associates
Present value of loans provided under the Employee Share Plan
2017
$’000
26,581
(615)
25,966
29,085
55,051
1,476
43
–
1,519
2016
$’000
18,705
(743)
17,962
20,893
38,855
1,070
43
10
1,123
As at 30 June 2017, trade receivables with a value of $615,000 (2016: $743,000) were impaired and fully provided for.
The movement in the allowance is not considered material.
As at 30 June 2017, trade receivables for the Group that were past due but not impaired were $4,048,000
(2016: $3,837,000), of which $2,112,000 (2016: $1,986,000) 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 $29,085,000 (2016: $20,893,000) 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.
50 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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 profit. 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 Shorter of estimated useful life and term of lease;
freehold buildings
resort apartments and share of common property
40 – 80 years; and
40 – 80 years.
3 – 20 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 2017 is set out below.
51 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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 7
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 in most cases upon independent valuations from registered
qualified valuers or management value in use calculations. 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 2016 and June 2015.
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 5.25% to 14.00% and pre-tax discount rates utilised
ranged from 6.00% 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. However, overall 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
Independent valuation
– 2016
– 2015
Alternate use is highest and best use
Independent valuation
– 2015
Land and buildings not independently valued
Book value of land and buildings not independently valued
2017
$’000
2016
$’000
474,326
576,110
1,050,436
474,460
602,665
1,077,125
75,600
85,200
389,626
1,515,662
170,796
1,333,121
The book value of the above interests at 30 June 2017 was $1,044,822,000 (2016: $843,646,000). The written-down book
value of plant and equipment which is deemed integral to land and buildings, has been determined to total approximately
$139,857,000 as at 30 June 2017 (2016: $127,622,000).
The above valuations do not take into account the potential impact of capital gains tax.
53 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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
3.3 – PROPERTY, PLANT AND EQUIPMENT (continued)
Impairment considerations at 30 June 2017
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, a discount rate of pre-tax 9.23% (2016: 9.06% to 13.00%) per annum was used.
Cash flows were projected based on operating forecasts, with longer term cash flows, after the initial forecast periods,
extrapolated using an average expected growth rate of 1.5% (2016: 1.5%) per annum. As a result of these assessments,
impairment losses totalling $10,986,000 (2016: $13,415,000) 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. As a result of the review, there were no impairment charges booked in previous years, that
were required to be reversed in the year. The 2016 year included impairment reversals totalling $1,712,000 that 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 $1,405,000.
A 10% decrease in the forecast earnings would increase the impairment loss by $1,265,000.
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 (2016: $nil).
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
2017
$’000
257,622
13,750
271,372
2016
$’000
239,603
17,250
256,853
2017
$’000
2016
$’000
Capital expenditure commitments contracted but not provided for and payable
70,715
26,537
54 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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. Subsequent transfers from investment property to property, plant and equipment or
inventories occur when there is a change in use of the property, usually evidenced by commencement of redevelopment for
own use.
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. The significant unobservable inputs used by the valuer in determining the fair value of the investment
properties held by the Group at 30 June 2017 included capitalisation rates on reversionary rental yields in the range of
6.75% to 8.50% (2016: 6.875% to 8.500%).
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 year ended 30 June 2017, $4,494,000 (2016: $6,331,000) was recognised as rental income for investment
properties in the Income Statement, with $1,377,000 (2016: $1,353,000) incurred in respect of direct costs, including
$145,000 (2016: $156,000) 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 (decrement)/increment
Balance at the end of the year
55 EVENT Hospitality & Entertainment Limited – Annual Report 2017
2017
$’000
2016
$’000
68,250
68,500
68,500
–
–
(250)
68,250
71,050
20
(3,150)
580
68,500
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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
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.
56 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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
2017
Gross balance at the beginning of the year
Accumulated amortisation and impairment
losses at the beginning of the year
Net balance at the beginning of the year
Acquisitions and initial contributions
Transfers
Amortisation
Disposals
Net foreign currency differences on
translation of foreign operations
Net balance at the end of the year
2016
Gross balance at the beginning of the year
Accumulated amortisation and impairment
losses at the beginning of the year
Net balance at the beginning of the year
Acquisitions and initial contributions
Transfers
Amortisation
Disposals
Net foreign currency differences on
translation of foreign operations
Net balance at the end of the year
62,079
–
62,079
3,593
–
–
(2,164)
(36)
63,472
50,935
–
50,935
9,857
–
–
–
1,287
62,079
1,388
–
1,388
–
–
–
–
–
1,388
1,388
–
1,388
–
–
–
–
–
1,388
196
–
196
–
–
–
–
–
196
196
–
196
–
–
–
–
–
196
54,368
15,055
133,086
(17,067)
37,301
5,712
–
(3,684)
–
(9,424)
5,631
1,117
146
(2,114)
(43)
(26,491)
106,595
10,422
146
(5,798)
(2,207)
(54)
39,275
(169)
4,568
(259)
108,899
43,146
14,915
110,580
(12,950)
30,196
10,291
600
(4,027)
–
(8,075)
6,840
1,177
169
(2,709)
(12)
(21,025)
89,555
21,325
769
(6,736)
(12)
241
37,301
166
5,631
1,694
106,595
Impairment losses recognised
No impairment losses in relation to goodwill have been recognised in the year ended 30 June 2017 (2016: $nil).
Impairment tests for cash-generating units containing goodwill
The following units have carrying amounts of goodwill:
Entertainment – Australia
Entertainment – New Zealand
Entertainment – Germany
Hotels – New Zealand
Hotels – Australia
Multiple units without significant goodwill
2017
$’000
2016
$’000
33,260
9,605
3,817
10,200
3,593
2,997
63,472
33,260
11,778
3,836
10,211
–
2,994
62,079
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, have 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 2.5%, 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 7.86% to
12.0% (2016: 7.7% 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.
57 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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 payables 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
2017
$’000
2016
$’000
20,381
86,514
106,895
21,582
79,025
100,607
Accounting policy
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.
58 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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
3.7 – PROVISIONS (continued)
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.
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
Payments
Reversed
Notional interest
Net foreign currency differences on translation of foreign operations
Carrying amount at the end of the year
3.8 – OTHER LIABILITIES
2017
$’000
20,532
81
–
20,613
2,830
11,510
14,340
75
(20)
26
–
–
81
11,377
96
–
(50)
114
(27)
11,510
2016
$’000
19,886
75
–
19,961
2,093
11,377
13,470
218
(59)
59
(145)
2
75
8,718
2,490
(148)
(52)
210
159
11,377
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.
59 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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
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.
2017
Shares
2016
Shares
2017
$’000
2016
$’000
Share capital
Fully paid ordinary shares
159,488,932
158,732,489
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
158,732,489
756,443
159,488,932
158,106,883
625,606
158,732,489
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
159,369,264
27,548
92,120
159,488,932
158,584,722
34,647
113,120
158,732,489
1,070,991
160,559,923
1,827,434
160,559,923
Share buy-back
There is no current on-market buy-back.
Dividend Reinvestment Plan
The Dividend Reinvestment Plan was suspended in August 2010.
Treasury shares
Treasury shares consist of shares held in trust in relation to the Group’s Executive Performance Share Plan. As at 30 June 2017,
a total of 1,070,991 (2016: 1,827,434) 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
Other than the performance rights disclosed in Note 6.1, there were no share options on issue as at 30 June 2017 (2016: 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.
60 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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
Per share
Cents
Total
amount
$’000
Date of payment
Tax rate for
franking credit
Percentage
franked
Dividends on ordinary shares paid during the year were:
2017
Final 2016 dividend
Interim 2017 dividend
31
20
2016
Final 2015 dividend
Special dividend
Interim 2016 dividend
29
8
20
49,774
32,112
81,886
46,562
12,845
32,112
91,519
22 September 2016
16 March 2017
17 September 2015
17 September 2015
17 March 2016
Subsequent events
Since the end of the year, the directors declared the following dividends:
30%
30%
30%
30%
30%
100%
100%
100%
100%
100%
Final 2017 dividend
31
49,774
21 September 2017
30%
100%
The financial effect of the final dividend in respect of the year has not been brought to account in the financial statements for
the year ended 30 June 2017 and will be recognised in subsequent financial statements.
Franking credit balance
The amount of franking credits available for future reporting periods
2017
$’000
2016
$’000
140,314
138,821
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 $21,332,000
(2016: $21,332,000). 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.
61 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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 2016
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
Transfer to the Income Statement on sale of
interest in the Fiji Cinema Joint Venture
Currency translation adjustment on
controlled entities’ financial statements
Other adjustments
Available-for-
sale financial
assets
revaluation
$’000
Investment
property
revaluation
$’000
14,091
5,121
(97)
–
–
–
–
–
–
–
–
–
–
–
Hedging
$’000
Share-based
payments
$’000
Foreign
currency
translation
$’000
Total
$’000
10
–
(20)
–
–
–
–
21,779
5,320
46,321
–
–
7,873
–
–
169
–
–
–
306
381
–
(97)
(20)
7,873
306
381
169
At 30 June 2017
13,994
5,121
(10)
29,821
6,007
54,933
62 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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.
Loans and borrowings
Interest bearing and non-interest bearing loans and borrowings are recognised initially at fair value less attributable
transaction costs. Subsequent to initial recognition, loans and 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 loans and 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.
Bank debt – secured
At 30 June 2017, the Group’s secured bank debt facilities comprised the following:
$350,000,000 revolving multi-currency loan facility;
$30,000,000 credit support facility (for the issue of letters of credit and bank guarantees); and
$50,000 overdraft limit to support its transactional banking facilities.
The above facilities were to mature on 12 September 2017 and were supported by interlocking guarantees from most Group
entities and were 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 2017, the Group had
drawn $323,905,000 (2016: $198,364,000) under the debt facilities, of which $nil (2016: $nil) was subject to interest rate
swaps used for hedging, and had drawn $2,948,000 under the credit support facility (2016: $2,748,000).
Subsequent to 30 June 2017, the Group’s secured bank debt facilities were amended and restated on 15 August 2017 and
now comprise the following:
$525,000,000 revolving multi-currency loan facility; and
$15,000,000 credit support facility (for the issue of letters of credit and bank guarantees).
The above facilities mature on 15 August 2020 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 1.15% and 2.1% per annum.
Other facility – secured
Certain wholly owned German subsidiaries have arranged a secured five year guarantee facility of €17,000,000
(A$25,260,000) (for the issue of letters of credit and bank guarantees)
The facility is supported by interlocking guarantees from certain (non-Australian based) Group entities and are secured
against a specific property in Germany. Debt drawn under the facility bears interest at the relevant inter-bank benchmark
rate plus a margin of between 0.75% and 2.75% per annum. At 30 June 2017, the Group had drawn €15,052,000
(A$22,365,000) under the facility.
63 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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 (continued)
Loans and borrowings
Current
Interest bearing loans and borrowings
Bank loans – secured
Deferred financing costs
Non-interest bearing loans and borrowings
Loans from other companies – unsecured
Non-current
Interest bearing loans and borrowings
Bank loans – secured
Deferred financing costs
Non-interest bearing loans and borrowings
Loans from other companies – unsecured
4.5 – FINANCIAL RISK MANAGEMENT
2017
$’000
2016
$’000
323,905
(98)
323,807
1,634
325,441
–
–
–
2,360
2,360
776
–
776
1,249
2,025
200,640
(570)
200,070
2,540
202,610
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.
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.
64 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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)
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
2017
$’000
2016
$’000
19,928
20,067
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.
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 2017, 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.
65 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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)
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
2017
Non-derivative financial
liabilities
Secured loans
Unsecured non-interest bearing
loans from other companies
Trade payables
Other payables and accruals
Derivative financial liabilities
Forward exchange contracts
2016
Non-derivative financial
liabilities
Secured loans
Unsecured non-interest bearing
loans from other companies
Trade payables
Other payables and accruals
Derivative financial liabilities
Forward exchange contracts
323,905
(325,754)
(325,754)
3,994
20,381
86,514
(3,994)
(20,381)
(86,514)
(817)
(20,381)
(86,514)
14
434,808
(14)
(436,657)
(14)
(433,480)
(817)
(817)
(1,128)
(1,328)
(1,128)
(1,328)
96
96
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
201,416
(209,234)
(4,046)
(3,194)
(199,832)
(2,162)
3,789
21,582
79,025
(3,789)
(21,582)
(79,025)
(625)
(21,582)
(79,025)
(624)
(1,173)
(1,202)
(14)
305,798
14
(313,616)
14
(105,264)
(3,818)
(201,005)
(3,364)
(165)
(165)
For derivative financial assets and liabilities, maturities detailed in the table above approximate periods that cash flows and
the impact on profit or loss are expected to occur.
66 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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)
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 foreign currency
translation 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
2017
$’000
2016
$’000
83,506
(323,905)
(240,399)
138,913
(200,640)
(61,727)
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 2017
(2016: no interest rate hedges).
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 2017 (2016: 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”).
67 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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 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
842
108
(81,905)
(316)
(81,271)
–
–
2017
EUR
$’000
4,666
–
–
–
4,666
–
–
GBP
$’000
10
–
–
–
10
–
–
USD
$’000
1,270
–
–
–
1,270
NZD
$’000
399
225
(74,364)
(451)
(74,191)
2016
EUR
$’000
1,848
–
–
–
1,848
GBP
$’000
223
–
–
–
223
(14)
(14)
–
–
–
–
–
–
USD
$’000
1,701
–
–
–
1,701
14
14
Net exposure
(81,271)
4,666
10
1,256
(74,191)
1,848
223
1,715
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 2017 was $81,905,000
(2016: $74,364,000). A foreign exchange loss of $25,000 (2016: loss of $5,007,000) 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.
68 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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 combination in the year ended 30 June 2017
The Group acquired the following businesses during the year:
Downtown Cinemas
Effective 28 July 2016, Event Cinemas Limited, a wholly-owned subsidiary in New Zealand, acquired three cinemas in
Palmerston North, Paraparaumu and Havelock North, New Zealand. The consideration paid was $7,255,000 (NZ$7,650,000).
The Group recognised the fair value of the following identifiable assets and liabilities relating to this acquisition:
Plant and equipment
Inventories
Sub-total
Leasehold and management rights
Total net value of identifiable assets
Fair value at acquisition date
$’000
1,762
69
1,831
5,424
7,255
Leasehold and management rights
Leasehold and management rights were recognised as a result of the acquisition as follows:
Total cash consideration paid, net of cash acquired
Less: net value of other identifiable assets and liabilities
Leasehold and management rights
69 EVENT Hospitality & Entertainment Limited – Annual Report 2017
$’000
7,255
(1,831)
5,424
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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
5.1 – BUSINESS COMBINATIONS (continued)
Leasehold and management rights will be amortised over the remaining term of the lease. 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 $33,000 which have been expensed in the Income Statement
for the period.
The Income Statement includes revenue and net profit for the year ended 30 June 2017 of $6,734,000 and $625,000
respectively as a result of this acquisition.
Rydges Geelong
On 3 March 2017, the Group acquired a hotel property in Geelong in Victoria, Australia. The total consideration paid for the
acquisition was $23,994,000.
The Group recognised the fair value of the following identifiable assets and liabilities relating to the acquisition:
Fair value at acquisition date
$’000
Property, plant and equipment
Other assets and liabilities
Total net value of identifiable assets
Goodwill
Goodwill was recognised as a result of the acquisition as follows:
Total cash consideration paid, net of cash acquired
Less: net value of identifiable assets and liabilities
Goodwill
20,607
(206)
20,401
$’000
23,994
(20,401)
3,593
The goodwill is attributable mainly to the trading reputation and other intangible assets which are not separately identifiable.
Goodwill recognised is not expected to be deductible for income tax purposes.
The Group incurred direct costs relating to this acquisition of $1,159,702 which have been expensed in the Income Statement
for the year.
The Income Statement includes revenue and net loss for the year ended 30 June 2017 of $2,150,000 and $9,000 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 $7,597,000 and $1,465,000 respectively.
70 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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
5.1 – BUSINESS COMBINATIONS (continued)
Business combination in the year ended 30 June 2016
The Group acquired the following business during the prior year:
Museum Art Hotel, Wellington, New Zealand
On 3 August 2015, the Group acquired the Museum Art Hotel, Wellington, New Zealand. The total consideration paid for the
acquisition was $26,549,000 (NZ$28,846,000).
The Group recognised the fair value of the following identifiable assets and liabilities relating to the acquisition:
Fair value at acquisition date
$’000
Property, plant and equipment
Other assets and liabilities
Deferred tax liabilities
Total net value of identifiable assets
Goodwill
Goodwill was recognised as a result of the acquisition as follows:
Total cash consideration paid, net of cash acquired
Less: net value of identifiable assets and liabilities
Goodwill
20,755
318
(4,381)
16,692
$’000
26,549
(16,692)
9,857
The goodwill is attributable mainly to the trading reputation and other intangible assets which are not separately identifiable.
Goodwill recognised is not expected to be deductible for income tax purposes.
The Group incurred direct costs relating to this acquisition of $96,000 which have been expensed in the Income Statement
for the year.
The Income Statement includes revenue and net profit for the year ended 30 June 2016 of $13,568,000 and $3,187,000
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 $1,363,000 and
$276,000 respectively.
71 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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
5.2 – SUBSIDIARIES
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
Albury Hotel Property Unit Trust
Amalgamated Cinema Holdings Limited
Amalgamated Holdings Superannuation Fund Pty Limited
Ancona Investments Pty Limited
Atura Adelaide Airport Unit Trust
Atura Holdings 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 Cinema Entertainment Pty Limited
Event Cinemas (Australia) Pty Limited
Event Cinemas (Fiji) Limited
Event Cinemas Limited
Event Cinemas Nominees Limited
Event Cinemas (NZ) Limited
Event Cinemas Queen Street Nominees Limited
Event Hotels and Resorts Pty Limited
Event Hotels (NZ) Limited
EVT Administration 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
72 EVENT Hospitality & Entertainment Limited – Annual Report 2017
Ownership
interest
2017
%
2016
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
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
(c)
(c)
(a)(e)
(a)(e)
(a)(d)
(f)
(c)
(c)
(c)
(c)
(a)(c)
(a)(e)
(a)(e)
(a)(d)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
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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
5.2 – SUBSIDIARIES (continued)
Greater Union Filmpalast Dortmund GmbH & Co. KG
Greater Union Filmpalast GmbH
Greater Union Filmpalast in der Kulturbrauerei Berlin GmbH
Greater Union Filmpalast in Hamburg GmbH
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 40 GmbH
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
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
RH Hotels Pty Limited
73 EVENT Hospitality & Entertainment Limited – Annual Report 2017
Note
(a)(e)
(a)(e)
(a)(e)
(a)(e)
(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)(e)
(a)(c)
Ownership
interest
2017
%
2016
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
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 7
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)
RQ Motels Pty Limited
Rydges Bankstown Pty Limited
Rydges Cronulla Pty Limited
Rydges Gladstone Hotel Property Unit Trust
Rydges Hobart Hotel Property Unit Trust
Rydges Hobart Hotel Pty Limited
Rydges Hotels Limited
Rydges Hotels Property Unit Trust
Rydges HPT Pty Limited
Rydges Property Holdings Pty Limited
Rydges Rotorua Hotel Limited
Rydges Townsville Hotel Property Unit Trust
Sonata Hotels Pty Limited
Southport Cinemas 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
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
2017
%
2016
%
Note
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(a)(c)
(a)(e)
(a)(e)
(a)(e)
(a)(e)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(a)
(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, and was sold on 29 June 2017.
All companies, except those stated above, were incorporated in Australia. All trusts were established in Australia.
74 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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
2017
$’000
147
10,795
10,942
2016
$’000
150
11,819
11,969
75 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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 7
S E C T I O N 5 – G R O U P C O M P O S I T I O N
5.4 – ACQUISITION OF ADDITIONAL INTERESTS IN JOINT ARRANGEMENTS
Interest in Joint Arrangements in the year ended 30 June 2017
There were no acquisitions of interests in Joint Arrangements in the current year.
Interest in Joint Arrangements in the year ended 30 June 2016
The Group acquired the following interest in Joint Arrangements during the prior year:
Castle Hill cinema complex
Effective 29 September 2015, The Greater Union Organisation Pty Limited, a wholly owned subsidiary, acquired an
additional 17% interest in the Castle Hill Multiplex Cinema Joint Venture, taking the ownership interest in this leasehold
site to 50%. The consideration paid was $5,971,000.
The Group recognised the fair value of the following identifiable assets and liabilities relating to this acquisition:
Plant and equipment
Cash and cash equivalents
Other assets
Trade and other payables
Employee benefits
Deferred revenue
Sub-total
Leasehold and management rights
Total net value of identifiable assets
Fair value at acquisition date
$’000
742
113
204
(85)
(15)
(27)
932
5,039
5,971
Leasehold and management rights
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
Leasehold and management rights
$’000
5,971
(932)
5,039
Leasehold and management rights will be amortised over the remaining term of the respective leases for each 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 $311,000 which were expensed in the Income Statement for
the prior year.
Browns Plains cinema complex
Birch, Carroll & Coyle Limited, a wholly owned subsidiary, acquired a 50% interest in Browns Plains Cinemas Pty Limited on
29 September 2015 for total consideration of $955,000. As disclosed in Note 5.3, the investment in Browns Plains Cinemas
Pty Limited has been classified as a joint venture and equity accounted.
Browns Plains Cinemas Pty Limited owns 33% of the Browns Plains Multiplex Joint Venture. The Group also has a direct
33% share in the Browns Plains Multiplex Joint Venture which is accounted for as a joint operation (see page 77). The Group’s
total effective interest in the Browns Plains Multiplex Joint Venture is 50%.
78 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 7
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, February 2015, February 2016 and February 2017.
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 shares in the Company. 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 in the Company 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 instruments 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 CEO).
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.
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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)
Set out below are summaries of performance rights awarded under the plan:
Type of right
Grant date
2017
Balance at
the start of
the year
Granted
Exercised
Forfeited
Performance rights
20 February 2014
611,269
Performance rights
19 February 2015
663,443
Performance rights
18 February 2016
550,958
Performance rights
16 February 2017
581,616
(611,269)
(30,883)
(35,275)
(3,376)
Balance at
the end of
the year
–
632,560
515,683
578,240
1,825,670
581,616
(611,269)
(69,534)
1,726,483
Balance at
the start of
the year
Granted
Exercised
Forfeited
Balance at
the end of
the year
Type of right
Grant date
2016
Performance rights
20 February 2014
632,834
Performance rights
19 February 2015
707,404
–
–
Performance rights
18 February 2016
–
563,893
1,340,238
563,893
–
–
–
–
(21,565)
(43,961)
(12,935)
611,269
663,443
550,958
(78,461)
1,825,670
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 2017 was $11.09 (2016: $14.01) for those rights that have EPS hurdles and $3.92 (2016: $11.40) 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
16 February 2017
Granted
18 February 2016
Granted
19 February 2015
4.2%
19%
1.92%
$12.38
3 years
3.4%
19%
1.85%
$15.31
3 years
4%
17%
1.83%
$11.93
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.
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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)
Executive Performance Share Plan
Employees who received awards under the Executive Performance Share Plan were those of a senior level and above
(including the CEO). 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 seventh 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 the 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:
Year
Type of right
Balance at
the start of
the year
Granted
Exercised
Forfeited
shares
reallocated
Balance at
the end of
the year (a)
2017
2016
Performance shares
1,827,434
Performance shares
2,453,040
–
–
(145,174)
(611,269)
1,070,991
(625,606)
–
1,827,434
(a) The balance at the end of the year includes a total of 183,261 shares (2016: 794,530 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 2017 (2016: nil).
Share-based payment expense
Total share-based payment expense included within employee expenses for the year ended 30 June 2017 was $8,042,000
(2016: $4,991,000).
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 2017 and consequently no shares were purchased during the year by employees under this plan (2016: nil).
Employee Share Plan
The Group has in prior years issued shares to certain employees under the 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 plan does not result in any expense to the Group.
At 30 June 2017, the total shares issued under the plan were 92,120 (2016: 113,120). 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 2017 was $13.37 (2016: $14.53). Note 4.1 provides details of the movement
in the ordinary share capital during the year.
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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)
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:
2017
$’000
2016
$’000
Superannuation contributions recognised as an employee expense
15,917
14,678
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
CEO and other 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
Directors’ Report page reference
17
18
18
18
19
21
23
24
28
29
30
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6.2 – DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
Key management personnel remuneration
The key management personnel remuneration included in employee expenses is as follows:
Employee benefits
Short term
Post-employment
Termination payments
Equity compensation
Other long term
2017
$
2016
$
9,842,862
54,645
1,959,618
4,111,152
208,077
16,176,354
7,782,816
187,510
2,059,611
131,347
10,161,284
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 $20,240 (2016: $21,057). The Company holds shares in Carlton Investments Limited. Dividends received during the
year from Carlton Investments Limited totalled $780,420 (2016: $704,799).
AG Rydge paid rent, levies and other costs to Group entities during the year amounting to $98,527 (2016: $96,764). Rent is
charged to AG Rydge at market rates.
A controlled entity has entered into a lease agreement for a cinema complex in Townsville with an entity related to
KG Chapman. Rent paid under the lease is at market rates.
Apart from the details disclosed in the Remuneration Report, no KMP 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, KMP 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.
6.3 – RELATED PARTIES
Relationships with associates
Transactions with associates were receipt of property rentals from associates of $57,000 (2016: $55,000) and costs of
$104,000 (2016: $102,000) paid on behalf of an associate, $nil (2016: $nil) 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 Note 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.
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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 $6,907,000 (2016: $7,924,000).
Payments made under operating leases are charged to profit or loss 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. Operating lease rental expense (including contingent rent) for the year ended
30 June 2017 was $136,516,000 (2016: $137,395,000).
The Group does not have finance lease or hire purchase arrangements either as a lessor or a lessee.
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
2017
$’000
2016
$’000
96,737
279,791
214,146
590,674
97,474
284,673
245,449
627,596
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
84 EVENT Hospitality & Entertainment Limited – Annual Report 2017
2017
$’000
2016
$’000
10,654
32,872
238,959
282,485
14,334
49,474
21,689
85,497
10,755
35,740
246,251
292,746
12,358
46,657
33,036
92,051
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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
7.2 – CONTINGENT LIABILITIES
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
110,819
130,248
2017
$’000
2016
$’000
Adjustments for:
Depreciation and amortisation
Profit on sale of non-current assets
Net impairment adjustment
Fair value decrement/(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 losses/(gains)
(Decrease)/increase in income taxes payable
Net cash provided by operating activities before change in assets and
liabilities
Change in assets and liabilities adjusted for effects of consolidation of controlled
entities acquired/disposed during the year:
(Increase)/decrease in trade and other receivables
Decrease/(increase) in inventories
(Increase)/decrease in prepayments and other current assets
Increase in deferred tax items
Increase in trade and other payables
Increase in provisions
Decrease in other liabilities
Increase in deferred revenue
Increase in financing costs payable
Net cash provided by operating activities
73,605
(5)
10,986
250
3,692
(2,684)
8,042
(128)
369
(19,009)
69,501
(18,860)
11,703
(580)
2,415
(2,273)
4,991
387
(123)
3,988
185,937
201,397
(16,445)
12,307
(1,178)
(1,853)
7,477
1,573
(1,303)
2,156
10
188,681
8,538
(12,335)
7,659
(1,303)
3,892
3,669
(963)
1,872
44
212,470
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.
85 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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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
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 auditors
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
Other auditors
Tax compliance and advice
Other services
7.5 – PARENT ENTITY DISCLOSURES
2017
$
2016
$
1,187,000
146,756
438,000
86,192
1,857,948
57,618
57,618
1,157,000
110,368
404,000
20,083
1,691,451
68,798
68,326
137,124
1,915,566
1,828,575
263,949
172,016
435,965
207,815
139,276
347,091
362,039
251,800
3,663
75,029
78,692
876,696
2,154
16,890
19,044
617,935
As at, and throughout the financial year ended, 30 June 2017, the parent entity of the Group was EVENT Hospitality &
Entertainment Limited.
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
86 EVENT Hospitality & Entertainment Limited – Annual Report 2017
2017
$’000
68,598
4,895
73,493
646
402,095
9,175
14,239
387,856
2016
$’000
62,719
2,640
65,359
1,087
420,760
21,374
27,562
393,198
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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)
Total equity of parent entity comprises:
Share capital
Available-for-sale financial assets revaluation reserve
Share-based payments reserve
Retained earnings
Total equity
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
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
2017
$’000
2016
$’000
219,126
13,994
29,820
124,916
387,856
219,126
14,091
21,778
138,203
393,198
50,938
74,582
43,735
169,255
49,347
87,904
60,286
197,537
34,368
92,259
117,433
244,060
413,315
33,875
101,026
111,764
246,665
444,202
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
Dividends
For final dividends declared after 30 June 2017, refer to Note 4.2.
Secured bank debt facilities
The Group’s secured bank debt facilities were amended and restated on 15 August 2017. Details of the new facilities are set
out in Note 4.4.
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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 Corporations (Wholly-owned Companies) Instrument 2016/785, 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 Instrument 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 Cinema Entertainment Pty Limited
Event Cinemas (Australia) Pty Limited
Event Hotels and Resorts 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 2017 respectively is set out on the following page:
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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 (continued)
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
Receivables
Loans to controlled entities
Other financial assets
Available-for-sale financial assets
Investments in controlled entities
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
Other loans and borrowings
Current tax liabilities
Provisions
Deferred revenue
Other current liabilities
Total current liabilities
Non-current liabilities
Loans from controlled entities
Other loans and borrowings
Provisions
Deferred revenue
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained earnings
Total equity
89 EVENT Hospitality & Entertainment Limited – Annual Report 2017
2017
$’000
110,283
(35,315)
74,968
596,777
(81,886)
589,859
29,541
29,943
15,627
7,579
82,690
1,519
188,506
1,392
19,928
71,227
8,400
926,004
68,250
74,034
2,979
2,158
1,364,397
1,447,087
68,715
324,059
2,352
17,193
56,358
2,216
470,893
103,053
859
7,339
5,936
117,187
588,080
859,007
219,126
50,022
589,859
859,007
2016
$’000
144,386
(42,135)
102,251
586,045
(91,519)
596,777
27,412
18,921
28,917
5,905
81,155
1,052
176,079
1,392
20,067
71,227
9,236
747,219
68,500
73,329
1,341
2,496
1,171,938
1,253,093
67,022
–
18,153
16,636
54,948
2,643
159,402
25,982
198,652
6,349
4,332
235,315
394,717
858,376
219,126
42,473
596,777
858,376
1.
In the opinion of the directors of EVENT Hospitality & Entertainment Limited:
D I R E C T O R S ’ D E C L A R A T I O N
(a)
the consolidated financial statements and notes that are set out on pages 33 to 89 and the Remuneration Report
in the Directors’ Report set out on pages 17 to 30, 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 2017 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.
There are reasonable grounds to believe that the Company and the Group entities identified in Note 7.7 to the financial
statements 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 Corporations (Wholly-owned
Companies) Instrument 2016/785.
3.
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 2017.
4.
The directors draw attention to Note 1.2 to the financial statements, which includes a statement of compliance with
International Financial Reporting Standards.
Signed in accordance with a resolution of the directors:
AG Rydge
Director
JM Hastings
Director
Dated at Sydney this 24th day of August 2017.
90 EVENT Hospitality & Entertainment Limited – Annual Report 2017
Independent Auditor’s Report
To the shareholders of Event Hospitality & Entertainment Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Event Hospitality & Entertainment Limited
(the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
(cid:120) giving a true and fair view of the
Group’s financial position as at 30 June
2017 and of its financial performance for
the year ended on that date; and
(cid:120)
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises:
(cid:120) Consolidated statement of financial position as at 30
June 2017
(cid:120) Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of cash
flows for the year then ended
(cid:120) Notes including a summary of significant accounting
policies
(cid:120) Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements
of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our
other ethical responsibilities in accordance with the Code.
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.
91 EVENT Hospitality & Entertainment Limited – Annual Report 2017
Key Audit Matters
The Key Audit Matters we identified are:
(cid:120) Asset valuation – Hotel and Cinema
Property, Plant and Equipment
Assets
Key Audit Matters are those matters that, in our
professional judgment, were of most significance in our audit
of the Financial Report of the current period.
These matters were addressed in the context of our audit of
the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Asset valuation – Hotel and Cinema Property, Plant and Equipment Assets
Refer to Note 3.3 to the Financial Report
The key audit matter
How the matter was addressed in our audit
This is a key audit matter due to:
Our procedures included:
(cid:120)
(cid:120)
the significant value of property, plant and
equipment (being 76% of total assets); and
the high level of judgement required by us in
assessing the significant judgements used by
the Group to determine the carrying value of
property, plant and equipment.
The Group use a combination of external
independent valuation experts and internal
analysis to determine asset valuations. Internal
analysis is the preparation of value in use models
on an individual hotel, cinema site or collections
thereof into a cash generating unit (‘CGU’).
There are a number of judgements, made by the
Group and their external independent valuation
experts when estimating the recoverable value of
these assets, some more complex as they are
dependent on assumptions about the future, such
as revenue and cost growth rates and discount
rates. Examples of specific judgments made in
relation to hotel asset valuation include forecasted
occupancy and room rates. Examples of specific
judgements made in relation to cinema valuation
include forecasted ticket and merchandising
revenue. For each asset valuation, the geographic
location and local economic conditions, such as
the decline in mining activity in central
Queensland, are also taken into consideration
when assessing the carrying value.
These forward-looking estimations and the current
market conditions increase the range of possible
outcomes and the complexity for the audit.
(cid:120) Evaluating the Group’s asset valuation assessment
process and tested controls such as the review
and approval of forecasts;
(cid:120) Assessing management’s determination of the
Group’s CGUs based on our understanding of the
Group’s business. We also analysed the internal
reporting of the Group to assess how result
streams are monitored and reported, and the
implications to CGU identification in accordance
with the accounting standards;
(cid:120) Evaluating all external independent valuations
obtained by the Group regarding the carrying value
of hotel and cinema assets at reporting date by
assessing the valuation methodology adopted, the
data used by the valuers and competence of
valuers. We evaluated the appropriateness of the
valuation approach adopted considering revaluation
requirements of the accounting standard and
industry practice. We compared key amounts in
the independent expert’s valuation to a
combination of board approved budgets and
business forecast plans. To assess competency of
the valuer we consider evidence of capability and
objectivity along with the nature and scope of work
that the valuer was engaged by the Group to
complete.
(cid:120) Assessing the accuracy of previous forecasting to
inform our evaluation of forecasts included in the
value in use models. We applied increased
scepticism to current period forecasts in areas
where previous forecasts were not achieved
and/or where future uncertainty is greater, volatility
is expected, or specific local conditions are
92 EVENT Hospitality & Entertainment Limited – Annual Report 2017
present;
(cid:120) Assessing the accuracy of previous occupancy,
room rates, ticketing and merchandise revenue,
cost and capital expenditure forecasts to inform
our evaluation of the Group’s ability to forecast
accurately. We corroborated forecasts with
external data, such as forecast tourism visitation
and box office scheduling;
(cid:120) Performing sensitivity analysis on those CGU’s
with a higher risk of impairment in two main areas
being the discount rate and terminal growth
assumptions; and
(cid:120) Comparing carrying values with recent market
transactions to further challenge assumptions
within management’s internal valuations.
Other Information
Other Information is financial and non-financial information in Event Hospitality & Entertainment Limited’s
annual reporting which is provided in addition to the Financial Report and the Auditor's Report. The Directors
are responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and
based on the work we have performed on the Other Information that we obtained prior to the date of this
Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
(cid:120) preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
(cid:120)
implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error
(cid:120) assessing the Group’s ability to continue as a going concern. This includes disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless they either
intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
93 EVENT Hospitality & Entertainment Limited – Annual Report 2017
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
(cid:120)
(cid:120)
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar2.pdf. This description
forms part of our Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Event Hospitality & Entertainment Limited
for the year ended 30 June 2017, complies
with Section 300A of the Corporations Act
2001.
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 responsibilities
We have audited the Remuneration Report included in pages
16 to 30 of the Directors’ report for the year ended 30 June
2017.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
KPMG
Anthony Travers
Partner
Sydney
24 August 2017
Tracey Driver
Partner
Sydney
24 August 2017
94 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 25 AUGUST 2017)
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
* Includes Carlton Investments Limited holding.
Number of ordinary shares held
56,598,377*--
56,588,377
21,113,669
VOTING RIGHTS
Ordinary shares
There were 7,075 holders of ordinary shares of the Company. The voting rights attaching to the ordinary shares, set out in
clause 7.8(a) of the Company’s Constitution, are:
“Subject to this constitution and to any rights or restrictions attached to any shares or class of shares, at a general
meeting:
(1)
on a show of hands, every member present has one vote; and
(2)
on a poll, every member present has one vote for each share held as at the Record Time by the member entitling
the member to vote, except for partly paid shares, each of which confers on a poll only the fraction of one vote
which the amount paid (not credited) on the shares bears to the total amounts paid and payable
(excluding amounts credited) on the share. An amount paid in advance of a call is disregarded for this purpose.”
Options
There were no outstanding options of the Company as at 25 August 2017.
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
3,673
2,340
512
506
44
Number of
shares held
1,592,264
5,672,490
3,671,543
12,888,957
136,734,669
7,075
160,559,923
The number of shareholders holding less than a marketable parcel is 302.
UNQUOTED ORDINARY SHARES
There were 1,163,111 unquoted ordinary shares issued pursuant to the employee share plans. The shares were held by
142 holders. The unquoted ordinary shares have been included within the distribution of shareholders table above.
95 EVENT Hospitality & Entertainment Limited – Annual Report 2017
S H A R E H O L D E R I N F O R M A T I O N
TWENTY LARGEST SHAREHOLDERS
The names of the 20 largest shareholders of the quoted shares are:
Enbeear Pty Limited
HSBC Custody Nominees (Australia) Limited
Eneber Investment Company Limited
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Alphoeb Pty Limited
The Manly Hotels Pty Limited
Carlton Hotel Limited
National Nominees Limited
Mr Alan Graham Rydge
BNP Paribas Noms Pty Limited (DRP)
Argo Investments Limited
Citicorp Nominees Pty Limited (Colonial First State Investment Account)
BNP Paribas Nominees Pty Limited (Agency Lending DRP Account)
Australian United Investment Company Limited
TN Phillips Investments Pty Limited
Australian Foundation Investment Company Limited
Milton Corporation Limited
Netwealth Investments Limited (Wrap Services Account)
RBC Investor Services Australia Nominees Pty Limited (VFA Account)
Number of
shares held
Percentage of
capital held
32,134,031
20,925,269
19,777,772
11,364,094
7,373,349
6,027,315
5,732,812
5,276,103
4,034,280
3,824,163
2,594,408
2,272,387
2,020,802
1,839,711
1,500,000
1,346,000
1,030,258
1,010,921
771,234
649,591
20.01%
13.03%
12.32%
7.08%
4.59%
3.75%
3.57%
3.29%
2.51%
2.38%
1.62%
1.42%
1.26%
1.15%
0.93%
0.84%
0.64%
0.63%
0.48%
0.40%
131,504,500
81.90%
ON-MARKET BUY-BACK
There is no current on-market buy-back.
SECURITIES EXCHANGE
EVENT Hospitality & Entertainment Limited, incorporated and domiciled in Australia, is a publicly listed company limited by
shares. Shares are listed on the ASX under the code EVT.
96 EVENT Hospitality & Entertainment Limited – Annual Report 2017
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 20 October 2017 at:
Event Cinemas
505 – 525 George Street
Sydney NSW 2000
REGISTERED OFFICE
478 George Street
Sydney NSW 2000
Telephone
Facsimile
+61 2 9373 6600
+61 2 9373 6534
www.evt.com
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 EVENT Hospitality & Entertainment Limited, please refer to our website at www.evt.com.
97 EVENT Hospitality & Entertainment Limited – Annual Report 2017