Financial Report
Contents Page Directors' Report 1 Auditor's Independence Declaration 7 Statement of Comprehensive Income 8 Statement of Financial Position 9 Statement of Changes in Equity 10 Statement of Cash Flows 11 Notes to the Financial Statements 12 Directors' Declaration 29 Independent Auditor's Report 30
Directors' Report 31 May 2018 Your Directors present their report on the Company for the financial year ended 31 May 2018. Directors The names of the Directors in office at any time during or since the end of the year are: Phillip INNES Appointed 17 September 2017 Norman MALZARD Appointed 17 September 2017 Pamela TYE Resigned 20 June 2017 Appointed 17 September 2017 Eunice ROBERTS Appointed 17 September 2017 Richard PIERCE Appointed 17 September 2017 Lynette MOORE Appointed 17 September 2017 Ken PRITCHARD Appointed 5 February 2018 Warren HENDERSON Resigned 17 September 2017 Ann BUTLIN Resigned 17 September 2017 Marilyn DEWSON Resigned 17 September 2017 Noel ELLIOTT Resigned 17 September 2017 Steve WEBSTER Resigned 3 January 2018 Rhonda BATEMAN Resigned 27 November 2017 Barry BIRD Resigned 30 April 2018 Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Short-Term Objectives The short term objectives of the Company are to: Service all debts as and when they fall due. Provide benefits to members in a financially viable manner. Operate bar, gaming and catering operations for the benefit of our members and their guests. Service the needs of our affiliated sub clubs of lawn bowls, fishing, golf and darts. Provide entertainment for the benefit of our members and their guests. Utilise funds derived from the Club s operations for the support and development of our community. Provide a high standard of customer service when dealing with members and their guests. Ensure the Board is educated and informed appropriately in order to be able to provide the Club with the necessary guidance to achieve its objectives. Long-Term Objectives The long term-objectives of the Company are to: Provide, maintain or change goods and services in order to continually meet the needs of our members and their guests. Create sustainable financial viability while maintaining our position as the focus of social and community activities. Provide and maintain Club facilities at a high level to meet the needs of members and their guests. Purchase additional property as it becomes available for the growth of the Club in the future. 1
Strategies Directors' Report 31 May 2018 To achieve the objectives of the Company the following strategies have been adopted: Planning The Club s business plan is reviewed by the Board on an annual basis to ensure that the strategies implemented to meet the Club s objectives are appropriate. The Club has developed a growth plan which details renovations to be completed over a period of at least 5 years. Marketing The Club researches its members through surveys to assist in satisfying their needs and wants. Through this research the club aims to improve its food, beverage, gaming and bowls activities for its members and their guests. The Club trains and monitors staff with a view to providing acceptable experiences for its members and their guests. Principal Activities The principal activity of the Company during the financial year was the conduct of a Licensed Bowling and Recreation Club. No significant change in the nature of this principal activity occurred during the financial year. Means by which Principal Activities Assisted in Achieving the Company's Objectives The profit and cash flows generated from the Company's principal activities were utilised in achieving the Company's Objectives. Key Performance Measures The Company measures and monitors performance by comparing actual results to past performance. The Company reviews key performance indicators such as gross profit margins, net returns from trading and poker machine returns. Management develops an annual budget for planning and control purposes. The budget is prepared on the basis of past results and anticipated future changes in revenues and expenses. Members' Guarantee is incorporated under the Corporations Act 2001 and is a Company limited by guarantee. If the Company is wound up, the constitution states that each member is required to contribute a maximum of 5 towards meeting any outstanding obligations of the Company. At 31 May 2018 the collective liability of members was 5,670 (2017: 6,805). 2
Other Matters Directors' Report 31 May 2018 During the financial year, the Company made the decision to outsource the bistro operations. The outsourced bistro operations are due to commence 1 August 2018 with the objective of eliminating the impact of losses incurred from that trading department. Subsequent to year end the Club's Secretary Manager resigned from his position with the Club. The Club Board will oversee the management of the Club until the position is filled. Auditor's Independence Declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act has been received and is included in this financial report. Core and Non-Core Property Core property is defined as any real property owned by the Club that comprises the defined premises of the Club or any facility provided by the Club for the use of its members and their guests. Core property of the Club consists of land occupied by the Clubhouse and bowling greens at 45 Evans Street and the carpark at 56 Evans Street, Lake Cathie, New South Wales. Non-core property of the Club means any real property owned by the Club that is not core property. The Club does not currently hold any non-core property. 3
Meetings of Directors Directors' Report 31 May 2018 During the financial year 16 meetings and 2 special meetings of Directors were held. Attendances by each director during the year were as follows: Directors' Meetings Number eligible to attend Number attended Phillip INNES 15 15 Norman MALZARD 15 15 Pamela TYE 16 15 Eunice ROBERTS 15 15 Richard PIERCE 15 15 Lynette MOORE 15 12 Ken PRITCHARD 8 8 Warren HENDERSON 3 3 Ann BUTLIN 3 3 Marilyn DEWSON 3 2 Noel ELLIOTT 3 3 Steve WEBSTER 8 6 Barry BIRD 17 9 Rhonda BATEMAN 6 3 4
Directors' Report 31 May 2018 Information on Current Directors Phillip INNES Qualifications and Experience Special Responsibilities Director of Lake Cathie Bowling and Recreation Club for 5 years. Retired Director of Lake Cathie Pre School and Day Care Cottage Chairperson Norman MALZARD Qualifications and Experience Special Responsibilities Director of Lake Cathie Bowling and Recreation Club for 10 years. Treasurer of Lake Cathie Men's Bowling Club for 6 years 10 Years as Director for an International Company 30 Years working in the Electronic Engineering Profession Vice Chairperson Pamela TYE Qualifications and Experience Special Responsibilities Director of Lake Cathie Bowling and Recreation Club for 1 year. Secretary of Lake Cathie Women's Bowling Club Chair of Organising Committee - Women's Hockey World Cup Vice President/Director of Board of International Hockey Federation President & Chair of Hockey Australia President and Chair of NSW Hockey Board of Director of Australian Sports Commission Board of Director of State Sports Centre Director of Olympic Park Principal of a State Primary School Vice Chairperson Eunice ROBERTS Qualifications and Experience Richard PIERCE Qualifications and Experience Director of Lake Cathie Bowling and Recreation Club for 1 year. President of Kew Women's Bowling Club for 2 Years Treasurer of Kew Women's Club for 3 years Secretary of Kew Women's Club for 5 years Director of Women's Bowls NSW for 3 years District Treasurer for 1 year Director of Governing Body of Camden Haven Golf Club for 3 years Director of Lake Cathie Bowling and Recreation Club for 4 years. Director of Kareela Golf Club for 4 years 12 years as Pool Maintenance Business (Owner) 25 years as Building Site Manager 5
accountants + financial services PARTNERS Robert Magnussen B Bus FCA Paul Fahey B Bus CA Rodney Smith B Fin Admin FCA Bart Lawler B Com CA Patrick Brennan B Com CA Auditor's Independence Declaration Under Section 307C of the Corporations Act 2001 To the Directors of I declare that, to the best of my knowledge and belief, during the year ended 31 May 2018 there have been no contraventions of: (i) (ii) the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and any applicable code of professional conduct in relation to the audit. NorthCorp Accountants Rodney Smith Partner 10-12 Short Street Port Macquarie NSW 2444 30 July 2018 T 02 6588 4444 F 02 6583 4527 E northcorp@northcorp.com.au www.northcorp.com.au Suites 1-3 Bourne House, 10-12 Short Street, Port Macquarie NSW 2444 3/80 High Street, Wauchope NSW 2446 PO Box 166, Port Macquarie NSW 2444 Liability limited by a scheme approved under Professional Standards Legislation 7
Statement of Comprehensive Income Note 2018 2017 Revenue 2 2,385,677 2,478,853 Other income 2(b) 4,550 8,965 2,390,227 2,487,818 Advertising and promotion (143,397) (165,863) Cleaning Costs (61,850) (65,182) Changes in inventories 3 (4,971) 7,759 Inventory purchased 3 (441,870) (477,478) Depreciation and amortisation expense 3 (242,698) (255,676) Electricity and gas (77,481) (75,166) Employee benefits expense (872,351) (867,281) Entertainment (5,558) (34,686) Printing, Postage and Stationery (35,073) (36,644) Insurance (51,258) (44,377) Raffle and bingo expenses (83,274) (78,646) Poker machine supplementary tax (68,347) (68,170) Repairs and maintenance (167,333) (154,510) Subscriptions and licenses (67,660) (68,929) Other expenses (207,491) (223,751) (2,530,612) (2,608,600) Profit / (loss) before income tax (140,385) (120,782) Income tax expense 1(a) - - Profit / (loss) for the year (140,385) (120,782) Other comprehensive income for the year - - Total comprehensive income for the year (140,385) (120,782) Profit / (loss) attributable to members of the entity (140,385) (120,782) Total comprehensive income attributable to members of the entity (140,385) (120,782) The accompanying notes form part of these financial statements 8
Statement of Financial Position As at 31 May 2018 Note 2018 2017 ASSETS Current assets Cash and cash equivalents 4 69,451 104,638 Trade and other receivables 5 6,780 12,331 Inventories 6 37,761 42,732 Other financial assets 7 427,816 513,183 Prepayments 8 9,294 13,173 Total current assets 551,102 686,057 Non-current assets Property, plant and equipment 9 1,110,075 1,131,551 Intangible assets 10 188,117 190,440 Total non-current assets 1,298,192 1,321,991 TOTAL ASSETS 1,849,294 2,008,048 LIABILITIES Current liabilities Trade and other payables 11 133,617 217,826 Borrowings 12 36,641 65,870 Short-term provisions 13 156,708 118,117 Other liabilities 14 31,771 32,810 Total current liabilities 358,737 434,623 Non-current liabilities Borrowings 12 50,370 3,102 Long-term provisions 13 33,738 23,489 Total non-current liabilities 84,108 26,591 TOTAL LIABILITIES 442,845 461,214 NET ASSETS 1,406,449 1,546,834 EQUITY Retained earnings 1,406,449 1,546,834 TOTAL EQUITY 1,406,449 1,546,834 The accompanying notes form part of these financial statements 9
Statement of Changes in Equity 2018 Retained Earnings Total Balance at 1 June 2017 1,546,834 1,546,834 Profit / (loss) attributable to members of the Company (140,385) (140,385) Other comprehensive income - - Total comprehensive income for the year (140,385) (140,385) Balance at 31 May 2018 1,406,449 1,406,449 2017 Retained Earnings Total Balance at 1 June 2016 1,667,616 1,667,616 Profit / (loss) attributable to members of the Company (120,782) (120,782) Other comprehensive income - - Total comprehensive income for the year (120,782) (120,782) Balance at 31 May 2017 1,546,834 1,546,834 The accompanying notes form part of these financial statements 10
Statement of Cash Flows Note 2018 2017 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers 2,645,602 2,718,225 Payments to suppliers and employees (2,586,156) (2,557,205) Interest received 11,024 14,165 Net cash provided by (used in) operating activities 70,470 175,185 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property, plant and equipment 11,000 13,000 Acquisition of property, plant and equipment (220,063) (197,002) Redemption of held-to-maturity assets 85,367 - Purchase of investments - (14,235) Net cash provided by (used in) investing activities (123,696) (198,237) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 98,498 86,746 Repayment of borrowings (80,459) (99,778) Net cash provided by (used in) financing activities 18,039 (13,032) Net increase (decrease) in cash and cash equivalents held (35,187) (36,084) Cash and cash equivalents at beginning of financial year 104,638 140,722 Cash and cash equivalents at end of financial year 4 69,451 104,638 The accompanying notes form part of these financial statements 11
Notes to the Financial Statements The financial report is for as an individual entity, incorporated and domiciled in Australia. is a Company limited by guarantee. Note 1 Summary of Significant Accounting Policies Basis of Preparation The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards - Reduced Disclosure Requirements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated. The financial statements, except for the cash flow information, have been prepared on an accruals basis and are based on historical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The financial statements were authorised for issue on 30 July 2018 by the Directors of the Company. Accounting Policies (a) (b) (c) Income Tax The Company has been granted an exemption from income tax under Section 50-45 of the Income Tax Assessment Act 1997. The exempt status of the Company applies indefinitely or until such time as a change in circumstances warrants a review of the exempt status. Inventories Inventories are measured at the lower of cost and net realisable value. Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Property Freehold land and buildings are measured on the cost basis. 12
Notes to the Financial Statements Note 1 Summary of Significant Accounting Policies (c) Property, Plant and Equipment Plant and equipment Plant and equipment are measured on the cost basis less accumulated depreciation and impairment losses. In the event that the carrying amount of plant and equipment is greater than its estimated recoverable amount, the carrying amount is written down immediately to its estimated recoverable amount and impairment losses are recognised in the statement of comprehensive income. An assessment of recoverable amount is made when impairment indicators are present (refer to Note 1(f) for details of impairment). Subsequent costs are included in the asset's 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 statement of comprehensive income during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets including buildings and capitalised leased assets but excluding freehold land, is depreciated on a straight-line basis over the asset's useful life to the Company commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Depreciation Rates Buildings and improvements 5-20% Plant and Equipment 10-50% 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 the carrying amount. These gains or losses are recognised in the statement of comprehensive income in the period in which they arise. (d) Financial Instruments Initial Recognition and Measurement Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions to the instrument. For financial assets, this is the equivalent to the date that the Company commits itself to either the purchase or sale of the asset. Financial instruments are initially measured at fair value plus transactions costs, except where the instrument is classified at "fair value through profit or loss", in which case transaction costs are recognised immediately as expenses in profit or loss. 13
Notes to the Financial Statements Note 1 Summary of Significant Accounting Policies Classification and Subsequent Measurement Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest method or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Amortised cost is calculated as: the amount at which the financial asset or financial liability is measured at initial recognition; less principal repayments; plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and less any reduction for impairment. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss. (i) Financial assets at fair value through profit or loss Financial assets are classified at "fair value through profit or loss" when they are held for trading for the purpose of short-term profit taking. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Loans and receivables are classifed as current assets, except for those which are not expected to mature within 12 months after the end of the reporting period, which will be classified as non-current assets. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company's intention to hold these investments to maturity. They are 14
Notes to the Financial Statements Note 1 Summary of Significant Accounting Policies subsequently measured at amortised cost. Held-to-maturity investments are classifed as non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either not capable of being classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. They are subsequently measured at fair value. Available-for-sale financial assets are classifed as non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period. (v) Financial liabilities Non-derivative financial liabilities are subsequently measured at amortised cost. Fair Value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions and reference to similar instruments. Impairment At the end of each reporting period, the Company assesses whether there is objective evidence that a financial asset has been impaired. In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised immediately in the statement of comprehensive income. (e) Impairment of Assets At the end of each reporting period, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the statement of comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for intangible assets with indefinite useful lives. 15
Notes to the Financial Statements Note 1 Summary of Significant Accounting Policies (f) Intangibles Poker Machine Licences Poker machine licences are recognised at cost of acquisition. Poker machine licences are tested annually for impairment and carried at cost less accumulated impairment losses. Other Intangibles Other intangibles are recognised at cost of acquisition. Other intangibles are amortised over their useful life. (g) (h) (i) (j) Employee Benefits Provision is made for the Company's liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may not satisfy vesting requirements. Contributions are made by the Company to an employee superannuation fund and are charged as expenses when incurred. Provisions Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions recognised represent the best estimate of the amounts required to settle the obligation at the end of the reporting period. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. Trade and other payables Trade and other payables are carried at amortised cost and represent the liability for goods and services received by the Company during the reporting period which remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. 16
Notes to the Financial Statements Note 1 Summary of Significant Accounting Policies (k) (l) (m) (n) Revenue Revenue is measured at the fair value of the consideration received or receivable. Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. All revenue is stated net of the amount of goods and services tax (GST). Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position. Cash flows are presented 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. Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Critical Accounting Estimates and Judgements The Directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company. Key estimates - Impairment The Company assesses impairment at the end of each reporting period by evaluating conditions specific to the Company that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. The recoverable amount of the poker machine licences was estimated based on its value in use using a pre-tax discount rate of 15% and a growth rate of 1%. The recoverable amount was estimated to be higher than the carrying amount of the poker machine licences, and no impairment was required. No other impairment has been recognised in respect of assets at reporting date. 17
Notes to the Financial Statements Note 2 Revenue and Other Income (a) Revenue 2018 2017 Sale of goods: - Bar sales 579,879 647,474 - Bistro sales 384,066 406,074 963,945 1,053,548 Other revenue: - Commission received 54,035 61,170 - Function room hire fees 400 191 - Interest received 11,024 14,165 - Poker machine takings 1,117,799 1,128,085 - Membership subscriptions 13,409 13,718 - Poker machine GST rebate 17,180 17,180 - Green fees 108,567 90,359 - Bingo and raffles 75,336 84,948 - Sundry revenue 23,982 15,489 Total Revenue 2,385,677 2,478,853 (b) Other income - Net gain on disposal of property, plant and equipment 4,550 8,965 Total Other Income 4,550 8,965 2,390,227 2,487,818 18
Notes to the Financial Statements Note 3 Profit for the Year (a) Expenses 2018 2017 Depreciation and amortisation Depreciation - buildings 37,351 37,641 Plant and machinery 195,149 209,118 Motor vehicles 7,875 7,931 Software 2,323 986 Total depreciation and amortisation 242,698 255,676 Cost of sales - Bar sales 262,051 295,249 - Bistro sales 184,790 174,470 446,841 469,719 Note 4 Cash and Cash Equivalents Cash at bank and in hand 69,451 104,638 Reconciliation of Cash Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows are reconciled to items in the statement of financial position as follows: Cash and cash equivalents 69,451 104,638 19
Notes to the Financial Statements Note 5 Trade and Other Receivables 2018 2017 Current Trade and other receivables 6,780 12,331 Note 6 Inventories Current Finished goods - at cost Bar stock 34,970 33,859 Bistro stock 2,791 8,873 37,761 42,732 Note 7 Other Financial Assets Current Held-to-maturity financial assets 7(a) 427,816 513,183 (a) Held-to-maturity investments comprise: Interest bearing deposits 427,816 513,183 (b) Restricted Asset 250,000 Term Deposit is used as security over NAB Bank loan facility. Refer Note 12(a). Note 8 Other Assets Current Prepayments 9,294 13,173 20
Notes to the Financial Statements Note 9 Property Plant and Equipment 2018 2017 Land and Buildings Freehold Land Land at cost 86,944 86,944 Buildings Buildings at cost 1,817,668 1,805,177 Less: accumulated depreciation (1,493,478) (1,456,128) Total buildings 324,190 349,049 Total land and buildings 411,134 435,993 Plant and Equipment Plant and equipment at cost 2,537,153 2,422,816 Less: accumulated depreciation (1,858,095) (1,755,016) Total plant and equipment 679,058 667,800 Motor Vehicles Motor vehicles at cost 38,010 38,010 Less: accumulated depreciation (18,127) (10,252) Total motor vehicles 19,883 27,758 Total property, plant and equipment 1,110,075 1,131,551 21
Notes to the Financial Statements Note 9 Property Plant and Equipment (a) Movements in Carrying Amounts Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year: Land Buildings Plant and Equipment Motor Vehicles Total 2017 Balance at the beginning of year 1 June 2016 86,944 349,049 667,800 27,758 1,131,551 Additions - 12,492 212,857-225,349 Disposals - written down value - - (6,450) - (6,450) Depreciation expense - (37,351) (195,149) (7,875) (240,375) Balance at 31 May 2018 86,944 324,190 679,058 19,883 1,110,075 Note 10 Intangible Assets 2018 2017 Software Software at cost 7,300 7,300 Accumulated amortisation (4,278) (1,955) Net carrying value 3,022 5,345 Poker Machine Licences Poker machine licences at cost 185,095 185,095 Accumulated impairment losses - - Net carrying value 185,095 185,095 Total Intangibles 188,117 190,440 22
Notes to the Financial Statements Note 10 Intangible Assets continued Reconciliation of intangible assets Software Poker machine licences Total Year ended 31 May 2018 Opening balance 5,345 185,095 190,440 Additions - - - Disposals - - - Amortisation (2,323) - (2,323) Balance at 31 May 2018 3,022 185,095 188,117 Poker machine licences have been determined to have indefinite useful lives as the licences have not been cancelled by legislation and the Company has no intention to sell poker machine licences. Note 11 Trade and Other Payables 2018 2017 Current Unsecured liabilities Trade Payables 83,238 126,426 Other payables 50,379 91,400 133,617 217,826 23
Notes to the Financial Statements Note 12 Borrowings Note 2018 2017 Current Secured liabilities Other Loans 12(b) 35,581 65,870 Bank loans 1,060 - Total current borrowings 36,641 65,870 Non-current Secured liabilities Other Loans 12(b) 50,370 3,102 Total non-current borrowings 50,370 3,102 Total Borrowings 87,011 68,972 (a) Bank Loan The Club entered into a Market Rate Loan Facility during the current financial year, the approved credit facility provided is 250,000. At 31 May 2018, 1,060 was drawn on the facility in relation to establishment and other credit related fees leaving a balance of 248,940 available for drawdown. The Market Rate Facility is due to expire 1 April 2021 where full repayment is required. The Bank Loan is a market rate repricing loan facility secured by a fixed term deposit held with NAB totalling 250,000. The financial assets pledged as collateral represent a floating charge and cannot be disposed of without consent of the financier. Refer Note 7(b). (b) Other Loans Other Loans consists of finance contracts for the purchase of poker machines. The borrowings are secured by the underlying assets acquired. The loans are interest free with aggregate monthly repayments of 6,842. 24
Notes to the Financial Statements Note 13 Provisions Employee benefits Total Opening balance at 1 June 2017 141,606 141,606 Additional provisions 85,918 85,918 Provisions used (37,078) (37,078) Balance at 31 May 2018 190,446 190,446 2018 2017 Analysis of Total Provisions Employee benefits Current 156,708 118,117 Non-current 33,738 23,489 190,446 141,606 Provision for Employee Benefits Provison for employee benefits represent amounts accrued for wages, annual leave, long service leave and termination of employment payments. The current portion for this provision includes the total amount accrued for wages, annual leave entitlements, termination of employment payments and amounts accrued for long service leave entitlements that have vested due to employees having completed the required period of service. These amounts are classifed as current liabilities since the Company does not have an unconditional right to defer settlement of these amounts in the event employees wish to use their entitlement. The non-current portion of the provision includes amounts accrued for long service leave entitlements that have not yet vested in relation to those employees who have not yet completed the required period of service. Note 14 Other Liabilities Current Other liabilities 31,771 32,810 25
Notes to the Financial Statements Note 15 Capital and Leasing Commitments (a) Capital Expenditure Commitments Capital expenditure commitments contracted for: - Club Furniture - 14,377 - Bistro Renovations 27,800 - Payable: - not later than 12 months 27,800 14,377 Note 16 Contingent Liabilities Bank Guarantee TAB Limited 5,000 5,000 The Company has a banker's guarantee in favour of TAB Limited for 5,000. The guarantee is secured by mortgage over the Company's premises. The guarantee is only payable in the event of economic loss to the TAB caused by the Company's staff. To date there has been no event or events that would require the guarantee to be called upon. 26
Notes to the Financial Statements Note 17 Members' Guarantee The Company is limited by guarantee. If the Company is wound up, the Constitution states that each member is required to contribute a maximum of 5 each towards meeting outstanding obligations of the Company. At 31 May 2018 the number of members was 1,134 (2017: 1,361). Note 18 Key Management Personnel Compensation Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any Director (whether executive or otherwise) of that entity. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The aggregate compensation of key management personnel during the year comprising amounts paid or payable or provided for was as follows: 2018 2017 Short-term employee benefits 148,814 177,263 Post-employment benefits 14,149 16,381 Other long-term benefits 1,978 7,342 Total 164,941 200,986 Note 19 Related Party Transactions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other persons unless otherwise stated. 27
Notes to the Financial Statements Note 20 Financial Risk Management The Company's financial instruments consist mainly of deposits with banks, cash on hand, accounts receivable and payable, and borrowings. The carrying amounts for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows: 2018 2017 Financial Assets: Cash and cash equivalents 69,451 104,638 Trade and other receivables 6,780 12,331 Interest bearing deposits 427,816 513,183 Total financial assets 504,047 630,152 Financial Liabilities Trade and other payables 133,617 217,826 Borrowings 87,011 68,972 Total financial liabilities 220,628 286,798 Net Fair Values The net fair values of financial assets and financial liabilities approximates their carrying values. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statement of financial position and in the notes to the financial statements. Note 21 Company Details The registered office and principal place of business of the Company is: 45 Evans Street Lake Cathie 28
accountants + financial services PARTNERS Robert Magnussen B Bus FCA Paul Fahey B Bus CA Rodney Smith B Fin Admin FCA Bart Lawler B Com CA Patrick Brennan B Com CA Report on the Audit of the Financial Report Opinion Independent Auditor's Report to the members of We have audited the financial report of, which comprises the Statement of Financial Position as at 31 May 2018, the Statement of Comprehensive Income, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatroy information, and the Directors' Declaration. and the directors' declaration. In our opinion, the accompanying financial report of 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 May 2018 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 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. 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 Company in accordance with the auditor independence requirements of 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 also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Information Other than the Financial Report and Auditor's Report Thereon The Directors are responsible for the other information. The other information comprises the information included in the Company's annual report for the year ended 31 May 2018, but does not include the financial report and our auditor s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, 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. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. T 02 6588 4444 F 02 6583 4527 E northcorp@northcorp.com.au www.northcorp.com.au Suites 1-3 Bourne House, 10-12 Short Street, Port Macquarie NSW 2444 3/80 High Street, Wauchope NSW 2446 PO Box 166, Port Macquarie NSW 2444 30 Liability limited by a scheme approved under Professional Standards Legislation
accountants + financial services PARTNERS Robert Magnussen B Bus FCA Paul Fahey B Bus CA Rodney Smith B Fin Admin FCA Bart Lawler B Com CA Patrick Brennan B Com CA Responsibilities of Directors for the Financial Report Independent Auditor's Report to the members of 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. In preparing the financial report, the Directors are responsible for assessing the the Company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are 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 and 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 the financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit 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. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. T 02 6588 4444 F 02 6583 4527 E northcorp@northcorp.com.au www.northcorp.com.au Suites 1-3 Bourne House, 10-12 Short Street, Port Macquarie NSW 2444 3/80 High Street, Wauchope NSW 2446 PO Box 166, Port Macquarie NSW 2444 Liability limited by a scheme approved under Professional Standards Legislation 31
accountants + financial services PARTNERS Robert Magnussen B Bus FCA Paul Fahey B Bus CA Rodney Smith B Fin Admin FCA Bart Lawler B Com CA Patrick Brennan B Com CA Independent Auditor's Report to the members of Conclude on the appropriateness of the Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. NorthCorp Accountants Rodney Smith Partner 10-12 Short Street Port Macquarie NSW 2444 Dated: 30 July 2018 T 02 6588 4444 F 02 6583 4527 E northcorp@northcorp.com.au www.northcorp.com.au Suites 1-3 Bourne House, 10-12 Short Street, Port Macquarie NSW 2444 3/80 High Street, Wauchope NSW 2446 PO Box 166, Port Macquarie NSW 2444 Liability limited by a scheme approved under Professional Standards Legislation 32