Annual Report 2017 by Merrylands RSL

ANNUAL 2016

REPORT

ANNUAL 2016 REPORT

Merrylands RSL Club Limited ACN 000 926 358 Annual Financial Report 31 December 2016

CONTENTS: Chairman’s Report

CEO’s Report

Development Report

AGM Notice

Finance Report

Director’s Report

Declaration of Independence

Report on the Audit of the Financial Report

Directors Declaration

Statement of Profit or Loss & Other Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

CHAIRMAN’S REPORT The senior management team, with the support of the Board, applied their experiences to turn the circumstances around.

It is my very great pleasure to present to you the 2017 Chairman’s Report in association with the Annual Report. Members would be aware that there has been a decline in the clubs operating result over the reporting period up to December 2016. This has been confirmed by the final audit that was carried out during February 2017 that showed a 17% slowing down when compared to the record year of 2015 when our surplus was $5.1M.

SAVE PAPER: GO ELECTRONIC. The Club is required to send all member an AGM Notice. The Annual Financial Report is now available on our website via www.mrsl.com.au. To update your mailing preferences, please call Reception on (02) 8868 7777.

Factors that may have influenced the outcome would have been the presence of the construction activities on Miller St, together with a need for an increase in the marketing spends to attract some of the lost business from the club. The good news is that this strategy appears to have been a success judging by the encouraging results that have been recorded in the first month of this year. Close scrutiny of our accounts will reveal that the slide was arrested in the period after the first quarter of the 2016.

We have had some major changes to the senior management team that has seen David Kim and Vicky Kotkiewicz joining Merrylands RSL. David has taken over the role of Gaming Manager, and has been in the job for most of 2016. Vicky came on board mid way through the year to take on a position of HR Manager. It is pleasing to report that Julie Bond still makes occasional visits to the club to make sure that all is going along smoothly. Merrylands RSL has long been recognised as being a willing participant when the Clubs Grants cycle comes around. The amount provided to the community during the past year was just a little under $790,000. Our five major recipients were delighted that we matched our previous commitments. This result was achieved at a time when the clubs operating revenues were under threat, and proves that we take these responsibilities very seriously. This year will have an exciting period when the time gets closer to moving in to our new premises. Momentum is starting to build among the staff who are already on their toes eager to show off the new offerings that will come with the relocated entry and layout.

We can report that club membership is pushing through to the 78,696 mark. One of the financial savings decisions that were made mid way through 2016 was to cease marketing activity to boost the membership numbers. It appears that the appeal of joining Merrylands RSL must be very tempting to the community not to miss out on as the numbers continued to rise. In closing, I would like to congratulate our management team and staff headed by CEO Bryn for their commitment to Merrylands RSL during a difficult year. I would also like to thank our members for their loyal support, and to thank the Board for their dedication to the future of our club. To the families, relatives and friends who have lost loved ones during the past year; I offer our most sincere condolences on behalf of our members. To those who are sick or hospitalised, we wish you a speedy recovery.

Ron Hand, JP Chairperson

MAKE THE SWITCH AND GO ELECTRONIC!

ANNUAL 2016 REPORT

CEO’S REPORT CATERING

FINANCIAL PERFORMANCE 2016 has proved to be a challenging year for the Club. The impact of the building work has had a major effect on our business profitability. Some months we saw our business 20%-30% down, where we only anticipated a 5% drop. Due to this down turn, major rethinking took place on the focus of our business and major changes in promoting and a shift to a more customer based driven business was undertaken by management in the second half of 2016. This has led to encouraging turnover and strong improvements in our financial position. A big thank you and acknowledgment to Svetlana Kargin, Jessica Thy, Chris Debrincat, David Kim and Wayne Mar in this mighty turnaround. The team worked hard, creative in their thoughts, determined with their targets, and innovative in their method; to score the Club’s great results.

Business at our eateries has seen positive growth with their trade booming in 2016. Olivier Maokhamphieu, also referred to as Chef Ollie, has made great strides of improvement in the Waratah Café with the quality and standard of food rising sky high. His effectiveness in providing ‘A class’ food has been consistent all year with functions of high volume dishes right through to lunch time specials. His influence has spread through the kitchen with all of Seng Hong’s staff, really catapulting the café to new heights. Michael Lau and his leadership has improved the quality, flavour diversity and customer service of the buffet. Club patrons are clearly noticing these great changes. The utilisation of the alfresco dining expansion, has really benefited the buffet with the ability to hold over 100 seats in that area alone.

KOKODA YOUTH LEADERSHIP CHALLENGE This year the Club was represented by Svetlana Kargin and Caesar Harb in undertaking the Kokoda Trail. Both of these future leaders have come back and really applied what they learnt in their work and daily lives. They experienced firsthand the treacherous Kokoda trail and gained a renewed perspective on adversity. The Club has sent in total

17 young adults and we look forward to Michael Tortosa representing our Club in 2017. He has already shown to be a great asset to our Club and community. We hope this will be a beneficial experience for him to learn and grow as a young Australian.

RSL & SERVICES CLUBS ASSOCIATION NATIONAL CONFERENCE It gives me great pleasure in reporting on two members of our staff who have represented your Club on a national scale. Jessica Thy and Kelly He presented an extensive workshop on membership at the 2016 RSL & Services Clubs Association National Conference at the Hunter Valley. They provided an insightful presentation to representatives from around the country of Merrylands RSL Club’s strategy and focus on membership. Their presentation on our Club and its record 70,000 members, portrays our Club to be a leader in the industry when it comes to Club membership and we are all very proud of Jessica and Kelly for the hard work they put in.

2016 HOLROYD CITIZEN OF THE YEAR I would once again like to congratulate member Robin Grimley for receiving the Holroyd Citizen of the Year award back in January 2016. I cannot think of a more

deserving recipient of the award. Robin has contributed so much to the Club and community with his efforts in the planning of Anzac Day commemorations as well as his involvement with local schools educating the youth of Holroyd about important events and milestones of Australia’s wartime history. He is a true ambassador of what our Club represents and strives to uphold.

ANZACS IN FRANCE 1916 EXHIBITION In May, the Club hosted a historical exhibition partnered with the RSL & Services Clubs Association. To launch the exhibit, Dr Brendan Nelson from the AWM in Canberra was the guest speaker. It was very much appreciated that Dr Nelson made the trip to Merrylands, and his contribution to the launch was wonderful as he is a remarkable orator and he truly gave the exhibit the limelight it deserved.

HOMES FOR HEROES RELAY On the 1st of May 2016, at Parramatta park, the Club was involved in the first Annual Honour Our Heroes Relay Walk. The goal is to raise funds and to raise awareness of the plight of many of our returned services personnel who suffer from PTSD, and to raise much needed funds to improve and expand the facilities

and services offered by “Homes for Heroes”. The day was a great success with both staff and members participating in the walk. We look forward to repeating the fun we all had in 2017 for this great cause.

COMMUNITY SUPPORT Your Club has a strong tradition in helping the community and 2016 it no different with $786,726 given to worthy organisations in the great Holroyd area. Our strong relationship with the Goannas, the Two Blues Rugby Club, and Umina Surf Lifesaving Club continued as we financially assisted them throughout the year. The youth of our community is very important to the Club hence why we endeavour to support organisations that provide a direct benefit to the community. We are proud supporters of Colon Cancer research and are also involved with over 8 schools in our local area. We hope our financial and collaborative assistance will further add to the resources available to develop the future of Merrylands and our community.

will be a benefit to all members of the Club as they would be a better representation of what the greater Holroyd area needs. Although we faced many obstacles in 2016, the direction of the Board as well as the hard work of management and staff has seen the Club head quite strongly in the right direction. I would like to thank the Board of Directors of Merrylands who have once again gone above the call of duty with the numerous hours they have dedicated and the efforts they have displayed in growing the Club to a destination of choice in Western Sydney. The Boards Chairman, Ron Hand and Vice President Steve Cunningham and George Salisbury are truly appreciated for their constant assistance to the Administration staff.

Bryn Miller Chief Executive Officer

We look forward in welcoming a new democratically elected council in 2017, where we will hopefully once again resume our strong relationship, for the better of our community and its residents. The elected council

ANNUAL 2016 REPORT

NOTICE OF GENERAL MEETING NOTICE IS HEREBY GIVEN THAT THE ANNUAL GENERAL MEETING OF THE MERRYLANDS R.S.L. CLUB LIMITED WILL BE HELD IN THE CLUB’S AUDITORIUM AT 14 MILITARY ROAD, MERRYLANDS ON SUNDAY MAY 7 2017 AT 9.30AM

EXPLANATORY NOTES: 1.

The Club's Constitution currently entitles all members of the SubBranch to be eligible to apply for RSL membership of the Club.

However, the Club has determined that such membership should only be afforded to those who are classified as Service Members so that all Associate members of the Sub-Branch may apply for Associate membership of the Club.

The wording of the existing Rule 21 has also been updated to be significantly clearer on the eligibility criteria in accordance with recommendations made by a recent Supreme Court decision affecting another registered club's constitution.

The Special Resolution will not affect those members who are already classified as RSL Members of the Club. However, all future persons who apply for RSL membership will need to meet the new eligibility criteria of being Service Member of the Sub-Branch.

BUSINESS:

DEVELOPMENT REPORT There has been a total of $10.7M committed to the project as at the 22nd February 2017. The revised budget after considering the water ingress problems in the early part of the work was in the order of $15M. From that we can see that there will be a high standard of finishes to be installed that will make up the remainder of the budget. The first stage of the clubs future is only a couple of months away from becoming a reality. All of the structural elements have been completed, and the new building is going through the services rough-in and fit-out stage. The unofficial date for Practical Completion has been hinted at around mid to late 2017. This is a far cry from the original date of November 2016 that was shattered by the excavation delays with artesian water flooding the site.

The re-instatement of the Link Lounge during 2016 gave us some much needed seating space back for members to relax with their friends. The temporary lounge next to Signatures had to be demolished to make way for the construction of the new Reception space in Stage 1. The Stage 2 DA was lodged with Cumberland Council during the last week of January 2017. Total budget for this next stage has been estimated at $19M. A reminder to

the members that this stage will involve the construction of another level above the Signatures Buffet. It will allow them to move upstairs at the top of the escalators. A multi-million dollar renovation/ refurbishment program to the existing gaming room and others is being considered after all of the machines have been relocated. These works would be part of an integrated plan to showcase the newly opened ground floor club. I would like to take this opportunity to thank all of the people associated with the development team for the time and dedication that you have placed into the club’s future.

To confirm the Minutes of the previous Annual General Meeting.

To receive reports from the Board of Management.

To receive and consider the Financial Performance Report and Financial Report from the Auditor.

To deal with Business of which due notices has been given:(i) Consider the Special Resolution in relation to changing Rule 2 (a) and Rule 21 (a) of the Club’s Constitution.

To deal with Business of which due notices has been given: (i) Consider the following Ordinary Resolutions in relation to Directors & Members Benefits. (See the following pages).

To consider Life Member’s nominations in accordance with the Club’s Constitution.

To deal with any other General Business.

B. MILLER CHIEF EXECUTIVE OFFICER

SPECIAL RESOLUTION: That the Constitution of Merrylands R.S.L. Club Ltd ACN 000 926 358 be amended by: 1.

Inserting the following definitions in Rule 2(a):

“R.S.L.” means the Returned and Services League of Australia (New South Wales Branch) Incorporated. “Sub-Branch” means the Merrylands Sub-Branch of the R.S.L. 2.

Deleting existing Rule 21(a) and replacing it with the following new Rule 21(a): 21. (a)

RSL Members An RSL Member shall be: (i) any person who has obtained the age of eighteen (18) years and who is a member of the Sub-Branch and has paid all subscriptions, fees and levies due to the Sub-Branch, and who has made application for membership of the Club in accordance with this Constitution and has been duly elected prior to the 2017 Annual General Meeting; or (ii) any person who: (A) has obtained the age of eighteen (18) years;

Ron Hand, JP Chairman, Development Committee

(B) is a Service member of the R.S.L. (within the meaning of any constitution or rules of the R.S.L.); (C) is a member of the Sub-Branch and has paid all subscriptions, fees and levies due to the Sub-Branch; and (D) who has made application for membership of the Club in accordance with this Constitution after the 2017 Annual General Meeting and has been duly elected.

ANNUAL 2016 REPORT

FIRST RESOLUTION:

SECOND RESOLUTION:

That pursuant to the Registered Clubs Act:

(a) the members hereby approve and agree to expenditure by the Club in a sum not exceeding $150,000.00 until the next Annual General Meeting of the Club for the following:-

(a)

(i) Reasonable expenditure incurred by Directors in travelling to and from Directors Meetings or other duly constituted Committee meetings as approved by the Board from time to time on production of invoices, receipts or other proper documentary evidence of such expenditure. (ii) Reasonable expenditure in the form of a meeting allowance for each Director incurred with the attendance at Board or Committee Meetings in the course of that persons duties in relation to the Club. (iii) Reasonable expenditure on a Merrylands R.S.L. Club Ltd. uniform for each Director or Officer of the Club who does not possess such items of clothing. (iv) Reasonable expenditure of food and refreshments for each Director, Club officers and various guests of the Club who have previously attributed to the service of the Club and their partners at the following Club functions:

• The Board of Directors & Sub-Branch Dinner • The Christmas Cabaret Night • The Golden Oldies Luncheon • Gallipoli Scholarship Luncheon • ANZAC & Remembrance Day Luncheons • Veterans Luncheon

The Members hereby approve And agree to expenditure By the Club in a sum not exceeding $165,000.00 for the professional development and education of Directors until the next Annual General Meeting and being:

(i) The reasonable cost of food, travel and accommodation for not more than four Officers of the Club and not more than 3 Management staff attending at the Clubs NSW Annual General Meeting, Conferences and Trade Show: (ii) The reasonable cost of food, travel & accommodation for not more than nine Officers of the Club and not more than six management staff attending: The RSL & Services Clubs Association Annual General Meeting & Conference and the RSL National Conference. (iii) The reasonable cost of Directors and Officers attending, in Australian or Overseas, seminars, lectures, trade displays, commemorations and other similar events as may be determined by the Board from time to time. (iv) The reasonable cost of Directors & Officers of the Club attending other Registered Clubs for the purpose of viewing and assessing their facilities and methods of operation provided such attendances are approved by the Board as being necessary for the betterment of the Club. (v) The reasonable cost of Directors and Officers of the Club attending any community or charity function as the representatives of the Club and authorised by the Board to do so.

(v) Provision of a Cab Charge Credit Card to all Directors to be used for attendance at Club Special functions, meetings and events as determined by the Board.

(b) The members acknowledge that the benefits in paragraph (a) above are not available to members generally but only for those who are Directors or other Officers of the Club.

(vi) Reasonable expenditure for Directors entertaining guests who visit the Club, where the Board determines such expenditure is in the interests of the Club, including its commercial business.

THIRD RESOLUTION:

(vii) Provision of reserved car parking at the Club for the President, plus additional spaces for Directors and Welfare Officer & Lucky Triple Eight Recipients.

(a) That pursuant to Section 10(6) (b) of the Registered Clubs Act, 1976 the Members agree to the payment of the following honoraria for the period until the next Annual General Meeting:-

(viii) Provision and payment of a mobile phone, to be used by the President, and the payment of the rental and operating charges of the home phone of the President, to assist the President in discharging his duties.

(i) President $1083 per month = $13,000 pa

(ix) Provision of a Christmas hamper to each Director and each member who conducts welfare duties in the Club.

(b) The Members acknowledge that the benefits in paragraph (a) above are not available to members generally but only for those who are Directors or other Officers of the Club.

(b) The Members acknowledge that The benefits in paragraph (a) above are not available to members generally but only for those who are Directors or other Officers of the Club.

(ii) Vice-Presidents, $750 each per month = $9,000 pa (iii) Directors, $500 each per month = $6,000 pa

ANNUAL 2016 REPORT

FOURTH RESOLUTION:

NOTES TO MEMBERS:

That pursuant to the Registered Clubs Act:

These notices are to be read in conjunction with the proposed Resolutions:

(a) The Members hereby approve and agree to expenditure in a sum not exceeding $10,000.00 and being:-

To be passed each ordinary resolution must receive votes in its favour from not less than a simple majority of those members, who being entitled to do so, vote in person at the Meeting.

(i) The Pension subsidy for Club members after five years continuous membership to the Club.

The following members are entitled to vote on the Special Resolution:

1. Full Member Pensioner.

2. Full Member 25 yr.

3. Life Member Club 25yr.

(b) Financial Associate Members who have at least five (5) years’ continuous membership of the Club prior to the date of this Annual General Meeting; and (c) Life Members.

(b) The Members hereby approve and agree to the payment of $200.00 Mortality Benefit Payment to members who were registered joining the Club before February 1st 1979. (c) The Members acknowledge that the benefits in paragraph (a) & (b) above are not available to members generally but only for those members listed in the above categories of membership of the Club.

FIFTH RESOLUTION: The pursuant to the Registered Clubs Act: (a) The Members hereby approve and agree to expenditure in a sum not exceeding $12,000 and being: (i)

(a) Financial RSL Members;

The RSL Widow’s Christmas Gift Vouchers valued at $75 each paid to wives (who are current financial members of the Club) & whose late husbands were financial RSL Members.

The Special Resolution must be considered as a whole and cannot be amended by motions from the floor.

The Special Resolution will be passed if at least a 75% majority of the members present and voting (being entitled to do so), vote in favour of the Special Resolution.

Employees of the Club are prohibited from voting and proxy voting is prohibited under the Registered Clubs Act.

A copy of the current Constitution is available to members on request from the Club’s office.

Members are requested to send any questions regarding the Special Resolution to the Chief Executive Officer in writing at least 5 business days prior to the Annual General Meeting so that they can be addressed, and brought to the attention of the meeting where appropriate.

Members wishing to attend must register with the Returning Officer at the Annual General Meeting to verify their eligibility and obtain any voting papers, and registration will open at 9am on the day. Members are reminded to be in attendance in time to register before the meeting commences at 9.30am.

By Direction of the Board B. MILLER CEO Dated: 13-03-2017

(b) The Members acknowledge that the benefits in paragraph (a) above are not available to members generally but only for those members listed in the above categories.

SIXTH RESOLUTION:

ATTENTION MEMBERS:

The pursuant to the Registered Clubs Act:

At the Annual General Meeting any member will have the opportunity of asking questions concerning the accounts.

(a)

It is requested however, that those members requiring an in-depth explanation, which would need some research, give notice in writing to the CEO by 5pm on Friday 28 April 2017.

The Members hereby approve and agree to expenditure for “Length of Service” to retiring Board Members or in the event of the death of a Director whilst serving in office expenditure towards the cost of a “Wake” held at the Club as per formula listed below not exceeding $2,000 per individual:-

Years of Service

Value of Gift

Death In Office

5 yrs

Nil

5 + yrs

$500 + $100 pa

10 yrs

$1,000

20 + yrs

$2,000

Written enquires will be dealt with at the Meeting and in no way will restrict any member requesting clarification from the floor of any items shown in the Financial Statement.

$500 + $100pa

(b) The Members acknowledge that the benefits in paragraph (a) above are not available to members generally but only for those who are Directors of the Club.

ANNUAL 2016 REPORT

FINANCE REPORT OPERATING RESULT

TOTAL TURNOVER 40,000,000.00 38,000,000.00 36,000,000.00 34,000,000.00 32,000,000.00 30,000,000.00

After achieving record figures for 2015, this yearâ&#x20AC;&#x2122;s result has been a bit disappointing. Trade at Merrylands has been affected by the renovations, which we hope to be complete later this year. Umina being steady in their respective business. Resulting in an overall net profit after tax for the year of $4,308,239 compared with $5,187,647 for the prior year.

28,000,000.00

2016

2015

2014

2013

2012

With major construction works continuing, we have seen some negative effects on patronage and revenue overall, hence, affecting our net profit. This is after charging $4,169,011 (2015 - $4,096,715) for depreciation and amortisation, $1,345,833 for impairment gains (2015 - $131,060), and before charging $415,384 (2015 $383,336) for income tax. We see a decrease in the EBITDAI of $2,024,768, which is not great considering Stage 2 of the Masterplan is in the planning stages. We need to continually improve and grow this so as to achieve our future Masterplan, in a timely manner

POKER MACHINE DUTY 9,000,000.00 8,000,000.00 7,000,000.00

In closing special thanks to the Board of Directors, CEO Bryn Miller, Senior Managers and all the staff for their efforts and a job well done again this year. Also, a big thank you to our loyal members for their support in the past and in the future.

6,000,000.00 5,000,000.00 4,000,000.00 3,000,000.00 2,000,000.00

NET PROFIT AFTER TAX 6,000,000.00 5,000,000.00 4,000,000.00 3,000,000.00 2,000,000.00 2,000,000.00 0.00

2016

2015

2014

2013

2012

2016

2015

2014

2013

2012

TOTAL EBITDAI 12,000,000.00 10,000,000.00 8,000,000.00 6,000,000.00 4,000,000.00 2,000,000.00 0.00

1,000,000.00 0.00

2016

2015

2014

2013

2012

Wayne Mar - B.Bus CPA Chief Financial Officer

ANNUAL 2016 REPORT

MERRYLANDS RSL CLUB LIMITED

DIRECTORS’ REPORT DIRECTORS

DIRECTORS’ MEETINGS

The directors present their report, together with the financial statements of Merrylands RSL Club Limited (the Company) for the year ended 31 December 2016.

The number of meetings of the Company’s Board of Directors (the Board) and of each board committee held during the year ended 31 December 2016, and the number of meetings attended by each director were:

The directors of the Company in office at any time during or since the end of the financial year are: Name

OCCUPATION

YEARS OF EXPERIENCE

Ronald James Hand President

Retired

23 years

Stephen Cunningham Vice-President

Supervisor

12 years

George Salisbury Vice-President

Retired

16 years

Eric William Michelmore Director

Retired

20 years

Robert Ernest Shorrock Director

Retired

10 years

Peter Francis Harding Director

Contract Carrier

10 years

Sydney Alfred Thode Director

Retired

8 years

Peter Ross Hickey Director

Retired

4 years

Ian Nicholson Hyde Resigned 1 May 2016 Director

Retired

4 years

Roger Ford Appointed 1 May 2016 Director

Retired

1 year

BOARD MEETING

SUB-COMMITTEE MEETINGS

Director

NUMBER OF MEETINGS ATTENDED

R Hand

13 13 50 50

S Cunningham

9 13 36 44

G Salisbury

12 13 48 49

E Michelmore

12 13 14 14

S Thode

9 13 9 15

R Shorrock

11 13 11 13

P Harding

13 13 19 19

P Hickey

13 13 4 6

NUMBER OF MEETINGS HELD*

NUMBER OF MEETINGS ATTENDED

NUMBER OF MEETINGS HELD*

I Hyde - Resigned 1 May 2016 13

R Ford - Appointed 1 May 2016 9

* Number of meetings held where each Director was entitled to attend during the time they held office throughout the year.

ANNUAL 2016 REPORT

MERRYLANDS RSL CLUB LIMITED DIRECTORS’ REPORT (CONTINUED)

MEMBERSHIP

OBJECTIVES

The company is a Company limited by guarantee and is without share capital.

SHORT TERM

The number of members as at 31 December 2016 and the comparison with last year is as follows:

The Club’s objectives are to assist generally in the promotion, conduct and propagation of a Community based organisation that was founded for the care and commemoration of the RSL members and their families.

2016

2015

Ordinary

78,696

69,843

78,696

69,843

Further short term objectives are to provide for the use of members and their guests a great Community Club with a commitment to ensuring the club is focused with service orientated employees continuously seeking to improve the clubs services, facilities and amenities for all to enjoy. LONG TERM

MEMBERS’ LIMITED LIABILITY In accordance with the Constitution of the Company, every member of the Company undertakes to contribute an amount limited to $5 per member in the event of the winding up of the Company during the time that he/she is a member or within one year thereafter. The total members’ limited liability is $344,035 (2015: $349,215)

STRATEGY FOR ACHIEVING THE OBJECTIVES

OPERATING RESULT The table below shows a reconciliation of Merrylands RSL Club Limited’s earnings before interest, income tax, depreciation, amortisation and impairment losses. This is referred to as EBITDAI.

To continuously plan to improve our clubs services, facilities and amenities for our members ensuring that the company’s pursuit of its objectives can be achieved via existing and future business segments whilst maintaining sustained growth and sound financial cash flow, creditworthiness, earnings growth and an acceptable return on investment.

2016

2015

The Club conducts an annual Strategic Review of its operation and undertakes a number of strategic actions to achieve these objectives such as providing: • Providing Great Facilities

$ $

• Developing and provide Training for our Staff and Management

Net profit after income tax expense attributable to members

• Customer Focused Organisation 4,308,239

5,187,647

ADD BACK:

• Growing our Business • Caring for the Community

Depreciation and amortisation expense

4,169,011

4,096,715

• Improving Operational Efficiencies

Finance cost

116,872

151,802

• Supporting Local Sports

Income tax expense

415,384

383,336

Impairment write back

(1,345,833)

(131,060)

EBITDAI

7,663,673

9,688,440

ANNUAL 2016 REPORT

MERRYLANDS RSL CLUB LIMITED DIRECTORS’ REPORT (CONTINUED)

PRIN CIPAL ACTIVITIES The principal activities of the Company during the year have continued to be that of licensed social clubs.

TEL: +61 2 9251 4100

LEVEL 11, 1 MARGARET ST

FAX: +61 2 9240 9821

SYDNEY NSW 2000

WWW.BDO.COM.AU

AUSTRALIA

DECLARATION OF INDEPENDENCE BY PAUL CHEESEMAN TO THE DIRECTORS OF MERRYLANDS RSL CLUB LIMITED As lead auditor of Merrylands RSL Club Limited for the year ended 31 December 2016, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

PERFORMANCE MEASUREMENT AND KEY PERFORMANCE INDICATOR

•

The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

The Club’s financial performance is measured against the annual budget, previous year’s results and benchmark data from the club industry.

•

No contraventions of any applicable code of professional conduct in relation to the audit.

Financial performance measures include: •

Earnings before Interest, Taxation, Depreciation and Amortisation, and Impairment (EBITDAI)

•

Wage percentages to Income

•

Expense percentages to Income

•

Gross Profit percentages

•

Cash Flow

Paul Cheeseman Partner

BDO East Coast Partnership Sydney, 28 February 2017

Non financial performance measures include: •

Mystery shoppers

•

Members’ feedback

•

Market research

•

Patronage numbers

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 Merrylands this 28 of February 2017.

R J Hand Director

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, 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.

ANNUAL 2016 REPORT

MERRYLANDS RSL CLUB LIMITED TEL: +61 2 9251 4100

LEVEL 11, 1 MARGARET ST

FAX: +61 2 9240 9821

SYDNEY NSW 2000

WWW.BDO.COM.AU

AUSTRALIA

REPORT ON THE AUDIT OF THE FINANCIAL REPORT Opinion We have audited the financial report of Merrylands RSL Club Limited (the Company), which comprises the statement of financial position as at 31 December 2016, the statement of profit and loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies, and the directors’ declaration. In our opinion the accompanying financial report of Merrylands RSL Club Limited, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Company’s financial position as at 31 December 2016 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards 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 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 confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information The directors are responsible for the other information. The other information obtained at the date of this auditor’s report is information included in the Directors report, but does not include the financial report and our auditor’s report 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 on the other information obtained prior to the date of this auditor’s report, 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. Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that 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 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 has 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 the 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 this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: http://www.auasb.gov.au/auditors_files/ar1.pdf. This description forms part of our auditor’s report. BDO East Coast Partnership

Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon.

PAUL CHEESEMAN Partner 28 February 2017

ANNUAL 2016 REPORT

MERRYLANDS RSL CLUB LIMITED

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the Year Ended 31 December 2016 2016

2015

3,958,651

4,132,850

31,244,275

32,625,397

Other revenue

1,029,924

941,171

Other income

32,547

131,630

36,265,397

37,831,048

(1,698,140)

(1,756,863)

Note

REVENUE AND OTHER INCOME Sale of goods Rendering of services

DIRECTORS’ DECLARATION The directors of Merrylands RSL Club Limited declare that: (a) In the Directors’ opinion the financial statements and notes set out on pages 23 to 42, 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 December 2016 and of its performance, for the financial year ended on that date; and Complying with Australian Accounting Standards Reduced Disclosure Requirements and Corporations Regulations 2001 and other mandatory professional reporting requirements.

(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.

TOTAL REVENUE AND OTHER INCOME

EXPENSES Cost of sales Employee benefits expense

(7,403,657)

(7,075,665)

Entertainment, marketing and promotional costs

(4,960,219)

(4,965,412)

Poker machine licences and taxes

(7,468,659)

(7,736,260)

Donations

(573,246)

(615,976)

Occupancy expenses

(4,063,003)

(3,722,670)

Other expenses

(2,434,800)

(2,269,763)

(28,601,724)

(28,142,609)

7,663,673

9,688,439

Signed in accordance with a resolution of the directors. Dated at Merrylands this 28th day of February 2017 Earnings before depreciation and amortisation expense, finance costs and impairment losses

R J HAND Director

Depreciation and amortisation expenses

2(a)

(4,169,011)

(4,096,715)

28 February 2017

Finance costs

2(a)

(116,872)

(151,802)

Impairment write back

2(a)

1,345,833

131,060

4,723,623

5,570,982

(415,384)

(383,336)

4,308,239

5,187,646

4,308,239

5,187,646

PROFIT BEFORE INCOME TAX

Income tax expense NET PROFIT AFTER INCOME TAX EXPENSE ATTRIBUTABLE TO MEMBERS

3(a)

OTHER COMPREHENSIVE INCOME Other comprehensive income for the year, net of tax TOTAL PROFIT OR LOSS AND COMPREHENSIVE INCOME FOR THE YEAR

‘The Statement of Financial Position should be read in conjunction with the accompanying notes set out on pages 27 to 42.’

ANNUAL 2016 REPORT

Merrylands RSL Club Limited

STATEMENT OF CHANGES IN EQUITY

STATEMENT OF FINANCIAL POSITION

For the Year Ended 31 December 2016

Note

2016

2015

ASSETS

54,789,335

5,187,646

BALANCE AT 31 DECEMBER 2015

59,976,981

Net profit for the year

4,308,239

64,285,220

Net profit for the year

Cash and cash equivalents

14,926,839

17,945,210

144,756

165,956

Inventories

137,873

123,306

Prepayments

261,273

155,526

Trade and other receivables Other financial assets

TOTAL CURRENT ASSETS

15,470,743

18,390,000

Other comprehensive income for the year Total comprehensive income for the year

NON-CURRENT ASSETS Property, plant and equipment

51,236,653

43,838,417

Investment property

968,863

1,033,455

Intangible assets

Total Equity $

BALANCE AT 1 JANUARY 2015

CURRENT ASSETS

Deferred tax assets

Retained Earnings $

3 (c)

61,284

55,499

4,849,290

3,503,457

57,116,090

48,430,828

72,586,833

66,820,828

TOTAL NON-CURRENT ASSETS TOTAL ASSETS

BALANCE AT 31 DECEMBER 2016

LIABILITIES CURRENT LIABILITIES Trade and other payables

4,421,880

2,299,562

Financial liabilities

1,542,120

1,368,064

Current tax liabilities Employee benefits

3 (b)

392,918

386,956

1,423,938

1,399,104

73,809

76,249

7,854,665

5,529,935

Income received in advance

TOTAL CURRENT LIABILITIES

NON-CURRENT LIABILITIES Financial liabilities

347,963

1, 154,225

Employee benefits

98,985

159,687

TOTAL NON-CURRENT LIABILITIES

446,948

1,313,912

TOTAL LIABILITIES

8,301,613

6,843,847

NET ASSETS

64,285,220

59,976,981

MEMBERS’ FUNDS RETAINED PROFITS

64,285,220

59,976,981

TOTAL MEMBERS’ FUNDS

64,285,220

59,976,981

‘The Statement of Financial Position should be read in conjunction with the accompanying notes set out on pages 27 to 42.’

ANNUAL 2016 REPORT

Merrylands RSL Club Limited

NOTES TO THE FINANCIAL STATEMENTS

STATEMENT OF CASH FLOWS

For the Year Ended 31 December 2016

For the Year Ended 31 December 2016 2016

2015

38,743,856

40,496,724

(30,090,494)

(32,495,213)

363,594

325,823

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (GST inclusive) Payments to suppliers and employees (GST inclusive) Interest received Rent received

666,330

615,348

Finance costs paid

(116,872)

(151,802)

Income taxes paid

(415,207)

(292,294)

NET CASH INFLOW FROM OPERATING ACTIVITIES

9,151,207

8,498,585

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment

220,453

58,939

Payment for property, plant and equipment

(11,757,825)

(3,538,364)

NET CASH OUTFLOW FROM INVESTING ACTIVITIES

(11,537,372)

(3,479,425)

CASH FLOWS FROM FINANCING ACTIVITIES Repayment of borrowings

(561,973)

(530,788)

Proceeds from finance leases

252, 181

Repayment of finance leases

(70,233)

(131,807)

NET CASH OUTFLOW FROM FINANCING ACTIVITIES

(632,206)

(410,414)

NET (DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS

(3,018,371)

4,608,746

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR

17,945,210

13,336,464

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR

14,926,839

17,945,210

ABOUT THIS REPORT Merrylands RSL Club Limited is a company limited by guarantee, incorporated and domiciled in Australia and is a non-forprofit entity for the purposes of preparing the financial statements. The financial statements are for Merrylands RSL Club Limited as a standalone legal entity. The financial statements were approved for issue by the Directors on 28 February 2017. The financial statements are general purposes financial statements which: •

Have been prepared in accordance with the requirements of the Corporations Act 2001 and Australia Accounting Standards - Reduced Disclosure Requirements of the Australia Accounting Standards Board;

•

Adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are relevant to the operations of the Company and effective for reporting periods beginning on or after 1 January 2016.

• Have been prepared on a going concern basis. The Notes to the Financial Statements The notes include information which is required to understand the financial statements and is material and relevant to the operations, financial position and performance of the company. Information is considered material and relevant if, for example:

Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements. Critical Accounting Judgements, Estimates and Assumptions In the process of applying the company’s accounting policies, management has made a number of judgements and applied estimates of future events. Judgements and estimates that are material to the financial statements include: Estimation of useful lives of assets

Note 4

Intangible Assets

Note 6

• The amount in question is significant because of its size or nature;

Long service leave liability

Note 9

• Have been prepared under the historical cost convention;

• It is important for understanding the results of the company;

Change in accounting policy adoption of AASB 2015-2

• Are presented in Australian dollars;

•

The Company adopted AASB 2015-2 Amendments to Australian Accounting Standards - Disclosure initiative: Amendments to AASB 101 with a date of initial application of 1 January 2016.

• Where necessary comparative information has been restated to conform with changes in presentation in the current year; and

It helps to explain the impact of significant changes in the company’s business - for example, acquisitions and impairment write downs; and

• It relates to an aspect of the Company’s operations that is important to its future performance

KEY EVENTS FOR THE REPORTING PERIOD

‘The Statement of Financial Position should be read in conjunction with the accompanying notes set out on pages 27 to 42.’

ANNUAL 2016 REPORT

Merrylands RSL Club Limited

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

For the Year Ended 31 December 2016

1 REVENUE AND OTHER INCOME (CONTINUED)

1 REVENUE AND OTHER INCOME 2016

2015

SALE OF GOODS REVENUE Bar sales Catering sales

3,628,608

3,815,459

330,043

317,391

3,958,651

4,132,850

Recognition and Measurement 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

RENDERING OF SERVICES REVENUE Poker machines - net clearances

29,381,321

30,484,944

817,964

871,404

Keno and TAB commission

356,583

358,856

Commission received

265,008

253,222

Sundry income

423,399

656,971

31,244,275

32,625,397

Entertainment and promotions

Revenue from the sale of goods comprises revenue earned from the provision of food, 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

OTHER REVENUES Interest received

363,594

325,823

Rent received

666,330

615,348

TOTAL REVENUE

1,029,924

941,171

36,232,850

37,699,418

OTHER INCOME Net gain on disposal of non-current assets Gain on foreign exchange movements

32,547

23,133

108,497

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

proceeds on disposal (including incidental costs) and is recognised as other income at the date control of the asset passes to the buyer.

Interest Revenue

Foreign currency transaction

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets is the rate inherent in the instrument.

Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Australian dollars, which is Merrylands RSL Club Limited’s functional and presentation currency.

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

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at yearend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

2 EXPENSES 2016

(a) Profit before income tax includes the following specific expenses

2015

330,043

91,256

56,500

60,546

116,872

151,802

FINANCE COSTS Total other income

32,547

131,630

Bank Loans Interest on finance leases

TOTAL REVENUE AND OTHER INCOME

36,265,397

37,831,048 DEPRECIATION Buildings and improvements

2,251,784

1,968,827

Poker machines

272,213

425,813

Plant and equipment

601,588

597,243

29,280

Forster holiday complex Investment property

64,592

Sundry assets

270,831

305,634

3,490,288

3,391,389

Leased assets

678,723

705,326

TOTAL DEPRECIATION AND AMORTISATION

4,169,011

4,096,715

Total depreciation

AMORTISATION

ANNUAL 2016 REPORT

Merrylands RSL Club Limited

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Year Ended 31 December 2016

2016

Net expense from movements in provision for

2015

(35,868)

45,573

(1,345,833)

(131,060)

Impairment (write back)/losses Impairment write back of poker machine entitlements recognised in the Statement of Profit or Loss and Other Comprehensive Income Defined contribution superannuation expense

For the Year Ended 31 December 2016

3 INCOME TAX

2 EXPENSES (CONTINUED)

Employee benefits

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

561,357

533,297

RECOGNITION AND MEASUREMENT

(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. 2016

Finance costs include interest, 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. 2016

2015

(b) Key Performance Indicators

Gross profit percentage

58.75%

59.38%

Wages to sales percentage

39.75%

33.47%

Less: Proportion of expenses attributable to non-members

(3,797,463)

(3,312,072)

890,111

954,971 1,445,685

2,351,749

2,400,657

(968,738)

(1,017,379)

Net income subject to tax

1,383,011

1,383,278

Current income tax applicable to above at rate of 30%

414,903

414,982

6,266

(34,070)

(lncrease)/decrease in deferred tax assets

(5,785)

2,424

Income tax expense

415,384

383,336

386,956

295,914

(415,207)

(258,224)

414,903

383,336

6,266

(34,070)

392,918

386,956

Less: Other deductible expenses

Under/ (over) provided in prior years

Movements during the year:

Income tax paid

Bar - Umina Gross profit percentage

56.87%

55.74%

Wages to sales percentage

14.75%

15.06%

20.40%

18.70%

21.11%

25.61%

4,267,043

1,461,638

Add: Other taxable income

Balance at beginning of year

EBITDA percentage (before impairment)

4,687,574

(b) Current Tax Liabilities

Bar - Merrylands RSL

Wages and salaries - percentage of total revenue

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

Finance Cost

2015

Current yearâ&#x20AC;&#x2122;s income tax expense Under/ (over) provision in prior year

Current tax liabilities

ANNUAL 2016 REPORT

Merrylands RSL Club Limited

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

For the Year Ended 31 December 2016

4 PROPERTY, PLANT AND EQUIPMENT

3 INCOME TAX (CONTINUED) 2016 $

2015

45,189,124

44,839,171

(12,497,742)

(10,245,958)

32,691,382

34,593,213

5,129,472

7,145,789

(4,234,280)

(6,359,126)

895, 192

786,663

Freehold Land, Buildings and improvements

At cost Accumulated depreciation The balance comprises temporary differences attributable to: Poker machines

Amounts recognised in profit or loss 61,284

At cost

55,499

Accumulated depreciation Net deferred tax assets

2015

Employee benefits

2016

61,284

55,499 Plant and equipment

At cost

Movements

11,981,263

11,876,120

(9,785,511)

(9,305,185)

2,195,752

2,570,935

1,321,209

1,321,208

(532,652)

(503,372)

788,557

817,836

3,211,189

3,041,796

(2,315,758)

(2,087,336)

895,431

954,460

7,072,160

5,986,481

(4,831,659)

(4,152,936)

2,240,501

1,833,545

At cost

11,529,838

2,281,764

Total property, plant and equipment net book value

51,236,653

43,838,417

Accumulated depreciation Opening balance Charged to the Statement of Profit or Loss and Other Comprehensive Income Opening balance

55,499

57,923

5,785

(2,424)

61,284

55,499

Forster holiday complex land and buildings

At cost Accumulated depreciation Sundry assets

Mutuality Principle

Recognition and Measurement

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, e.g. 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.

The income tax expense or benefit for the period is the tax payable on that periodâ&#x20AC;&#x2122;s taxable income based on the applicable income tax rate, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences.

Amendments to the Income Tax Assessment Act 1997 ensure RSL and social clubs continue not to be taxed on receipts from contributions and payments received from members.

Deferred tax assets are recognised for deductible temporary differences 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 entityâ&#x20AC;&#x2122;s which intend to settle the claim simultaneously.

At cost Accumulated depreciation

Leased assets

At cost Accumulated depreciation

Work in progress

Refer to Note 8 for details of security over property, plant and equipment.

ANNUAL 2016 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Year Ended 31 December 2016

4 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Valuation The independent valuations of the companyâ&#x20AC;&#x2122;s freehold land and buildings were carried out as at December 2013, November 2013 and February 2014 on the basis of open market value for existing use resulted in a valuation of $50,750,000. As freehold land and buildings are recorded at cost the valuations have not been brought to account. The directors do not believe that there has been a material movement in fair value since the revaluation date. 2016

2015

4 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

RECONCILIATIONS (CONTINUED)

2016

2015

954,460

1,075,739

Sundry Assets

RECONCILIATIONS

Carrying amount at beginning of year

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:

Additions

262,521

202,836

Disposals

(50,719)

(18,481)

(270,831)

(305,634)

895,431

954,460

Carrying amount at beginning of year

1,833,545

1,577,271

Additions

1,085,679

961,600

Amortisation expense

(678,723)

(705,326)

Carrying amount at end of year

2,240,501

1,833,545

Carrying amount at beginning of year

2,281,764

546,981

Additions

9,248,074

1,734,783

11,529,838

2,281,764

Depreciation expense

Carrying amount at end of year Freehold land, buildings and improvements Carrying amount at beginning of year

34,593,213

36, 164,353

349,953

397,687

Depreciation expense

(2,251,784)

(1,968,827)

Carrying amount at end of year

32,691,382

34,593,213

Additions

Work in Progress

Poker machines Carrying amount at beginning of year

786,663

1,190,506

Additions

585,192

21,970

Disposals

(204,450)

(272,213)

(425,813)

895,192

786,663

817,836

847,116

(29,280)

788,556

817,836

2,570,935

2,965,829

226,405

202,349

Depreciation expense

(601,588)

(597,243)

Carrying amount at end of year

2,195,752

2,570,935

Depreciation expense

Leased Assets

Transfer to buildings & improvements

Carrying amount at end of year Carrying amount at end of year

Forster Holiday Complex Land and Buildings Carrying amount at beginning of year Depreciation expense

Carrying amount at end of year

Plant and Equipment Carrying amount at beginning of year Additions

ANNUAL 2016 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

For the Year Ended 31 December 2016

4 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

5 INVESTMENT PROPERTY 2016

Core properties held by the Club are: Merrylands 14 Military Road, Merrylands NSW 2160 Umina Beach Melbourne Avenue, Umina Beach NSW 2257 Forster 6-12 Lake Street, Forster NSW 2428 Non-core properties held by the Club are: Merrylands Units 1, 3-7 & 9-12 1 Newman Street, Merrylands NSW 2160 Recognition and Measurement All property, plant and equipment (including Investment Property) 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: Property, Plant and Equipment Buildings

1,291,823

(322,960)

(258,368)

968,863

1,033,455

1,098,047

Depreciation expense

(64,592)

Carrying amount at end of year

968,863

1,033,455

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 Buildings of an asset’s fair value less costs 50 years to sell and value-in-use. The valuein-use is the present value of Plant and equipment the estimated future cash flows 5 - 10 years relating to the asset using a pre tax discount rate specific to the Poker machines asset or cash-generating unit to 5 - 7 years which the asset belongs. Assets that do not have independent Furniture, fittings and equipment cash flows are grouped together 5 - 10 years to form a cash-generating unit. Impairment losses are recognised Investment Property in the income statement, unless an Buildings asset has previously been revalued, 50 years in which case the impairment loss is recognised as a reversal to the The assets’ residual values and extent of that previous revaluation useful lives are reviewed, and with any excess recognised through adjusted if appropriate, at the end the income statement. of each reporting period. As asset’s carrying amount is written down Key estimate and Judgement: immediately to its recoverable Estimation of Useful Lives of Assets amount if the asset’s carrying The company determines the amount is greater than its estimated estimated useful lives and related recoverable amount. depreciation and amortisation Capital works in progress is charges for its property, plant and transferred to property, plant and equipment and finite life intangible equipment and depreciated when assets. The useful lives could change completed and ready for use. significantly as a result of technical innovations or some other event. Gains and losses on disposals are The depreciation and amortisation determined by comparing proceeds charge will increase where the with carrying amount. These are useful lives are less than previously included in the profit or loss. estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Freehold land and buildings

At cost Accumulated depreciation

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: Carrying amount at beginning of year

Recognition and Measurement

Valuation Basis

Investment properties consist of properties held for long term rentals and/or capital appreciation and properties being constructed or developed for future use as investment properties. Investment properties are initially recognised at cost including transaction costs, development costs, construction costs and interest incurred during the construction phase.

The independent valuation of the company’s investment property was carried out as at December 2013 on the basis of open market value for existing use resulting in a valuation of $2,400,000. As investment properties are recorded at cost the valuations have not been brought to account.

Key estimate and Judgement: 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.

6 INTANGIBLE ASSETS 2016

2015

4,849,290

3,503,457

1,098,047

80,730

Impairment write back

1,345,833

131,060

Closing carrying value

4,849,290

3,503,457

Poker machine entitlements At valuation

Movement Opening net book amount Additions

2015

ANNUAL 2016 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

For the Year Ended 31 December 2016

6 INTANGIBLE ASSETS (CONTINUED)

8 FINANCIAL LIABILITIES (CONTINUED) 2016

Valuation Basis

Recognition and Measurement:

The independent valuation of the company’s poker machine entitlements was carried out as at December 2016 on the basis of open market value for existing use. As poker machine entitlements are carried at fair value, the valuation has been brought to account in the current year ended 31 December 2016. The valuation represented an increase in fair value of $1,345,833.

Poker Machine Entitlements are held at fair value. Any accumulated impairment at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Any revaluation increase arising on the revaluation of such poker machine entitlements which reverses a revaluation decrease for the same asset previously is recognised in profit or loss, except to the extent that all revaluation decreases have been reversed in which case the increase is credited in other comprehensive income.

7 TRADE AND OTHER PAYABLES

2016

Trade creditors Goods and Services Tax (GST) payable Other creditors and accruals

Key estimate and judgement: Intangible Assets Poker machine entitlements are not amortised as they are deemed to have an indefinite useful life they have an indefinite useful life as they do not expire and under current government legislation there is no plan to remove such entitlements. As a result, 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 fair value.

2015

3,772,134

1,634,783

67,528

137,880

582,218

526,899

4,421,880

2,299,562

Recognition and Measurement 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.

8 FINANCIAL LI ABILITIES

2016 Note

2015 $

594,710

561,672

947,410

806,392

1,542,120

1,368,064

Flexible rate bank loan Asset finance leasing

1,841,276

8,748,815

1,500,000

11,188,815

3,341,276

748,815

1,841,276

1,890,809

1,087,136

2,639,624

2,928,412

Facilities utilised at reporting date: Flexible rate bank loan Asset finance leasing

Recognition and Measurement

Bank Loans

Security

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.

The Bank loans are denominated in Australian dollars. The bank loans amount in current liabilities comprises the portion of the company’s bank loan payable within one year ($594,710). The bank loans non-current balance represents the portion of the company’s bank loans not due within one year.

The bank loans are secured against the term deposit of $2,700,000 and a security interest and charge over all of the present and future rights, property and undertaking of Merrylands RSL Club Limited.

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.

The loan bears interest at the bank base indicator rate of 4.67% plus customer margin and default interest rate margin of up to 10.2% (2015: 10.2%), payable monthly. The weighted average interest rate is 5.7% (2015: 5. 7%) as at 31 December 2016.

Bank loans 10

153,806

748,441

194,157

405,784

347,963

1,154,225

The lease facility is secured against the assets purchased under this facility as disclosed in Note 4.

9 EMPLOYEE BENEFITS Aggregate liability for employee benefits including on-costs

Current Non-Current Total employee benefits

Secured

2,440,000

Total facilities available:

2016

NON - CURRENT

Finance leases

The company has access to the following lines of credit:

Secured

Finance leases

$ FINANCING ARRANGEMENTS

CURRENT

Bank loans

2015

1,423,938

1,399,104

98,985

159,687

1,522,923

1,558,791

The present value of employee benefits not expected to be settled within 12 months of reporting date have been calculated using the following weighted averages: Inflation rate 1.70% 1.70% Discount rate 2.73% 2.81% Settlement term (years)

6.96 years

5.62 years

ANNUAL 2016 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

For the Year Ended 31 December 2016

9 EMPLOYEE BENEFITS (CONTINUED)

11 CONTINGENT LIABILITIES

SUPERANNUATION PLANS

Long Service Leave

Contributions

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 oncosts 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.

The company is under a legal obligation to contribute 9.5% of each employee’s base salary to a superannuation fund.

RECOGNITION AND MEASUREMENT Wages and Salaries and Annual 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.

10 COMMITMENTS FINANCE LEASE COMMITMENTS

Key estimate and judgement: Long Service Leave 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.

B A N K G UA R A N T E E S

2016

2015

10,900

The company has given the following bank guarantees: TAB Limited

12 KEY MANAGEMENT PERSONNEL DETAILS (a) Directors

(b) Other Key Management Personnel

The following persons were nonexecutive directors of the company during the financial year:

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:

Superannuation Plan

R Hand

The company contributes to several defined contribution superannuation plans. Contributions are recognised as an expense as they are made.

S Cunningham G Salisbury E Michelmore R Shorrock

Name Position Bryn Miller Chief Executive Officer Wayne Mar Chief Financial Officer

P Harding S Thode P Hickey 2016

2015

Within one year

594,710

859,998

One year or later and no later than five years

153,806

260,525

Minimum lease payments

748,516

1,120,523

2,912,313

10,683,956

I Hyde - Resigned 1 May 2016 Roger Ford - Appointed 1 May 2016

Finance lease rental commitments are payable:

Benefits and payments made to the Directors and Other Key Management Personnel

C A P I TA L C O M M I T M E N T S Total capital commitments due within one year

Recognition and Measurement 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.

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.

Finance Leases

Operating Leases

A lease asset and a lease liability are recorded at their fair value at the

Payments made under operating leases are expensed on a straight-

13 RELATED PARTIES Key Management Personnel 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. Capital Commitments Capital commitments relate to the alterations and additions to the Merrylands RSL Club .

Disclosures relating to key management personnel are set out in Note 12. Directors’ Transactions with the Company From time to time directors of the company may purchase goods from the company or participate in other Club activities. These purchases and participations are on the same terms and conditions as those entered into by any other member of the Club. Apart from the details disclosed in this note, no director has entered

2016

2015

649,703

612,387

into a material contract with the company since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year end.

14 COMPANY DETAILS The Club is incorporated and domiciled in Australia as a company limited by guarantee. In accordance with the Constitution of the Company, every member of the company undertakes to contribute an amount limited to $5 per member in the event of the winding up of the Company during the time that he/ she is a member or within one year thereafter. At 31 December 2016 there were 68,807 members.

The registered office of the Company is 14 Military Road, Merrylands NSW 2160.

15 EVENTS SUBSEQUENT TO REPORTING DATE There are no matters or circumstances that have arisen since the end of the financial year that have significantly affected or may significantly affect the operations of the company, the results of those operations or the state of affairs of the company in future financial years.

ANNUAL 2016 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Year Ended 31 December 2016

16 SUMMARY OF SIGN IFICANT 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) Basis of Preparation Historical Cost Convention The financial statements have been prepared under the historical cost convention. 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. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and interpretations are most relevant to the company: â&#x20AC;˘

AASB 2014-1 Amendments to Australian Accounting Standards (Parts A to C)

The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the company.

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. (c) Cash and cash equivalents 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. Cash includes deposits for which there is a short term identified use in the operating cash flows of the Company, and attracts interest at rates between 0% and 1.3% per annum (2015: 0% and 2.16%).

(b) Goods and Services Tax

(d) Trade and other receivables

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.

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.

(e) Inventories Inventories are measured at the lower of cost and net realisable value. Costs are assigned on the basis of weighed average costs. (f) Far 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 for sale 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.