NEWCASTLE LEAGUES CLUB LIMITED Summary Financial Statements For the Year Ended 30 June 2014 The financial statements and other specific disclosures have been derived from Newcastle Leagues Club Limited's (the Club s) full financial statements for the financial year. Other information included in the Summary Financial Statements is consistent with the Club s full financial statements. The Summary Financial Statements do not, and cannot be expected to, provide as full an understanding of the financial performance, financial position and financing and investing activities of the Club as the full financial statements. A copy of the Club s 2014 full financial statements, including the independent audit report, is available to all members and will be sent to members without charge upon request.
Contents DIRECTORS' REPORT... 1 AUDITOR'S INDEPENDENCE DECLARATION... 4 INDEPENDENT AUDIT REPORT... 5 DIRECTORS' DECLARATION... 6 SUMMARY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME... 7 SUMMARY STATEMENT OF FINANCIAL POSITION... 8 SUMMARY STATEMENT OF CHANGES IN EQUITY... 9 SUMMARY STATEMENT OF CASH FLOWS... 10 NOTES TO THE SUMMARY FINANCIAL STATEMENTS... 11 DISCUSSION AND ANALYSIS OF THE SUMMARY FINANCIAL STATEMENTS... 13
Directors' Report 30 June 2014 Your directors present their report on Newcastle Leagues Club Limited for the financial year ended 30 June 2014. Directors The names of the directors in office at any time during, or since the end of, the year are: Name Position Occupation Years Service D. Gall President Retired 5 E. Long Vice President Retired 21 E. Condon Director Retired 27 S. Doran Director Architect 2 M. Graham Director High School PD/PE Teacher 1 H. Billings Director Customer Service 1 Advisor M. Hanlon Director Solicitor 1 J. Daowlis Director Miner Appointed 10/2014 T. Crow Director Sales Representative Appointed 4/2014 P. Kreft Director Music Technician Appointed 10/2013, resigned 10/2013 J. Wilson Director Retired Appointed 10/2013 M. Harris - - Resigned 3/2014 C. Condon - - Deceased 8/2013 Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Club secretary The following person held the position of club secretary at the end of the financial year: Nicole Rollason has been the club secretary since 28 February 2014. Prior to this, John Fahey had held this position since 1 February 2013. Principal activities The principal activity of Newcastle Leagues Club Limited during the financial year was the conduct of a Licensed Club. No significant changes in the nature of the Club's activity occurred during the financial year. 1
Directors' Report 30 June 2014 Operating results The loss of the club after providing for income tax amounted to 5,549 (2013: loss of 84,731) Review of operations Profit from bar trading amounted to 167,766 and gross profit percentage of 61% was obtained from sales of 602,052. Net gaming revenue amounted to 906,631 and compares with 885,939 in 2013. Meetings of directors During the financial year, 12 meetings of directors were held. Attendances by each director during the year were as follows: Directors' Meetings Number eligible to attend Number attended D. Gall 12 12 C. Condon (deceased 8/2013) 2 2 E. Long 12 11 E. Condon 3 3 S. Doran 12 10 M. Graham 12 10 H. Billings 12 10 M. Hanlon 12 7 J. Dawolis (appointed 10/2013) 9 9 T. Crow (appointed 4/2014) 3 2 J. Wilson (appointed 10/2013) 9 8 P. Kreft (appointed 10/2013, resigned 10/2013) 1 - M. Harris (resigned 3/2014) 9 3 Member guarantee Newcastle Leagues Club Limited is a company limited by guarantee. In the event of, and for the purpose of winding up of the company, the constitution states that each member is required to contribute a maximum of 20 each towards meeting any outstandings and obligations of the club. At 30 June 2014, the number of members was 1,462 (2013: 1,504). Significant changes in state of affairs There have been no significant changes in the state of affairs of the club during the year. 2
Directors' Report 30 June 2014 After balance date events No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the club, the results of those operations or the state of affairs of the club in future financial years. Environmental issues The club's operations are subject to environmental regulations under the laws of the Commonwealth and State of Australia. The Directors are not aware of any breaches of the legislation during the financial year which are material in nature. Short and long term objectives The club has established short and long term objectives as outlined in the club's business plan which is reviewed on an annual basis. These objectives are both financial and non financial and are aimed towards providing a comfortable and secure environment to its members that continues to meet their needs. These objectives are measured through both financial and non financial key performance indicators that have been determined relevant to the club industry. No information is included on the likely developments in the operations of the club and the expected results of those operations. Auditors independence declaration The lead auditors independence declaration for the year ended 30 June 2014 has been received and can be found on page 4 of the financial report. Indemnification and insurance of officers and auditors The club has paid premiums to insure each of the Directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of Director of the club, other than conduct involving a wilful breach of duty in relation to the club. Directors emoluments No Director has received or become entitled to receive, during or since the financial year, a benefit because of a contract made by the club, with a Director, a firm of which the Director is a member or an entity in which the Director has a substantial financial interest. Signed in accordance with a resolution of the Board of Directors: Director:... Director:... Dated 29 July 2014 3
Auditor's Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Newcastle Leagues Club Limited I declare that, to the best of my knowledge and belief, during the year ended 30 June 2014, there have been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) no contraventions of any applicable code of professional conduct in relation to the audit. Cutcher & Neale Chartered Accountants M.J. O'Connor Partner 22 July 2014 NEWCASTLE 4
Independent Audit Report to the members of Newcastle Leagues Club Limited Report on the Financial Report The summary financial statements of Newcastle Leagues Club Limited comprise the summary statement of profit or loss and other comprehensive income, summary statement of financial position, summary statement of cash flows, summary statement of recognised income and expenditure, discussion and analysis of the financial statements, and the Directors declaration derived from the audited financial statements of Newcastle Leagues Club Limited for the year ended 30 June 2014 as set out on pages 6 to 13. The summary financial statements do not contain all the disclosures required by Australian Accounting Standards Reduced Disclosure Requirements. Reading the summary financial statements, therefore, is not a substitute for reading the audited financial report of Newcastle Leagues Club Limited. Directors responsibility for the summary financial statements The Directors are responsible for the preparation of a summary of the audited financial statements on the basis described in Note 1. Auditor's Responsibility Our responsibility is to express an opinion on the summary financial statements based on our procedures, which were conducted in accordance with Auditing Standard ASA 810: Engagements to Report on Summary Financial Statements. Auditor's Opinion In our opinion, the summary financial statements derived from the audited financial statements of Newcastle Leagues Club Limited for the year ended 30 June 2014, are consistent, in all material respects with those audited financial statements, on the basis described in Note 1. Emphasis of Matter Without qualifying our audit opinion, we draw attention to Note 1(a) to the financial statements which indicates that the Club incurred a net loss of 5,549 during the year ending 30 June 2014 and, as of that date, the Club's current liabilities exceeded it's current assets by 98,218. These conditions, along with other matters disclosed in Note 1(a), indicate the existence of material uncertainty which may cast doubt about the Club's ability to continue as a going concern. Our opinion is not qualified in respect of this matter. Cutcher & Neale Chartered Accountants M.J. O'Connor Partner 30 July 2014 NEWCASTLE 5
Directors' Declaration The Directors of Newcastle Leagues Club Limited declare that the summary financial statements of Newcastle Leagues Club Limited for the financial year ended 30 June 2014, as set out on pages 7 to 13: (a) (b) (c) comply with Accounting policies as described in Note 1; and have been derived from and are consistent with the full financial statements of Newcastle Leagues Club Limited. In the directors' opinion, there is some uncertainty that the Club will be able to pay its debts as and when they become due and payable. Refer to Note 1(a). This declaration is made in accordance with a resolution of the Board of Directors. Director... Director... Dated 29 July 2014 6
Summary Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2014 Bar sales 602,052 557,466 Less: Bar cost of goods sold (233,667) (233,300) Catering sales 342,391 363,644 Less: Catering cost of goods sold (134,608) (129,543) Gross profit Note 2014 2013 576,168 558,267 Poker machine net clearances 906,631 885,939 Gaming commissions 53,412 55,525 Raffles and bingo income 72,013 66,069 Other income 2 62,836 55,071 Finance costs (19,629) (20,592) Bar trading expenses (200,619) (207,196) Catering trading expenses (197,181) (220,546) Poker machine trading expenses (93,136) (87,353) Gaming commission expenses (138,687) (144,263) Raffle and bingo expenses (98,889) (103,316) Occupancy expenses (311,022) (264,525) Club promotion and entertainment expenses (85,619) (89,263) Depreciation of property, plant and equipment (134,057) (144,381) Administrative expenses (398,186) (426,534) Profit / (loss) before income tax (5,965) (87,098) Income tax expense/(benefit) 416 2,367 Profit / (loss) after income tax (5,549) (84,731) Other comprehensive income for the year - - Total comprehensive income / (loss) for the year (5,549) (84,731) The accompanying notes form part of these financial statements. 7
Summary Statement of Financial Position 30 June 2014 ASSETS CURRENT ASSETS Cash and cash equivalents 89,559 92,961 Trade and other receivables 2,077 4,064 Inventories 21,411 22,112 Other assets 57,125 57,716 TOTAL CURRENT ASSETS 170,172 176,853 NON-CURRENT ASSETS Property, plant and equipment 1,654,489 1,632,724 Deferred tax assets 3,480 3,241 TOTAL NON-CURRENT ASSETS TOTAL ASSETS 2014 2013 1,657,969 1,635,965 1,828,141 1,812,818 LIABILITIES CURRENT LIABILITIES Trade and other payables 118,905 162,301 Short-term borrowings 113,262 80,090 Short-term provisions 36,223 38,237 TOTAL CURRENT LIABILITIES 268,390 280,628 NON-CURRENT LIABILITIES Long-term borrowings 191,990 159,104 Deferred tax liabilities 606 783 Long-term provisions 15,892 15,491 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS 208,488 175,378 476,878 456,006 1,351,263 1,356,812 EQUITY Retained Earnings 1,351,263 1,356,812 TOTAL EQUITY 1,351,263 1,356,812 The accompanying notes form part of these financial statements. 8
Summary Statement of Recognised Income and Expenditure For the Year Ended 30 June 2014 2014 Retained Earnings Balance at 1 July 2013 1,356,812 Profit / (loss) attributable to members (5,549) Balance at 30 June 2014 1,351,263 2013 Retained Earnings Balance at 1 July 2012 1,441,543 Profit / (loss) attributable to members (84,731) Balance at 30 June 2013 1,356,812 The accompanying notes form part of these financial statements. 9
Summary Statement of Cash Flows For the Year Ended 30 June 2014 2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers 2,325,221 2,164,148 Payments to suppliers and employees (2,219,000) (2,138,107) Interest received 368 816 Interest paid (19,629) (20,592) Net cash provided by (used in) operating activities 86,960 6,265 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (156,419) (124,957) Net cash used by investing activities (156,419) (124,957) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 152,854 95,235 Repayment of borrowings (86,797) (17,889) Net cash used by financing activities 66,057 77,346 Net increase (decrease) in cash and cash equivalents held (3,402) (41,346) Cash and cash equivalents at beginning of year 92,961 134,307 Cash and cash equivalents at end of financial year 89,559 92,961 The accompanying notes form part of these financial statements. 10
Notes to the Financial Statements For the Year Ended 30 June 2014 1 Summary of Significant Accounting Policies (a) Going Concern The statement of profit or loss and other comprehensive income for the year ending 30 June 2014 reflects a net loss of 5,549 (2013 - a loss of 84,731) and the statement of financial position reflects that current liabilities exceed current assets by 98,218 (2013 - current liabilities exceeded current assets by 103,775). Continued operating losses will create significant uncertainty as to whether the Club will continue to meet its financial obligations as they fall due and therefore whether the Club realise its assets in the normal course of business. Whilst the Club reported an operating loss, and a negative working capital position this year, the operating revenues improved on the prior year and excluding depreciation and interest, the Club reported a surplus of 147,951 for 2014 compared with 79,168 for 2013. Operating cash flows were positive 162,034 this year. The directors have resolved that the going concern basis of accounting is appropriate. In making their assessment, the Directors have considered strategies to increase trading and reduce operating costs as well as ensuring the Club has access to sufficient cashflows to meet its obligations. The Directors also note that the Club has additional assets being the 44 poker machine licences that are not recorded as assets in the financial statements. If the Club was not considered a going concern, the value of the leasehold improvements may be overstated. Leasehold improvements are currently recorded at cost less accumulated depreciation. 2 Revenue 2014 2013 Operating activities - Revenue - trading 1,976,499 1,928,643 Other Revenue from Ordinary Activities - Commissions 368 816 - Royalties 7,156 7,389 - Rental income 17,180 17,180 - Sundry income 6,637 367 - Room hire 8,793 4,533 - Commissions received 19,895 18,936 - Concert income 2,807 5,850 62,836 55,071 Total Revenue 2,039,335 1,983,714 11
Discussion and Analysis of the Summary Financial Statements For the Year Ended 30 June 2014 Information on Newcastle Leagues Club Limited Summary Financial Statements The financial statements, disclosures and discussion and analysis in the summary financial statements have been derived from the 2014 financial statements of Newcastle Leagues Club Limited. A copy of the full financial statements and auditors report will be sent to any member, free of charge, upon request. The summary financial statements cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the entity as the full financial statements. The discussion and analysis is provided to assist members in understanding the summary financial statements. Summary Statement of Profit or Loss and Other Comprehensive Income The loss from ordinary activities attributable to members for the year was 5,549, which is an improvement 79,182 on the loss result incurred in 2013. The improved result is mainly due to an increase in revenue such as bar and poker machines, as well as a decrease in operating expenses such as gaming commission and administration expenses. Summary Statement of Financial Position Assets Total assets increased by 15,323 to 1,828,141 representing an increase of 0.8%. This increase is mainly reflected in the following balances: Decrease in cash assets due to the club being in overdraft at the end of this financial year. Increase in property, plant and equipment due to asset additions during the year mainly for poker machines. All other assets have remained relatively comparable to the previous year balances. Liabilities Total liabilities increased by 20,872 to 476,878 representing an increase of 4.6%. This increase is mainly reflected in the following balances: Increase in short and long term borrowings due to new poker machine purchases and the club being in overdraft at the end of this financial year. All other liabilities have remained relatively comparable to the previous year balances. 12
Discussion and Analysis of the Summary Financial Statements For the Year Ended 30 June 2014 Summary Statement of Recognised Income and Expenditure The equity of the Club has decreased entirely due to the reported loss amount of 5,549 in 2014. Summary Statement of Cashflows Operating Activities Cash inflows from operating activities were 86,960, a increase of 80,695 which is due to an increase in receipts from customers this year. Investing Activities Cash invested by the Club in the premises and on plant and equipment during the year totalled 156,419. Financing Activities Net cash inflows from financing activities were 66,057. The Club financed the insurance premium and the purchase of several poker machines during the year. The Club has also made principle repayments on existing and new borrowings as well. 13