ANNUAL REPORT 30 August 2016 “Proud to Have Been Both a Participant and a Funder of the Tour of Southland Over the Last 60 Years”
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ANNUAL GENERAL Invercargill Licensing Trust & ILT Foundation 2016 MEETING to be held at Elmwood Garden, 7.30pm on Tuesday ANNUAL REPORT 30 August 2016 “Proud to have been both a participant and a funder of the Tour of Southland over the last 60 years” Invercargill Licensing Trust. Greg Mulvey General Manager Your City, Your Trust. The Invercargill Licensing Trust belongs to you, the people of Invercargill. This concept of community ownership is both the Trust’s uniqueness and its reason for being - with direct accountability back to its owners, the residents of our city. More than ever, there is an increasing appreciation around the globe for the benefits community organisations such as ours deliver. OUR VISION: OUR MISSION: For Invercargill to grow and To operate the best quality develop into the best place to hospitality businesses, making live, work and play. it possible for us to return Alan Dennis significant benefits to the people President of Invercargill. GROUP ILT TOTAL GRANTS 2016: Courtesy of The Southland Times Courtesy Executive Management Team Chris Ramsay, Greg McElhinney (seated), Neil Affleck, Greg Mulvey, Terry Laidlaw $8.03 million for the year ended Group Financial Performance 31 March 2016 Achieving sound financial results for the year, the Invercargill Licensing Trust and ILT Foundation were able to provide a Overview high level of grants totalling $8.03 million to local community u The Invercargill Licensing Trust recorded a significant level organisations. of profit after tax for the year. This resulted from an increase A significant increase in the Invercargill Licensing Trust profit is in trading profit along with benefit from the gain on sale of a explained in the notes below. property asset, a lower level of project maintenance costs and the inclusion of a large taxation refund from prior years. ILT (Group) Net After-Tax u Value of Associated Company: The value of the Trust’s investment in DB South Island Brewery Ltd decreased by $38,000 due primarily to the timing of profit distributions Profit 2016 ($) 2015 ($) which affects the net tangible asset value included in the Group u Invercargill Licensing Trust 10,704,000 5,582,000 financial statements. (Parent) u The ILT Foundation achieved an increase in profit to a total of u Change in Value of (38,000) (42,000) $4.552 million (up from $4.332 million) due to a small increase Associate Company in sales and continued good control of operating expenses. u ILT Foundation 4,552,000 4,332,000 u The Invercargill Licensing Trust and the ILT Foundation u Consolidated Group 15,218,000 9,872,000 allocated grants totalling $8.03 million for the year – a u Less Grants Allocated (8,030,000) (8,012,000) slight increase on last year’s grants of $8.012 million but still representing a substantial level of funding provided to benefit u 7,188,000 1,860,000 Net Surplus for the year the local community. Invercargill Licensing Trust HOW EACH DOLLAR OF INVERCARGILL LICENSING Financial Performance TRUST INCOME IS DISTRIBUTED The Invercargill Licensing Trust’s pre-tax operating surplus, before Income Tax 1.1% Surplus grants, is $8.462 million – considerably higher than last year’s available result of $6.844 million and ahead of our budget expectations. Sundry Operating Depreciation after Tax Contributing influences were the inclusion of a gain on sale of Expenses 3.4% 8.8% 10.4% the Waikiwi Tavern land and buildings and a lower level of project maintenance work embarked on during the year. When these two factors are excluded, the comparable trading profit before tax is Staffing Costs $7.343 million compared to $6.844 million last year – an increase 22.1% Cost of Goods for Sale of 7.3%. 54.2% u The net after-tax profit, before grants, is $10.704 million compared to last year’s result of $5.582 million. This substantial increase is the result of the improved pre-tax trading profit noted above, and the inclusion of a large taxation refund from prior years. u Total sales for the year were $82.5 million – up 1.8% on last year’s total of $81.0 million. Higher accommodation sales and off-premise beverage sales contributed to the increase, while OPERATING PROFIT OVER THE LAST 5 YEARS restaurant sales were on par with last year and on-premise (before deducting Taxation and Grants) (bar) sales were down 4.2%. $ 9,000,000 u Investment income was maintained at similar levels to last year. 8,000,000 u Operating expenses were well managed with a small decrease 7,000,000 on the previous year. 6,000,000 u Grants of $4.002 million were allocated, a similar level to last 5,000,000 year’s total of $4.001 million. 4,000,000 3,000,000 Financial Strength 2,000,000 The Trust’s financial position remains very strong with a low level 1,000,000 0 of term debt and total assets of $94.7 million, compared to $87.8 2012 2013 2014 2015 2016 million last year. This includes substantial cash reserves available for future development projects which will ultimately benefit our ■ Invercargill Licensing Trust ■ ILT Foundation community. u Equity has increased by $6.68 million to a total of $78.6 million. Invercargill Licensing Trust 2016 Operating Surplus (before tax and grants): $8.462 million Investing in the Future ILT Foundation Hospitality has always been at the heart of our business. The The ILT Foundation was established challenge of exceeding the expectations of our clientele in a by the Invercargill Licensing Trust world of evolving trends is one we embrace with gusto. After to own and operate all gaming all, reputation is everything in this industry. machines in its establishments. It’s As a Trust, we have a well-structured plan for ongoing an innovative model designed to investment in our portfolio. Our commitment to reinvesting ensure a maximum level of grants substantial levels of capital expenditure back into our businesses are returned to our community. In plays a vital role in our future success as well as maintaining our this regard, the ILT Foundation has relevance to the community. consistently been one of the highest performing of all gaming trusts in During the past year projects invested in have included: New Zealand. Acutely aware of its social responsibilities, the ILT WAIKIWI TAVERN: u With the sale of the old Waikiwi Tavern in Gimblett Street Foundation is actively implementing and the subsequent purchase of a new site on North Road, harm minimisation practices and Jackie Flutey considered by the Department of construction of a new restaurant and tavern development ILT Foundation Internal Affairs to be a leader in this commenced. The project is expected to be completed Manager in early October 2016 and will be an exciting new venture important aspect of its operation. to enable us to better cater for the substantial population u The ILT Foundation’s net surplus of $4.552 million represents based in the Waikiwi/Grasmere area. a 5% increase on last year’s result of $4.332 million. ASCOT PARK HOTEL: u Revenue at $9.394 million was up nearly 4% on last year. u Ongoing reinvestment in our flagship hotel property continued, including final payments made on the u Total grants allocated for the year were $4.027 million, (last refurbishment of all motel units and planning for more year $4.011 million). projects early in the new financial year. u During the year the Appleby Tavern, one of the venues at which the ILT Foundation operated gaming machines, LONE STAR CAFÉ AND BAR: u We successfully completed a major redevelopment of the was closed. The ILT Foundation now operates 163 gaming bar area adding to the appeal of this popular café bar. machines in 10 venues. u Trustees of the ILT Foundation have an unwavering focus KELVIN HOTEL: on community benefit and grant distributions reflect this by u A continuation of our plan to maintain this hotel at a supporting an array of Invercargill charitable and amateur standard which meets its target market, the bathroom areas organisations across the arts, culture, education, welfare, on the third and fifth floors were refurbished. Further work health, religion, sport and recreational activities. will be completed in the new financial year, including the replacement of the two guest lifts. u The ILT Foundation Board is comprised of all current Invercargill Licensing Trust Board members, together with A NEW ACQUISITION: the Trust’s solicitor Chris Ward and Jason McKenzie. u During the year, the Trust entered into an agreement to purchase the former Southland Times building on Esk Street, adjacent to the Kelvin Hotel. Possession will take place on 30 June 2016. The acquisition will provide us with a viable option for developing new hotel accommodation in the HOW EACH DOLLAR OF ILT FOUNDATION inner city or future development opportunities for the Kelvin INCOME IS DISTRIBUTED Hotel. Administration Costs LIQUOR DISTRIBUTION BUSINESS: 2.3% u By year end we had completed negotiations to acquire Surplus available Operating the assets of a Central Otago liquor distribution business, for Grants Expenses Beaver Liquor Ltd based in Queenstown. This company 49.0% 19.6% supplies a significant number of bars and restaurants in the Queenstown basin and we took ownership from 1 April 2016. Gaming Machine Duty 23.0% It will provide us with a step change in our wholesale liquor distribution business in that region – one we have been Depreciation involved with for many years and will now enable us to grow 6.1% our business model. APPLEBY TAVERN SALE: u Subsequent to balance date, the Trust entered into an unconditional sale and purchase agreement for the sale of the Appleby Tavern, with settlement due on 1 July 2016.