Canterbury-Hurlstone Park RSL Club Limited 2017 Financial Statements.pdfCanterbury-Hurlstone Park...

Canterbury-Hurlstone Park RSL ClubLimitedABN: 56 000 967 199

Consolidated Financial StatementsFor the Year Ended 31 December 2017

Canterbury-Hurlstone Park RSL Club LimitedABN: 56 000 967 199

ContentsFor the Year Ended 31 December 2017

Page

Consolidated Financial StatementsDirectors' Report 1Auditors Independence Declaration under Section 307C of the Corporations Act 2001 5Consolidated Statement of Profit or Loss and Other Comprehensive Income 6Consolidated Statement of Financial Position 7Consolidated Statement of Changes in Equity 8Consolidated Statement of Cash Flows 9Notes to the Financial Statements 10Directors' Declaration 27Independent Audit Report 28


Directors' ReportFor the Year Ended 31 December 2017

The directors present their report, together with the financial statements of the Group, being the Parent and itscontrolled entities, for the financial year ended 31 December 2017.

Directors

The names of each person who has been a director during the year and to the date of this report are:

Names PositionRobert CrowhurstMalcolm TylerStephen BakerNeville Brown

PresidentSenior Vice President Junior Vice President Director

Michelle BoonMark McIntyreLee Fitzgerald

Director Director Director

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Principal activities

The principal activities of Canterbury-Hurlstone Park RSL Club Limited during the financial year were those of alicensed Club providing:

! Social facilities;

! Food, beverage, entertainment, event and gaming facilities;

! Health and Fitness;

! Sporting facilities;and

! Vocational hospitality training and education.

No significant change in the nature of these activities occurred during the year.

Short term objectives

The Group's short term objectives are to:

! Maintain and / or modernise the Club's premises;

! Provide best possible hospitality services to members and to the local community; and

! Ensure ongoing profitability of the Club to secure its financial future.

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Long term objectives

The Group's long term objectives are to:

! Always endeavour to meet or exceed members' expectations for all services and facilities provided by the Club;

! To maintain a dynamic and relevant presence through the provision of hospitality, lifestyle and entertainmentservices to the communities in which the Club operates;

! Invest funds generated by the Club's operations to develop the Club's assets so that the Club is able tocontinue to provide services to members and the local community that are concurrent with the needs of themembers and local community;

! Endeavour to set aside 20% of net profit each year for community contributions; and

! Always endeavour to attract and retain excellent hospitality staff.

Strategy for achieving the objectives

To achieve these objectives, the Group has adopted the following strategies:

! Ensure Club policies are appropriate;

! Ensure professional management;

! Ensure proficient and cost effective operation of the Club; and

! Ensure continued trading profitability and invest surplus funds securely with good returns.

Significant changes in state of affairs

No significant changes in the state of affairs occurred during the financial year.

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Information on directors:

Robert CrowhurstQualifications Company DirectorYears as director of the Club 12Special Responsibilities President and Board Chairperson

Neville BrownQualifications Curator/ TechnicalYears as director of the Club 20Special Responsibilities Director, Member of the Operations Committee, Member of the Disciplinary

Committee

Malcolm TylerQualifications IT Business Analyst (retired)Years as director of the Club 9Special Responsibilities Senior Vice President, Member of the Audit and Compliance Committee,

Chairperson of the Remuneration Committee

Stephen BakerQualifications Carpenter (retired)Years as director of the Club 16Special Responsibilities Junior Vice President, Chairperson of the Disciplinary Committee,

Chairperson of the Operations Committee, Member of the RemunerationCommittee

Michelle BoonQualifications Financial ControllerYears as director of the Club 13Special Responsibilities Director, Chairperson of the Audit and Compliance Committee

Mark McIntyreQualifications Industrial Chemist (retired)Years as director of the Club 11Special Responsibilities Director, Member of the Disciplinary Committee, Member of the Operations

Committee, Member of the Remuneration Committee

Lee FitzgeraldQualifications Sales ManagerYears as director of the Club 2Special Responsibilities Director, Member of the Audit and Compliance Committee, Member of the

Disciplinary Committee, Member of the Remuneration Committee

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Canterbury-Hurlstone Park RSL Club Limited

ABN: 56 000 967 199

Directors' Report For the Year Ended 31 December 2017

4

Meetings of directors

During the financial year, 43 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows:

Directors' Meetings

Audit & Compliance Committee Meetings

Operations Committee Meetings

Disciplinary Committee Meetings

Remuneration Committee Meetings

Number eligible to

attend Number attended

Number eligible to attend

Number attended

Number eligible to


Number eligible to


Number eligible to


Robert Crowhurst 16 16 8 7 9 8 4 4 1 1

Neville Brown 16 14 - - 9 3 9 8 - -

Malcolm Tyler 16 15 8 8 - - - - 1 1

Stephen Baker 16 16 - - 9 8 9 9 1 1

Michelle Boon 16 13 8 7 - - - - - -

Mark McIntyre 16 13 - - 9 6 9 6 1 1

Lee Fitzgerald 16 16 8 7 - - 4 4 1 1

Auditor's independence declaration

The lead auditor's independence declaration in accordance with section 307C of the Corporations Act 2001, for the year ended 31 December 2017 has been received and can be found on page 5 of the financial report.

Signed in accordance with a resolution of the Board of Directors:

Director: ............................................................... Director: ................................................................

Robert Crowhurst Malcolm Tyler Sydney Dated: 26 February 2018

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Auditors Independence Declaration under Section 307C of the Corporations Act 2001 to the Directors of Canterbury-Hurlstone Park RSL Club Limited and Controlled Entities

I declare that, to the best of my knowledge and belief, during the year ended 31 December 2017, 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.

PKF SCOTT TOBUTT Chartered Accountants Partner

Date: 26 February 2018

Level 8, 1 O'Connell Street, Sydney NSW 2000

PKF(NS) Audit & Assurance Limited Partnership is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.

For office locations visit www.pkf.com.au

Sydney

Level 8, 1 O’Connell StreetSydney NSW 2000 Australia GPO Box 5446 Sydney NSW 2001

p +61 2 8346 6000 f +61 2 8346 6099

PKF(NS) Audit & Assurance Limited Partnership

ABN 91 850 861 839

Liability limited by a scheme

approved under Professional

Standards Legislation

Newcastle

755 Hunter Street Newcastle West NSW 2302 Australia PO Box 2368 Dangar NSW 2309

p +61 2 4962 2688 f +61 2 4962 3245


Consolidated Statement of Profit or Loss and Other ComprehensiveIncomeFor the Year Ended 31 December 2017

Consolidated

Note2017

$2016

$Revenue 2 46,049,839 47,121,726Other income 2 1,170,000 -Cost of sales 3 (2,918,721) (2,942,916)Employee benefits expense 3 (14,715,531) (13,206,292)Advertising expenses (110,278) (158,650)Cleaning and waste removal expense (655,292) (645,642)Club magazine cost (222,796) (201,671)Entertainment and promotion cost (4,082,224) (4,173,811)Insurance expense (383,897) (275,905)Poker machine duty (8,619,366) (8,928,446)Printing, postage and stationery expense (193,089) (201,888)Rates and utilities expense (991,999) (1,000,118)Member expenses (975,006) (876,923)Repairs and maintenance expense (794,083) (651,337)Other expenses (2,920,688) (2,845,427)Security cost (669,634) (627,103)Consultant fees (813,218) (699,148)

Profit before income tax, depreciation, interest and support to community 8,154,017 9,686,449Interest and finance charge 3 (612,153) (752,024)Donations and sponsorship (1,220,644) (1,236,432)Depreciation, amortisation and impairments 3 (3,931,185) (3,595,609)

Profit before income tax 2,390,035 4,102,384Income tax expense 4 (586,543) (298,813)

Profit for the year 1,803,492 3,803,571

Other comprehensive incomeFair value movement on the revaluation of property 894,694 -

Total other comprehensive income for the year 894,694 -

Total comprehensive income for the year 2,698,186 3,803,571Total comprehensive income attributable to:Members of the club 2,698,186 3,803,571

The accompanying notes form part of these financial statements.6


Consolidated Statement of Financial PositionAs at 31 December 2017

Consolidated

Note2017

$2016

$

ASSETSCURRENT ASSETSCash and cash equivalents 6 10,744,084 12,188,203Trade and other receivables 7 444,631 494,193Inventories 8 197,428 170,764Other assets 9 627,123 528,407TOTAL CURRENT ASSETS 12,013,266 13,381,567NON-CURRENT ASSETSProperty, plant and equipment 10 70,540,899 64,862,189Investment property 11 7,066,510 2,855,000Intangible assets 12 1,759,410 1,733,752TOTAL NON-CURRENT ASSETS 79,366,819 69,450,941TOTAL ASSETS 91,380,085 82,832,508

LIABILITIESCURRENT LIABILITIESTrade and other payables 13 4,017,148 3,039,134Financial liabilities 15 2,832,386 2,434,999Current tax liabilities 98 177,746Provisions 14 1,690,387 1,683,388TOTAL CURRENT LIABILITIES 8,540,019 7,335,267NON-CURRENT LIABILITIESTrade and other payables 13 76,618 95,283Financial liabilities 15 13,847,513 9,761,301Deferred tax liabilities 5 932,278 345,735Provisions 14 186,886 196,337TOTAL NON-CURRENT LIABILITIES 15,043,295 10,398,656TOTAL LIABILITIES 23,583,314 17,733,923NET ASSETS 67,796,771 65,098,585

EQUITYReserves 13,853,092 12,958,398Retained earnings 53,943,679 52,140,187TOTAL EQUITY 67,796,771 65,098,585



Consolidated Statement of Changes in EquityFor the Year Ended 31 December 2017

Consolidated

RetainedEarnings

$

AssetRealisation

Reserve$

Total$

Balance at 1 January, 2017 52,140,187 12,958,398 65,098,585Profit attributable to members of the entity 1,803,492 894,694 2,698,186

Balance at 31 December 2017 53,943,679 13,853,092 67,796,771

Consolidated

RetainedEarnings

$

AssetRealisation

Reserve$

Total$

Balance at 1 January, 2016 48,336,616 12,958,398 61,295,014Profit attributable to members of the entity 3,803,571 - 3,803,571

Balance at 31 December 2016 52,140,187 12,958,398 65,098,585



Consolidated Statement of Cash FlowsFor the Year Ended 31 December 2017

Consolidated2017

$2016

$

CASH FLOWS FROM OPERATING ACTIVITIES:Receipts from customers 50,468,217 51,100,848Payments to suppliers and employees (44,169,930) (42,660,171)Interest received 193,937 169,196Finance costs (612,153) (752,024)Net cash provided by operating activities 5,880,071 7,857,849

CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sale of plant and equipment 225,382 628,682Purchase of property, plant and equipment (8,909,329) (6,617,678)Purchase of investment property (3,041,510) -Purchase of intangible assets (31,645) -Net cash used by investing activities (11,757,102) (5,988,996)

CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from/ (repayment of) borrowings 5,000,000 (500,000)Net repayment of financial liabilities (516,401) (79,209)Net cash provided by/ (used by) financing activities 4,483,599 (579,209)

Net increase/(decrease) in cash and cash equivalents held (1,393,432) 1,289,644Cash and cash equivalents at beginning of year 12,188,203 10,950,763Cash and cash equivalents 10,794,771 12,240,407Bank overdraft (50,687) (52,204)

Cash and cash equivalents at end of financial year 10,744,084 12,188,203



Notes to the Financial StatementsFor the Year Ended 31 December 2017

1 Summary of Significant Accounting Policies

(a) Basis of Preparation

The financial statements are general purpose financial statements that have been prepared in accordance withAustralian Accounting Standards - Reduced Disclosure Requirements and the Corporations Act 2001.

Material accounting policies adopted in the preparation of these financial statements are presented below andhave been consistently applied unless otherwise stated.

The financial statements have been prepared on an accruals basis and are based on historical costs modified,where applicable, by the measurement at fair value of selected non-current assets, financial assets andfinancial liabilities.

(b) Revenue and other income

Revenue is measured at the fair value of the consideration received or receivable after taking into account anytrade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of financeand is discounted at a rate of interest that is generally accepted in the market for similar arrangements. Thedifference between the amount initially recognised and the amount ultimately received is interest revenue.

Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer ofsignificant risks and rewards of ownership of the goods and the cessation of all involvement in those goods.

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets,is the rate inherent in the instrument. Dividend revenue is recognised when the right to receive a dividend hasbeen established.

Investment property revenue is recognised on a straight-line basis over a period of the lease term so as toreflect a constant periodic rate of return on the net investment.

Gaming machine revenue is recognised on an accrual basis calculated as net of gaming machine collectionsand payouts, less any costs associated with future jackpot contributions.

Revenue recognition relating to the provision of services is determined with reference to the stage of completionof the transaction at the reporting date and where the outcome of the contract can be estimated reliably. Stageof completion is determined with reference to the services performed to date as a percentage of totalanticipated services to be performed. Where the outcome cannot be estimated reliably, revenue is recognisedonly to the extent that related expenditure is recoverable.

All revenue is stated net of the amount of goods and services tax (GST).

(c) Property, plant and equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, anyaccumulated depreciation and impairment.

Property

Freehold land and buildings are shown at their fair value (being the amount for which an asset could beexchanged between knowledgeable willing parties in an arm's length transaction), based on periodic, but atleast triennial, valuations by external independent valuers, less subsequent depreciation for buildings.

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1 Summary of Significant Accounting Policies (cont'd)

(c) Property, plant and equipment (cont'd)

Property (cont'd)

Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluationreserve in equity. Decreases that offset previous increases of the same asset are charged against this reservedirectly in equity and reflected in other comprehensive income; all other decreases are charged to theStatement of Comprehensive Income.

Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of theasset and the net amount is restated to the revalued amount of the asset.

Plant and equipment

Plant and equipment are measured on the cost basis less depreciation and impairment losses. Cost includesexpenditure that is directly attributable to the asset.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess ofthe recoverable amount from these assets. The recoverable amount is assessed on the basis of the expectednet cash flows that will be received from the asset's employment and subsequent disposal. The expected netcash flows have been discounted to their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets excluding building and freehold land are depreciated on a reducingbalance basis over the asset's useful life to the Club from the time the asset is held ready for use. Buildings aredepreciated on a straight line basis of the useful life. Land is not depreciated.

The depreciation rates used for each class of depreciable asset are shown below:

Fixed asset class Depreciation rateCapital Works in Progress Nil until works are completeFreehold Land NilBuildings 2% - 5%Plant and Equipment 4.5% - 40%

At the end of each annual reporting period, the depreciation method, useful life and residual value of each assetis reviewed. Any revisions are accounted for prospectively as a change in estimate.

(d) Construction in progress

Expenditure on the construction, installation and completion of assets under construction, is capitalised withinproperty, plant and equipment, capital works in progress. When development is completed, the asset will betransferred to plant and equipment. No depreciation or amortisation is charged during the development phase.

(e) Inventories

Inventories are measured at the lower of cost and net realisable value. Inventories acquired at no cost, or fornominal consideration are valued at the current replacement cost as at the date of acquisition.

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(f) Investment property

Investment property is held to generate long term rental yields and/or for capital appreciation. All tenant leasesare on an arm's length basis. Investment property is carried at fair value determined by current market values.Changes to the fair value are recorded separately as an income or expense items directly in the Statement ofComprehensive Income.

(g) Financial instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractualprovisions of the instrument. For financial assets, this is the equivalent to the date that the Group commits itselfto either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transactions costs, except where the instrument isclassified 'at fair value through profit or loss' in which case transaction costs are expensed to profit or lossimmediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at either fair value, amortised cost using the effective interestrate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liabilitysettled, between knowledgeable, willing parties in an arm's length transaction. Where available, quoted pricesin an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

(a) the amount at which the financial asset or financial liability is measured at initial recognition;

(b) less principal repayments;

(c) plus or minus the cumulative amortisation of the difference, if any, between the amount initiallyrecognised and the maturity amount calculated using the effective interest method; and

(d) less any reduction for impairment.

The effective interest method is used to allocate interest income or interest expense over the relevant periodand is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees,transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliablypredicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset orfinancial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carryingvalue with a consequential recognition of an income or expense in profit or loss.

The classification of financial instruments depends on the purpose for which the investments were acquired.Management determines the classification of its investments at initial recognition and at the end of eachreporting period for held-to-maturity assets.

The Club does not designate any interests in subsidiaries, associates or joint venture entities as being subjectto the requirements of accounting standards specifically applicable to financial instruments.

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(g) Financial instruments (cont'd)

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market and are subsequently measured at amortised cost.

Loans and receivables are included in current assets, except for those which are not expected to mature within12 months after the end of the reporting year.

Available-for-sale financial assets are included in non-current assets, except for those which are expected to bedisposed of within 12 months after the end of the reporting period, which will be classified as current assets.

(ii) Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortisedcost. Fees payable on the establishment of loan facilities are recognised as transaction costs of the loan.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement ofthe liability for at least 12 months after the reporting date.

Impairment of financial assets

At the end of the reporting period the Group assesses whether there is any objective evidence that a financialasset or group of financial assets is impaired.

Financial assets at amortised cost

If there is objective evidence that an impairment loss on financial assets carried at amortised cost has beenincurred, the amount of the loss is measured as the difference between the asset’s carrying amount and thepresent value of the estimated future cash flows discounted at the financial assets original effective interestrate.

Impairment on loans and receivables is reduced through the use of an allowance accounts, all other impairmentlosses on financial assets at amortised cost are taken directly to the asset.

(h) Impairment of assets

At the end of each reporting period the Group determines whether there is an evidence of an impairmentindicator for non-financial assets.

Where this indicator exists and regardless for goodwill, indefinite life intangible assets and intangible assets notyet available for use, the recoverable amount of the asset is estimated.

Where assets do not operate independently of other assets, the recoverable amount of the relevant cash-generating unit (CGU) is estimated.

The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the valuein use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit.

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(h) Impairment of assets (cont'd)

Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit orloss.

Reversal indicators are considered in subsequent periods for all assets which have suffered an impairmentloss, except for goodwill.

(i) Provisions

Provision is made for the Club's liability for employee benefits arising from services rendered by employees tothe end of the reporting period. Employee benefits that are expected to be wholly settled within one year havebeen measured at the amounts expected to be paid when the liability is settled.

Employee benefits expected to be settled more than twelve months after the end of the reporting period havebeen measured at the present value of the estimated future cash outflows to be made for those benefits. Indetermining the liability, consideration is given to employee wage increases and the probability that theemployee may satisfy vesting requirements. Cashflows are discounted using market yields on nationalgovernment bonds with terms to maturity that match the expected timing of cashflows. Changes in themeasurement of the liability are recognised in profit or loss.

Employee benefits are presented as current liabilities in the consolidated statement of financial position if theGroup does not have an unconditional right to defer settlement of the liability for at least 12 months after thereporting date regardless of the classification of the liability for measurement purposes under AASB 119.

Contributions are made by the club to an employee superannuation fund and are charged as expenses whenincurred.

(j) Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short-term investments which arereadily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

Bank overdrafts also form part of cash equivalents for the purpose of the consolidated statement of cash flowsand are presented within current liabilities on the consolidated statement of financial position.

(k) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GSTincurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised aspart of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in thestatement of financial position are shown inclusive of GST.

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(l) Income Tax

The income tax expense (revenue) for the year comprises current income tax expense (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated usingapplicable income tax rates enacted, or substantially enacted, as at the end of reporting year. Current taxliabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevanttaxation authority.

The Income Tax Assessment Act, 1997 (amended) provides that under the concept of mutuality clubs are onlyliable for income tax on income derived from non-members and from outside entities. The club is assessed forincome tax on the basis of mutuality concept and accounts for its income tax liabilities after excluding incomefrom members which is exempt under this concept.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the taxbases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets alsoresult where amounts have been fully expensed but future tax deductions are available. No deferred income taxwill be recognised from the initial recognition of an asset or liability, excluding a business combination, wherethere is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period whenthe asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end ofthe reporting year. Their measurement also reflects the manner in which management expects to recover orsettle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extentthat it is probable that future taxable profit will be available against which the benefits of the deferred tax assetcan be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and jointventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporarydifference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current assets and liabilities are offset where a legally enforceable right of setoff exists and it is intended thatnet settlement or simultaneous realisation and settlement of the respective asset and liability will occur.Deferred tax assets and liabilities are offset where a legally enforceable right of setoff exists, the deferred taxassets and liabilities relate to income taxes levied by the same taxation authority on either the same taxableentity or different taxable entities where it is intended that net settlement or simultaneous realisation andsettlement of the respective asset and liability will occur in future periods in which significant amounts ofdeferred tax assets or liabilities are expected to be recovered or settled.

(m) Intangible Assets

Poker machine entitlements

Poker machine entitlements are initially recorded at cost. Poker machine entitlements have an indefinite life andare tested annually for impairment and carried at cost less any accumulated amortisation and impairmentlosses.

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(n) Comparative Amounts

When required by Accounting Standards, comparative figures have been adjusted to conform to changes inpresentation for the current financial year.

When the Club applies an accounting policy retrospectively makes a retrospective restatement or reclassifiesitems in its financial statements, a statement of financial position as at the beginning of the earliest comparativeperiod will be disclosed.

(o) Trade and other payables

Trade and other payables represent the liability outstanding at the end of the reporting period for goods andservices received by the Club during the reporting period which remain unpaid. The balance is recognised as acurrent liability with the amounts normally paid within 30 days of recognition of the liability.

(p) Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, butnot the legal ownership that are transferred to entities in the Club, are classified as finance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fairvalue of the leased property or the present value of the minimum lease payments, including any guaranteedresidual values. Lease payments are allocated between the reduction of the lease liability and the lease interestexpense for the period.

Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor,are charged as expenses on a straight-line basis over the life of the lease term.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis overthe life of the lease term.

(q) Principles of Consolidation

The consolidated financial statements include the financial position and performance of controlled entities fromthe date on which control is obtained until the date that control is lost.

Intragroup assets, liabilities, equity, income, expenses and cashflows relating to transactions between entitiesin the consolidated entity have been eliminated in full for the purpose of these financial statements.

Appropriate adjustments have been made to a controlled entity’s financial position, performance and cash flowswhere the accounting policies used by that entity were different from those adopted by the consolidated entity.All controlled entities have a December financial year end.

A list of controlled entities is contained in Note 21 to the financial statements.

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the parent has control. Control isestablished when the parent is exposed to, or has rights to variable returns from its involvement with the entityand has the ability to affect those returns through its power to direct the relevant activities of the entity.

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(r) New Accounting Standards and Interpretations

The AASB has issued new and amended Accounting Standards and Interpretations that have mandatoryapplication dates for future reporting periods. The directors do not expect the adoption of these standards tohave any impact on the reported position or performance of the Club.

(s) Critical Accounting Estimates and Judgments

The directors make estimates and judgements during the preparation of these financial statements regardingassumptions about current and future events affecting transactions and balances.

These estimates and judgements are based on the best information available at the time of preparing thefinancial statements, however as additional information is known then the actual results may differ from theestimates.

The significant estimates and judgements made have been described below.

Key estimates - Fair Value of Investment Properties

The Investment Properties were independently valued at 29 June 2017 by Global Valuation Services. Thevaluations were based on the market values. The critical assumptions adopted in determining the valuationincluded the location of land buildings, the current strong demand for land and buildings in the area and recentsales data for similar properties. The directors have made an assessment at year end and have concludedthese fair values relevant at 29 June 2017 are still appropriate.

Key estimates - Fair Value of Land and Buildings

The Land and Buildings were independently valued at 30 June 2017 by Global Valuation Services. Thevaluations were based on the market values. The critical assumptions adopted in determining the valuationincluded the location of land buildings, the current strong demand for land and buildings in the area and recentsales data for similar properties. The directors have made an assessment at year end and have concludedthese fair values relevant at 30 June 2017 are still appropriate.

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Consolidated2017

$2016

$

2 RevenueSale of goods 7,465,660 7,628,743Gaming machine revenue 34,391,276 35,660,812Anytime fitness membership 1,095,679 1,029,212Commissions received 578,425 557,395Promotions revenue 833,826 858,316Training services revenue 710,500 811,339Interest received 193,937 169,196Member subscriptions 119,903 88,081Rent received 256,322 40,177Other revenue 404,311 278,455

46,049,839 47,121,726

Other IncomeMovement in fair value of investment property 1,170,000 -

3 Items of expense included in the result of the year

Interest and finance charge 612,153 752,024Cost of sales 2,918,721 2,942,916Depreciation, amortisation and impairments 3,931,185 3,595,609Employee benefits expense 14,715,531 13,206,292

4 Income Tax Expense(a) The major components of tax expense (income) comprise:

Current tax expense - 177,746Deferred tax expense 586,543 121,067

Total income tax expense 586,543 298,813Prima facie tax payable on profit from ordinary activities beforeincome tax at 30% (2016: 30%) 717,011 1,230,715

Add/Less:- Net income and expenditure items relating to member activity (130,468) (931,902)

Income tax expense 586,543 298,813

(b) Income Tax Assessment Act, 1936 (amended) provides that under the concept of mutuality Clubs are only liable forincome tax on income derived from non-members and from outside entities.

5 Deferred tax liabilitiesRevaluation on property 932,278 345,735

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Consolidated2017

$2016

$

6 Cash and cash equivalentsCash on hand 2,257,831 2,127,196Bank balances 8,486,253 10,061,007

10,744,084 12,188,203

7 Trade and other receivableCURRENTTrade receivables 444,631 494,193

8 InventoriesCURRENT

At cost:Beverages and catering stock 197,428 170,764

9 Other assetsCURRENTPrepayments 627,123 528,407

10 Property, plant and equipmentLAND AND BUILDINGS

Freehold landAt valuation 18,735,000 16,000,000

BuildingsAt valuation 40,188,976 39,920,907Accumulated depreciation (3,122,246) (2,025,564)

Total buildings 37,066,730 37,895,343Total land and buildings 55,801,730 53,895,343

PLANT AND EQUIPMENT

Capital works in progressAt cost 4,622,617 247,643

Plant and equipmentAt cost 29,608,126 28,521,871Accumulated depreciation (19,491,574) (17,802,668)

Total plant and equipment 10,116,552 10,719,203

Total property, plant and equipment 70,540,899 64,862,189

19



Consolidated2017

$2016

$

10 Property, plant and equipment (cont'd)An independent valuation of freehold land and buildings situated at 18-34 Canterbury Road and 120-126 Crinan StreetHurlstone Park NSW 2193 was undertaken on the 30 June 2017 resulting in a fair value adjustment of $536,484 beingrecognised for the 2017 financial year. An independent valuation of freehold land and buildings situated at 3580Remembrance Drive Bargo NSW 2574 was undertaken on the 6 July 2017 resulting in a fair value adjustment of$358,210 being recognised for the 2017 financial year. The 2017 valuations were performed by Global ValuationServices. Valuations were made on the basis of open market value in an arms-length transaction based on similarproperties. The revaluation surplus net of applicable deferred income taxes was credited to an asset revaluationreserve in shareholders' equity.

Movements in carrying amounts of property, plant and equipment

Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the endof the current financial year:

CapitalWorks inProgress

$Land

$Buildings

$

Plant andEquipment

$Total

$Balance at 1 January 2017 247,643 16,000,000 37,895,343 10,719,203 64,862,189Additions 4,398,951 - 2,099,273 2,411,105 8,909,329Disposals - written down value - - - (176,553) (176,553)Transfers (23,977) - - 415 (23,562)Depreciation expense - - (1,087,580) (2,837,618) (3,925,198)Fair value adjustment - 2,735,000 (1,840,306) - 894,694

Balance at the end of the year 4,622,617 18,735,000 37,066,730 10,116,552 70,540,899

11 Investment PropertyBalance at beginning of year 2,855,000 2,855,000Additions 3,041,510 -Fair value gain 1,170,000 -

Balance at end of year 7,066,510 2,855,000

Core and Non-core Property

Pursuant to Section 41J(2) of the Registered Clubs Act, the Club is now required to notify members of the Club's coreand non-core property in each annual report for the financial year to which the annual report relates.

Core property is specified as land, buildings and the Club's capital works in progress. These are classified as property,plant and equipment in the statement of financial position.

Non-core property is specified as 117, 119 Crinan Street, Hurlstone Park, NSW 2193, 8 The Avenue, Hurlstone Park,NSW 2193, 48 Hampton Street, Croydon Park, NSW 2133 and 342 Canterbury Road, Hurlstone Park, NSW 2193.These are classified as investment properties in the statement of financial position.

Valuation information

The fair value model is applied to all investment property. Investment properties are independently revalued and arebased on an active liquid market and are performed by a registered independent valuer.

20



Consolidated2017

$2016

$

12 Intangible AssetsLicenses and franchisesCost 76,545 44,900Accumulated amortisation and impairment (44,900) (38,913)

Net carrying value 31,645 5,987

Poker machine entitlementsCost 1,727,765 1,727,765

Total Intangibles 1,759,410 1,733,752

13 Trade and other payablesCURRENTTrade payables 3,457,514 2,513,956Amounts received in advance 27,382 56,421Accrued expenses 404,567 352,690Unpaid progressive jackpot 127,685 116,067

4,017,148 3,039,134

NON-CURRENTTrade and other payables 76,618 95,283

14 ProvisionsCurrent 1,690,387 1,683,388Non-current 186,886 196,337

1,877,273 1,879,725

Opening balance 1 January, 2017 1,879,725Additional provisions 1,198,928Provisions used (1,201,380)

Balance at 31 December, 2017 1,877,273

21



Consolidated2017

$2016

$

15 Financial LiabilitiesCURRENTUnsecured liabilities:Other financial liabilities 108,615 -Secured liabilities:Bank overdraft 50,687 52,204Bank loans (a) 720,000 500,000Finance lease obligations (c) 1,953,084 1,882,795

2,723,771 2,434,999

2,832,386 2,434,999

NON-CURRENTSecured liabilities:Bank loans (a) 10,530,000 5,800,000CHPRSL Sub Branch Loan (b) 1,400,000 1,350,000Finance lease obligation (c) 1,917,513 2,611,301

13,847,513 9,761,301

(a) Bank loan

The bank loan from ANZ is secured by a registered first mortgage over the Club's property at 20 - 26Canterbury Road, Hurlstone Park.

(b) CHPRSL Sub Branch Loan

The loan from CHPRSL Sub Branch is secured by a registered first mortgage over residential investmentproperties as 117, 119 Crinan Street, Hurlstone Park, NSW 2193 and 8 The Avenue, Hurlstone Park, NSW2193.

(c) Finance lease obligation

Finance leases are secured against the underlying asset of the hire purchase or finance leases.

16 Capital and Leasing Commitments

(a) Operating leases

Non-cancellable operating leases contracted for but not capitalised in the financial statements:Payable - minimum lease payments:- not later than one year 201,054 311,867- between one year and five years 383,999 594,878

585,053 906,745

22



Consolidated2017

$2016

$

16 Capital and Leasing Commitments (cont'd)

(b) Capital Expenditure Commitments

Capital expenditure contracted for at the end of the reporting period but not yet incurred yet is as follows:

Payable within 12 months - 3,450,000

(c) Finance leases

Minimum lease payments:- not later than one year 2,172,819 2,150,833- between one year and five years 1,992,263 2,817,028Minimum lease payments 4,165,082 4,967,861Less: finance charges (294,485) (473,765)Minimum lease payments 3,870,597 4,494,096

17 Key Management Personnel Disclosures

The total remuneration paid to key management personnel of the Group was $723,558 (2016:$681,023).

18 Financial Risk Management

The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market riskconsisting of interest rate risk.

The Group's financial instruments consist mainly of deposits with banks, short-term investments, accounts receivableand payable, bank loans and overdrafts, loans to and from subsidiaries, bills and leases.

23



Consolidated2017

$2016

$

18 Financial Risk Management (cont'd)

The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in theaccounting policies to these financial statements, are as follows:

Financial AssetsCash and cash equivalents 10,744,084 12,188,203Trade receivables 444,631 494,193

Total financial assets 11,188,715 12,682,396

Financial LiabilitiesLoans 12,650,000 7,650,000Finance lease obligations 3,870,597 4,494,096Trade and other payables 4,093,948 3,134,417Bank overdrafts 50,687 52,204

Total financial liabilities 20,665,232 15,330,717

19 Contingent Liabilities and Contingent Assets

Estimates of the potential financial effect of contingent liabilities that may become payable:

Contingent Liabilities

Bank GuaranteeBank guarantee issued on behalf of the Club in favour of TAB 5,570 5,485

Mortality benefitsMortality benefits payable to members 2017: 517 (2016: 543) who joinedthe Club prior to 29 May 1984 and who have maintained continuousmembership. The maximum potential benefit payable to each eligiblemember is $225. 116,325 122,175

20 Events Occurring After the Reporting Date

No matters or circumstances have arisen since the end of the financial year which significantly affected or couldsignificantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group infuture financial years.

24



21 Interests in SubsidiariesPrincipal place ofbusiness / Country ofIncorporation

PercentageOwned (%)*

2017

PercentageOwned (%)*

2016

Parent entityCanterbury-Hurlstone Park RSL Club Limited Australia 100 100

SubsidiariesCHPRSL Holdings Pty Limited Australia 100 100Camperdown Project Pty Limited Australia 100 100Camperdown Tennis Pty Limited Australia 100 -

*The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries.

CHPRSL Holdings Pty Limited was established as a wholly owned subsidiary of Canterbury-Hurlstone Park RSL ClubLimited to facilitate future diversification opportunities.

Camperdown Project Pty Limited was established as a wholly owned subsidiary of CHPRSL Holdings Pty Ltd.Camperdown Project Pty Limited signed an agreement for lease with Marrickville Council for the use of the land at theformer Camperdown Bowling Club site, 31A Mallett St Camperdown, NSW.

Camperdown Tennis Pty Limited was established as a unit trust and wholly owned subsidiary of Camperdown ProjectPty Limited. Camperdown Tennis Pty Limited was acquired on 13 July 2017 for $400,000.

22 Parent entity2017

$2016

$

Statement of Financial PositionAssetsCurrent assets 5,203,757 10,835,571Non-current assets 80,680,388 63,841,076

Total Assets 85,884,145 74,676,647LiabilitiesCurrent liabilities 7,791,604 6,226,041Non-current liabilities 14,714,675 7,406,250

Total Liabilities 22,506,279 13,632,291EquityRetained earnings 50,847,797 48,453,145Asset revaluation reserve 12,530,069 11,993,585

Total Equity 63,377,866 60,446,730

Statement of Profit or Loss and other Comprehensive IncomeTotal profit or loss for the year 2,394,652 4,347,382Other comprehensive income 536,484 -

Total comprehensive income 2,931,136 4,347,382

25



23 Group Details

The registered office of the Club is:Canterbury-Hurlstone Park RSL Club Limited20-26 Canterbury RoadHurlstone Park NSW 2193

The principal places of business are:Canterbury-Hurlstone Park RSL Club Limited20-26 Canterbury RoadHurlstone Park NSW 2193

Bargo Sports Club3580 Remembrance DriveBargo NSW 2574

Magpie Sports Club46 Hampton StreetCroydon Park NSW 2133

Camperdown Projects Pty Ltd 31A Mallett Street Camperdown NSW 2050

Camperdown Tennis Pty Ltd33 Mallett Street Camperdown NSW 2050

26

Canterbury-Hurlstone Park RSL Club Limited

ABN: 56 000 967 199

Directors' Declaration

27

The directors of the Group declare that: 1. The financial statements and notes as set out on pages 6 to 26, are in accordance with the Corporations Act 2001 and:

a. comply with Accounting Standards - Reduced Disclosure Requirements; and

b. give a true and fair view of the financial position as at 31 December 2017 and of the performance for the year ended on that date of the Group;

2. In the directors' opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and

when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Director .................................................................. Director ..................................................................

Robert Crowhurst Malcolm Tyler Sydney Dated: 26 February 2018

28

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF CANTERBURY-HURLSTONE PARK RSL CLUB LIMITED

Report on the Financial Report Opinion

We have audited the financial report of Canterbury-Hurlstone Park RSL Club Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2017, the consolidated statement of profit or loss, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,including:

(i) giving a true and fair view of the Group's financial position as at 31 December 2017 and of its financial performance for the year ended; and

(ii) complying with Australian Accounting Standards - Reduced Disclosure Requirements and the Corporations Regulations 2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We 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.

Responsibilities of 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 - Reduced Disclosure Requirements and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the Group’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 Group or to cease operations, or have no realistic alternative but to do so.

PKF(NS) Audit & Assurance Limited Partnership is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.

For office locations visit www.pkf.com.au

Sydney

Level 8, 1 O’Connell StreetSydney NSW 2000 Australia GPO Box 5446 Sydney NSW 2001

p +61 2 8346 6000 f +61 2 8346 6099

PKF(NS) Audit & Assurance Limited Partnership

ABN 91 850 861 839

Liability limited by a scheme

approved under Professional

Standards Legislation

Newcastle

755 Hunter Street Newcastle West NSW 2302 Australia PO Box 2368 Dangar NSW 2309

p +61 2 4962 2688 f +61 2 4962 3245

29

Auditor's Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

PKF SCOTT TOBUTT Chartered Accountants Partner

Level 8, 1 O'Connell Street, Sydney NSW 2000

Date: 26 February 2018

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