Abn 69 001 068

ABN 69 001 068 864 1 ANNUAL REPORT 2017 SHELLHARBOUR WORKERS’ CLUB LTD 2 VISION OUR REACH ITS HIGHEST POTENTIAL TO ENABLE THECOMMUNITY TO AUDIT REPORT AUDITOR’S INDEPENDENCEDECLARATION DIRECTOR’S REPORT OUR COMMUNITY OUR PEOPLE REPORT CEO PRESIDENT’S REPORT

44 26 22 19 16 6 3 PRESIDENT’S REPORT MARK CLIMO On behalf of the Board of Directors I present the Annual Report for Shellharbour Workers’ Club Limited for the year ending 30 June 2017. It is again pleasing to report another successful year with sound financial results and continued implementation of the Estate Plan. Thank you to the current Board of Directors - Brian Goodall (Vice President), Dianne Hyde, Luke McPhie, Peter Cooper, Scott Murphy and Board appointed Director Dan Hunt. Thank you also to outgoing Director, Bill Gillespie and of course a very special note of thanks for the passion and commitment of deceased Director, Craig Taylor who has been an instrumental part of the success the Club is experiencing today. Thank you to the Management Team for their continued commitment and support over the past year and of course a big thank you to our amazing employees. Your continued excellence ensures that we are able to achieve our vision ….“To enable the community to reach its highest potential.” It has been an extremely busy year for the Club and although at times it has been a disruptive year with the construction of the carpark, quickly followed by Precinct and Society, quickly followed by the start of construction of the Childcare Centre - it has also been a financially sound 3 Financial Year. The Club has again produced a healthy profit of $1.77 million which has been achieved in conjunction with the continued focus on project development and delivery. This is credit to sound planning and the long term focus by the Board and Management on the sustainable development of our Club. ANNUAL REPORT TWO THOUSAND AND SEVENTEEN Throughout the year we also remained acutely aware of our core purpose and have been busy over the past year out in the community visiting ClubGRANTS recipients and experiencing the amazing work that these groups are doing. I sincerely thank the community groups for their commitment and the wonderful volunteers that support them and I am proud to say that our Club can help you. All in all it has been an amazing year and there is another exciting year ahead for the Club as we focus on the delivery of a brand new Sports Bar, the Imperial Project and finalising the Childcare Centre.

Thank you for your support. Mark Climo, President “IT HAS BEEN AN AMAZING YEAR” YOUR CLUB

Year Members Gross Revenue Gross Profit EBITDA before Tax

2010 18,988 15,703,546 285,908 12.98%

2011 20,302 15,913,115 1,229,883 16.91%

2012 17,924 19,355,679 1,908,590 21.17%

2013 20,295 20,450,143 1,255,569 19.28%

2014 24,795 21,511,676 1,611,062 22.38%

2015 25,369 23,756,822 2,712,372 23.73%

2016 28,175 25,178,101 2,572,471 22.41%

2017 29,909 25,391,750 1,952,693 20.93%

Number of Members 30,000

4 25,000

20,000

15,000 18,988 17,924 20,295 24,795 20,302 28,175 25,369 29,909

10,000

5,000

0 2010 2011 2012 2013 2014 2015 2016 2017

EBITDA %

EBITDA calculation* 2017 2016 30%

Earnings 1,765,636 2,480,571 25% Before Interest 534,392 509,140 20% Taxes 187,057 91,900 Depreciation & 15% Amortisation** 2,827,251 2,561,612

EBITDA in $ 5,314,336 5,643,223 10% 21.17% 20.93% 22.41% 19.28% 23.73% 12.98% 22.38% REVENUE 25,391,750 25,178,101 16.91% EBITDA in % 20.93% 22.41% 5%

* Calculation based on revenue excluding Food & Beverage subsidies 0% SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ ** Includes loss of disposal of property 2010 2011 2012 2013 2014 2015 2016 2017 4.37%

13.71%

11.66%

70.26%

Revenue Streams

Gaming

Bar

Catering

Other

Gross Profit before Tax $ 3,000,000

2,500,000 5

2,000,000

1,500,000

1,000,000 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN

500,000 1,611,062 1,952,693 1,952,693 2,572,471 1,255,569 285,908 1,908,590 1,229,883 2,712,372

0 2010 2011 2012 2013 2014 2015 2016 2017

Gross Revenue $ 30,000,000

25,000,000

20,000,000

15,000,000

10,000,000 21,511,676 23,756,822 25,178,101 20,450,143 15,703,546 19,355,679 15,913,115 5,000,000 25,391,750

0 2010 2011 2012 2013 2014 2015 2016 2017 CEO REPORT

DEBBIE COSMOS The 2016/2017 Financial Year has been one of the busiest years in the history of the Club. Focus has remained on the annual review, documentation and delivery of the Five Year Rolling Strategic Plan for Shellharbour Workers’ Club Limited (the Group) and the Business Plan for The Shellharbour Club. These documents set the strategic direction for the business and ensure that the Group remain focused on the vision and purpose of the Registered Club. Throughout the 2016/2017 Financial “ONE OF Year there has been a very heavy focus on the implementation of the Estate Plan. This saw the launch THE BUSIEST of a number of Core and Non-Core projects (as per the approved Core YEARS IN THE and Non-Core Plan), feasibility and development of future projects HISTORY OF and a continued strong focus on

SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ optimising the Core Business - The THE CLUB” Shellharbour Club.

CORE AND NON-CORE PLAN CEO (approved in the 2014 AGM) REPORT

2016/2017 ESTATE PLAN UPDATE 7 PRIMARY ASSET - SHELLHARBOUR ANNUAL REPORT TWO THOUSAND AND SEVENTEEN 8 CARPARK “THE END The Carpark Project commenced in February 2016 and was completed in December 2016. The new RESULT IS carpark has added an additional 216 car parks adjacent to the entry of the Club. The carpark A WELL- also provides for additional car parking for future projects and throughout this project we have also DESIGNED upgraded infrastructure including major upgrades to hydraulic and electrical infrastructure. CARPARK” The construction of the new carpark placed a significant strain on the business throughout the first half of the Financial Year both from an operational and financial perspective. Staging the construction entailed many shifts in parking and at one stage we were down to only 45 car parking spaces in the top carpark! However, staging the construction of the carpark in this way ensured that we were able to minimise the time frame for delivery and ensured that we were able to have the full carpark open and operating by Christmas 2016. The end result is a well-designed carpark that provides spacious parking adjacent to the entry of the Club, additional accessible car parking, new footpaths and ample lighting. Thank you to all of our members and visitors that

SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ persisted throughout this difficult period. The Works was launched in April 2017. The Works is a fun and quirky workshop business model offering interactive lifestyle classes. The workshop schedule offers a diverse range of super-easy introductory workshop classes for adults and children that explore creativity and teach new skills. Workshop classes include a wide array of activities including cooking classes, photography, yoga, macramé, gardening, interior design and more.

9 MY SHELLY’S REWARDS My Shelly’s Rewards is the Membership Rewards Program launched in April 2017 designed to reward our loyal members by providing access to a number of exclusive benefits and rewards. Members can now enjoy an extra layer of value to Club membership. There are five levels of rewards - Member, Silver, Platinum, Gold & 24K - each with its own unique rewards. ANNUAL REPORT TWO THOUSAND AND SEVENTEEN THE TASTES, THE SOUNDS, THE SIGHTS, THE SCENE.

Although Precinct took Precinct has: a little longer than we • Four food outlets: expected to deliver - it - Bon Bon - dessert; has certainly been worth - Rancho Grande; the wait! This project - Big Time BBQ; and opened in early June 2017 and delivers a brand new - Dynasty Dumplings; exciting food and beverage • Velvet Bar; experience to the Club. • Block House - Since opening, this project children’s play area and party zone; has seen a significant uplift • Gazebo - reserved dining space; and in food and beverage trade.

SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ • A MASSIVE projection wall. 11 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN SOCIETY opened in early June 2017 and was part of the reconstruction of the old auditorium space, along with Precinct. This space is now an event space available to host events of all types - parties, weddings, cocktail parties, corporate events and workshop classes. The space is a large industrial space with exposed brick work, a high ceiling, polished concrete floors and handcrafted timber tables. Society has seating for up to 120 seated guests and has the capacity to cater for 150 in a cocktail style event.

INDUSTRIAL. EDGY. ELEGANT. EXPERIENCE SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ SOCIETY. VENUE REFRESH

OTHER CLUB UPGRADES Throughout 2016/2017 Financial Year we have continued to refresh other areas within the Club to ensure that they are market relevant. These areas have included the floor and furniture upgrades throughout Lido Café Pizza Kitchen and Fiftysix Dining and upgrades to the gardens, furniture and outdoor heating on the terrace. These spaces feel fresh and vibrant again and have been well received by members and visitors.

13 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN AIMS TO REWARD EXISTING EMPLOYEES; ATTRACT FUTURE EMPLOYEES AND ENCOURAGE EMPLOYEES TO SHOP LOCALLY. EMPLOYEES WITH A MINIMUM OF 3 MONTH’S SERVICE HAVE ACCESS TO A RANGE OF DISCOUNTS AND BENEFITS AT OVER 34 DIFFERENT LOCAL BUSINESSES. COMING VERY SOON...

CHILDCARE CENTRE Construction of the Childcare The ShellharbourCentre on the Clubsouth west Childcare boundary Centre of the Shellharbour site is well underway. The new Childcare Centre will provide childcare for up to 120 children in the local community and will be operated

TM by The Grove Academy under a

EARLY EDUCATION CENTRES long term lease with Shellharbour Workers’ Club. This project is estimated to be completed in 14 December 2017 ready for opening CHILDCARE in January 2018. PAD SITE

SPORTS BAR PROJECT The Sports Bar Project is in the final design stage and is forecast CONTEMPORARY SUPER LARGE HIGH-END to commence in early 2018. This BAR SPACE SCREENS AUDIO project will provide an upgrade to the existing Sports Bar area and will include significant upgrades to the back of house areas including fire stairs and lift. The existing Sports Bar will be reinvented to provide; • A contemporary bar space NEW NEW • Super large screens TAB AREA DARTS AREA • High-end audio • New TAB area • New darts area SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ SECONDARY ASSET - CLIFTON The Clifton asset was purchased on 14 March 2015 and was purchased as a development investment within the Club’s Strategic Estate Plan. The property is prominently located on the Grand Pacific Drive, 500m south of the Sea Cliff Bridge in Clifton NSW. Since the purchase of this asset there has been a heavy focus on planning and development of the design, the development of the Business Plan and financial model for The Imperial and the lodgement of the Section 96 Development Application to amend the previous application approved by Wollongong City Council. The good news is - the Development Application has been approved by Wollongong City Council and documentation of the Business Plan and the design is in the final stages. Construction on this project is forecast to commence in early 2018.

15 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN OUR PEOPLE The Shellharbour Club is one of the largest Registered Clubs within the Illawarra region and employs 142 employees, as at 30 June 2017. Our employees are our greatest asset, they support and champion the Vision, Mission and Values.

VISION TO ENABLE THE COMMUNITY TO REACH ITS HIGHEST POTENTIAL. MISSION TO INVEST IN AND OPERATE ASSETS THAT ARE SUSTAINABLE AND HAVE COMMUNITY VALUE. AS A DIVIDEND FROM THESE ASSETS WE WILL CONVENE, ENGAGE, MOBILISE AND SUPPORT THE COMMUNITY BY FOSTERING ITS SPIRIT THROUGH FINANCIAL, SOCIAL AND ENVIRONMENTAL CONTRIBUTIONS. VALUES INTEGRITY COMMITMENT EMPOWERMENT SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ EXCELLENCE “OUR COMMITTED AND DEDICATED EMPLOYEES OUR WORKED A TOTAL OF 176,026 HOURS OVER THE LAST FINANCIAL PEOPLE YEAR.” FULL-TIME 33%

FULL-TIME 33% CASUAL FEMALE MALE 44% 55% 45%

PART-TIME 23%

GENDER EMPLOYMENT 17 STATUS

15-20 YRS 65+ 6% 20+ YRS 1% 7% ANNUAL REPORT TWO THOUSAND AND SEVENTEEN 55-64 13% 10-15 YRS 45-54 8% 9% 18-24 42% <2 YRS 5-10 YRS 49% 11% 35-44 15% 2-5 YRS 19% 25-34 20%

AGE TENURE

TRAINING AND DEVELOPMENT In the 2016/2017 Financial Year our team members participated in more than 4,949 hours of training and development including on-the-job, classroom, online and external training. This was a total investment of $304,022 for our greatest asset – our people. OVER THE LAST FINANCIAL YEAR, A TOTAL OF 23,680 EMPIRE REWARD POINTS WERE ISSUED TO EMPLOYEES.

The Empire Rewards Program is a multi-dimensional employee recognition program that incorporates five individual streams to recognise the achievements, 6990 tenure and performance of team members. The five reward 12250 mechanisms are follows: 1. I.C.E.E.-V program, 2. Mystery Shopper program, 2300 1175 3. Up-selling program, 4. Tenure Recognition program, and 5. Membership sales. 965 Each employee who has been rewarded via one of the five streams EMPIRE REWARDS POINTS receives Empire Reward points PER STREAM which can be spent instantly, or 2016/2017 FINANCIAL YEAR saved to purchase an item of their ICEE-V Points 6990 choice through the online shopping Mystery Shopper 1175 portal. All finalists and winners Up-sell Program 2300 18 from the above tiers are also Membership 965 invited to attend the Annual Empire Tenure Recognition 12250 Rewards celebration.

The Good Stuff program aims to reward existing employees, attract future employees and encourage employees to shop locally. Employees with more than 3 months service are eligible THE GOOD STUFF for a range of Aaron Goodwin successfully discounts and completed his three-year benefits offered Apprenticeship in Commercial at 34 local retail Cookery on 15th April 2017. businesses. Aaron is now a fully qualified chef and remains working in the Kitchen as a Commis chef. SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ ClubGRANTS CATEGORY 1 $140,077 CATEGORY 2 $204,408 CATEGORY 3 $74,330 TOTAL $418,815

OUR

COMMUNITY 19 The Shellharbour Club has a long In the 2016/2017 ClubGRANTS • Illawarra Women’s Health Centre and proud history of supporting year, more than $340,000 • St Vincent De Paul Society the local community with over was distributed to the local • Riding for the Disabled Illawarra $2.1 million donated over the community through a range of • The Denny Foundation ANNUAL REPORT TWO THOUSAND AND SEVENTEEN past 8 years. Each year the programs and projects that were • SAFF - Support Amputees Club provides financial assistance aligned with the community’s Family and Friends to numerous not-for-profit needs and will provide great • Shellharbour Surf Life Saving organisations via the benefits to the local area. Club ClubGRANTS scheme; a Through the ClubGRANTS • Lifeline South Coast ClubsNSW initiative designed scheme, there are three • Flagstaff Group to ensure that larger Registered categories in which community Clubs in NSW contribute to the organisations can apply for • Bowls Australia provision of front-line services grants: • Shellharbour City Baptist Church to their local communities and CATEGORY 1 covers expenditure • FADISS provide much-needed support to on specific community welfare • The Disability Trust community groups. and social services, community CATEGORY 2 provides funding for Through its support of local development, community health general community development community groups, sporting services and employment and support activities, such as teams and charity organisations, assistance activity. Recipients junior sport. Under this category, the Club endeavours to improve include: traditional recipients of club the quality of services and • Hospital Art Australia support such as sporting groups facilities within the local area • Albion Park Rail Public P&C and recreation groups are offered while encouraging positive • Illawarra Drug Awareness financial assistance. Recipients connections to ensure a strong Group - Life Education include: community. • Dragons Abreast Illawarra ILLAWARRA DRUG • Special Olympics Illawarra AWARENESS GROUP • The Shellharbour Club LIFE EDUCATION Billiards Club The Shellharbour Club has • The Disability Trust supported the Life Education • Shellharbour Sports Star “Healthy Harold” Program for Assistance Fund a number of years, helping this • DV8 Malibu Club program to be delivered in a • Illawarra Sports High number of local schools. • The Shellharbour Club Darts Club The Life Education school • Lake Illawarra Little Athletics program reaches around 700,000 • Stingrays Junior Rugby League children across Australia, Football Club with over 100 mobile learning • Stingrays Senior Rugby League centres and 95 specially trained Football Club educators. Life Education has • Shellharbour Junior Football Club been empowering children and young people to make safer • Shellharbour Sharks Junior Rugby League Football Club and healthier choices through education for more than 35 years. • Shellharbour Sharks Senior Rugby League Football Club The mobile classroom allows • Albion Park Amateur children to explore creative and Swimming Club collaborative learning in a space that is entirely different from a • Sculptures at Killalea traditional classroom. There are • Roo Theatre Company no desks, pens or paper. Children • Illawarra Light Railway are encouraged to participate and Museum Society learn through engaging education CATEGORY 3 is a state-wide experiences, which they believe fund that supports large-scale bring out the best in all children. community infrastructure projects, 20 such as hospitals and sporting LAKE ILLAWARRA LITTLE ATHLETICS facilities. Category 3 expenditure is Lake Illawarra Little Athletics was established in 1969/1970 season allocated by the NSW Government and was the first Athletics club to be established outside the Sydney ClubGRANTS Fund based on Metropolitan area. The club now boasts close to 300 athletes from tiny community needs. tots to under 17s. Over the past few years The Shellharbour Club has funded a number of projects including discus cages, safety fencing, hurdles, starting blocks and timing gates. The purchase of new equipment and the upgrade to the facilities has allowed the Athletics Club to hold State Championship Carnivals, bringing tourism to the local area and showcasing the South Coast Club as one of the best in the area. SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ In the 2016/2017 Financial Year the Charitable Events Calendar was implemented across the business allowing team members to participate and support nominated charities whilst raising awareness of various causes. Team members participated in several different activities from staff BBQs, yoga sessions and also participated in bake-offs with the aim to create awareness and generate enthusiasm for our team members, whilst raising much needed funds for the ST VINCENT DE various charities. Team members participated in the following PAUL BREAKFAST charitable events raising a total of $2,296. PROGRAM Many children don’t receive an adequate breakfast in the morning, hindering their concentration and capacity to learn at school. The St Vincent De Paul Breakfast Program aims to support these students and provides 3 local high schools, Oak Flats High School, Warilla High School and Kanahooka High School with a free breakfast on selected week days throughout the school term. This program delivers a variety of healthy breakfast options to over 600 students a week. This aids in improved health and learning outcomes, socialisation and increased participation and engagement at school.

Growing a “MO” for Movember –

raising awareness and funds for ANNUAL REPORT TWO THOUSAND AND SEVENTEEN men’s health.

SHELLHARBOUR JUNIOR FOOTBALL CLUB Established in 1967, Shellharbour CORPORATE VOLUNTEERING PROGRAM Junior Football Club (SJFC) has On the 21st August 2017 The Shellharbour Club launched a grown into one of the largest junior Corporate Volunteering Program. The aim of the program is to football clubs in the Illawarra with encourage employees to engage in volunteering opportunities for approximately 650 registered local community groups and organisations in a safe and enjoyable players. SJFC has a proud history environment. of being a family club and the support of local businesses and the There are a number of benefits of volunteering such as learning community has been a vital factor in new skills, enhancing workplace relationships, creating different the clubs success. The Shellharbour opportunities for employees, development of communication skills Club has been instrumental in and the development of a sense of personal achievement. supporting this growing Club and We aim to work with a number of local community providers and funded numerous projects and groups supported by our ClubGRANTS program to help enhance equipment purchases that have these relationships and give our employees an opportunity to give enabled the football club to grow. back to the local community. DIRECTOR’S The Directors of Shellharbour Workers’ Club Ltd. (the Company) present this report, together with the financial statements for the Financial REPORT Year ended 30 June 2017. DIRECTOR POSITION TERM QUALIFICATIONS, EXPERIENCE CURRENT & RESPONSIBILITIES

Mark Climo President Director 2007 - Current Occupation: Real Estate Sales Club Member 1990 - Current Training: Cert IV Corporate Governance - Director Foundation & Management Collaboration, Finance for Club Boards, Club Leadership in Action, Strategic Planning & Market Profiling, Risk Management & Procurement, Responsible Service of Alcohol & Responsible Conduct of Gambling

Brian Goodall Vice Director 2013 - Current Occupation: Business Manager President Club Member 1996 - Current Sub-committees: Audit, Risk & Compliance Committee, Remuneration Committee Training: Cert IV Corporate Governance - Director Foundation & Management Collaboration, Finance for Club Boards, Club Leadership in Action, Strategic Planning & Market Profiling, Risk Management & Procurement, Responsible Service of Alcohol & Responsible Conduct of Gambling

22 Dianne Hyde Director Director 1975 - 1986 Occupation: Business Owner Director 2000 - Current Sub-committees: ClubGRANTS Committee Club Member 1969 - Current Training: Cert IV Corporate Governance - Director Life Member 1985 - Current Foundation & Management Collaboration, Finance for Club Boards, Club Leadership in Action, Strategic Planning & Market Profiling, Risk Management & Procurement, Responsible Service of Alcohol & Responsible Conduct of Gambling

Peter Cooper Director Director 2009 - 2013 Occupation: Social Worker (Retired) Director 2015 - Current Sub-committees: Audit, Risk & Compliance Club Member 2000 - Current Committee, Remuneration Committee Training: Director Foundation & Management Collaboration, Finance for Club Boards, Responsible Service of Alcohol & Responsible Conduct of Gambling Luke McPhie Director Director 2013 - Current Club Member 1997 - Current Occupation: Police Officer (Retired) Sub-committees: ClubGRANTS Committee Training: Cert IV Corporate Governance - Director Foundation & Management Collaboration, Finance for Club Boards, Club Leadership in Action, Strategic Planning & Market Profiling, Risk Management & Procurement, Responsible Service of Alcohol & Responsible Conduct of Gambling

Scott Murphy Director Director 2016 - Current Occupation: Commercial Manager Club Member 1998 - Current Sub-committees: ClubGRANTS Committee Training: Director Foundation & Management

SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ Collaboration, Finance for Club Boards & Responsible Service of Alcohol Mark Climo Brian Goodall Dianne Hyde

23 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN

Peter Cooper Luke McPhie Scott Murphy

DIRECTOR POSITION TERM QUALIFICATIONS, EXPERIENCE NON-CURRENT & RESPONSIBILITIES

Craig Taylor Director Director 2004 - 2017 Occupation: Truck Driver (Retired) (Deceased) Club Member 1999 - 2017 Sub-committees: Audit, Risk & Compliance Life Member 2015 - 2017 Committee, ClubGRANTS Committee Training: Cert IV Corporate Governance - Director Foundation & Management Collaboration, Finance for Club Boards, Club Leadership in Action, Strategic Planning & Market Profiling, Risk Management & Procurement, Responsible Service of Alcohol & Responsible Conduct of Gambling

William Director Occupation: Linesman (Retired) Gillespie Director 2007 - Sub-committees: ClubGRANTS Committee 29 August 2016 Training: Cert IV Corporate Governance - Director Club Member 2002 - Current Foundation & Management Collaboration, Finance for Club Boards, Club Leadership in Action, Strategic Planning & Market Profiling, Risk Management & Procurement, Responsible Service of Alcohol & Responsible Conduct of Gambling CHIEF EXECUTIVE objectives are set that enable INDEMNIFYING OFFICE/COMPANY the Group to optimise strengths DIRECTORS AND SECRETARY and possible opportunities whilst OFFICERS Debra Cosmos was appointed addressing identified weaknesses During the Financial Year the Company Secretary on 4 May and minimising potential threats. Company paid premiums in respect 2013. Debra commenced The objectives provide a five year of a contract insuring all Directors employment with the Club in 1995 view towards progressive growth and Executives of Shellharbour and has a Diploma in Hospitality of the business aimed at optimising Workers’ Club Ltd. against legal Management, Advance Diploma the existing Group assets, capturing liability arising from any wrongful in Social Welfare, Certificate new products and services and act committed, attempted or IV in Workplace Training and working towards sustainable allegedly committed or attempted Assessment, Certificate IV in diversification. The corresponding in the course of their duties as Corporate Governance, Responsible strategies provide the specific a Director or Executive of the Service of Alcohol Certificate and direction required to achieve these Company. Total premiums paid Responsible Conduct in Gambling objectives. during the Financial Year were Certificate. The 4 primary objectives of the $4,103.07 (2016: $4,038.49). Group are: PRINCIPAL ACTIVITY Market Positioning INDEMNIFICATION OF The principal activity of the To ensure that the Group is AUDITORS Company during the Financial Year positioned strategically within the To the extent permitted by law, the was that of a Registered Club. market to increase market share. Company has agreed to indemnify Asset Management its Auditors, Ernst & Young, as OPERATING RESULTS To manage the acquisition, part of the terms of its audit development, use and disposal of engagement agreement against FOR THE YEAR Group Assets. claims by third parties arising The Company had a profit of from the audit (for an unspecified $1,765,636 for the 2017 year (2016: People and Culture amount). No payment has been $2,480,571). To ensure the organisational design, human resources and systems made to indemnify Ernst & Young enable optimal performance of the during or since the Financial Year. SIGNIFICANT EVENTS Group. AFTER THE REPORTING Risk Management DIRECTORS 24 PERIOD To implement and connect risk ENTITLEMENTS There have been no significant management to business planning No Director has received or changes in the state of affairs of and decision making. become entitled to receive, during the Company occurred during the or since the end of the Financial Financial Year. MEASUREMENT OF Year, a benefit because of a contract made by the Company or SUCCESS BUSINESS OVERVIEW a related body corporate with the The Club measures success against Annually the Board of Directors Director, a firm of which a Director industry wide benchmarks and key review and set the strategic is a member or an entity in which a performance indicators for: direction for the Group. The Director has a substantial financial annual strategic planning process • EBITDA - Earnings before interest with the exception of: interest, tax, depreciation, is a collaboration of the Board of Dianne Hyde, a Director of Warilla amortisation Directors and the Management Florist - supplied goods (flowers) Team working together to set • Revenue to the Club totalling $1,500.00 priorities. It is a disciplined process • Patron visitation (2016: $4,061.41) that produces key actions that • Member satisfaction This statement excludes a benefit shape and guide what the business included in the aggregate amount is, who it serves, what it does and • Community Benefit though the of emoluments received or due why it does it, with a focus on ClubGRANTS Scheme and receivable by Directors shown the future. This process is always • Community Engagement in the Company’s accounts or the guided by our vision: fixed salary of a full time employee “To enable the community to ENVIRONMENTAL ISSUES of the Company, controlled entity reach its highest potential.” The Company’s operations are or related body corporate. The Strategic Plan is underpinned not regulated by any significant by a detailed review of the business environmental regulation under a strengths, weakness, opportunities law of the Commonwealth or of a

SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ and threats (SWOT). In response State Territory. to the SWOT analysis, four primary DIRECTORS MEETINGS The number of Director Meetings and Sub-Committee Meetings held during the year were as follows: BOARD SUB-COMMITTEE OTHER MEETINGS MEETINGS

MONTHY SPECIAL AUDIT, RISK & REMUNERATION ClubGRANTS STRATEGIC BOARD BOARD COMPLIANCE COMMITTEE COMMITTEE PLANNING MEETING MEETING COMMITTEE

Mark Climo 11 4 0 0 0 1 Brian Goodall 12 4 3 3 0 1 Dianne Hyde 12 3 0 0 2 1 Peter Cooper 12 4 3 3 0 1 Luke McPhie 12 4 0 0 2 1 Scott Murphy 9 2 0 0 2 1 Craig Taylor (deceased) 6 3 1 0 2 0 William Gillespie 2 0 0 0 1 0

MEMBERS GUARANTEES The Company is limited by guarantee. If the Company is wound up, the Constitution states that each member is required to contribute a maximum of $2 each. At 30 June 2017 the number of members was 29,909 (2016: 28,175) as follows: NUMBER OF MEMBERS

Life Members 12 Full Members 29,897

TOTAL MEMBERS 29,909

At 30 June 2017, the total amount that members of the Company are liable to contribute if the Company is wound up is $59,818 (2016: $56,350).

25 PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. ANNUAL REPORT TWO THOUSAND AND SEVENTEEN

AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration for the year ended 30 June 2017 has been received and can be found attached to the Director’s Report. Signed in accordance with a resolution of the Directors.

MARK CLIMO President 14 August 2017

BRIAN GOODALL Vice President 14 August 2017 Ernst & Young Tel: +61 2 9248 5555 680 George Street Fax: +61 2 9248 5959 Sydney NSW 2000 Australia ey.com/au GPO Box 2646 Sydney NSW 2001 AUDITOR’S INDEPENDENCE

DECLARATION TO THE DIRECTORS OF SHELLHARBOUR WORKERS’ CLUB LTD Auditor’s Independence Declaration to the Directors of Shellharbour Workers’ Club Ltd

Ernst & Young Tel: +61 2 9248 5555 In relation to our audit of the financial200 George report Street of Shellharbour Workers’Fax: +61 2 Club 9248 5959 Ltd for the financial year ended 30 June 2014, to the best of my knowledgeSydney NSW 2000 and Australia belief, there haveey.com/au been no contraventions of the auditor independence requirements of theGPO Corporations Box 2646 Sydney NSWAct 20012001 or any applicable code of professional conduct.

Auditor’s Independence Declaration to the Directors of Shellharbour Workers Club Limited Ernst & Young

As lead auditor for the audit of Shellharbour Workers Club Limited for the financial year ended 30 June 2017, I declare to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit ; and b no contraventions of any applicable code of professional conduct in relation to the audit. Daniel Cunningham Partner 29 September 2014

Ernst & Young

Daniel Cunningham Partner Sydney 14 August 2017

A member firm of Ernst & Young Global Limited

SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ Liability limited byA member a scheme firm ofapproved Ernst & Young under Global Professional Limited Standards Legislation 6 Liability limited by a scheme approved under Professional Standards Legislation STATEMENT OF PROFIT OR LOSS AND

OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017

Notes 2017 $ 2016 $ Sale of goods 6,924,194 6,441,334 Rendering of services 18,467,556 18,736,767 Revenue 4 25,391,750 25,178,101

Other income 5 9,150 23,389

Cost of sales (2,844,237) (2,640,854) Employee benefits expense (6,911,148) (6,591,417) Depreciation expense (2,629,759) (2,464,991) Other expenses 6 (10,528,671) (10,422,617) Finance costs (534,392) (509,140) Profit before income tax expense 1,952,693 2,572,471

Income tax expense 7 (187,057) (91,900) Profit for the year 1,765,636 2,480,571

Other comprehensive income - - Total comprehensive income for the year 1,765,636 2,480,571

27 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017

Notes 2017 $ 2016 $ Assets Current assets Cash 8 3,164,404 3,228,921 Trade and other receivables 9 47,092 118,270 Inventories 10 309,310 313,436 Income tax receivable 9,891 - Prepayments 250,075 177,274 Total current assets 3,780,772 3,837,901

Non-current assets Property, plant and equipment 11 42,399,361 33,041,486 Intangible assets 12 748,259 610,959 Deferred tax assets 7 75,751 81,012 Total non-current assets 43,223,371 33,733,457 Total assets 47,004,143 37,571,358

Liabilities and equity Current liabilities Trade and other payables 13 1,610,332 1,802,012 Interest-bearing loans and borrowings 14 3,857,145 2,863,645 Income tax payable - 18,130 Employee benefit liabilities 15 894,382 920,212 Other liabilities 16 41,599 116,684 28 Total current liabilities 6,403,458 5,720,683

Non-current liabilities Interest-bearing loans and borrowings 14 19,035,336 12,172,328 Employee benefit liabilities 15 101,604 74,794 Members’ subscription in advance 16 156,066 45,402 Deferred tax liabilities 7 123,314 139,422 Total non-current liabilities 19,416,320 12,431,946 Total liabilities 25,819,778 18,152,629

Equity Retained earnings 21,184,365 19,418,729 Total equity 21,184,365 19,418,729

Total equity and liabilities 47,004,143 37,571,358

The above statement of financial position should be read in conjunction with the accompanying notes. SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017

Retained earnings $ Total $ As at 1 July 2016 19,418,729 19,418,729 Profit for the year 1,765,636 1,765,636 Other comprehensive income - - Total comprehensive income 1,765,636 1,765,636

At 30 June 2017 21,184,365 21,184,365

As at 1 July 2015 16,938,158 16,938,158 Profit for the year 2,480,571 2,480,571 Other comprehensive income - - Total comprehensive income 2,480,571 2,480,571

At 30 June 2016 19,418,729 19,418,729

29 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN

The above statement of changes in equity should be read in conjunction with the accompanying notes. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017

Notes 2017 $ 2016 $ Operating activities Receipts from customers 28,037,682 28,005,642 Payments to suppliers and employees (22,872,018) (22,356,340) Interest received 9,150 23,389 Interest paid (595,527) (571,313) Income tax paid (225,925) (185,099) Net cash flows from operating activities 4,353,362 4,916,279

Investing activities Proceeds from sale of property, plant and equipment 45,414 12,000 Purchase of property, plant and equipment (12,182,501) (6,407,139) Purchase of intangible assets (137,300) (177,932) Net cash flows used in investing activities (12,274,387) (6,573,071)

Financial activities Proceeds from borrowings 7,856,508 2,019,566 Net cash flows from financing activities 7,856,508 2,019,566

Net (decrease)/increase in cash and cash equivalents (64,517) 362,774 Cash and cash equivalents at 1 July 3,228,921 2,866,147 Cash and cash equivalents at 30 June 8 3,164,404 3,228,921

The above statement of cash flows should be read in conjunction with the accompanying notes. SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

1. CORPORATE INFORMATION Accounting Standards - Reduced new or amended standards or The financial report of Shellharbour Disclosure Requirements and other interpretations. The directors have Workers Club Limited (the authoritative pronouncements not yet fully assessed the impact of “Company”/”Club”) for the year of the Australian Accounting these new or amended standards (to ended 30 June 2017 was authorised Standards Board (AASB). Australian the extent relevant to the Company) for issue in accordance with a Accounting Standards contain and interpretations. resolution of the directors on 14 requirements specific to not-for- d. Current versus non-current August 2017. profit entities, including standards classification AASB 116 Property, Plant and Shellharbour Workers Club Limited The Company presents assets and Equipment, AASB 138 Intangible is a not for profit entity limited liabilities in the statement of financial Assets, AASB 136 Impairment by guarantee, incorporated and position based on current/non- of Assets and AASB 1004 domiciled in Australia. current classification. An asset is Contributions. current when it is: The Company’s registered office The financial report has been and principal place of business is • Expected to be realised or prepared on the basis of historical Cnr Wattle and Shellharbour Road, intended to be sold or consumed costs. Shellharbour NSW 2529. in the Company’s normal operating The financial report is presented in cycle The nature of the operations and Australian dollars and all values are principal activities of the Company • Held primarily for the purpose of rounded to the nearest dollar. and described in the director’s trading report. Statement of Compliance • Expected to be realised within The financial statements for the twelve months after the reporting 2. SUMMARY OF SIGNIFICANT Company are tier 2 general purpose period, or ACCOUNTING POLICIES financial statements that have • Cash or a cash equivalent unless been prepared in accordance with restricted from being exchanged a. Going concern Australian Accounting Standards - or used to settle a liability for The financial report has been Reduced Disclosure Requirements at least twelve months after the prepared on a going concern basis, (AASB-RDRs). reporting period which contemplates continuity 31 c. New accounting standards and All other assets are classified as non- of normal business activities and interpretations current. realisation of assets and settlement of liabilities in the ordinary course of Changes in accounting policies, A liability is current when: business. new and amended standards and • It is expected to be settled in the interpretations At 30 June 2017, the Club’s total Company’s normal operating cycle current liabilities exceeded total The accounting policies adopted are • It is held primarily for the purpose ANNUAL REPORT TWO THOUSAND AND SEVENTEEN current assets by $2,622,686 (2016: consistent with those of the previous of trading $1,882,782). Given that there are financial year. • It is due to be settled within twelve $3,342,430 of financing facilities The Company applied for the months after the reporting period, available for use at 30 June 2017 first time certain standards and or (2016: $11,055,793), in addition to the amendments, which are effective for • There is no unconditional right to financing facilities available to the annual periods beginning on or after defer the settlement of the liability Club, management have projected 1 July 2016. The new standards and for at least twelve months after the the company will continue to amendments applied for the first reporting period generate positive cash flows for the time in 2017 did not have a material The Company classifies all other 2018 financial year (2017: $4,353,362 impact on the annual financial liabilities as non-current. net cash flow from operating statements of the Company. Deferred tax assets and liabilities are activities). Based on the above, the Accounting Standards and classified as non-current assets and Directors have concluded that the Interpretations issued but not yet liabilities. use of the going concern assumption effective in the preparation of the financial e. Cash Certain Australian Accounting statements is appropriate. Standards and Interpretations have Cash in the statement of financial position comprises cash on hand b. Basis of preparation recently been issued or amended and at bank. The financial report is a general but are not yet effective and have purpose financial report, which not been adopted by the Company f. Trade and other receivables has been prepared in accordance for the annual reporting period Trade receivables are recognised with the requirements of the ended 30 June 2017. The directors initially at fair value and Corporations Act 2001, Australian have not early adopted any of these subsequently measured at amortised cost using the effective interest of the asset (calculated as the whether the indefinite life continues method, less an allowance for difference between the net disposal to be supportable. If not, the change impairment. proceeds and the carrying amount in useful life from indefinite to finite Collectability of trade receivables of the asset) is included in the is made on a prospective basis. is reviewed on an ongoing basis. statement of profit or loss and other Gains or losses arising from Individual debts that are known to comprehensive income when the derecognition of an intangible asset be uncollectible are written off when asset is derecognised. are measured as the difference identified. An impairment provision The residual values, useful lives and between the net disposal proceeds is recognised when there is objective methods of depreciation of property, and the carrying amount of the evidence that the Company will not plant and equipment are reviewed at asset and are recognised in the be able to collect the receivable. each financial year end and adjusted statement of profit or loss and other g. Inventories prospectively, if appropriate. comprehensive income when the asset is derecognised. Inventories are valued at the lower of i. Intangible assets cost and net realisable value. Intangible assets acquired separately j. Leases Net realisable value is the estimated are measured on initial recognition The determination of whether an selling price in the ordinary course at cost. The cost of intangible arrangement is (or contains) a of business, less estimated costs of assets acquired in a business lease is based on the substance of completion and the estimated costs combination is their fair value at the the arrangement at the inception necessary to make the sale. date of acquisition. Following initial of the lease. The arrangement is, recognition, intangible assets are or contains, a lease if fulfilment of h. Property, plant and equipment carried at cost less any accumulated the arrangement is dependent on Plant and equipment are stated amortisation and accumulated the use of a specific asset or assets at cost, net of accumulated impairment losses. Internally and the arrangement conveys a depreciation and accumulated generated intangibles, excluding right to use the asset (or assets), impairment losses, if any. Such cost capitalised development costs, even if that asset is (or those assets includes the cost of replacing part of are not capitalised and the related are) not explicitly specified in an the property, plant and equipment expenditure is reflected in the arrangement. and borrowing costs for long- statement of profit or loss and other A lease is classified at the term construction projects if the comprehensive income in the period inception date as a finance lease recognition criteria are met. When in which the expenditure is incurred. or an operating lease. A lease that significant parts of property, plant The useful lives of intangible assets transfers substantially all the risks and equipment are required to be are assessed as either finite or and rewards incidental to ownership replaced at intervals, the Company indefinite. to the Company is classified as a depreciates them separately finance lease. 32 based on their specific useful lives. Intangible assets with finite lives are An operating lease is a lease other Likewise, when a major inspection is amortised over the useful economic than a finance lease. Operating performed, its cost is recognised in life and assessed for impairment lease payments are recognised the carrying amount of the plant and whenever there is an indication as an operating expense in the equipment as a replacement if the that the intangible asset may be statement of profit or loss and other recognition criteria are satisfied. All impaired. The amortisation period comprehensive income on a straight- other repair and maintenance costs and the amortisation method for an line basis over the lease term. are recognised in the profit or loss as intangible asset with a finite useful incurred. life are reviewed at least at the end k. Interest-bearing loans and borrowings Land and buildings are measured at of each reporting period. Changes cost less accumulated depreciation in the expected useful life or the Interest-bearing loans and on buildings. expected pattern of consumption of borrowings are recognised initially future economic benefits embodied at fair value and, net of directly Depreciation is calculated on a in the asset are considered to modify attributable transaction costs. straight-line basis over the estimated the amortisation period or method, After initial recognition, interest useful lives of the assets, as follows: as appropriate, and are treated as bearing loans and borrowings are Class of fixed asset:Depreciation rate changes in accounting estimates. subsequently measured at amortised Freehold land: Not depreciable The amortisation expense on cost using the effective interest rate Buildings: 2 - 8% intangible assets with finite lives is (EIR) method. Gains and losses are recognised in the statement of profit recognised in the statement of profit Poker machines: 10 - 50% or loss in the expense category that or loss and other comprehensive Plant and equipment: 5 - 40% is consistent with the function of the income when the liabilities are Motor vehicles: 22.50% intangible assets. derecognised as well as through the An item of property, plant and Intangible assets with indefinite EIR amortisation process. equipment and any significant part useful lives are not amortised, Amortised cost is calculated by initially recognised is derecognised but are tested for impairment taking into account any discount upon disposal or when no future annually, either individually or at or premium on acquisition and fees economic benefits are expected the cash-generating unit level. or costs that are an integral part from its use or disposal. Any gain The assessment of indefinite life of the EIR. The EIR amortisation

SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ or loss arising on derecognition is reviewed annually to determine is included in finance costs in the statement of profit or loss and other Wages, salaries and employee The specific recognition criteria comprehensive income. provisions described below must also be met l. Borrowing costs Liabilities for wages and salaries, before revenue is recognised. Borrowing costs directly attributable including non-monetary benefits Sale of goods to the acquisition, construction and employee provisions which are Revenue from the sale of goods or production of an asset that expected to be settled within 12 is recognised when the significant necessarily takes a substantial months of the reporting date are risks and rewards of ownership of period of time to get ready for its recognised in respect of employees’ the goods have passed to the buyer, intended use or sale are capitalised services up to the reporting date. usually on delivery of the goods. They are measured at the amounts as part of the cost of the asset. All Revenue from the sale of goods is expected to be paid when the other borrowing costs are expensed measured at the fair value of the liabilities are settled. in the period in which they occur. consideration received or receivable, Borrowing costs consist of interest Long service leave and annual leave net of returns and allowances, trade and other costs that an entity incurs The Company does not expect its discounts and volume rebates. in connection with the borrowing of long service leave or annual leave Rendering of services benefits to be settled wholly within funds. Revenue from the rendering of 12 months of each reporting date. m. Impairment of non-financial a service is recognised upon the The Company recognises a liability assets delivery of the service to the for long service leave and annual At each reporting date, the customers. leave measured as the present Company assesses whether there value of expected future payments Interest income is an indication that an asset may to be made in respect of services Interest income is recorded using be impaired. Where an indicator of provided by employees up to the the effective interest rate (EIR). The impairment exists or where annual reporting date using the projected EIR is the rate that exactly discounts impairment testing for an asset is unit credit method. Consideration the estimated future cash receipts required, the Company makes a is given to expected future wage through the expected life of the formal estimate of the recoverable and salary levels, experience of financial instrument or a shorter amount. An impairment loss is employee departures, and periods of period, where appropriate, to the recognised for the amount, by which service. Expected future payments net carrying amount of the financial the carrying amount of an asset are discounted using market yields asset. Interest income is included in exceeds recoverable amount, which at the reporting date on high quality other income from ordinary activities is defined for not for profit entities corporate bonds with terms to in the statement of profit or loss and as the higher of an asset’s fair value maturity and currencies that match, other comprehensive income. less costs to sell or depreciated as closely as possible, the estimated Rental income replacement cost. For the purpose future cash outflows. 33 of assessing impairment, assets are Rental income arising from operating o. Trade and other payables grouped at the levels for which there leases is accounted for on a straight- are separately identifiable cash flows. Trade and other payables represent line basis over the lease terms An impairment loss is recognised in the liabilities for goods and services and is included in revenue in the received by the company that the statement of profit and loss and statement of profit or loss and other remain unpaid at the end of the comprehensive income due to its

other comprehensive income. ANNUAL REPORT TWO THOUSAND AND SEVENTEEN reporting period. The balance is operating nature. n. Provisions and employee benefit recognised as a current liability with q. Taxes liabilities the amounts normally paid within 30 Income tax General days of recognition of the liability. The Income Tax Assessment Act Provisions are recognised when the p. Revenue recognition Company has a present obligation 1997 (Amended) provides that under Revenue is recognised to the the concept of mutuality, Clubs are (legal or constructive) as a result extent that it is probable that the only liable for income tax on income of a past event, it is probable that economic benefits will flow to the derived from non-members and an outflow of resources embodying Company and the revenue can from outside entities. Current tax economic benefits will be required be reliably measured, regardless assets and liabilities for the current to settle the obligation and a of when the payment is received. period are measured at the amount reliable estimate can be made of Revenue is measured at the fair expected to be recovered from the amount of the obligation. When value of the consideration received or paid to the taxation authorities the Company expects some or all or receivable, taking into account based on the current period’s of a provision to be reimbursed, contractually defined terms of taxable income. The tax rates and the reimbursement is recognised payment and excluding taxes or tax laws used to compute the as a separate asset, but only when duty. The Company has concluded amount are those that are enacted the reimbursement is virtually that it is the principal in all of its or substantively enacted by the certain. The expense relating to revenue arrangements since it is the reporting date. any provision is presented in the primary obligor in all the revenue statement of profit or loss and other arrangements, has pricing latitude Goods and Services Tax (GST) comprehensive income net of any and is also exposed to inventory and Revenues, expenses and assets are reimbursement. credit risks. recognised net of the amount of GST, except: based its assumptions and estimates recognised initially at its fair value • When the GST incurred on a sale on parameters available when as at the date it was granted with or purchase of assets or services is the financial statements were a corresponding adjustment to the not payable to or recoverable from prepared. Existing circumstances profit and loss to recognise the grant the taxation authority, in which and assumptions about future immediately as income. Until new case the GST is recognised as part developments, however, may gaming legislation taking effect in change due to market changes of the revenue or the expense item April 2002 allowing poker machine or circumstances arising that are or as part of the cost of acquisition licences to be traded for the first beyond the control of the Company. of the asset, as applicable time, the Company has determined Such changes are reflected in the • When receivables and payables assumptions when they occur. that fair value at grant date for are stated with the amount of GST licences granted pre April 2002 to Impairment - General included be zero. Should licences be granted The Company assesses impairment The net amount of GST recoverable to the Company post April 2002 at the end of each reporting period from, or payable to, the taxation they will be initially recognised at fair by evaluation of conditions and authority is included as part of value. The Company has determined receivables or payables in the events specific to the Company that that the market for poker machine statement of financial position. may be indicative of impairment licences does not meet the Commitments and contingencies are triggers. Recoverable amounts of definition of an active market and disclosed net of the amount of GST relevant assets are reassessed using consequently licences recognised recoverable from, or payable to, the value-in-use calculations which taxation authority. incorporate various key assumptions. will not be revalued each year. These may differ from accrual. Cash flows are included in the statement of cash flows on a gross Taxes basis and the GST component of Deferred tax assets are recognised cash flows arising from investing for all unused tax losses to the and financing activities, which is extent that it is probable that taxable recoverable from, or payable to, the profit will be available against which taxation authority is classified as the losses can be utilised. Significant part of operating cash flows. management judgement is required r. Comparatives to determine the amount of deferred tax assets that can be recognised, Certain numbers of the prior based upon the likely timing and year have been reclassified to the level of future taxable profits, be consistent with current year’s together with future tax planning 34 disclosure presentation. strategies. Long service leave provision 3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND As discussed in note 2, the liability ASSUMPTIONS for long service leave is recognised and measured at the present value The preparation of the Company’s of the estimated future cash flows to financial statements requires be made in respect of all employees management to make judgements, at reporting date. In determining the estimates and assumptions that present value of the liability, attrition affect the reported amounts of rates and pay increase through revenues, expenses, assets and promotion and inflation have been liabilities, and accompanying taken into account. disclosures, and the disclosure of contingent liabilities. Uncertainty Key judgements about these assumptions and In the process of applying the estimates could result in outcomes Company’s accounting policies, that require a material adjustment to management has made the the carrying amount of the asset or following judgements, which have liability affected in future periods. the most significant effect on the Estimates and assumptions amounts recognised in the financial statements: The key assumptions concerning the future and other key sources Poker machine licenses of estimation uncertainty at The Company holds poker machine the reporting date, that have licences either acquired through a significant risk of causing a a past business combination or material adjustment to the carrying granted at no consideration by the amounts of assets and liabilities NSW government. AIFRS requires within the next financial year, are that licences outside of a pre AIFRS

SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ described below. The Company transaction business combination be NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

4. REVENUE

2017 $ 2016 $ Sale of goods Bar sales 2,946,058 2,959,838 Food & catering sales 3,978,136 3,481,496 6,924,194 6,441,334 Rendering of services Poker machine revenue 17,559,380 17,840,424 Commission & vending income 456,390 444,407 Members subscriptions 167,452 160,217 Other income 5,929 15 Poker machine rebate 17,180 17,180 Rental & hall hire 50,527 56,709 Social & entertainment income 210,698 217,815 18,467,556 18,736,767

Total revenue 25,391,750 25,178,101

35 5. OTHER INCOME

2017 $ 2016 $ Interest revenue 9,150 23,389 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN

6. OTHER OPERATING EXPENSES

2017 $ 2016 $ Loss on disposal of property, plant and equipment 197,492 96,621 Bar indirect expenses 129,204 132,378 Catering indirect expenses 338,839 387,689 Gaming indirect expenses 629,586 638,742 Poker machine tax 4,195,174 4,283,712 Advertising and promotional expenses 2,018,521 1,953,576 Donations 331,565 343,724 Maintenance costs 556,905 494,721 Club services 1,634,707 1,569,310 Members expenses 148,563 126,133 Administration costs 348,115 396,011 Total other operating expenses 10,528,671 10,422,617 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

7. INCOME TAX (a) The major components of income tax expense for the years ended 30 June 2017 and 2016 are:

2017 $ 2016 $ Current income tax: Current income tax charge 131,628 97,279 Adjustment with respect of current income tax of previous years 66,276 - Deferred tax: Relating to the origination and reversal of temporary differences (10,847) (5,379) Income tax expense reported in the statement of profit or loss and other comprehensive income 187,057 91,900

(b) A reconciliation of tax expense and the accounting profit multiplied by Australian’s domestic tax rate for the years 2016 and 2017:

2017 $ 2016 $ Accounting profit before tax 1,952,693 2,572,471 At Company’s statutory income tax rate of 30% (2016: 30%) 585,808 771,742 Non-deductible expenses for tax purposes

36 Other non-dedectible differences 65,906 144,928 Net income from members subject to tax (530,933) (824,770) Adjustment with respect to income from prior years 66,276 - Aggregated income tax expense 187,057 91,900

2017 $ 2016 $ (i) Deferred tax liabilities Fixed Assets 122,539 139,422 Prepayments 775 - 123,314 139,422 (ii) Deferred tax assets Blackhole deductions 1,983 3,160 Borrowing costs 495 1,263 Accruals 6,202 5,361 Provisions 67,071 71,228 75,751 81,012

SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

8. CASH

2017 $ 2016 $ Cash on hand 1,065,518 999,268 Cash at bank 2,098,886 2,229,653 3,164,404 3,228,921

9. TRADE AND OTHER RECEIVABLES

2017 $ 2016 $ Trade debtors 26,089 4,408 Sundry debtors 21,003 113,862 47,092 118,270

10. INVESTORIES

2017 $ 2016 $ Stock on hand 309,310 313,436 309,310 313,436

37 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

11. PROPERTY, PLANT AND EQUIPMENT

Freehold Land Plant & Poker Motor Capital Works Total & Buildings Equipment Machines Vehicles in Progress $ $ $ $ $ $ Cost or valuation At 1 July 2016 23,685,993 17,395,638 8,066,550 19,517 5,513,196 54,680,894 Additions 3,614,380 1,781,829 1,077,858 - 5,756,473 12,230,540 Disposals (26,582) (152,380) (1,108,113) - - (1,287,075) At 30 June 2017 27,273,791 19,025,087 8,036,295 19,517 11,269,669 65,624,359

Depreciation At 1 July 2016 6,630,111 9,988,287 5,001,972 19,038 - 21,639,408 Depreciation charge for the year 522,407 1,117,736 989,508 108 - 2,629,759 Write back of depreciation on disposal (10,987) (60,710) (972,472) - - (1,044,169) At 30 June 2017 7,141,531 11,045,313 5,019,008 19,146 - 23,224,998

Net book value At 30 June 2017 20,132,260 7,979,774 3,017,287 371 11,269,669 42,399,361 38

Additions to capital work in progress include interest capitalised of $61,135 (2016: $62,173). Core properties The following are core properties: - Cnr Wattle Rd & Shellharbour Rd, Shellharbour NSW 2529 (excluding development precincts listed below)

The following are non-core properties: - Northern development precinct of Cnr Wattle Rd & Shellharbour Rd, Shellharbour NSW 2529 - Southern development precinct of Cnr Wattle Rd & Shellharbour Rd, Shellharbour NSW 2529 - 315-321 Lawrence Hargrave Dr, Clifton NSW 2515 SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

12. INTANGIBLE ASSETS

2017 $ 2016 $ Poker machine entitlements At cost 748,259 610,959 Net carrying amount 748,259 610,959

Reconciliation of carrying amounts at the beginning and the end of the year 2017 $ 2016 $ Poker machine entitlements At cost At 1 July 610,959 433,027 Additions 137,300 177,932 Net book value at 30 June 748,259 610,959

Poker machine entitlements Poker machine entitlements are carried at cost less accumulated impairment losses and have been determined to have indefinite useful lives. Poker machine entitlements are subject to impairment testing on an annual basis or whenever there is an indicator of impairment.

13. TRADE AND OTHER PAYABLES 39 2017 $ 2016 $ Current Trade payables 467,642 815,987 Other creditors & accruals 1,046,090 951,401

GST payable 96,600 34,624 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN 1,610,332 1,802,012 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

14. INTEREST-BEARING LOANS AND BORROWINGS

2017 $ 2016 $ Current Bank loans 3,857,145 2,863,645 3,857,145 2,863,645 Non-current Bank loans 19,035,336 12,172,328 19,035,336 12,172,328

The bank loan facilities total $22,892,481 of which $3,857,145 is classified as current and $19,035,336 is classified as non-current, the loan matures in February 2022 and is subject to monthly repayments. Interest rate for 2017 as at reporting date is 4.3% and is secured by a First Registered Mortgage over all the Company’s property and a registered floating charge over all the Company’s assets in support of its guarantee and loan.

Loan facility limits Bank loan facility 22,984,911 24,336,766 Finance lease facility 250,000 250,000 Overdraft facility 3,000,000 1,500,000 Bank guarantee facility 5,000 5,000 26,239,911 26,091,766 40 Loan facilities available Bank loan facility 92,430 9,300,793 Finance lease facility 250,000 250,000 Overdraft facility 3,000,000 1,500,000 Bank guarantee facility - 5,000 3,342,430 11,055,793

15. EMPLOYEE BENEFIT LIABILITIES

2017 $ 2016 $ Current Annual leave 585,138 658,905 Long service leave 309,244 261,307 894,382 920,212 Non-current Long service leave 101,604 74,794 101,604 74,794 SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

16. OTHER LIABILITIES

2017 $ 2016 $ Current Members’ subscriptions in advance 41,599 116,684 41,599 116,684

Non-current Members’ subscription in advance 156,066 45,402 156,066 45,402

17. RELATED PARTY DISCLOSURES

(a) Key Management Personnel: Any person(s) having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director (whether executive or otherwise) of that Company is considered key management personnel. The Key Management Personnel (KMP) of the Company during the year are: Mark Climo President 41 Brian Goodall Snr Vice President Dianne Hyde Director Craig Taylor (deceased) Director William Gillespie Director Luke McPhie Director ANNUAL REPORT TWO THOUSAND AND SEVENTEEN Peter Cooper Director Scott Murphy Director Debra Cosmos Secretary/ Chief Executive Officer Margo Emmerik Chief Financial Officer Amy Traviss Chief Operations Officer Jason Petrolo Operations Manager Brooke Formica Chief Marketing Officer

The total remuneration paid to key management personnel (KMP) of the Company during the year is as follows: 2017 $ 2016 $ Total remuneration paid 741,697 691,327 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

17. RELATED PARTY DISCLOSURES (CONTINUED) (b) Other Related Parties: Other related parties include immediate family members of KMP; entities that are controlled or significantly influenced by those KMP individually or collectively with their immediate family members. Brian Goodall has disclosed he is the State Business Manager for Coca Cola Amatil, a supplier of goods to the Club. All goods are supplied on normal terms and conditions and no financial benefit is received by any director.

(c) Transactions with related parties: Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

The following transactions occurred with related parties:

2017 $ 2016 $ Purchase of goods and services Warilla Florist 1500 4,061

18. COMMITMENTS AND CONTINGENT LIABILITIES Capital commitments As at 30 June 2017, the Company has a contractual commitment related to the construction of the new Childcare facility for $2,830,000 (2016: $2,325,430 for the construction of the new car park). 42

Contingent liabilities (a) The Company had no contingent liabilities as at 30 June 2017 (2016: none). (b) The Company has outstanding bank guarantees of $5,000 as at 30 June 2017 (2016: $5,000).

19. SIGNIFICANT EVENTS AFTER THE REPORTING DATE On 3 August 2017, the Club received council approval to continue with the proposed development at the Imperial Hotel, Clifton. There have been no other significant events occurring after the reporting period which may affect either the Company’s operations or results of those operations or the Company’s state of affairs.

20. MEMBERS GUARANTEE The Company is limited by guarantee. If the Company is wound up, the articles of association state that each members is required to contribute a maximum of $2.00 each. At 30 June 2017, the number of members was 29,909 (2016: 28,175). SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of Shellharbour Workers’ Club Ltd, I state that: In the opinion of the directors: (a) the financial statements and notes of the Company are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Company’s financial position as at 30 June 2017 and of its performance for the year ended on that date; and

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

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

On behalf of the board

MARK CLIMO 43 President 14 August 2017 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN

BRIAN GOODALL Vice President 14 August 2017 Ernst & Young Tel: +61 2 9248 5555 680 George Street Fax: +61 2 9248 5959 Sydney NSW 2000 Australia ey.com/au GPO Box 2646 Sydney NSW 2001 INDEPENDENT AUDITOR’S

REPORT TO THE MEMBERS OF SHELLHARBOUR WORKERS’ CLUB LTD Auditor’s Independence Declaration to the Directors of Shellharbour Workers’ Club Ltd

In relation to our audit of the financial report of Shellharbour Workers’ Club Ltd for the financial year ended 30 June 2014, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

Daniel Cunningham Partner 29 September 2014

A member firm of Ernst & Young Global Limited

SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ Liability limited by a scheme approved under Professional Standards Legislation 6 Ernst & Young Tel: +61 2 9248 5555 680 George Street Fax: +61 2 9248 5959 Sydney NSW 2000 Australia ey.com/au GPO Box 2646 Sydney NSW 2001

Auditor’s Independence Declaration to the Directors of Shellharbour Workers’ Club Ltd

Ernst & Young

Daniel Cunningham Partner 29 September 2014

45 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 6 Ernst & Young Tel: +61 2 9248 5555 680 George Street Fax: +61 2 9248 5959 Sydney NSW 2000 Australia ey.com/au GPO Box 2646 Sydney NSW 2001

Auditor’s Independence Declaration to the Directors of Shellharbour Workers’ Club Ltd

Ernst & Young

Daniel Cunningham Partner 29 September 2014

A member firm of Ernst & Young Global Limited

SHELLHARBOUR WORKERS’ CLUB LTD CLUB SHELLHARBOUR WORKERS’ Liability limited by a scheme approved under Professional Standards Legislation 6 NOTES

47 ANNUAL REPORT TWO THOUSAND AND SEVENTEEN ABN 69 001 068 864

CNR. WATTLE & SHELLHARBOUR ROADS SHELLHARBOUR NSW 2529 PO BOX 4063 SHELLHARBOUR NSW 2529 TELEPHONE 02 4296 7155 FACSIMILE 02 4297 1319 shellys.com.au