St George Masonic Club Limited ACN

Transcription

1 St George Masonic Club Limited ACN Annual Financial Report 31 March 2014

2 Directors Report Your directors present their report together with the financial report of St George Masonic Club Limited (the company) for the year ended 31 March 2014 and the auditor s report thereon. Directors The directors of the company in office at any time during or since the end of the financial year are: Ronald M Haira Resigned as President on 26 February 2014 Gregory F Kerr Ian Manley Appointed President 26 February 2014 Brian G Griggs Geoffrey C Sim Resigned 21 July 2013 John Brooks Reynir Potter Paul Dawkins Kenneth R Tildsley Norma Alexander Appointed 21 July 2013 Information on directors Ian Manley Ronald M Haira Gregory F Kerr Brian G Griggs John Brooks Reynir Potter Paul Dawkins Kenneth R Tildsley Norma Alexander Geoffry C Sim Retired Businessman Appointed to Board 24 July 2011 Junior Vice President to 26 February 2014 Appointed President on 26 February 2014 Retired Businessman Appointed to Board 2005 Resigned as President on 26 February 2014 Retired Building Trade Appointed to Board 2002 Senior Vice President Retired Business Contractor Appointed to Board 1992 Past President Self employed Carpet Layer Appointed to Board 2006 Fire-fighter/Paramedic Appointed to Board 2010 Accountant Appointed to Board 18 April 2012 Treasurer Retired Public Servant Appointed to Board 22 July 2012 Semi Retired Administrator Appointed to Board 21 July 2013 Retired Businessman Appointed to Board 1992 Resigned as Director on 21 July

3 Directors Report (continued) Directors meetings The number of meetings of the company s Board of Directors (the Board) and of each Board committee held during the year ended 31 March 2014, and the number of meetings attended by each director were: Director Meetings Attended BOARD MEETINGS Meetings * Held Meetings Attended SPECIAL MEETINGS Meetings * Held Haira R M Kerr G F Manley I R Griggs B G Sim G C Brooks J Potter R Dawkins P Tildsley K R Alexander N * Number of meetings held during the time the director held office during the year. Membership The company is a company limited by guarantee and is without share capital. The number of members as at 31 March 2014 and the comparison with last year is as follows: Full (Ordinary Members) Associates (Widows and Wives) Social 5,761 5,441 5,977 5,651 Members' limited liability In accordance with the Constitution of the company, every member of the company undertakes to contribute an amount limited to $2 per member in the event of the winding up of the company during the time that he or she is a member or within one year thereafter. The total liability in the event of winding up is $11,954 (2013: $11,302). 2

4 Directors Report (continued) Operating result The table below shows a reconciliation of earnings before interest, income tax, depreciation, amortisation and impairment losses. This is referred to as EBITDA. Net profit after income tax expense attributable to members Add back: 117, ,777 Depreciation and amortisation expense 685, ,609 Finance cost 113, ,347 Impairment losses - - Income tax (benefit)/expense (25,537) 4,885 EBITDA 890,718 1,046,618 Objectives Short term The Club s main short term objective is to provide a Licensed Social Club that is a family friendly destination that continues to support Local Sporting Clubs and the Local Community while in the short term always being mindful to strive for financial sustainability. Long term To strengthen the Club s financial position by retiring debt whilst always striving to improve our Club s services, facilities and amenities for all to enjoy. Strategy for achieving the objective The Club conducts a Strategic Review of its operation annually and undertakes a number of strategic pillars to achieve these objectives such as providing: Detailed budgets, cash flows and other forecasts are prepared and used as a mainstream managements and Board tool. Strong Customer Focused by the development of our team. To constantly review our business operations to ensure efficiencies. Growing our Business. Being a good corporate citizen and by supporting the Local Sporting Clubs and Local Community. Providing great facilities that are constantly improving to meet and exceed our members expectations in alignment with sound business plans, ensuring it suits the ever changing market. Principal activities The principal activity of the company during the year has continued to be that of a licensed social club. There have been no significant changes in the nature of these activities during the year. 3

5 Directors Report (continued) How these activities assist in achieving the objectives The principal activities of the Club outlined above are consistent with the Club achieving the objectives with each stated strategy designed to enhance and improve the Club s facility and ensure delivery of quality facilities of a Licensed Social Club. Performance measurement and key performance indicators The Club has detailed budgets and cash flows developed for the ensuing year. The performance for the year is scrutinized on an ongoing, monthly basis, using the budget to industry benchmarks from the Club industry. Some of the criteria are as follows: Gross profit margins Detailed wages to sales analysis Detailed profit and loss accounts Balance sheet analysis Earnings before interest, tax, depreciation and amortisation (EBITDA) Cash flow Non Financial Performance is assessed by a variety of measures including: Membership numbers Patron feedback Staff involvement and feedback Comparison to industry trends and initiatives Key Performance Indicators Bar Gross profit 610, ,129 Gross profit percentage 57.1% 60.0% Wages to sales percentage 32.7% 28.7% Wages and salaries (including on-costs) percentage of total revenue 25.9% 24.6% EBITDA percentage (excludes impairment) 17.0% 19.3% Auditor s independence declaration A copy of the auditor's independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 5. Signed in accordance with a resolution of the directors. Dated at Mortdale this 22 day of May Ian Manley President 4

6 Tel: Fax: Level 11, 1 Margaret St Sydney NSW 2000 Australia DECLARATION OF INDEPENDENCE BY PAUL CHEESEMAN TO THE DIRECTORS OF ST GEORGE MASONIC CLUB LIMITED As lead auditor of St George Masonic Club Limited for the year ended 31 March 2014, I declare that, to the best of my knowledge and belief, there have been no contraventions of: The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and Any applicable code of professional conduct in relation to the audit. Paul Cheeseman Partner BDO East Coast Partnership Sydney, 22 May 2014 BDO East Coast Partnership ABN is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN , an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania. 5

7 Tel: Fax: Level 11, 1 Margaret St Sydney NSW 2000 Australia INDEPENDENT AUDITOR S REPORT To the members of St George Masonic Club Limited Report on the Financial Report We have audited the accompanying financial report of St George Masonic Club Limited, which comprises the statement of financial position as at 31 March 2014, the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors declaration. Directors Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards Reduced Disclosure Requirements and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. BDO East Coast Partnership ABN is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN , an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania. 6

8 INDEPENDENT AUDITOR S REPORT (continued) Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of St George Masonic Club Limited, would be in the same terms if given to the directors as at the time of this auditor s report. Opinion In our opinion the financial report of St George Masonic Club Limited is in accordance with the Corporations Act 2001, including: (a) Giving a true and fair view of the company s financial position as at 31 March 2014 and of its performance for the year ended on that date; and (b) Complying with Australian Accounting Standards Reduced Disclosure Requirements and the Corporations Regulations BDO East Coast Partnership Paul Cheeseman Partner Sydney, 22 May

9 Directors Declaration The directors of St George Masonic Club Limited declare that: (a) In the Directors opinion the financial statements and notes set out on pages 9 to 34, are in accordance with the Corporations Act 2001, including: (i) (ii) Giving a true and fair view of the company s financial position as at 31 March 2014 and of its performance, for the financial year ended on that date; and Complying with Australian Accounting Standards Reduced Disclosure Requirements and Corporations Regulations (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. Signed in accordance with a resolution of the directors. Dated at Mortdale this 22 day of May 2014 Ian Manley President 8

10 Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 31 March 2014 Revenue Note Sale of goods 1,070,091 1,118,316 Rendering of services 4,054,491 4,215,067 Other revenue 92,163 92,484 Total revenue 2 5,216,745 5,425,867 Other Income 2 23,717 - Expenses Raw Materials used (459,410) (447,187) Depreciation and amortisation expenses 3 (685,313) (725,609) Employee benefits expense (1,356,172) (1,333,766) Entertainment, marketing and promotional costs (640,682) (633,883) Finance costs 3 (113,031) (142,347) Occupancy expenses (801,248) (803,659) Poker machine licences and taxes (705,852) (757,319) Rental expenses (11,989) (9,392) Other expenses from ordinary activities (374,391) (394,043) (5,148,088) (5,247,205) Profit before income tax 92, ,662 Income tax benefit/(expense) 4(a) 25,537 (4,885) Net profit after income tax benefit attributable to members , ,777 Other comprehensive income for the year, net of tax - - Total comprehensive income for the year attributable to members 117, ,777 The Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes set out on pages 13 to 34. 9

11 Statement of Financial Position As at 31 March 2014 ASSETS Note Current Assets Cash and cash equivalents 5 450, ,288 Trade and other receivables 6 11,319 4,481 Inventories 7 57,572 67,517 Other current assets 8 23,229 53,185 Current financial assets Total Current Assets 543, ,221 Non-Current Assets Property, plant and equipment 10 5,888,766 6,049,728 Deferred tax assets 4(b) 72,399 46,862 Intangible assets , ,291 Total Non-Current Assets 6,154,456 6,289,881 Total Assets 6,698,254 6,869,102 LIABILITIES Current Liabilities Trade and other payables , ,798 Financial liabilities , ,276 Employee benefits , ,730 Other current liabilities 15 25,637 28,122 Total Current Liabilities 1,126,376 1,223,926 Non-Current Liabilities Financial liabilities 13 1,021,638 1,207,431 Employee benefits 14 6,484 10,515 Other non-current liabilities 15 23,746 25,131 Total Non-Current Liabilities 1,051,868 1,243,077 Total Liabilities 2,178,244 2,467,003 Net Assets 4,520,010 4,402,099 Members Funds Retained profits 16 4,520,010 4,402,099 Total Members Funds 4,520,010 4,402,099 The Statement of Financial Position should be read in conjunction with the accompanying notes set out on pages 13 to

12 Statement of Changes in Equity For the Year Ended 31 March 2014 Retained Total Earnings Equity Balance at 1 April ,228,322 4,228,322 Total comprehensive income for the year 173, ,777 Total other comprehensive income for the year - - Balance at 31 March ,402,099 4,402,099 Total comprehensive income for the year 117, ,911 Total other comprehensive income for the year - - Balance at 31 March ,520,010 4,520,010 The Statement of Changes in Equity should be read in conjunction with the accompanying notes set out on pages 13 to

13 Statement of Cash Flows For the Year Ended 31 March 2014 Cash Flows From Operating Activities Receipts from customers 5,653,918 5,866,721 Payments to suppliers and employees (4,889,019) (4,917,223) Interest received 6,467 8,660 Rent received 85,696 83,824 Finance costs paid (113,031) (142,347) Net cash inflows from operating activities 744, ,635 Cash Flows From Investing Activities Proceeds from sale of property, plant and equipment 46,660 25,000 Payment for property, plant and equipment (547,294) (511,252) Net cash outflows from investing activities (500,634) (486,252) Cash Flows From Financing Activities Repayment of borrowings (165,000) (142,500) Finance lease payments - (18,980) Proceeds from hire purchase agreements 311, ,170 Hire purchase payments (392,356) (341,128) Net cash outflows from financing activities (245,757) (274,438) Net increase/(decrease) in cash and cash equivalents (2,360) 138,945 Cash and cash equivalents at the beginning of the financial year 453, ,343 Cash and cash equivalents at the end of the financial year 5 450, ,288 The Statement of Cash Flows should be read in conjunction with the accompanying notes set out on pages 13 to

14 For the Year Ended 31 March Summary of Significant Accounting Policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) New, revised or amending Accounting Standards and Interpretations adopted The company has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period. The company has early adopted AASB 1053 'Application of Tiers of Australian Accounting Standards,' AASB 'Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements' and later amending Standards, as relevant. No other new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have been early adopted. Any significant impact on the accounting policies of the company from the adoption of these Accounting Standards and Interpretations are disclosed in the relevant accounting policy. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the company. The following Accounting Standards and Interpretations are most relevant to the company: AASB 1053 Application of Tiers of Australian Accounting Standards The company has early adopted AASB 1053 from 1 April This standard establishes a differential financial reporting framework consisting of two Tiers of reporting requirements for preparing general purpose financial statements, being Tier 1 Australian Accounting Standards and Tier 2 Australian Accounting Standards - Reduced Disclosure Requirements. The company being classed as Tier 2 continues to apply the full recognition and measurements requirements of Australian Accounting Standards with substantially reduced disclosure in accordance with AASB and later amending Standards, as relevant. AASB Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements The company has early adopted AASB from 1 April These amendments make numerous modifications to a range of Australian Accounting Standards and Interpretations, to introduce reduced disclosure requirements to the pronouncements for application by certain types of entities in preparing general purpose financial statements. The adoption of these amendments has significantly reduced the company's disclosure requirements. AASB Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project - Reduced Disclosure Requirements AASB Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements and AASB Amendments to Australian Accounting Standards Reduced Disclosure Requirements and Other Amendments The company has early adopted AASB , AASB and amendments from 1 April 2011, to the extent that they related to other standards already adopted by the company. These amendments make numerous modifications to a range of Australian Accounting Standards and Interpretations to significantly reduce the company's disclosure requirements. 13

15 1 Summary of Significant Accounting Policies (continued) (a) New, revised or amending Accounting Standards and Interpretations adopted (continued) AASB Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehensive Income The company has applied AASB amendments from 1 April The amendments requires grouping together of items within other comprehensive income on the basis of whether they will eventually be 'recycled' to the profit or loss (reclassification adjustments). The change provides clarity about the nature of items presented as other comprehensive income and the related tax presentation. The amendments also introduced the term 'Statement of profit or loss and other comprehensive income' clarifying that there are two discrete sections, the profit or loss section (or separate statement of profit or loss) and other comprehensive income section. Basis of Preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards - Reduced Disclosure Requirements and Interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations Act These financial statements do not comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB). The financial report consists of the financial statements, notes to the financial statements and the directors declaration. The financial report is presented in Australian dollars, which is the company's functional and presentation currency. The company is a not for profit entity for the purpose of preparing these financial statements, which means that in preparing the financial report, the company has applied the exemptions available for not for profit entities. The financial report was authorised for issue on 22 May 2014, in accordance with a resolution of directors. The directors have the power to amend and reissue the financial report. Historical Cost Convention The financial statements have been prepared under the historical cost convention. 14

16 1 Summary of Significant Accounting Policies (continued) (b) Revenue Recognition Note 2 Revenues are recognised at fair value of the consideration received or receivable net of the amount of goods and services tax (GST) payable to the taxation authority. Exchanges of goods or services of the same nature and value without any cash consideration are not recognised as revenues. Sale of Goods Revenue from the sale of goods comprises revenue earned from the provision of beverage and other goods and is recognised (net of rebates, returns, discounts and other allowances) on the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods. Rendering of Services Revenue from rendering services comprises revenue from gaming facilities together with other services to members and other patrons of the club and is recognised when the services are provided. Interest Revenue Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets is the rate inherent in the instrument. Rental Revenue Rental revenue is recognised on a straight-line basis over the lease term. Lease incentives granted are recognised as part of the rental revenue. Contingent rentals are recognised as income in the period when earned. Sale of Property, Plant and Equipment The gain or loss on disposal of property, plant and equipment is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal (including incidental costs) and is recognised as other income at the date control of the asset passes to the buyer. (c) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included as a current asset or liability in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the Australian Taxation Office. 15

17 1 Summary of Significant Accounting Policies (continued) (d) Finance Costs Note 3 Finance costs include interest or premiums relating to borrowings, amortisation of ancillary costs incurred in connection with arrangement of borrowings and lease finance charges. 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. In these circumstances, finance costs are capitalised to the cost of the assets. Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of finance costs capitalised is those incurred in relation to that borrowing, net of any interest earned on those borrowings. Where funds are borrowed generally, finance costs are capitalised using a weighted average capitalisation rate. (e) Income Tax Note 4 The income tax expense or benefit for the period is the tax payable on that period s taxable income based on the applicable income tax rate, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities settled, based on those tax rates that are enacted or substantively enacted, except for: When deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business a business combination and that, at the tie of the transaction, affects neither the accounting nor taxable profits; or When the taxable temporary difference is associated with investments in subsidiaries, associate or interest in joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entity s which intend to settle the claim simultaneously. 16

18 1 Summary of Significant Accounting Policies (continued) (f) Impairment of Assets Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset s fair value less costs to sell and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pretax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. (g) Cash and Cash Equivalents Note 5 Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (h) Trade and Other Receivables Note 6 Trade debtors and other receivables represent the principal amounts due at balance date plus accrued interest and less, where applicable, any unearned income and provisions for doubtful accounts. (j) Inventories Note 7 Inventories are measured at the lower of cost and net realisable value. Costs are assigned on the basis of weighted average costs. (k) Leased Assets Leases under which the company assumes substantially all the risks and benefits incidental to the ownership of the assets but not the legal ownership are classified as finance leases. Other leases are classified as operating leases. Finance Leases Note 13 A lease asset and a lease liability are recorded at their fair value at the inception of the lease or, if lower at the present value of the minimum lease payments. Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed. Contingent rentals are expensed as incurred. Operating Leases Payments made under operating leases are expensed on a straight-line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property. 17

19 1 Summary of Significant Accounting Policies (continued) (l) Fair Value Estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets such as trading and available-forsale securities is based on quoted market prices at the Statement of Financial Position date. The quoted market price used for financial assets held by the company is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price. (m) Property, Plant and Equipment Note 10 All property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred. The depreciable amount of all fixed assets, including buildings and capitalised lease assets, but excluding freehold land, is depreciated using the straight line/diminishing value methods to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows: Buildings and improvements 40 years 40 years Plant and equipment 4-10 years 4-10 years Poker machines 4 years 4 years Motor vehicles 4 years 4 years Leased plant and equipment 3 years 3 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the profit or loss. Capital works in progress is transferred to property, plant and equipment and depreciated when completed and ready for use. (n) Intangible Assets Note 11 Poker Machine Entitlements Poker machine entitlements are not amortised. Instead, poker machine entitlements are tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and are carried at cost less accumulated impairment losses. 18

20 1 Summary of Significant Accounting Policies (continued) (o) Trade and Other Payables Note 12 These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. (p) Financial Liabilities Note 13 Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the profit or loss over the period of borrowings using the effective interest method. Borrowings are classified as non-current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period. (q) Employee Benefits Note 14 Wages and Salaries, Annual Leave and Sick Leave Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables with respect to employees services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. Long Service Leave The provision for employee benefits relating to long service leave represents the present value of the estimated future cash outflows to be made resulting from employees services provided to reporting date. The provision is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates based on turnover history and is discounted using the market yields on national government bonds at reporting date which most closely match the terms of maturity with the expected timing of cash flows. The unwinding of the discount is treated as long service leave expense. Superannuation Plan The company contributes to several defined contribution superannuation plans. Contributions are recognised as an expense as they are made. The company has no legal or constructive obligation to fund any deficit. 19

21 1 Summary of Significant Accounting Policies (continued) (r) Customer Loyalty Program The company operates a loyalty program where customers accumulated points for dollars spent. The award points are recognised as a separately identifiable component of the initial sale transaction, by allocating the fair value of the consideration received between the award points and the other components of the sale that the award points are recognised at their fair value. Revenue from the award points is recognised when the points are redeemed. The amount of revenue is based on the number of points redeemed relative to the total number expected to be redeemed. (s) Critical Accounting Judgements, Estimates and Assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events that management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Estimation of Useful Lives of Assets The company determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. Long Service Leave Provision As discussed in note 1(q), the liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect to all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account. Intangible Assets As discussed in note 1(n), impairment of poker machine entitlements is recognised based on a value in use calculations and is measured at the present value of the estimated future cash inflows available to the company from the use of these licenses. In determining the present value of the cash inflows growth rate and appropriate discount factor have been considered. 20

22 2 Revenue and Other Income Sale of Goods Revenue Bar sales 1,070,091 1,118,316 Rendering of Services Revenue Poker machines net clearances 3,777,097 3,946,078 Members subscriptions 43,120 47,034 Entertainment and promotions 74,542 68,391 Keno sales 47,410 48,414 Commission received 110,854 95,034 Sundry income 1,468 10,116 Other Revenues 4,054,491 4,215,067 Interest received 6,467 8,660 Rent received 85,696 83,824 92,163 92,484 Total revenue 5,216,745 5,425,867 Other Income Net gain on disposal of non-current assets 23,717 - Total other income 23,717-21

23 3 Expenses Profit before income tax includes the following specific expenses: Finance costs Bank loans and overdraft 57,955 84,148 Loan funding 3,363 2,783 Hire purchase charges 51,713 55,416 Rental expense relating to operating leases 113, ,347 Minimum lease payments 11,989 9,392 Depreciation and amortisation Buildings and improvements 103, ,503 Plant and equipment 210, ,670 Poker machines 349, ,324 Motor vehicles under hire purchase 5,344 5,344 Amortisation Leased plant and equipment 15,768 15,768 Total depreciation and amortisation 685, ,609 Net expense from movements in provision for Employee benefits (written back)/expense (2,057) 32,150 Contribution to superannuation plans 102,163 92,390 Net loss on disposal of property, plant and equipment - 8,252 22

24 4 Income Tax (a) Income Tax Expense The Income Tax Assessment Act, 1997 (amended) provides that under the concept of mutuality clubs are only liable for income tax on income derived from non-members and from outside entities. The amount set aside for income tax in the Statement of Profit or Loss and Other Comprehensive Income has been calculated as follows: Proportion of income attributable to non-members 1,342,099 1,233,748 Less: Proportion of expenses attributable to non-members (1,212,397) (1,080,921) 129, ,827 Add: Other taxable income 267, , , ,994 Less: Other deductible expenses (473,495) (405,994) Net income subject to tax (76,186) - Transfer to tax losses carried forward 76,186 - Income tax attributable to operating profit at a rate of 30% - - Increase/(Decrease) in deferred tax assets 25,537 (4,885) Income tax benefit /(expense) 25,537 (4,885) 23

25 4 Income Tax (continued) (b) Deferred Tax Assets The balance comprises temporary differences attributable to: Amounts recognised in profit or loss Employee benefits 13,302 12,857 Tax losses 59,097 34,005 Net deferred tax assets 72,399 46,862 Movement during the year: Balance at the beginning of the year 46,862 51,747 Credited to the Statement of Profit or Loss 25,537 (4,885) 72,399 46,862 5 Cash and Cash Equivalents Reconciliation of Cash Cash as at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows: Cash and cash equivalents 450, ,288 6 Trade and Other Receivables Sundry Debtors 11,319 4,481 7 Inventories Finished goods at cost 57,572 67,517 8 Other Current Assets Prepayments 23,229 53,185 9 Current Financial Assets Shares at cost

26 10 Property, Plant and Equipment Freehold Land and Buildings At cost 750, ,000 Buildings and Improvements At cost 4,160,743 4,140,123 Accumulated depreciation (867,678) (763,780) 3,293,065 3,376,343 Total Land, Buildings and Improvements 4,043,065 4,126,343 Plant and Equipment At cost 3,535,505 3,420,077 Accumulated depreciation (2,793,894) (2,602,752) 741, ,325 Poker Machines At cost 1,465,525 1,439,708 Accumulated depreciation (1,069,360) (954,120) 396, ,588 Plant and Equipment Under Hire Purchase At cost 112, ,274 Accumulated depreciation (62,072) (42,492) 50,202 69,782 Poker Machines Under Hire Purchase At cost 2,097,053 1,956,634 Accumulated depreciation (1,651,075) (1,466,790) 445, ,844 Motor Vehicles Under Hire Purchase At cost 35,624 35,624 Accumulated depreciation (14,615) (9,271) 21,009 26,353 25

27 10 Property, Plant and Equipment (continued) Poker Machines Under Finance Lease At capitalised cost 143, ,194 Accumulated amortisation (127,469) (111,701) 15,725 31,493 Work In Progress At capitalised cost 175,011 - Accumulated amortisation ,011 - Total property, plant and equipment net book value 5,888,766 6,049,728 Refer to Note 13 for details of security over property, plant and equipment. Valuation The independent valuation of the company s land and buildings was carried out as at 28 February 2012 by Andrew Nock Pty Ltd on the basis of open market for existing use and resulted in a valuation of $5,100,000. As land and buildings are recorded at cost the valuation has not been brought to account. The Directors do not believe that there has been a material movement in the fair value since the valuation date. Reconciliations Movements in Carrying Amounts Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year are set out below: Buildings and Improvements Carrying amount at beginning of year 3,376,343 3,479,846 Additions 20,620 - Depreciation expense (103,898) (103,503) Carrying amount at end of year 3,293,065 3,376,343 26

28 10 Property, Plant and Equipment (continued) Plant and Equipment Carrying amount at beginning of year 817, ,899 Additions 115, ,516 Depreciation expense (191,142) (191,090) Carrying amount at end of year 741, ,325 Poker Machines Carrying amount at beginning of year 485, ,609 Additions 98, ,937 Disposals (22,943) (17,834) Depreciation expense (165,296) (156,124) Carrying amount at end of year 396, ,588 Plant and Equipment Under Hire Purchase Carrying amount at beginning of year 69,782 89,362 Depreciation expense (19,580) (19,580) Carrying amount at end of year 50,202 69,782 Poker Machines Under Hire Purchase Carrying amount at beginning of year 492, ,662 Additions 137, ,800 Disposals - (15,418) Depreciation expense (184,285) (234,200) Carrying amount at end of year 445, ,844 Motor Vehicles under Hire Purchase Carrying amount at beginning of year 26,353 31,697 Depreciation expense (5,344) (5,344) Carrying amount at end of year 21,009 26,353 27

29 10 Property, Plant and Equipment (continued) Poker Machines Under Finance Lease Carrying amount at beginning of year 31,493 47,261 Amortisation (15,768) (15,768) Carrying amount at end of year 15,725 31,493 Work in progress Carrying amount at beginning of year - - Additions 175, ,011 - Core Properties held by the Club are: St George Masonic Club Ltd 86 Roberts Avenue Mortdale NSW 2223 Non-Core Properties held by the Club are: None 28

30 11 Intangible Assets Poker machine entitlements at cost 193, ,291 Accumulated Impairment losses - - Net book amount 193, ,291 Impairment tests for poker machine entitlement At the end of the reporting period the entity assessed the recoverable amount of poker machine entitlement based on the value in use methodology. The entity uses the daily net income earned (excluding GST) per machine per day and multiplies by the number of poker machine entitlements it has paid for. The value in use recoverable amount for each entitlement is calculated by dividing the total value of the entitlements with the actual number of entitlements. 12 Trade and Other Payables Trade creditors 87, ,814 Goods and Services Tax (GST) payable 33,587 41,214 Other creditors and accruals 189, , , ,798 29

31 13 Financial Liabilities Note Current Secured Hire purchase liabilities , ,276 Commercial bill facilities 216, ,000 Non-Current 621, ,276 Secured Hire purchase liabilities , ,431 Commercial bill facilities 914, ,000 1,021,638 1,207,431 Financing Arrangements The company has access to the following lines of credit: Total facilities available: Commercial bill facilities 1,130,000 1,295,000 Overdraft facility 50,000 50,000 Asset finance line 600, ,000 Master Credit Card Facility 10,000 10,000 1,790,000 1,605,000 Facilities utilised at reporting date: Commercial bill facilities 1,130,000 1,295,000 Asset finance line 203, ,533 Master Credit Card Facility 722 1,344 1,334,633 1,470,877 Commercial Bill Facilities The facilities bear interest based on the following: The Bill facility for $1,130,000, attracts a variable interest rate of 4.89%. The principal amount is to be fully repaid by the 15 th June Principal repayments are $18,000 per month. 30

32 13 Financial Liabilities (continued) Escrow Facility allocated under Current Hire Purchase arrangements This facility relates to the purchase of a new air conditioning system. Work completed to date has been recognised under Property, Plant and Equipment above. At completion of the project, the facility will transfer to a hire purchase arrangement operating on normal commercial terms. 90% of the work has been completed as at balance date, with final completion expected by June Security The security for the commercial bill facility and asset finance line is: First registered real property mortgage by the St George Masonic Club over the commercial property located at 86 Roberts Avenue, Mortdale. Fixed charge over the Liquor Licence of the St George Masonic Club. First registered fixed and floating charge over the assets and undertakings of the St George Masonic Club. SSSA over Goods (Sovereign) Equipment suitable to be financed by St George Equipment Finance. 14 Employee Benefits Aggregate liability for employee benefits including on-costs Current 168, ,730 Non-current 6,484 10, , ,245 The present values of employee benefits not expected to be settled within 12 months of reporting date have been calculated using the following weighted averages: Assumed rate of increase in wage and salary rates 2.90% 2.20% Discount rate 4.10% 3.42% Settlement term (years) Superannuation Plans Contributions The company is under a legal obligation to contribute 9.25% of each employee s base salary to a superannuation fund. 31

33 15 Other Liabilities Current Income received in advance 25,637 28,122 Non-current Income received in advance 23,746 25, Retained Profits Retained profits at the beginning of the year 4,402,099 4,228,322 Net profit attributable to members of the company 117, ,777 Retained profits at the end of the year 4,520,010 4,402, Commitments Hire Purchase Commitments Within one year 438, ,005 One year or later and no later than five years 120, ,743 Minimum hire purchase payments 558, ,748 The company has purchased poker machines, motor vehicles and other plant and equipment under hire purchase agreements expiring from one to four years. The hire purchase facility is secured against the asset purchased under this facility as disclosed in Note Contingent Liabilities Bank Guarantees The company has given the following bank guarantees: TAB Limited 5,000 5,000 32

34 19 Mutuality Principle The company calculates its income in accordance with the mutuality principle which excludes from income, any amounts of subscriptions and contributions from members, and payments received from members for particular services provided by the club or association, eg. poker machines, bar and dining room service in the case of social clubs. The Commissioner of Taxation accepts this method of calculating income as appropriate for recognised clubs and associations. Following the Full Federal Court decision in Coleambally Irrigation Mutual Co-operative Limited v FCT [2004] FCAFC 250, Tax Laws Amendment (2005 Measures No.6) Bill 2005 was tabled in Parliament on 7 December 2005 to amend the Income Tax Assessment Act 1997 to restore the long standing benefits of the mutuality principle to those non-profit organisations affected by the Coleambally decision. These amendments will ensure social clubs continue not to be taxed on receipts from contributions and payments received from members. 20 Key Management Personnel Details (a) Directors The following persons were non-executive directors of the company during the financial year: Ronald M Haira Gregory F Kerr Ian Manley Brian G Griggs Geoffrey C Sim Resigned 21 July 2013 John Brooks Reynir Potter Paul Dawkins Kenneth R Tildsley Norma Alexander Appointed 21 July 2013 (b) Other Key Management Personnel The following persons also had authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly during the financial year: Name Position Paul O Connor General Manager Appointed November 2005 (c) Key Management Personnel Compensation Benefits and payments made to the Directors and Other Key Management Personnel 155, ,496 33