WesternSuburbs(N'cle)Leagues ClubLimited ... · Football operations 27,138 5,176 236 175,970...

Western Suburbs (N'cle) LeaguesClub LimitedACN 000 973 919

Annual financial reportfor the year ended 31 January 2019

Western Suburbs (N'cle) Leagues Club Limited ACN 000 973 919

Annual financial report - 31 January 2019

ContentsPage

Directors' report 1Auditor's independence declaration 7Financial statements 8Independent auditor's report to the members 35

Directors' report

Your directors present their report on the consolidated entity (the "Group") consisting of Western Suburbs (N'cle)Leagues Club Limited (the "Company" or 'Club") and the entities it controlled at the end of, and during, the yearended 31 January 2019.

The Club is incorporated and domiciled in Australia as a company limited by guarantee. In accordance with theConstitution of the Company, every member of the Company undertakes to contribute an amount limited to $1per member in the event of the winding up of the Company during the time they are a member or within one yearthereafter.

Directors

The following persons held office as directors of Western Suburbs (N'cle) Leagues Club Limited during thefinancial year, and up to the date of this report;

Owen KilpatrickWayne HoreJohn McLaughlinGeoff CoburnRobert DarcyKevin Scott HolmesKatie Brassil (appointed 22 February 2018)

Principal activities

During the year the principal continuing activities of the Group consisted of:

(a) the provision of hospitality, tourism and leisure facilities and services,(b) the fostering and promotion of the game of Rugby League Football,(c) motel operations providing superior accommodation facilities, and(d) the provision of Health & Fitness centres and services to members.

Membership

The Club is a company limited by guarantee without share capital. The number of Club members as at 31January 2019 and the comparison with the last financial year is as follows:

2019 2018Members 126,508 122,520

Dividends

The Company is a not for profit organisation and is prevented by its constitution from paying dividends.

Review of operations

All segments of the business have posted a revenue and net profit result for the Group as below:

Segment revenues ($'000) Segment results ($'000)2019 2018 2019 2018

Licensed Club 128,200 121,485 8,999 8,304Hotel 20,632 19,750 3,938 3,054Football operations 27,138 5,176 236

175,970 146,411 14,317 11,594

14,317 11,594- -

Profit from ordinary activities before related income tax expenseIncome tax expenseNet profit 14,317 11,594

The consolidated results from ordinary activities before tax for the period amounted to $14,317,224 compared to $11,594,291 for the prior year. This resulted after charging $12,013,848 (2018: $11,658,173) for depreciation/amortisation.

Revenue excluding other income for the past year was $175,760,059 (2018: $146,291,349) reflecting an increase of $29,468,710 (20%) from 2018.

Western Suburbs (N'cle) Leagues Club Limited31 January 2019

1

The Knights Rugby League Pty Limited recorded a net profit of $1,099,102 in their annual financial statements for the year ended 31 October 2018.

1,380

Core and non-core property

Pursuant to Section 41E(5) of the Registered Clubs Act 1976 (NSW) for the financial year ended 31 January 2019, the following land and buildings are considered to be non-core property with all other land and buildings being core property:

••••••••••••••••••••••••••••••••

73 Hobart Road, New Lambton79 Hobart Road, New Lambton80 Hobart Road, New Lambton82 Hobart Road, New Lambton84 Hobart Road, New Lambton98 Hobart Road, New Lambton94 Hobart Road, New Lambton92 Hobart Road, New Lambton7 Rugby Road, New Lambton10 Rugby Road, New Lambton41 Thalaba Road, New Lambton1A Tauranga Road, New Lambton68 Shoal Bay Road, Nelson Bay70 Shoal Bay Road, Nelson Bay72 Shoal Bay Road, Nelson Bay76 Shoal Bay Road, Nelson Bay90 Shoal Bay Road, Nelson Bay71 Achilles Street, Nelson Bay73 Achilles Street, Nelson Bay91 Achilles Street, Nelson Bay26 Corlette Road, Corlette11 Merewether Street, Cardiff16 Merewether Street, Cardiff14 Munibung Road, Cardiff16 Munibung Road, Cardiff18 Munibung Road, Cardiff27 Lachlan Road, Cardiff309 King Street, Newcastle36 Union Street, Newcastle42 Union Street, Newcastle605 Hunter Street, Newcastle32 Industrial Drive, Mayfield

Significant changes in the state of affairs

In the opinion of the directors there were no significant changes in the state of affairs of the Group that occurredduring the year under review or are expected to occur subsequent to year end.

Matters subsequent to the end of the financial year

No matter or circumstance has occurred subsequent to year end that has significantly affected, or maysignificantly affect:

(a) the Group's operations in future financial years, or(b) the results of those operations in future financial years, or(c) the Group's state of affairs in future financial years.

Likely developments and expected results of operations

Aside from the above, in the opinion of the directors there are no significant developments or expected results ofoperations that have occurred or are expected to occur subsequent to year end.


2

Short and long term objectives

The Club has established short and long term objectives as outlined in the Club’s Strategic Plan which is reviewed on an annual basis. The Club’s short term objective is the successful finalisation of the refurbishment programs across the Group, maintaining the relevance of the Group’s offerings to members and guests. This integrates with the longer term objective of providing value to all stakeholders and to the communities in which the Group operates. These objectives are measured through both financial and non financial key performance indicators that have been determined as relevant to the club industry.

Environmental regulation

The Group's operators are subject to various environmental regulations under both Commonwealth and statelegislation.

The Board believes that the Group has adequate systems in place for the management of its environmentalrequirements and is not aware of any breach of those environmental requirements as they apply to the Group.

Information on directors

Owen Kilpatrick

Experience and expertiseDirector since 1972 (47 years), President since 2006.Mr Kilpatrick also served as a director for a number of years prior to the Club's incorporation.Retired accountant.

Special ResponsibilitiesPresidentChair of Remuneration and Nomination Sub-Committee Member of Football Advisory Committee

Wayne Hore

Experience and expertiseDirector since 1981 (38 years).Retired police officer.

Special ResponsibilitiesMember of Remuneration and Nomination Sub-CommitteeChair of Members Sub-Committee

John McLaughlin

Experience and expertiseDirector since 1998 (21 years).Retired engineering officer.

Special ResponsibilitiesMember of Audit and Risk Management Sub-Committee


3

Information on directors (continued)

Geoff Coburn

Experience and expertiseDirector since 1993 (26 years).School teacher.

Special ResponsibilitiesMember of Members Sub-Committee Chair of Football Advisory Committee

Robert Darcy

Experience and expertiseDirector since November 2010 (9 years).Real Estate principal.

Other current directorshipsManaging Director, Darcy Real EstateManaging Director, Darcy Property Pty Ltd

Special ResponsibilitiesMember of Remuneration and Nomination Sub-Committee

Kevin (Scott) Holmes

Experience and expertiseDirector since February 2011 (8 years).Deputy Vice-Chancellor (Research and Development), University of Western Sydney.

Special ResponsibilitiesMember of Audit and Risk Management Sub-CommitteeMember of Members Sub-Committee

Katie Brassil (appointed 22 February 2018)

Experience and expertiseDirector since 2018Executive General Manager External Affairs - Centennial Coal Company Limited

Other current directorshipsDirector, Northern NSW Helicopter Rescue Service Ltd. Director, Hunter TAFE FoundationDirector, Coal 21 - Low Emissions Coal Australia Director, NSW Minerals Council

All of the above directors also serve as directors on all subsidiaries.

Company secretary

The Company secretary is Mr Philip Gardner. Mr Gardner was appointed to the position of company secretary inSeptember 1995.


4

Meetings of directors

The numbers of meetings of the Company's board of directors and of each board committee held during the yearended 31 January 2019, and the numbers of meetings attended by each director were:

Full meetings Meetings of committees

of directors Audit & RiskManagement

RemunerationCommittee

A B A B A BOwen Kilpatrick 12 12 - - 1 1Wayne Hore 11 12 - - 1 1John McLaughlin 11 12 1 1 - -Geoff Coburn 12 12 1 1 - -Robert Darcy 12 12 1 1 1 1Kevin Scott Holmes 5 12 1 1 - -Katie Brassil 12 12 - - - -

A = Number of meetings attendedB = Number of meetings held during the time the director held office or was a member of the committee duringthe year

Meetings of the Members Sub-Committee, Football Advisory Committee and the Sporting and Charitable Foundation Sub-Committee are conducted within the full meetings of directors.

Loans to directors and executives

No loans have been advanced to directors and executives by the Group during the year and no loan amounts areoutstanding from directors and executives.

Insurance of officers

During the year, the Company paid a premium for a Directors and Officers liability insurance policy. Theinsurance policy provides cover for the directors named in this report, the Company secretary, officers and formerdirectors and officers of the Company. The contract prohibits the disclosure of the nature of the liabilities and theamount of the premium.

Under Article 75 of the Company's Articles of Association, the Company also indemnifies every officer of theCompany and every auditor of the Company "out of the property of the Company against any liability incurred bythat person in that person's capacity as officer or auditor in defending any proceedings, whether civil or criminal inwhich judgement is given in favour of that person or in which that person is acquitted or in connection with anyapplication under the Act in which relief is under the Act granted to that person by the court in respect ofnegligence, default, breach of any duty or trust".

Proceedings on behalf of the company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bringproceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, forthe purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court undersection 237 of the Corporations Act 2001.

Rounding of amounts

The Company is of a kind referred to in ASIC Legislative (Rounding in Financial/Director's Report) Instrument2016/191, relating to the 'rounding off' of amounts in the directors' report. Amounts in the directors' report havebeen rounded off in accordance with the instrument to the nearest thousand dollars, or in certain cases, to thenearest dollar.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 isset out on page 7.


5

Auditor

PricewaterhouseGoopers continues in office in accordance with section 327 of the Corporations Act 2001

This report is made in accordance with a resolution of directors.

--f>-.<-ZZ-+tb-'qeOwen KilpatrickPresident

Geoff CoburnDirector

Newcastle28 March 2019


6

-3pwe

Auditor's Indep endence D eclar ationAs lead auditor for the audit of Western Suburbs (N'cle) leagues Club Limited for the year ended 3rJanuary zor9, I declare that to the best of my knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2oo1 inrelation to the audit; and

O) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Western Suburbs (N'cle) Ieagues Club Limited and the entities itcontrolled during the period.

O,Mo"@

Caroline MaraPartnerPricewaterhouseCoopers

Newcastlez8 March zorg

t"" --'--'---'--'

PriceuaterhouseCoopers, ABN 5z 78o 4SS 752Ievel 3, 45 Watt Street, PO Box 798, NEWCASTLE NSW z3ooT: +61 2 4925 7roo, F: +6t z 4925 tt9g, tuww.pwc.com.ou

Liability limited by a scheme approved under Professional Standards Legislation.

7

Western Suburbs (N'cle) Leagues Club Limited ACN 000 973 919

Annual financial report - 31 January 2019

ContentsPage

Financial statementsConsolidated statement of comprehensive income 9Consolidated balance sheet 10Consolidated statement of changes in equity 11Consolidated statement of cash flows 12Notes to the consolidated financial statements 13

Directors' declaration 34Independent auditor's report to the members 35

These financial statements are the consolidated financial statements of the Group consisting of Western Suburbs(N'cle) Leagues Club Limited and its subsidiaries. The financial statements are presented in the Australiancurrency.

The financial statements were authorised for issue by the directors on 28 March 2019. The directors have thepower to amend and reissue the financial statements.


8

Consolidated statement of comprehensive incomeFor the year ended 31 January 2019

Notes2019$'000

2018$'000

Revenue from continuing operations 1 175,970 146,411

2 (16) 1392 (17,253) (17,141)

(17,980) (17,444)(52,419) (48,190)(13,253) (7,751)

(3,971) (3,883)(2,125) (2,497)(4,144) (3,710)(1,634) (1,298)(1,818) (1,792)

(360) (433)2 (12,014) (11,659)

(1,119) (961)(9,126) (1,131)

(11,470) (3,032)(12,103) (13,099)

2 (849) (935)

Changes in inventories of finished goods and work in progress Inventory purchasedPoker machine dutyEmployee benefits expensePromotional and marketing expensesRepairs and maintenance expenseCommunity supportElectricity and fuelInsurance expenseSecurityMembers expensesDepreciation and amortisation expenseSubscriptionsFootball administrationFootball operationsOther expensesFinance costsProfit before income tax 14,317 11,594

Other comprehensive incomeBlankOther comprehensive income for the year, net of tax - -

Total comprehensive income for the year 14,317 11,594

Profit is attributable to:Owners of Western Suburbs (N'cle) Leagues Club Limited 14,317 11,594

Total comprehensive income for the year is attributable to:Owners of Western Suburbs (N'cle) Leagues Club Limited 14,317 11,594

The above consolidated statement of comprehensive income should be read in conjunction with theaccompanying notes.


9

3 - -Income tax expenseProfit for the year 14,317 11,594

Consolidated balance sheetAs at 31 January 2019

Notes2019$'000

2018$'000

ASSETSCurrent assetsCash and cash equivalents 4(a) 11,773 8,326Trade and other receivables 4(b) 7,508 5,630Inventories 5(c) 1,524 1,540Current tax receivable 5(d) - 66

Total current assets 20,805 15,562

Non-current assetsProperty, plant and equipment 5(a) 273,201 270,778Deferred tax assets 5(e) -Intangible assets 5(b) 17,219 17,219

Total non-current assets 290,420 287,997

Total assets 311,225 303,559

LIABILITIESCurrent liabilitiesTrade and other payables 4(c) 19,146 16,586Borrowings 4(d) 21,496 18,521Provisions 5(f) 3,424 3,519Deferred revenue 5(g) 6,628 5,469

Total current liabilities 50,694 44,095

5(g) 1,650 2,4005(e) -5(f) 2,062 2,562

Non-current liabilitiesBorrowingsDeferred revenueDeferred tax liabilities ProvisionsTotal non-current liabilities 3,712 16,962

Total liabilities 54,406 61,057

Net assets 256,819 242,502

MEMBERS FUNDSRetained profits 6 256,819 242,502

The above consolidated balance sheet should be read in conjunction with the accompanying notes.


10

-

-

4(d) - 12,000

Consolidated statement of changes in equityFor the year ended 31 January 2019

Retainedprofits

$'000

Totalequity$'000

Balance at 1 February 2017 230,908 230,908

Profit for the year 11,594 11,594Other comprehensive income - -

Balance at 31 January 2018 242,502 242,502

Balance at 1 February 2018 242,502 242,502

Profit for the year 14,317 14,317Other comprehensive income - -Total comprehensive income for the year 14,317 14,317

Balance at 31 January 2019 256,819 256,819

The above consolidated statement of changes in equity should be read in conjunction with the accompanyingnotes.


11

Consolidated statement of cash flowsFor the year ended 31 January 2019

Notes2019$'000

2018$'000

Cash flows from operating activitiesReceipts from customers (inclusive of goods and services tax) 191,904 161,447Payments to suppliers and employees (inclusive of goods and servicestax) (164,255) (141,661)

27,649 19,786Interest received 43 120Interest paid (849) (935)Income taxes received - 78

Net cash inflow from operating activities 26,843 19,049

Cash flows from investing activitiesPayments for property, plant and equipment and intangibles 5(a) (15,159) (21,293)Proceeds from sale of property, plant and equipment 722 956Acquisition of Knights net of cash acquired - 1,350

Net cash (outflow) from investing activities (14,437) (18,987)

Cash flows from financing activities(Repayments of) third party loans (12,938) (7,500)Proceeds from third party loans 10,000 7,500

Net cash inflow from financing activities (2,938) -

Net increase in cash and cash equivalents 9,468 62Cash and cash equivalents at the beginning of the financial year 2,305 2,243

Cash and cash equivalents at the end of the financial year 4(a) 11,773 2,305

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.


12

Contents of the notes to the consolidated financial statements

Page

1 Revenue 14

2 Other income and expense items 14

3 Income tax expense 15

4 Financial assets and financial liabilities 15

5 Non-financial assets and liabilities 17

6 Members funds 20

7 Interests in other entities 20

8 Contingent liabilities and contingent assets 20

9 Commitments 20

10 Events occurring after the reporting period 21

11 Related party transactions 22

12 Parent entity financial information 23

13 Critical accounting estimates and judgements 23

14 Financial risk management 24

15 Summary of significant accounting policies 24

16 Changes in accounting policies 32


13

1 Revenue

(a) Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services over time and at a point in time for the following services:

2019Provision of

services TotalSale of goods - food

and beverage$'000 $'000 $'000

43,787

131,974

147,839

43,787

104,052

175,761

Timing of revenue recognition At a point in timeOver time 27,922 27,922

2018Provision of

services TotalSale of goods - food

and beverage$'000 $'000 $'000

42,548

103,743 146,29142,548

93,242 135,790Timing of revenue recognition At a point in timeOver time 10,501 10,501

(b) Assets and liabilities related to contracts with customers

The Group has recognised the following assets and liabilities related to contracts with customers:

2019 2018$'000 $'000

4,274 3,963- -

4,274 3,963

619 509292 232

8,278 7,869

uCurrent contract assetsLoss allowanceTotal contract assetssContract liabilities (Deposits in advance) Contract liabilities (Gym memberships in advance)Contract liabilities (Sponsorship & football membership in advance) Total contract liabilities 9,189 8,610

2 Other income and expense items

Expenses

2019$'000

2018$'000

Cost of goods sold 17,269 17,002

Depreciation of:Buildings 4,537 4,323Plant and equipment 7,477 7,336

12,014 11,659

849 935


14

-

-

(c) Other revenue

167 18Interest

Royalties 42

102 209 120

Finance costs - interest and finance charges

Net loss on sale of assets 65 572

3 Income tax expense

(a) Numerical reconciliation of income tax expense to prima facie tax payable

The Income Tax Assessment Act 1936 (amended) provides that under the concept of mutuality, clubs are only liable for income tax on income derived from non-members and from outside entities. The amount set aside for income tax in the consolidated statement of comprehensive income has been provided on a taxable income calculated as follows:

2019$'000

2018$'000

(12,352) (18,802)17 42

(3,701) (5,628)

112 (1,072)

Taxable loss attributed to non-members Knights expenses permanent difference

Tax at the Australian tax rate at 30.0% (2018 - 30.0%)Tax losses not recognised

(112) 1,072

Effect of mutuality Income tax expense

- -Tax consolidation

The Company is part of a consolidated group for which Western Suburbs (N'cle) Leagues Club Limited is the parent. Tax Funding and Tax Sharing agreements are in the process of being formulated, and the group will adopt an allocation method under UIG 1052 in order to measure and account for each members tax contributions.

Deferred tax assets and deferred tax liabilities are measured by reference to the carrying amounts of the assets and liabilities of all members of the Tax Consolidated Group.

(b) Unrecognised tax losses

Gross unrecognised tax losses of $44,129,845 (2018: $29,152,027) have not been booked in the current year.

4 Financial assets and financial liabilities

(a) Cash and cash equivalents

2019$'000

2018$'000

Current assetsCash at bank 11,773 8,326

Reconciliation to cash at the end of the year

The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of thefinancial year as follows:

2019$'000

2018$'000

Balances as above 11,773 8,326Bank overdraft (note 4(d)) - (6,021)

Balances per consolidated statement of cash flows 11,773 2,305


15

(12,335) (18,760)

3,813 4,556

Financial assets and financial liabilities

(b) Trade and other receivables

2019$'000

2018$'000

5,686 4,263Current assetsOther receivables Provision for impairment of receivables (25) (4)

5,661 4,259

Prepayments 1,847 1,3717,508 5,630

(i) Impaired trade receivables

There were no impaired trade receivables for the Group in 2019 and 2018.

(c) Trade and other payables

2019$'000

2018$'000

Current liabilitiesTrade payables 15,746 14,070Members subscription in advance 445 535Other payables 2,955 1,981

19,146 16,586

Trade payables are unsecured and are usually paid within 30 days of recognition. Based on past experience, it isexpected all amounts recognised will be settled within the next 12 months. The carrying amounts of trade andother payables are assumed to be the same as their fair values, due to their short-term nature.

(d) Borrowings

2019 2018

NotesCurrent

$'000

Non-current$'000

Total$'000

Current$'000

Non-current$'000

Total$'000

SecuredBank overdraft 4(d)(i) - - - 6,021 - 6,021Bank bills payable 4(d)(i) - - - 7,500 - 7,500Bank loans payable 4(d)(i) - 21,496 5,000 12,000 17,000

Total secured borrowings 21,496 - 21,496 18,521 12,000 30,521


16

(i) Classification of trade and other payables

21,496

Financial assets and financial liabilities

(d) Borrowings (continued)

(i) Bank overdraft, bank bills and loans payable

All bank loans, bank bills and overdrafts are secured by fixed and floating charges over all assets andundertakings of the Group.

The Group's bank overdraft facility is for $8,000,000 (2018: $8,000,000). From this facility $nil (2018: $6,021,329)was utilised as at balance date.

In 2018, the Group had a bank bill facility of $7,500,000. $7,500,000 was drawn which was repaid during 2019, and the facility closed.

The Group's bank loan facility is for $22,500,000 (2018: $17,000,000). From this facility, $21,496,000 (2018:$17,000,000) was utilised as at balance date.

5 Non-financial assets and liabilities

(a) Property, plant and equipment

Land andBuildings

$'000

Plant andequipment

$'000

Capital worksin progress

$'000Total$'000

At 31 January 2018Cost 266,037 101,350 1,432 368,819Accumulated depreciation (40,766) (57,275) - (98,041)

Net book amount 225,271 44,075 1,432 270,778

Year ended 31 January 2019Opening net book amount 225,271 44,075 1,432 270,778Additions 104 6,681 8,374 15,159Disposals - (722) - (722)Transfers 4,241 1,315 (5,556) -Depreciation charge (4,537) (7,477) - (12,014)

Closing net book amount 225,079 43,872 4,250 273,201

At 31 January 2019Cost 270,383 106,319 4,250 380,952Accumulated depreciation (45,304) (62,447) - (107,751)

Net book amount 225,079 43,872 4,250 273,201

Valuations of land and buildings

An independent valuation of the consolidated entity's land and buildings, was carried out in August 2018 by Mr Andrew Le and Micheal Lim, Registered Valuer from AON Valuation Services on the basis of the current market values of the properties concerned in their existing use.The consolidated valuation was $227,440,000.This valuation was in accordance with the Group's policy of obtaining an independent valuation of land andbuildings every 3-5 years. The valuation has not been booked as property is carried at cost.

The value placed on the Group's hotel buildings was $74,820,000 and is dependent upon any future operator of the hotel having the ability to maintain the same service level agreements with the Group in relation to the provision of club services to hotel guests.


17

Non-financial assets and liabilities

(b) Intangible assets

Goodwill$'000

Trademarks&

licenses$'000

GamingMachineLicenses

$'000Total$'000

Year ended 31 January 2018Opening net book amount 407 5 10,235 10,647Additions - 6,572 - 6,572

Closing net book amount 407 6,577 10,235 17,219

At 31 January 2018Cost 407 6,577 10,235 17,219

Net book amount 407 6,577 10,235 17,219

Year ended 31 January 2019Opening net book amount 407 6,577 10,235 17,219Additions - - - -

Closing net book amount 407 6,577 10,235 17,219

At 31 January 2019Cost 407 6,577 10,235 17,219

Net book amount 407 6,577 10,235 17,219

(c) Inventories

2019$'000

2018$'000

Current assetsTrading stock - at cost 1,495 1,510Motel stock - at cost 29 30

1,524 1,540

Assigning costs to inventories

The costs of individual items of inventory are determined using FIFO. The Group's other accounting policies for inventory are outlined in the note 15 (i).

Inventories recognised as an expense during the year ended 31 January 2019 amounted to $17,269,151 (2018:$17,002,056).

(d) Current tax receivable

2019$'000

2018$'000

66 144Movements during the year: Balance at beginning of the year Income tax (received) paid (66) (78)

- 66


18


(e) Deferred tax balances

(i) Deferred tax assets 2019$'000

2018$'000

The balance comprises temporary differences attributable to:Tax losses 14,135 13,771Employee benefits 779 857Accruals expenses 17 18Sundry 18 24

14,949 14,670

Set-off of deferred tax liabilities pursuant to set-off provisions (note 5(e) (ii)) (14,949) (14,670)

Net deferred tax assets - -

(ii) Deferred tax liabilities

2019$'000

2018$'000

The balance comprises temporary differences attributable to:Property, plant and equipment 14,716 14,370Intangible assets 182 246Prepayments 51 44Borrowing costs - 10

14,949 14,670

(14,949) (14,670)- -

Set-off of deferred tax assets pursuant to set-off provisions (note 5(e) (i))

Net deferred tax liabilities

(f) Provisions

2019 2018

Current$'000

Non-current$'000

Total$'000

Current$'000

Non-current$'000

Total$'000

Employee benefits (i) 2,942 947 3,889 3,037 947 3,984Community football 482 1,115 1,597 482 1,615 2,097

Total 3,424 2,062 5,486 3,519 2,562 6,081

(i) Employee benefits

The provision for employee benefits relates to the Group's liability for long service leave.

(g) Deferred revenue

2019 2018

Current$'000

Non-current$'000

Total$'000

Current$'000

Non-current$'000

Total$'000

Deferred revenue 6,628 1,650 8,278 5,469 2,400 7,869


19


(g) Deferred revenue (continued)

Deferred revenue comprises sponsorship revenue, membership revenue and corporate hospitality revenue whichis recognised equally across games throughout the year.

6 Members funds

Retained profits

Movements in retained profits were as follows:

2019$'000

2018$'000

Retained profits at the beginning of the year 242,502 230,908Net profit for the year 14,317 11,594

Retained profits at the end of the year 256,819 242,502

7 Interests in other entities

Material subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries inaccordance with the accounting policy described in note 15 (b):

Name of entityCountry ofincorporation Class of shares Equity holding **

2019 2018% %

The Executive Inn Pty Limited Australia Ordinary 100% 100%Knights Rugby League Pty Limited Australia Ordinary 100% 100%

** The proportion of ownership interest is equal to the proportion of voting power held.

8 Contingent liabilities and contingent assets

(a) Contingent liabilities

The Group has guaranteed the following amounts:

• $3,000 (2018: $3,000) in respect of potential amounts owing to the NSW Lotteries;• $19,000 (2018: $19,000) in respect of potential amounts owing to the TAB Limited;• $100,000 (2018: $100,000) in respect of potential amounts owing to the Independent Liquor and Gaming Authority; and• $75,000 (2018: $75,000) in respect of potential amounts owing to Venues NSW.

(b) Contingent assets

The Group had no contingent assets at 31 January 2019 (2018: $nil).

9 Commitments

(a) Capital expenditure commitments

Commitments for the completion of the Knights Centre of Excellence at the reporting date but not recognised asliabilities are:

2019$'000

2018$'000

- -Within one yearAfter one year but not more than five years* 10,000 10,000

10,000 10,000


20

* While no amounts are yet contracted to be settled within the next 12 months, the timing ofexecution of contracts may see commencement of the Centre of Excellence within the next 12 months.

Commitments

(b) Non-cancellable operating leases

Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities:

2019$'000

2018$'000

Property leases 5,043 5,139Plant and equipment 147 231

5,190 5,370

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable asfollows:

2019$'000

2018$'000

Within one year 185 182After one year but not more than five years 466 542Later than five years 4,539 4,646

5,190 5,370

Commitments are GST exclusive where relevant.

(c) Football commitments

Commitments for football operations in existence at the reporting date but not recognised as liabilities are:

2019$'000

2018$'000

Within one year 12,353 10,606After one year but not more than five years 15,893 13,926

28,246 24,532

10 Events occurring after the reporting period

No matter or circumstance has occurred subsequent to year end that has significantly affected, or maysignificantly affect, the operations of the Group, the results of those operations or the state of affairs of the Groupor economic entity in subsequent financial years.


21

11 Related party transactions

Transactions between related parties are on normal commercial terms and conditions, and are no morefavourable than those available to other parties unless otherwise stated.

(a) Subsidiary entity

The subsidiary entities are:

- The Executive Inn Pty Limited, a Company incorporated in New South Wales.- Knights Rugby League Pty Limited, a Company incorporated in New South Wales.At 31 January 2019 the Company owned 100% (2018: 100%) of the share capital of The Executive Inn Pty Limited and 100% (2018: 100%) of Knights Rugby League Pty Limited.

(b) Transactions with subsidiary entities

The Company has provided an interest free loan at call to The Executive Inn Pty Limited. At 31 January 2019 the Company was owed $12,497,814 (2018: $6,113,659). The Company has formally agreed to provide financial support to The Executive Inn Pty Limited as and when required.

The Company has provided an interest free loan at call to the Knights Rugby League Pty Limited. At 31 January 2019 the Company was owed $749,801 (2018: $1,071,407). The Company has formally agreed to provide financial support to Knights Rugby League Pty Limited as and when required.

(c) Transactions with other related parties

Transactions between related parties are on normal commercial terms and conditions, and are no morefavourable than those available to other parties unless otherwise stated.

The following transactions and year end balances occurred with related parties.

nib holdings limited 2019* 2018

Sales from sponsorship 960,475 229,725

* This amount reflects the annual sponsorship of the Newcastle Knights. However nib holdings limited ceased

2019 2018

Trade and other receivables 689,175Deferred revenue 689,175

(d) Key management personnel compensation

2019$'000

2018$'000

Total key management personnel benefits 3,131 2,708


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to be a related party on 31 August 2018.

Western Suburbs (N'cle) Leagues Club Limited provides nib health insurance for its football players. This is

702,269702,269

Outstanding balances arising from sales/purchases of goods and services

2019 2018$'000 $'000

60 -Disposal of property, plant and equipment to related parties

transacted on commercial terms. However nib holdings limited ceased to be a related party on 31 August 2018.

12 Parent entity financial information

Summary financial information

The individual financial statements for the parent entity show the following aggregate amounts:

2019$'000

2018$'000

Balance sheetCurrent assets 27,048 16,802

Total assets 258,051 247,466

Current liabilities 18,385 17,068

Total liabilities 26,956 25,730- -

Members' fundsRetained profits 231,095 221,736

Profit for the year 9,359 8,745

Total comprehensive income 9,359 8,745

13 Critical accounting estimates and judgements

Management is required to make judgements, estimates and assumptions about reported amounts of assets,liabilities, income and expenses that are not readily apparent from other sources. The estimates and associatedassumptions are based on historical experience and various other factors that are believed to be reasonableunder the circumstance, the results of which form the basis of making the judgements. Actual results may differfrom these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates arerecognised in the period in which the estimate is revised and future periods if the revision affects both current andfuture periods.

Judgements made by management that have significant effects on the financial statements and estimates with asignificant risk of material adjustment in the next period are disclosed where applicable, in the relevant notes tothe financial statements.

(a) Estimated impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accountingpolicy stated in note 15(f). The recoverable amounts of cash-generating units (CGUs) have been determinedbased on value-in-use calculations. These calculations require the use of assumptions regarding gross margin,growth rates and discount rates applicable to each CGU.

Management have determined budgeted gross margin based on past performance and its expectations for thefuture. The weighted average growth rates used are consistent with forecasts included in industry reports. Thediscount rates used reflect specific risks relating to the relevant segments and the countries in which theyoperate.

(b) Property, plant and equipment residual values and useful lives

The Group determines the estimated useful lives, residual values and related depreciation and amortisation charges for its property, plant and equipment. 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. Therefore the Group estimates that 90% of the building assets for The Executive Inn and The Gateway Inn retain their residual value due to the active maintenance and rolling refurbishments of the premises.


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Critical accounting estimates and judgements

(c) Calculation of mutuality

Western Suburbs (N’cle) Leagues Club Limited has received a ruling from the ATO that confirms it can adopt a methodology, other than the normal member/non-member head count mutuality formula, for certain types of its income that can be applied to determine the taxable income of the Club.

The ruling allows the Club to apply a percentage based on poker machine payouts paid to members andnon-members to its profits from poker machines, which make up a significant portion of the Club’s profits.

14 Financial risk management

Financing arrangements

The Group had access to the following undrawn borrowing facilities at the end of each reporting period:

Consolidated

2019 2018$'000 $'000

Floating rateExpiring within one year (bank overdraft and bank loans) 8,937 1,979

The bank overdraft and bank loan facilities may be drawn at any time.

Fair value estimation

The Group's interest-rate risk arises from cash investments in term deposits and long-term borrowings. Cashbalances invested at fixed rates expose the Group to fair value interest-rate risk. Borrowings issued at variablerates expose the Group to cash flow interest-rate risk. Borrowings issued at fixed rates expose the Group to fairvalue interest-rate risk.

15 Summary of significant accounting policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are setout below. These policies have been consistently applied to all the years presented, unless otherwise stated. Thefinancial statements are for the consolidated group consisting of Western Suburbs (N'cle) Leagues Club Limitedand its subsidiaries (the "Group").

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian AccountingStandards - Reduced Disclosure Requirements, other authoritative pronouncements of the Australian AccountingStandards Board and the Corporations Act 2001. For the purposes of preparing the financial statements, WesternSuburbs (N'cle) Leagues Club Limited is a not for-profit entity.

(i) Compliance with Australian Accounting Standards - Reduced Disclosure Requirements

The consolidated financial statements of the Group comply with Australian Accounting Standards - ReducedDisclosure Requirements as issued by the Australian Accounting Standards Board (AASB).

(ii) Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by therevaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments)at fair value through the profit and loss, certain classes of property, plant and equipment and investmentproperties.

(iii) New standards and interpretations not yet adopted

AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the balance sheet by lessees, as the distinction between operating and finance leases is removed. Under new standard, as asset (the right to use the lease item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.


24

The Group will apply the standard from 1 February 2019. The Group intends to apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption. Right-of-use assets for property leases will be measured on transition as if the new rules had always been applied. All other right-of-use assets will be measured at the amount of the lease liability on adoptions (adjusted for any prepaid of accrued lease expenses).

The changes under AASB 16 Leases will have a material impact. The Group expects the change will result in the recognition of additional right-of-use asset of approximately $5,190,000 and finance lease liability of approximately $5,190,000 upon adoption at 1 February 2019. The Group currently discloses their non-cancellable operating leases within commitments of the financial statements. Management does not expect there to be a material impact between what is discloses currently to what will be adopted as at 1 February 2019.

Summary of significant accounting policies

(a) Basis of preparation (continued)

None of the new standards and amendments to standards that are mandatory for the first time for the financialyear affected any of the amounts recognised in the current period or any prior period and are not likely to affectfuture periods.

(iv) Working capital deficiency

As at 31 January 2019, the Group has a working capital deficiency of $29,888,129 (2018 deficiency:$28,534,095). Despite this deficiency, the financial statements have been prepared on a going concern basiswhich contemplates the continuity of normal business activity, and the realisation of assets and the settlement ofliabilities in the ordinary course of business.

The Group has a strong trading history, generating significant profits and strong cash flow. The directors forecastthis to continue. In addition, the group has access to undrawn borrowing facilities amounting to $8,937,000 (2018:$1,979,000). Having regard to these factors, the directors on the basis of management forecasts are of theopinion that the basis upon which the financial statements is presented is appropriate in the circumstances.

(v) Restatement of prior year amounts

When the presentation or classification of items in the financial report is amended, comparative amounts havebeen reclassified.

(b) Principles of consolidation

Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Western Suburbs(N'cle) Leagues Club Limited ('Company' or ' Club') as at 31 January 2019 and the results of all subsidiaries forthe year then ended. Western Suburbs (N'cle) Leagues Club Limited and its subsidiaries together are referred toin these financial statements as the Group.

Subsidiaries are all entities (including structured entities) over which the Group has the power to govern thefinancial and operating policies, generally accompanying a shareholding of more than one-half of the votingrights.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

The acquisition method of accounting is used to account for the business combination of subsidiaries by theGroup.

Intercompany transactions, balances and unrealised gains on transactions between Group companies areeliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment ofthe asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensureconsistency with the policies adopted by the Group.

(c) Revenue recognition

(i) Provision of Services - Accommodation

The Group operates motels providing accommodation services. Revenue from the sale of rooms is recognised when the service is provided to the customer as the Group’s obligation to the customer is fulfilled upon completion of the customers stay at the motel.


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(c) Revenue recognition (continued)

(ii) Sale of Goods - Food and Beverage

The Group sells a range of food and beverages across its sites. Revenue from the sale of goods is recognised when the Group sells a product to the customer as the obligation of the Group is satisfied upon delivery of the product to the customer.

(iii) Provision of Services – Gym

The Group operates gyms providing services to customers. Revenue is recognised over the term of the contract for membership of the customer as this reflects the period of the services being provided. The Group satisfies its performance obligation over the period of the customer’s membership where services are rendered.

Gym services are also provided to individuals through fitness programs where the performance obligation of the Group is satisfied upon completion of the customers visit. Revenue for these visits is recognised at the time of the visit as there are no further performance obligations to satisfy and the service has been performed.

(iv) Provision of Services - Gaming

The Group provides gaming services. Revenue is recognised when the service event has been provided with the performance obligation of the Group satisfied at the completion of the event.

(v) Provision of Services - Sponsorship

The Group generates sponsorship income which is recognised over the period that the sponsorship services are provided. The Group satisfies its performance obligations by performing services in accordance with the customers sponsorship agreement. Payment terms are specific to individual agreements with instalment payments paid at agreed times over the period of time that the performance obligation is being satisfied.

(vi) Provision of Services - Grant incomeThe Group receives grant income which is recognised over the period of the grant agreement. The grant funding is conditional on the Group performing services in accordance with the grant agreement and satisfies its obligations over time. Payment for the full grant is received in advance for the period of which services will be provided and is recognised over the period of time that the performance obligation is being satisfied.

(vii) Provision of Services - Football Operations

The Group generates revenue from individual ticket sales to attend football games. Revenue is recognised at a point in time when the game occurs with the performance obligation satisfied upon completion of the game.

Revenue from annual memberships is recognised over the period of membership (usually 1 November to 31October) as that is the period to which the performance obligation is satisfied and games are completed.

Income from merchandise sales is recognised at the point in time when the Group sells and delivers the product to the customer as there are no further performance obligations associated with the sale.

(d) Income tax

The income tax expense or credit for the year is the tax payable on the current year's taxable income based onthe applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilitiesattributable to temporary differences and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to applywhen the assets are recovered or liabilities are settled, based on those tax rates which are enacted orsubstantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts ofdeductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is madefor certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax assetor liability is recognised in relation to these temporary differences if they arose in a transaction, other than abusiness combination, that at the time of the transaction did not affect either accounting profit or taxable profit orloss.

Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilisethose temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assetsand liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets andtax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on anet basis, or to realise the asset and settle the liability simultaneously.


26


(d) Income tax (continued)

Western Suburbs (N'cle) Leagues Club Limited and its Australian wholly-owned controlled entity, The Executive Inn Pty Limited are part of a tax consolidated group. The head entity, Western Suburbs (N'cle) Leagues Club Limited, and the controlled entity in the Tax Consolidated Group continue to account for their own deferred tax amounts in relation to temporary differences. These tax amounts are measured under a group allocation approach. In addition to its own current and deferred tax amounts, Western Suburbs (N'cle) Leagues Club Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the Tax Consolidated Group. Assets or liabilities arising under proposed tax funding agreements will be recognised as amounts receivable from or payable to other entities in the Tax Consolidated Group.

(e) Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group aslessee are classified as operating leases (note 9). Payments made under operating leases (net of any incentivesreceived from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

(f) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are testedannually for impairment, or more frequently if events or changes in circumstances indicate that they might beimpaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that thecarrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset'scarrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair valueless costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at thelowest levels for which there are separately identifiable cash inflows which are largely independent of the cashinflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwillthat suffered an impairment are reviewed for possible reversal of the impairment at the end of each reportingyear.

(g) Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includescash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments withoriginal maturities of three months or less that are readily convertible to known amounts of cash and which aresubject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown withinborrowings in current liabilities in the consolidated balance sheet.

(h) Trade receivables

Trade receivables are amounts due from customers for goods sold in the ordinary course of business. They are generally due for settlement within 30 days and are therefore all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group holds trade receivables with the objective to collect the contractual cash flows and therefore measures them at amortised cost using the effective interest method.

Policies for impairment of trade receivables are described at note 15(j)(iv).

(i) Inventories

Trading and accommodation stores are stated at the lower of cost and net realisable value. Cost comprises directmaterials cost. Costs are assigned to individual items of inventory on the basis of FIFO. Costs of purchasedinventory are determined after deducting rebates and discounts. Net realisable value is the estimated sellingprice in the ordinary course of business.

(j) Investments and other financial assets

(i) Classification

From 1 February 2018, the Group classifies its financial assets in the follow measurement categories:

• those to be measured subsequently at fair value (either through Other Comprehensive Income [OCI], orthrough profit or loss), and

• those to be measured at amortised cost.


27


(j) Investments and other financial assets (continued)

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through OCI (FVOCI). For investments in debt instruments, this will depend on the business model in which the investment is held.

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

(ii) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

(iii) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and cash flow characteristics of the asset. There are three measurement categories into which the group classifies its debt instruments:

• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows representsolely payments of principal and interest are measured at amortised cost. Interest income from thesefinancial assets is included in finance income using the effective interest rate method. Any gain or loss arisingon derecognition is recognised directly in profit or loss and presented in other gains/(losses), together withforeign exchange gains and losses. Impairment losses are presented as a separate line item in theconsolidated statement of comprehensive income.

• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, wherethe assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI.Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains orlosses, interest income and foreign exchange gains and losses which are recognised in profit or loss. Whenthe financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassifiedfrom equity to profit or loss and recognised in other gains/(losses). Interest income from these financialassets is included in finance income using the effective interest rate method. Foreign exchange gains andlosses are presented in other gains/(losses). Impairment expenses are presented as separate line item in theconsolidated statement of comprehensive income.

• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or losson a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented netwithin other gains/(losses) in the period in which it arises.

(iv) Impairment of financial assets

From 1 February 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the Group applies the simplified approach permitted by AASB 9 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Group bases expected losses on historical credit losses experienced. The Group has experienced no losses with customers and has not observed other indicators of impairment to the receivables. Accordingly, credit losses are estimated to be immaterial and there has been no recorded provision for credit losses on trade receivables at 31 January 2019.


28


(j) Investments and other financial assets (continued)

(v) Accounting policies applied until 31 January 2018

The Group has applied AASB 9 Financial Instruments retrospectively, but has elected not to restate comparative information. As a result, the comparative information provided continues to be accounted for in accordance with the Group’s previous accounting policy.

Classification

Until 31 January 2018, the Group classified its financial assets in the following categories:

• financial assets at fair value through profit or loss,• loans and receivables,• held-to-maturity investments, and• available-for-sale financial assets.

The classification depended on the purpose for which the investments were acquired. Management determinedthe classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity,re-evaluated this designation at the end of each reporting period.

Financial assets at fair value through profit or loss

This category has two sub-categories: financial assets held for trading and those designated at fair value through profit or loss on initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. The policy of management is to designate a financial asset if there exists the possibility it will be sold in the short term and the asset is subject to frequent changes in fair value. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the end of the reporting period.

Loans and receivables

Loans and receivables were non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arose when the Group provided money, goods or services directly to a debtor with no intention of selling the receivable. They were included in current assets, except for those with maturities greater than 12 months after the end of the reporting period which were classified as non-current assets. Loans and receivables were included in receivables in the balance sheet.

Loans and receivables were carried at amortised cost using the effective interest rate method.

Impairment

The Group assessed at each reporting date whether there was objective evidence that a financial asset or groupof financial assets is impaired.

(k) Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditurethat is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate,only when it is probable that future economic benefits associated with the item will flow to the Group and the costof the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during thereporting period in which they are incurred.

Land owned by the Group and held under long-term lease that is expected to be renewed in the normal course ofbusiness is not depreciated. The building assets held by the Group are depreciated down to their recoverablenominal amount. All costs associated with the maintenance and refurbishment of the buildings are expensed.Depreciation on other assets is calculated using the straight line method to allocate their cost or revaluedamounts, net of their residual values, over their estimated useful lives.


29


(k) Property, plant and equipment (continued)

The depreciation rates used for each class of asset are as follows:

- Buildings 2.5%- Plant and equipment 5% to 40%

Depreciation is calculated using the straight-line method to allocate their cost or revalued amount, net of theirresidual values are their estimated useful lives or in the case of leasehold improvements and certain leased plantand equipment, the shorter lease term as follows.

Assets are depreciated from the date of acquisition or, in respect of internally constructed assets, from the timean asset is completed and held ready for use.

The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at the end of eachreporting period.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amountis greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are includedin the income statement.

Building assets are depreciated down to their recoverable nominal amount. All costs associated withmaintenance and refurbishments are recognised in the profit or loss.

(l) Intangible assets

(i) Goodwill

Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is testedfor impairment annually, or more frequently if events or changes in circumstances indicate that it might beimpaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of anentity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made tothose cash-generating units or groups of cash-generating units that are expected to benefit from the businesscombination in which the goodwill arose. The units or groups of units are identified at the lowest level at whichgoodwill is monitored for internal management purposes, being the operating segments.

(ii) Gaming machine licenses

Gaming machine licenses acquired have an indefinite useful life and those acquired are carried at cost less impairment losses.

(iii) Trademarks

Trademarks and licenses have a finite useful life and are carried at cost less accumulated amortisation andimpairment loss.

(iv) NRL licenses

NRL licenses have indefinite useful life and carried at cost less impairment losses.

(m) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financialyear which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition and arepresented as current liabilities unless payment is not due within 12 months from the reporting period. They arerecognised initially at their fair value and subsequently measured at amortised cost using the effective interestmethod.

(n) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequentlymeasured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemptionamount is recognised in profit or loss over the period of the borrowings using the effective interest method.


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(n) Borrowings (continued)

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,cancelled or expired. The difference between the carrying amount of a financial liability that has beenextinguished or transferred to another party and the consideration paid, including any non-cash assetstransferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

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 year.

(o) Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production ofa qualifying asset are capitalised during the year of time that is required to complete and prepare the asset for itsintended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get readyfor their intended use or sale.

Other borrowing costs are expensed in the year in which they are incurred.

(p) Provisions

Provisions for legal claims are recognised when the Group has a present legal or constructive obligation as aresult of past events, it is probable that an outflow of resources will be required to settle the obligation and theamount can be reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement isdetermined by considering the class of obligations as a whole. A provision is recognised even if the likelihood ofan outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management's best estimate of the expenditure required tosettle the present obligation at the end of the reporting year. The discount rate used to determine the presentvalue is a pre-tax rate that reflects current market assessments of the time value of money and the risks specificto the liability. The increase in the provision due to the passage of time is recognised as interest expense.

(q) Employee benefits

(i) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits expected to be settled wholly within 12 monthsafter the end of the period in which the employees render the related service are recognised in respect ofemployees’ services up to the end of the reporting period and are measured at the amounts expected to be paidwhen the liabilities are settled. Liability for non-accumulating sick leave are recognised when the leave is takenand measured at the rates paid or payable. All other short term employee benefit obligation are presented aspayables.

(ii) Other long-term employee benefit obligations

The liabilities for long service leave are not expected to be settled wholly within 12 months after the end of theperiod in which the employees render the related service, are recognised in the provision for employee benefits.They are measured as the present value of expected future payments to be made in respect of services providedby employees up to the end of the reporting period using the projected unit credit method. Consideration is givento expected future wage and salary levels, experience of employee departures and periods of service. Expectedfuture payments are discounted using market yields at the end of the reporting period of government bonds withterms and currencies that match, as closely as possible, the estimated future cash outflows.

(r) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurredis not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of theasset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount ofGST recoverable from, or payable to, the taxation authority is included with other receivables or payables in theconsolidated balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing orfinancing activities which are recoverable from, or payable to the taxation authority, are presented as operatingcash flows.


31


(s) Rounding of amounts

The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Report) Instrument 2016/191 issued by the Australian Securities and Investments commission, relating to the 'rounding off' of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with the instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

(t) Parent entity financial information

The financial information for the parent entity, Western Suburbs (N'cle) Leagues Club Limited, disclosed in note12 has been prepared on the same basis as the consolidated financial statements, except as set out below.

Investments in subsidiaries, associates and joint venture entities

Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financialstatements of Western Suburbs (N'cle) Leagues Club Limited.

16 Changes in accounting policies

The Group adopted the following standards as at 1 February 2018:

• AASB 9 Financial Instruments• AASB 15 Revenue from Contracts with Customers.

(a) AASB 9 Financial Instruments

AASB 9 replaces the provisions of AASB 139 that relate to the recognition, classification and measurement offinancial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets, andhedge accounting.

The adoption of AASB 9 Financial Instruments from 1 February 2018 resulted in changes in accounting policies. The new policies are set out in note 15(j).

(i) Classification and measurement

On 1 February 2018 (the date of initial application of AASB 9), the Group’s management assessed which business models apply to the financial assets held by the Group, as required by AASB 9, and classified them into the appropriate categories.

The Group's financial assets at 31 January 2018 consisted solely of cash in cash accounts, and trade receivables resulting from the provision of services. Management determined that cash and trade receivables meet the criteria for the category “Amortised cost.” This represents no change in categorisation from prior periods.

Accordingly, there was no impact on classification or measurement of financial assets from 31 January 2018 to 1February 2018 from the adoption of AASB 9.

(ii) Impairment of financial assets

The Group has two types of financial assets subject to AASB 9’s new expected credit loss model for determining impairment in the value of financial assets: trade receivables and cash accounts. While cash accounts are subject to the impairment requirements of AASB 9, the identified loss was immaterial.

The Group revised its impairment methodology for trade receivables, applying the “simplified approach” described by AASB 9, which uses a lifetime expected credit loss allowance.

To measure the expected credit losses, trade receivables have been grouped based on shared credit riskcharacteristics and the days past due. The estimated credit loss as at both 1 February 2018 and 31 January 2019were expected to be immaterial; the provision for loss at 31 January 2019 is set at $25,000.

The provision for expected credit losses for trade receivables was $nil at 31 January 2019.

Therefore there the adoption of the new impairment standard in AASB 9 had no impact on the financial position or operations of the Group.


32

Changes in accounting policies

(b) AASB 15 Revenue from Contracts with CustomersAASB 15 has been applied by the Group in accounting for and recognising revenue. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The new policies are set out in note 15(e).

The standard permits either a full retrospective or a modified retrospective approach for adoption. The Group employed the modified retrospective approach for adoption as at 1 February 2018.

Impact of adoption

The Group concluded that AASB 15 required no change in the method of accounting for the sale of goods and the provision of services. Sales are made at a point in time as the products and services are provided, with no contingent features to the price or volumes delivered. Sales for the provision of services are made over time, with no contingent features to the price. The Group has a customer loyalty program which allows customers to earn points from selected purchases which are redeemable on future purchases. It was determined that the impact of the loyalty program on 1 February 2018 and 31 January 2019 was immaterial.

The full retrospective method of adoption would have required restatement of contract assets and liabilities, if any, as at 31 January 2018. The Group's sales contracts do give rise to contract assets and liabilities after the adoption of AASB 15 as a result of deposits in advance for accommodation services, gym services and other unearned revenue. There was no impact on the Group's financial position or operations or presentation of the financial statements resulting from the adoption of AASB 15.


33

Directors' declaration

ln the directors' opinion:

(a) the financial statements and notes set out on pages 8 to 33 are in accordance with the Corporations Act2007, including:

(i) complying with Accounting Standards - Reduced Disclosure Requirements,lhe CorporationsRegulations 2001 and other mandatory professional reporting requirements, and

(ii) giving a true and fair view of the consolidated entity's financial position as at 31 January 2019 andof its performance for the financial year ended on that date, and

(b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when theybecome due and payable.

This declaration is made in accordance with a resolution of directors.

Owen KilpatrickPresident

Geoff CoburnDirector

Newcastle28 March 2019

Western Suburbs (N'cle) Leagues Club Limited31 January 201 9

34

}pwc

Indep endent auditor's r ep ortTo the members of Western Suburbs (N'cle) Leagues Club Limited

Our opinionIn our opinion:

The accompanying financial report of Western Suburbs (N'cle) Leagues Club Limited (the Company) andits controlled entities (together the Group) is in accordance with the Corporations Act 2oor, including:

(a) giving a true and fair view of the Group's financial position as at 31 January zorg and of its financialperformance for the year then ended

(b) complying with Australian Accounting Standards - Reduced Disclosure Requirements and theCorp or ations Reg ulations 2 o o t.

Wha,ttaehque sudited.The Group financial report comprises:

. the consolidatedbalance sheet as at 3r January zorg

. the consolidated statement of comprehensive income for the year then ended

. the consolidated statement of changes in equity for the year then ended

. the consolidated statement of cash flows for the year then ended

. the notes to the consolidated financial statements, which include a summary of significantaccounting policies

. thedirectors'declaration.

Basis for opirtion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities underthose standards are further described in the Audiro r's responsibilities for the audit of the financial reportsection of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.

IndependenceWe are independent of the Group in accordance with the auditor independence requirements of theCorporations Act zoot and the ethical requirements ofthe Accounting Professional and Ethical StandardsBoard's APES rro Code of Ethics for Professional Accountants (the Code) that are relevant to our audit ofthe financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance withthe Code.

Other inforntatiottThe directors are responsible for the other information. The other information comprises the informationincluded in the annual report for the year ended 3r January zorg, including the Directors report, but doesnot include the financial report and our auditor's report thereon.

Priceu:aterhouseCoopers, ABN 5z 78o 4gS 757Leuel 3, 45 Watt Street, PO Box Zg8, NEWCASTLE NSW 4ooT: +6t z 4g2S 11oo, F: +6t z 4925 1199, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

35

}pwe

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

In connection with our audit of the financial report, our responsibility is to read the other information and,in doing so, consider whether the other information is materially inconsistent with the financial report orour knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of thisauditor's report, we conclude that there is a material misstatement of this other information, we arerequired to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the fi"nancial report

The directors ofthe Company are responsible for the preparation ofthe financial report that gives a trueand fair view in accordance with Australian Accounting Standards - Reduced Disclosure Requirements andthe Corporations Act 2oor and for such internal control as the directors determine is necessary to enablethe preparation of the financial report that gives a true and fair view and is free from materialmisstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability ofthe Group tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the goingconcern 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.

Auditor's respotlsibilities for the audit of the fi.nancial report

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

A further description of our responsibilities for the audit of the financial report is located at the Auditingand Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ary.pdf.

This description forms part of our auditor's report.

P, u* a.l* h auceLaage us

PricewaterhouseCoopers

( t/n*@Caroline MaraPartner

Newcastlez8 March zorg

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