SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
August 13, 2003
Commission File number: 2-6860
JUPITERS LIMITED
-----------------------------------
NAME OF YOUR COMPANY
Level 9, Niecon Tower
17 Victoria Avenue
P.O. Box 1400
Broadbeach, QLD 4218
Australia
----------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
----- -----
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No
----- -----
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
JUPITERS LIMITED
By: /s/Laurence Martin Carsley
---------------------------
Laurence Martin Carsley
DATE: August 13, 2003 Company Secretary
[JUPITERS LETTERHEAD]
12 August 2003
JUPITERS LIMITED
PRELIMINARY FINAL REPORT PURSUANT TO LISTING RULE 4.3A
YEAR ENDED 30 JUNE 2003
Please refer to the attached documents which comprise the Preliminary Final
Report of Jupiters Limited for the year ended 30 June 2003:
1. Appendix 4E (including results for announcement to the market)
2. Letter from the Chairman
3. Management's Discussion & Analysis
4. Financial Report
5. Auditors' Report
JUPITERS LIMITED IS A LISTED COMPANY WITH INTERESTS IN TOURISM, LEISURE AND
GAMING. IT OWNS JUPITERS CASINO ON THE GOLD COAST, TREASURY CASINO IN BRISBANE,
JUPITERS TOWNSVILLE HOTEL AND CASINO AND MARINA. IN ADDITION, THE COMPANY
OPERATES KENO IN QUEENSLAND AND NEW SOUTH WALES, ONLINE SPORTSBETTING THROUGH
CENTREBET BASED IN THE NORTHERN TERRITORY AND PROVIDES TECHNOLOGY SERVICES.
JUPITERS LIMITED IS BASED ON THE GOLD COAST, QUEENSLAND, HAS ALMOST 30,000
INVESTORS IN ORDINARY SHARES, 5,000 JUPITERS RPS SECURITYHOLDERS AND EMPLOYS
OVER 5,000 STAFF.
APPENDIX 4E
PRELIMINARY FINAL REPORT
RULES 4.3A
APPENDIX 4E
PRELIMINARY FINAL REPORT
YEAR ENDED 30 JUNE 2003
Introduced 1/1/2003. Origin Appendix 4B
Name of entity
JUPITERS LIMITED
ABN or equivalent company Half yearly Preliminary Financial year ended Financial year ended
reference (tick) final (tick) (current period) (previous
corresponding
period)
010 741 045 [ ] [4] [30 JUNE 2003] [30 JUNE 2002]
RESULTS FOR ANNOUNCEMENT TO THE MARKET*
$A'000
2.1 Revenue from ordinary activities down 1.1% to 787,712
2.2 Profit (loss) from ordinary activities after tax down 25% to 58,519
attributable to members
2.3 Net profit (loss) for the period attributable to down 25% to 58,519
members
2.4 Dividends per ordinary share:
Interim dividend paid March 2003 11 cents fully franked
Final dividend payable September 2003 12 cents fully franked
Dividends per reset preference share:
Paid 9 April 2003 406.38 cents unfranked
Payable 9 October 2003 408.62 cents unfranked
2.5 The record date for determining entitlements to
the dividends (if any):
Ordinary dividend 12 September 2003
Reset preference share dividend 1 October 2003
* Based on attached audited Financial Report.
+ See chapter 19 for defined terms
Appendix 4E Page 1
APPENDIX 4E
PRELIMINARY FINAL REPORT
2.6 A brief explanation of any of the figures in 2.1 to 2.4 necessary to
enable the figures to be understood
The Directors of Jupiters Limited report normalised earnings per share ("EPS")
of 32.7 cents for the year ended 30 June 2003 ("2003"), up from 32.3 cents for
the prior year ("2002").
Normalised net profit after tax ("NPAT") for 2003 was $65.9 million, down from
$75.2 million for 2002. This decline was almost wholly due to an additional $8.9
million in after tax borrowing costs incurred as a result of the issuance of
Jupiters' Reset Preference Shares ("RPS") in April 2002, as part of the
restructure of the company's share capital, resulting in a reduction in the
number of Jupiters' shares outstanding.
Of particular note is that the businesses that will be merged with TABCORP
Holdings Limited ("TABCORP") (i.e. all operations excluding Centrebet) have
performed well with normalised earnings before interest, tax and amortisation
("EBITA") increasing 4.7% from $130.4 million in 2002 to $136.5 million in 2003.
Given the difficulties faced by the tourism industry resulting from the war in
Iraq and SARS, the Directors consider this to be a satisfactory result.
This improved performance of the Jupiters' core businesses was, however, largely
offset by the performance of Centrebet which was adversely impacted by the
combination of the sale process and increasing competition, resulting in a
reduction in earnings before interest, tax, depreciation and amortisation
("EBITDA") from $14.7 million to $9.5 million in 2003.
The company's NPAT of $65.9 million has been adjusted or normalised for the
non-recurring costs related to the merger with TABCORP ($4 million after tax)
and the win rates in the International Commission Business ("ICB") which were
below theoretical in the second half of the year adversely impacting the after
tax result by $3.4 million.
Normalised total EBITDA was $187.6 million in 2003 down 1% from $189.0 million
in 2002.
A full explanation of the normalised result is included in the attached
Management's Discussion and Analysis.
+ See chapter 19 for defined terms
Appendix 4E Page 2
[JUPITERS LETTERHEAD]
12 August 2003
File ref: 67 SX-02
The Manager
Company Announcements Office
Australian Stock Exchange Limited
Level 4, 20 Bridge Street
SYDNEY NSW 2000
Dear Sir
PRELIMINARY FINAL YEARLY REPORT
30 JUNE 2003
RESULTS AND DIVIDENDS
The Directors of Jupiters Limited report normalised earnings per share ("EPS")
of 32.7 cents for the year ended 30 June 2003 ("2003"), up from 32.3 cents for
the prior year ("2002").
Normalised net profit after tax ("NPAT") for 2003 was $65.9 million, down from
$75.2 million for 2002. This decline was almost wholly due to an additional $8.9
million in after tax borrowing costs incurred as a result of the issuance of
Jupiters' Reset Preference Shares ("RPS") in April 2002, as part of the
restructure of the company's share capital, resulting in a reduction in the
number of Jupiters' shares outstanding.
Of particular note is that the businesses that will be merged with TABCORP
Holdings Limited ("TABCORP") (i.e. all operations excluding Centrebet) have
performed well with normalised earnings before interest, tax and amortisation
("EBITA") increasing 4.7% from $130.4 million in 2002 to $136.5 million in 2003.
Given the difficulties faced by the tourism industry resulting from the war in
Iraq and SARS, the Directors consider this to be a satisfactory result.
This improved performance of the Jupiters' core businesses was, however, largely
offset by the performance of Centrebet which was adversely impacted by the
combination of the sale process and increasing competition, resulting in a
reduction in earnings before interest, tax, depreciation and amortisation
("EBITDA") from $14.7 million to $9.5 million in 2003.
1
The company's NPAT of $65.9 million has been adjusted or normalised for the
non-recurring costs related to the merger with TABCORP ($4 million after tax)
and the win rates in the International Commission Business ("ICB") which were
below theoretical in the second half of the year adversely impacting the after
tax result by $3.4 million.
Normalised total EBITDA was $187.6 million in 2003 down 1% from $189.0 million
in 2002.
A full explanation of the normalised result is included in the attached
Management's Discussion and Analysis.
Excluding the normalisation adjustments, NPAT was $58.5 million for 2003, down
from $78.1 million in 2002.
In accordance with previously released dividend policy, the dividend payout
ratio is based on the normalised earnings rather than the actual result and
accordingly the Directors have declared a fully franked final dividend of 12
cents per share consistent with this policy. The total dividend for 2003 of 23
cents is an increase of 2 cents per share over the total dividend for 2002.
CORE OPERATIONS
CASINOS
Despite the difficulties experienced by the tourism industry this year the
casino division posted normalised revenue of $614.4 million, an increase of 4.5%
over 2002.
Although the previous year was a record one for the ICB with the opening of a
new facility on the Gold Coast, 2003 saw another significant increase (20.9%) in
normalised revenue. However, an increase in doubtful debt provisioning, mainly
due to the impact of SARS in Asia, softened the otherwise strong earnings from
the ICB.
The positive trend in gaming machine performance continued. In the June 2003
half year gaming machine revenue increased by 8% over the prior corresponding
period at Conrad Jupiters, 8% at Conrad Treasury and 17% at Jupiters Townsville.
WIDE AREA GAMING
Wide Area Gaming, including Keno and gaming machine monitoring increased EBITDA
by 14% from $39.0 million in 2002 to $44.5 million in 2003.
TECHNOLOGY
The Technology division contributed an EBITDA of $1.5 million in 2003 after
posting a loss of $1 million in 2002.
2
[JUPITERS LOGOS]
SALE OF CENTREBET
Jupiters is now in final negotiations with shortlisted parties for the sale of
Centrebet. Although it is the intention of the Directors that the sale of
Centrebet will be concluded prior to the implementation of the merger with
TABCORP, this is not certain. Please note that the final terms may not be
consistent with those indicated below, however in the interests of maintaining
an informed market the Directors disclose the following information about the
Centrebet sale process.
The sale price of Centrebet is presently being negotiated in the range of $60
million to $70 million. Consideration being discussed for Centrebet could be
entirely cash or a mixture of cash and securities.
Should a sale of Centrebet be completed in the above price range, Jupiters would
incur capital gains tax of around $15 million and expenses of the sale of about
$4 million. The balance of the sale consideration would be distributed to
Jupiters' shareholders by way of either a cash dividend or a dividend in specie.
The dividend would be fully franked subject to an appropriate tax ruling.
MERGER WITH TABCORP
The meetings of Jupiters' ordinary shareholders and RPS holders to consider the
proposed schemes relating to the merger with TABCORP are scheduled to occur on
24 October 2003. Merger documentation with full details of the proposed merger
is expected to be despatched to shareholders in the middle of September 2003.
The Australian Taxation Office ("ATO") is currently reviewing Jupiters'
applications for tax rulings on the payment of the special dividend and the
Centrebet dividend under the scheme of arrangement for the ordinary shares.
Jupiters expects to receive a response from the ATO regarding its applications
before the merger documents are despatched to shareholders and RPS holders.
Yours faithfully
/s/ L.J. WILLETT AO
L.J. WILLETT AO
CHAIRMAN OF THE BOARD
For further information contact:
Mr Rob Hines, Managing Director & Chief Executive Officer
Phone: (07) 5584 8900
3
[JUPITERS LOGOS]
[JUPITER LETTERHEAD]
MANAGEMENT'S DISCUSSION & ANALYSIS
YEAR ENDED 30 JUNE 2003
OVERVIEW
- Net Profit After Tax (NPAT) on a headline basis has declined from
$78.1 million for the year ended 30 June 2002 to $58.5 million in
FY03.
- On a normalised basis (ie. excluding the after tax impact of
non-recurring items and adjusted to theoretical win rates), NPAT was
approximately $65.9 million with Earnings Per Share (EPS) up from
32.3 cents in FY02 to 32.7 cents in FY03.
- The decline in normalised NPAT was mainly due to an additional $8.9
million in after tax borrowing costs incurred as a result of the
issuance of Jupiters' Reset Preference Shares (RPS) in April 2002.
The impact of the lower normalised NPAT is offset by the reduction
in the number of Jupiters' shares outstanding as a result of the
restructure of the Company's share capital.
- During FY03 the only material change to the share capital of the
Company was the issue of approximately 423,000 ordinary shares
relating to the takeover of Breakwater Island Trust.
Changes in the pcp included:
- The buy back of approximately 40 million ordinary shares
- The issue of $190.2 million of RPS
- The Company incurred non-recurring costs related to the merger with
TABCORP Holdings Limited (TABCORP) of $4.0 million after tax,
reducing EPS by 2.0 cents. The International Commission Business
(ICB) achieved a win rate of 1.215% versus a theoretical win rate of
1.265%, reducing NPAT by $3.4 million and EPS by 1.7 cents.
- The continuing businesses that will be merged with TABCORP (ie. all
operations excluding Centrebet) performed well with normalised EBITA
increasing from $130.4 million in FY02 to $136.5 million in FY03, an
increase of 4.7%.
- All references to "Normalised" in this document refer to the current
year results adjusted for the deviation away from theoretical win
rates in ICB and merger costs, and pcp results adjusted for the
deviation away from theoretical win rates in ICB and the adverse tax
ruling relating to the deductibility of rent paid for the Brisbane
hotel/casino.
1
DIVIDENDS
In accordance with the Company's dividend policy, the dividend payout ratio is
based on the normalised earnings rather than the actual result and accordingly
the Directors have declared a fully franked dividend of 12 cents per share. The
total dividend for FY03 of 23 cents is an increase of 2 cents per share over the
total dividend for FY02. The record date for the final ordinary dividend is 12
September 2003.
The next semi-annual dividend on the RPS has been declared and will be paid on 9
October 2003 at 8.15% of the face value of the preference shares, being 408.62
cents per RPS. The record date for this RPS dividend is 1 October 2003.
The following analysis considers results on both an actual and a Normalised
basis to assist in understanding the performance of the Company's underlying
businesses.
REVENUE
- Normalised operating revenue was $802.3 million, up 3.7% compared to
$774.0 million for the pcp.
- Normalised land based revenues increased by $26.5 million or 4.5%.
- ICB revenue increased by 20.9% on a Normalised basis.
- Gaming machine revenue in the Casinos increased by 2.1% (see table
under Casino Revenue).
- Wide Area Operations increased revenue by 3.7%.
- AWA Technology Services revenue decreased by 3.7%, on a consolidated
basis.
- Centrebet increased revenue by 1.3%.
EBITDA
- Headline earnings before interest, income tax, depreciation and
amortisation (EBITDA) for the period were $178.7 million, compared
with $207.3 million for the pcp.
- Normalised EBITDA decreased by $1.4 million compared to the pcp.
- This normalised decrease was primarily attributable to a poor
performance in Centrebet and bad debts in the ICB partially offset
by earnings from the Company's wide-area gaming and technology
services operations.
2
[JUPITERS LOGOS]
FINANCIAL RESULTS
YEAR ENDED 30 JUNE 2003
Actual Normalised(I)
2003 2002 2003 2002
$M $M $M $M
Casino revenue 463.0 481.4 479.4 462.0
Hotel revenue (ii) 135.0 125.9 135.0 125.9
----- ----- ----- -----
Land based operations 598.0 607.3 614.4 587.9
Wide area operations 123.0 118.6 123.0 118.6
Technology operations 30.3 31.3 30.3 31.3
Sportsbetting operations 30.8 30.4 30.8 30.4
Unallocated 3.8 5.8 3.8 5.8
----- ----- ----- -----
Operating revenue 785.9 793.4 802.3 774.0
Employee related expenses (231.8) (223.4) (231.8) (223.4)
Gaming & wagering taxes/contribution (iii) (114.5) (117.2) (116.3) (115.1)
Marketing expenses (94.0) (89.3) (103.1) (91.5)
Cost of providing technology services (26.2) (24.3) (26.2) (24.3)
Commissions paid to Qld Keno agents (25.2) (23.5) (25.2) (23.5)
Cost of goods sold (23.6) (24.6) (23.6) (24.6)
Property and energy costs (22.4) (21.1) (22.4) (21.1)
Management fee (18.5) (20.1) (19.1) (18.7)
Other expenses (51.0) (42.6) (47.0) (42.8)
----- ----- ----- -----
EBITDA 178.7 207.3 187.6 189.0
Depreciation & amortisation (54.0) (54.4) (54.0) (54.4)
Net interest expense & finance charges (35.6) (27.6) (35.6) (23.1)
----- ----- ----- -----
Profit from ordinary activities 89.1 125.3 98.0 111.5
Income tax expense (30.0) (46.5) (31.5) (35.6)
----- ----- ----- -----
Net profit before outside equity interests 59.1 78.8 66.5 75.9
Outside equity interests (0.6) (0.7) (0.6) (0.7)
----- ----- ----- -----
Net profit 58.5 78.1 65.9 75.2
===== ===== ===== =====
(i) excludes effects of deviations from theoretical win on commission play
business, merger costs and adverse tax ruling.
(ii) includes rooms, food, beverage and entertainment, Breakwater Marina and
Townsville Entertainment Centre.
(iii) includes community benefit contribution of $4.6 million (2002: $4.8
million).
3
[JUPITERS LOGOS]
FINANCIAL STATISTICS
ACTUAL NORMALISED
2003 2002 2003 2002
EBITDA as a percentage of operating revenue 22.7% 26.1% 23.4% 24.4%
Earnings per share (cents) 29.0 33.6 32.7 32.3
Return on equity 12.3% 13.4% 13.9% 13.1%
Net debt to shareholders' equity 77.7% 69.1%
Interest cover 5.0 times 7.5 times
Net tangible assets per share $ 1.91 $ 1.83
Dividend per share (cents) - 100% franked 23.0 21.0
EBITDA BUSINESS SEGMENT ANALYSIS
Internally, management analyses the Company's performance on a business segment
basis. Consolidated EBITDA is analysed on that basis as follows:
ACTUAL NORMALISED
2003 2002 2003 2002
$M $M $M $M
Land based operations 141.5 167.3 146.4 149.0
Wide-area operations 44.5 39.0 44.5 39.0
Sportsbetting operations 9.5 14.7 9.5 14.7
Technology operations 1.5 (1.0) 1.5 (1.0)
Unallocated (18.3) (12.7) (14.3) (12.7)
----- ----- ----- -----
EBITDA 178.7 207.3 187.6 189.0
----- ----- ----- -----
CASINO REVENUE
Casino revenue decreased by $18.4 million, or 3.8%, to $463.0 million for the
year ended 30 June 2003. On a Normalised basis, casino revenue increased by
$17.4 million, or 3.8%.
On a Normalised basis, ICB revenue for the year ended 30 June 2003 increased
20.9% over the pcp, reflecting an increase in ICB front money. Revenue earned
from this business segment remains in the range of 10%-15% of the Company's
revenue. The ICB increased provisioning for doubtful debts during the year by
$5.3 million, compared to less than $0.1 million for the pcp.
Club Conrad's non-commission premium play revenues decreased 4.0% compared to
the pcp in the South East Queensland properties. Jupiters Townsville does not
participate in premium play business.
Main floor table game performance remained flat.
4
[JUPITERS LOGOS]
Gaming machine revenue growth on pcp improved consistently throughout the year
(see table below). Total gaming machine revenues for the three casinos was
$259.6 million compared to $254.3 million for the pcp, an increase of $5.3
million or 2.1%. Revenue for the six months ended 30 June 2003 was an increase
of $10.4 million or 8.5% on the pcp continuing the positive trend evident since
the installation of the Cougar gaming machine monitoring system and the
introduction of new gaming machines.
QUARTER SEPT. 02 DEC. 02 MAR. 03 JUN. 03
- ------- -------- ------- ------- -------
Revenue growth vs PCP (8.9%) 2.1% 7.9% 9.2%
Following the successful implementation of the Cougar monitoring system, the
Company's gaming machine replacement and investment cycle will be driven by
customer demand and availability of new product. In FY04, it is expected to
upgrade approximately one third of the installed base.
NO. OF MACHINES AT 30
CASINO JUNE 2003
Gold Coast 1,348
Brisbane 1,329
Townsville 292
HOTEL REVENUE
Total hotel revenue increased by $9.1 million, or 7.2% to $135.0 million
compared to the pcp of $125.9 million. This was primarily attributable to an
improved performance by food and beverage operations across all properties.
As a result of a continued focus on high yielding corporate and convention
business revenues, hotel rooms revenue increased by 7.7% compared to the pcp.
This strong result was achieved despite the war in Iraq and the outbreak of
SARS. An increase in domestic activity compensated for the decrease in activity
in the inbound segment.
CONRAD JUPITERS, GOLD COAST
Headline operating revenues at Conrad Jupiters decreased by $2.4 million, or 0.7
% to $328.6 million for the year ended 30 June 2003 compared to $331.0 million
for the pcp.
On a Normalised basis, operating revenues increased by $23.7 million or 7.5% to
$340.1 million in FY03 compared to $316.4 million in FY02.
Since March 2003, the Company's south east Queensland properties have been
trialling an electronic patron counting system which has consistently produced
results 20% to 30% above the historical manual count methodology. This new
system will be used for reported patronage figures from 1 July 2003.
5
[JUPITERS LOGOS]
Casino patronage of approximately 11,000 per day (manual count) remained in line
with the pcp. Average main floor spend per patron was also consistent with the
pcp.
Gaming machine revenue increased in FY03 by 2.9% compared to FY02. Strong growth
against pcp was recorded for the second half due to the impact of a significant
rollout of new product in the first half.
Hotel room revenue increased over the pcp reflecting an improvement in average
occupancy from 60.3% to 62.4% supported by an increase in average room rate of
2.8% over the pcp.
Food and beverage revenues increased 8.9% over the pcp primarily as a result of
promotions, theatre packages and some menu revisions. The hotel also benefited
from increased domestic tourism as locals chose not to travel abroad due to
uncertainty surrounding international events.
CONRAD TREASURY, BRISBANE
Headline operating revenues at Conrad Treasury decreased $7.9 million, or 3.3%
to $229.4 million for the year ended 30 June 2003 compared to $237.3 million for
the pcp.
On a Normalised basis, operating revenues increased by $2.0 million or 0.9% to
$234.4 million in FY03 compared to $232.4 million in FY02.
Gaming machine revenue increased in FY03 by 1.7% compared to FY02. Strong growth
against pcp was recorded for the second half due to the impact of a significant
rollout of new product in the first half.
Daily casino patronage remained flat at around 9,000 (manual count). Average
main floor spend per patron improved against the pcp primarily due to the
abovementioned small increase in gaming machine activity along with a small
increase in main floor table revenue.
Hotel room revenue was up 8.3% on the pcp. Occupancy continued to improve
increasing from 74.7% to 78.5% and was supported by an increase in average room
rate of 3.9% compared to the pcp.
Food and beverage revenues increased 10.2% compared to the pcp due to strong
convention activity in Brisbane.
JUPITERS TOWNSVILLE HOTEL & CASINO
Operating revenues at Jupiters Townsville increased $0.9 million, or 2.3% to
$39.9 million for the year ended 30 June 2003 compared to $39.0 million for the
pcp.
Gaming machine revenue for FY03 was in line with pcp. Strong growth against pcp
was recorded for the second half due to the impact of a significant rollout of
new product in the first half.
6
[JUPITERS LOGOS]
Hotel room revenue increased 7.4% compared to the pcp with occupancy
strengthening to 49.8% (pcp: 47.1%). Improved hotel occupancy and marketing
efforts resulted in food and beverage operations performing strongly with
revenues increasing 7.7% over the pcp.
GOLD COAST CONVENTION & EXHIBITION CENTRE
Construction work on the Gold Coast Convention & Exhibition Centre is
progressing well and is on schedule for a mid 2004 opening.
The core management team of the Centre is in place. Forward bookings continue to
grow with strong interest from international and domestic markets.
NON-CASINO OPERATIONS
Revenue earned by non-casino operations of $187.9 million was 23.4% of the
normalised operating revenue of the Company compared to $186.1 million (24.0%)
in the pcp.
Keno turnover in Queensland for the year ended 30 June 2003 was $278.2 million
(pcp: $261.4 million) and in New South Wales was $333.7 million (pcp: $343.0
million). Queensland has continued to perform strongly due to the continued
strong performance of clubs and hotels. The ongoing sales and marketing activity
has resulted in positive turnover growth. New South Wales struggled with
turnover for the year. Increasing responsible gambling regulation has continued
to have a negative impact on all gaming, including Keno in New South Wales. A
new logo was launched into the Queensland and New South Wales market providing a
unified brand for the game. The coming year will see new Keno terminals rolled
out into both states providing the latest technology and facilities for the
future development of new Keno products. Jupiters provides Keno to over 800
outlets in Queensland and 1,000 clubs in New South Wales.
Monitoring of gaming machines in clubs and hotels in Queensland generated
revenue of $19.1 million during the year ended 30 June 2003, an increase of
15.6% over the pcp. This performance is the result of the business attracting a
number of large venues which have elected to use a broad range of the Company's
products. Internal and wide area random jackpots have been introduced into a
number of sites bolstering the revenue of this business. The Company's market
share is approximately 37.7%, just below the regulated maximum level of 40%. The
increase in revenue combined with operational improvements saw most of the
incremental revenue reflected at the EBITDA line.
CENTREBET
The poor performance of Centrebet was attributable to a number of factors,
including increased competition, regulatory uncertainty and the impact of the
decision to sell the business taken in March 2003.
Turnover grew at a slower than expected rate due to increased competition in
Centrebet's traditional Nordic markets, which have become the target of
significant marketing spend by some of Centrebet's major UK based competitors.
The increasing impact of betting exchanges also had a significant effect on the
rate of turnover growth.
7
[JUPITERS LOGOS]
Regulatory uncertainty grew during the year with some significant developments
particularly in Denmark. This uncertainty together with the sale process has
impacted the day to day operation of the business resulting in a lower than
expected win rate.
As a result of the negotiations with TABCORP and the decision to recommend a
merger with that group, Jupiters decided to sell the business of Centrebet in
order to deliver greater value to its shareholders compared to only completing
the TABCORP merger. The process of selling the business has caused disruption to
it which can be seen in the lower win rate in the last quarter of the year
(3.6%), despite turnover for that quarter being in line with the Soccer World
Cup dominated pcp.
Expenses were incurred on marketing programs designed to counter the increased
competition and in preparing to deliver new products and a new web platform,
which has been postponed due to the sale process.
The lower win rate combined with an increase in overheads caused the EBITDA to
decline 35%, from $14.7 million in 2002 to $9.5 million in 2003.
$ 000'S FY03 FY02 CHANGE
- -------
TURNOVER 452,087 401,006 12.7%
WAGERING REVENUE 30,026 28,678 4.7%
WIN RATES 6.64% 7.15% (7.1)%
The total number of bets placed continues to grow strongly although the average
bet size has reduced. This is mainly due to the impact of betting exchanges on
the top end or wholesale segment of Centrebet's client base.
FY03 FY02 CHANGE
TOTAL BETS (MILS) 15.4 11.7 32%
AVERAGE BET SIZE $29.38 $34.35 (14.5)%
OTHER
Operating expenses were $607.2 million compared to $586.1 million in the pcp, an
increase of $21.1 million. Current year expenses included $4.0 million in costs
pertaining to the proposed merger with TABCORP.
Depreciation and amortisation expense was $54.0 million, broadly consistent with
the pcp of $54.4 million.
Net interest and finance charges increased by $8.0 million to $35.6 million.
Interest expense includes $15.5 million payable in respect of the reset
preference shares issued in April 2002 (pcp: $3.5 million).
Overall the net cash position reduced by $7.4 million from 30 June 2002 to 30
June 2003. Net cashflows from operating activities in FY03 were $85.6 million,
down from $136.2 million in FY02 due to higher borrowing costs paid and the
reduction in headline earnings.
8
[JUPITERS LOGOS]
Net cashflows used in investing activities in FY03 were $88.3 million compared
with $48.1 million in FY02 due to the increase in ownership interest in
Breakwater Island Trust and capital expenditure. Total capital expenditure
applicable to FY03 was approximately $63.0 million (pcp: $46.3 million). Major
capital expenditure items included investment in gaming machines deferred from
the previous financial year, the extension of the Conrad Jupiters island and
refurbishments within the casino properties. Net cashflows used in financing
activities were $4.6 million in FY03 compared to $119.5 million in FY02. The
prior year was affected by cashflows pertaining to the restructure of the
Company's share capital.
JUPITERS LIMITED
12 AUGUST 2003
For further information contact:
Mr Laurie Carsley, Chief Financial Officer
Phone: (07) 5584 8900
9
[JUPITERS LOGOS]
JUPITERS LIMITED
A.C.N. 010 741 045
AND ITS CONTROLLED ENTITIES
STATEMENTS OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2003
Consolidated Company
----------------------- -------------------------
Note 2003 2002 2003 2002
----
$000 $000 $000 $000
----- ----- ----- ----
Operating revenues:
Casino 462,979 481,373 440,219 458,297
Hotel 134,955 125,894 117,811 109,975
Other gaming and wagering 149,767 144,345 -- --
Gaming equipment sales and technology services 36,067 39,600 15,727 16,565
------- ------- ------- -------
783,768 791,212 573,757 584,837
Other revenue 3 3,944 5,061 54,376 16,635
------- ------- ------- -------
Total revenue from ordinary activities 787,712 796,273 628,133 601,472
Employee related expenses (231,849) (223,449) (182,185) (178,021)
Government gaming taxes and fees/community benefit contribution (114,454) (117,204) (91,757) (92,802)
Marketing expenses (93,980) (89,357) (85,846) (79,788)
Depreciation and amortisation expense 3 (53,968) (54,422) (30,287) (29,546)
Borrowing costs 3 (37,476) (30,350) (35,550) (28,233)
Cost of providing technology services (26,192) (24,346) -- --
Commissions paid to Queensland Keno agents (25,210) (23,467) -- --
Cost of goods sold (23,555) (24,569) (33,762) (33,075)
Property and energy costs (22,440) (21,096) (18,766) (18,294)
Management fees (18,549) (20,109) (18,549) (20,109)
Other expenses from ordinary activities (50,958) (42,599) (21,936) (12,517)
------- ------- ------- -------
Profit from ordinary activities before income tax expense 89,081 125,305 109,495 109,087
Income tax expense relating to ordinary activities 6 (30,013) (46,516) (18,113) (34,420)
------- ------- ------- -------
Net profit - before outside equity interest 59,068 78,789 91,382 74,667
Net profit - attributable to outside equity interest (549) (720) -- --
------- ------- ------- -------
Net profit - attributable to members of the Company 58,519 78,069 91,382 74,667
Total expenses adjustments attributable to members
of the Company and recognised directly in equity due
to a decrease in retained profits on adoption of
revised accounting standard AASB1028
"Employee Benefits" 2 (170) -- (96) --
------- ------- ------- -------
Total changes in equity other than those resulting from
transactions with owners as owners
attributable to members of the Company 58,349 78,069 91,286 74,667
======= ======= ======= =======
Basic earnings per share:
Ordinary shares (cents) 5 29.0 33.6
Diluted earnings per share:
Ordinary shares (cents) 5 29.0 33.6
The accompanying notes form an integral part of
the statements of financial performance
1
JUPITERS LIMITED
A.C.N. 010 741 045
AND ITS CONTROLLED ENTITIES
STATEMENTS OF FINANCIAL POSITION
AT 30 JUNE 2003
Consolidated Company
------------------------- ------------------------
Note 2003 2002 2003 2002
----
$000 $000 $000 $000
---- ---- ---- ----
CURRENT ASSETS:
Cash assets 77,933 85,301 56,313 58,940
Receivables 8 21,763 18,420 10,894 13,329
Inventories 13,097 14,098 11,240 7,318
Other 9 31,849 16,096 14,793 13,964
--------- --------- --------- ---------
Total current assets 144,642 133,915 93,240 93,551
--------- --------- --------- ---------
NON-CURRENT ASSETS:
Financial assets 10 -- -- 548,119 519,107
Property, plant and equipment 11 758,842 746,867 352,117 334,038
Intangibles 12 106,691 122,831 18,433 20,900
Deferred tax assets 3,241 -- 828 --
Other 13 39,000 63,718 39,000 63,718
--------- --------- --------- ---------
Total non-current assets 907,774 933,416 958,497 937,763
--------- --------- --------- ---------
Total assets 1,052,416 1,067,331 1,051,737 1,031,314
--------- --------- --------- ---------
CURRENT LIABILITIES:
Payables 14 87,486 91,752 52,304 53,525
Interest bearing liabilities 16 45,347 1,827 45,347 1,827
Current tax liabilities 6,122 21,348 1,569 14,002
Provisions 15 20,196 38,322 14,347 32,016
Other 17 12,326 -- 12,326 --
--------- --------- --------- ---------
Total current liabilities 171,477 153,249 125,893 101,370
--------- --------- --------- ---------
NON-CURRENT LIABILITIES:
Interest bearing liabilities 16 392,270 431,695 392,270 428,995
Deferred tax liabilities - 2,358 - 3,653
Provisions 15 9,705 10,622 7,273 9,487
Net loans - controlled entities -- -- 19,021 52,117
--------- --------- --------- ---------
Total non-current liabilities 401,975 444,675 418,564 494,252
--------- --------- --------- ---------
Total liabilities 573,452 597,924 544,457 595,622
--------- --------- --------- ---------
Net assets 478,964 469,407 507,280 435,692
========= ========= ========= =========
EQUITY:
Contributed equity 18 312,954 310,457 312,954 310,457
Retained profits 4 166,010 127,592 194,326 125,235
--------- --------- --------- ---------
Parent entity interest 478,964 438,049 507,280 435,692
Outside equity interest 19 -- 31,358 -- --
--------- --------- --------- ---------
Total equity 478,964 469,407 507,280 435,692
========= ========= ========= =========
The accompanying notes form an integral part of these
statements of financial position
2
JUPITERS LIMITED
A.C.N. 010 741 045
AND ITS CONTROLLED ENTITIES
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2003
Consolidated Company
---------------------- ------------------
Note 2003 2002 2003 2002
----
$000 $000 $000 $000
---- ---- ---- ----
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Cash receipts in the course of operations 781,438 808,215 578,278 601,775
Cash payments in the course of operations (603,750) (590,618) (450,854) (449,511)
Distributions received -- -- 683 1,367
Interest received 1,619 2,990 977 1,736
Borrowing costs (42,305) (26,485) (42,179) (20,712)
Income taxes paid (51,441) (57,912) (35,026) (50,203)
------- ------- ------- -------
Net cash provided by
operating activities 20(b) 85,561 136,190 51,879 84,452
------- ------- ------- -------
CASH FLOWS USED IN INVESTING
ACTIVITIES:
Purchase of property, plant and
equipment (63,005) (46,313) (46,817) (36,161)
Purchase of businesses -- (2,000) -- --
Increased ownership interest in controlled
entity 20(d) (26,581) -- (26,581) --
Proceeds from sale of property,
plant and equipment 3 1,306 189 1,252 45
------- ------- ------- -------
Net cash used in investing activities (88,280) (48,124) (72,146) (36,116)
------- ------- ------- -------
CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES:
Proceeds from issue of reset preference
shares 16 -- 190,174 -- 190,174
Proceeds from the exercise of options 18 67 -- 67 --
Share buy-back 18 -- (181,533) -- (181,533)
Borrowing costs capitalised -- (6,852) -- (6,852)
Proceeds from borrowings 16 140,500 60,000 140,000 60,000
Repayment of borrowings 16 (98,200) (129,800) (95,000) (126,500)
Repayment of finance lease (1,919) (1,714) (1,919) (1,714)
Loan repayments from controlled entities -- -- 18,835 43,752
Ordinary dividends paid (45,097) (49,782) (44,343) (48,272)
------- ------- ------- -------
Net cash from/(used in) financing
activities (4,649) (119,507) 17,640 (70,945)
------- ------- ------- -------
Net decrease in cash (7,368) (31,441) (2,627) (22,609)
Cash at the beginning of the
financial year 85,301 116,742 58,940 81,549
------- ------- ------- -------
Cash at the end of the financial year 20(a) 77,933 85,301 56,313 58,940
======= ======= ======= =======
The accompanying notes form an integral part of these statements of cash flows
3
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF ACCOUNTING
The financial report is a general purpose financial report which has been
prepared in accordance with Accounting Standards, Urgent Issues Group
Consensus Views and the Corporations Act (2001). It has been prepared on
the basis of historical costs and except where stated, does not take into
account changing money values or current valuations of non-current assets.
Where necessary, comparative information has been reclassified to achieve
consistency in disclosure with current financial year amounts and other
disclosures.
CONSOLIDATION
The consolidated financial report comprises the financial report of
Jupiters Limited (the "Company") and its controlled entities (referred to
collectively as the "Consolidated Entity"). The consolidation process
eliminates all inter-entity balances and transactions and reflects the
application of the Company's accounting policies on a consistent basis
throughout the Consolidated Entity and, unless otherwise stated, are
consistent with those of the previous year.
The Company reports receivables and payables with controlled entities on a
net basis.
REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the entity and the revenue can be reliably measured.
Casino and other gaming revenues represent the aggregate of gaming wins
and losses after allowances.
Revenue from the provision of services is recognised where the contracted
outcome can be reliably measured, control of the right to be compensated
for the services exists and the stage of completion can be reliably
measured.
Revenue from the sale of goods is recorded when control in the goods being
sold passes to the buyer, it is probable consideration will pass from the
buyer in accordance with an established arrangement and the amount of
consideration can be reliably measured.
COST OF GOODS SOLD
Cost of goods sold relates to the sale of food, beverage and gaming
equipment.
INCOME TAX
Tax effect accounting has been adopted in preparing this financial report.
Income tax expense is calculated on the accounting profit adjusted for
permanent differences.
To the extent that timing differences occur between the time items are
taken up for accounting purposes and when they are taken into account for
determination of taxable income, the related taxation liability or benefit
is calculated at the tax rate expected to apply when the differences
reverse.
At 30 June 2003, the Consolidated Entity had not elected to form a
consolidated group for taxation purposes. The formation of a consolidated
group for taxation purposes in the future is not expected to materially
affect the carrying value of the Consolidated Entity's deferred tax assets
and liabilities. The Consolidated Entity is expected to form a
consolidated group for taxation purposes in the year ending 30 June 2004.
4
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D):
GAMING TAXES AND GOODS AND SERVICES TAX ("GST")
Revenues, expenses and assets are recognised net of the amount of GST
except where the GST incurred on a purchase of goods and services is not
recoverable from the taxation authority (in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of
the expense item as applicable) and receivables and payables are stated
with the amount of GST included.
Prima facie gaming taxes are brought to account on a gross basis in the
Statements of Financial Performance. Pursuant to agreements between the
Federal and State Governments, any GST payable on the related gaming
activities is deducted from those gaming tax remittances and paid to the
Federal Government.
INVENTORIES
Inventories which include food, beverages, general stores and computer
hardware are stated at the lower of cost and net realisable value. They
comprise raw materials, work in progress and finished goods. Cost is
assigned on a weighted average cost basis.
GOVERNMENT FUNDED DEVELOPMENT
The Company is currently developing a convention and exhibition centre on
behalf of the State of Queensland. Development costs are generally
reimbursed by the State within one month of them being paid. Development
costs incurred and not yet reimbursed are classified as current
receivables.
NON-CURRENT ASSETS
Land, buildings and casino licences are recorded at cost of acquisition or
development. The Gold Coast and Townsville casino licences are issued in
perpetuity and the Brisbane casino licence expires in April 2070.
Buildings, plant and equipment and where appropriate, casino licences are
depreciated over their estimated useful lives on a straight line basis
with depreciation on buildings and applicable casino licences applying a
rate of 1% - 1.3%, plant and equipment - owned applying a rate of 7% -
33%, and plant and equipment - leased applying a rate of 20%.
All non-current assets are reviewed semi-annually to determine whether
their carrying amounts require write down to recoverable amount.
Recoverable amount is determined using net cash flows discounted at 10.9%
to present values.
Investments in controlled entities are carried in the Company's financial
report at the lower of cost and recoverable amount.
The acquisition of the management contract in respect of Jupiters
Townsville Hotel & Casino is recorded at cost and is being amortised over
the period of the extended term of the contract of 22 years.
Deferred borrowing expenses are amortised over the term of the related
financial instrument.
5
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D):
LEASED ASSETS
Assets acquired under finance leases are capitalised and amortised over
the life of the relevant lease or, where ownership is likely to be
obtained on expiration of the lease, over the expected useful life of the
asset. Lease payments are allocated between interest expense and reduction
in the lease liability. Gains or losses on the sale and leaseback of
assets are deferred and amortised over the lease term when the lease is a
finance lease.
Operating lease assets are not capitalised and rental payments are charged
to profit on a basis to match the expense with the economic benefits
consumed from the leased asset in each period. Where rental payments are
expected to produce economic benefits in a future period, a prepayment of
rent is recognised in the Statements of Financial Position (refer Note
13).
GOODWILL/DISCOUNT ON ACQUISITION
On acquisition of a controlled entity or a business, the difference
between the purchase consideration plus incidental expenses and the fair
value of identifiable net assets acquired is initially brought to account
as either goodwill on acquisition or as a discount on acquisition which is
allocated between the non-monetary assets of the controlled entity.
Purchased goodwill is amortised on a straight line basis for AWA Limited
at twenty years and for Centrebet at seven years. The unamortised balance
of goodwill is reviewed at each balance date and charged to the Statement
of Financial Performance to the extent that applicable future benefits are
no longer probable.
PROVISIONS
Provisions are recognised when the Consolidated Entity has a legal,
equitable or constructive obligation to make a future sacrifice of
economic benefits to other entities as a result of past transactions or
other past events, it is probable that a future sacrifice of economic
benefits will be required and a reliable estimate can be made of the
amount of the obligation.
A provision for dividend is not recognised as a liability unless the
dividends are declared, determined or publicly recommended on or before
the reporting date.
PROVISION FOR EMPLOYEE BENEFITS
Provision has been made in the financial reports for benefits accruing to
employees in relation to such matters as annual leave and long service
leave and are based on remuneration rates which are expected to be paid
when the liability is settled. On-costs are included in the determination
of provisions.
SELF INSURANCE OF QUEENSLAND WORKERS COMPENSATION LIABILITIES
From 1 July 2002, the Consolidated Entity self insures its potential
workers' compensation liabilities in respect of its Queensland employees
pursuant to a licence from WorkCover Queensland. Liabilities that may
arise in this regard are contingent on claims by employees. At each
reporting date, the liability recognised for the Consolidated Entity's
potential workers' compensation liabilities in respect of its Queensland
employees is measured in accordance with an independent actuarial
valuation. The valuation makes allowance for the Consolidated Entity's
estimated claims liability, residual liability and outstanding liability
(refer Note 15).
6
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D):
FOREIGN CURRENCY TRANSLATION
Transactions in foreign currencies are converted to local currency at the
rate of exchange ruling at the date of the transaction. Foreign currency
monetary items that are outstanding at the reporting date are translated
using the spot rate at the end of the financial year.
FINANCIAL INSTRUMENTS
Ordinary share capital is recorded at a value equivalent to the total
consideration received less the costs of issuing shares. Ordinary share
capital bears no special terms or conditions affecting income or capital
entitlements of the shareholders.
Reset preference shares exhibit characteristics of liabilities and are
recognised as liabilities in the Statements of Financial Position. The
corresponding dividends are charged as borrowing costs in the Statements
of Financial Performance.
Trade debtors primarily represent amounts receivable from hotel and casino
patrons, and technology services customers of the international sales
division and are recorded at transaction amounts. Provision for doubtful
debts is recognised to the extent that the recovery of the outstanding
receivable balance is considered less than likely to be collected. Such
provision is established based on a review of all outstanding amounts at
balance date.
Investments in bank accepted bills of exchange are carried at cost.
Interest revenue is recognised on an effective yield basis.
Liabilities for trade creditors, other creditors and accruals are carried
at cost which is the fair value of the consideration to be paid in the
future for goods and services received, whether or not billed to the
Consolidated Entity.
Notes payable are recognised when issued at the face value of the notes
issued, with any discount on issue amortised over the period to maturity.
Interest is recognised as an expense on an effective yield basis.
Borrowings under a commercial bill facility are recognised when bills are
issued with the liability recorded based upon the face value of the bills.
The difference between the face value and proceeds received from the bills
is recognised as interest expense over the period to maturity.
A cross currency interest rate swap agreement hedges the Company's
interest rate and foreign currency exposure in respect of notes payable
(refer Note 27). Under the terms of the swap agreement, the Company agrees
with the counterparty to exchange the difference between the fixed and
floating rate interest amounts and to exchange the principal at an agreed
rate of foreign currency conversion. Amounts payable under the cross
currency interest rate swap agreement are recognised as a component of
interest expense as they accrue.
7
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
2. CHANGE IN ACCOUNTING POLICIES:
PROVISION FOR DIVIDENDS
The application of new Accounting Standard AASB 1044 "Provisions,
Contingent Liabilities and Contingent Assets", has resulted in a change in
the timing of recognition of the dividend provision. Previously, the
Consolidated Entity recognised a provision for dividend based on the
amount that was proposed or declared after the reporting date. In
accordance with the requirements of the new standard, a provision for
dividend will only be recognised at the reporting date where the dividend
has been declared, determined or publicly recommended prior to the
reporting date. The effect of the revised policy has been to increase
consolidated retained profits and decrease provisions at the beginning of
the year by $22,902,204 (refer Note 4). In accordance with the new
standard, no provision for final dividend has been recognised for the year
ended 30 June 2003. Recognition of this dividend occurred at the date of
this financial report and accordingly will be included in the financial
report for the year ending 30 June 2004.
EMPLOYEE BENEFITS
The revised Accounting Standard AASB1028 "Employee Benefits", has resulted
in a change in the accounting policy for the measurement of employee
benefit liabilities. Previously, the Consolidated Entity measured the
provision for annual leave based on remuneration rates at the date of
recognition of the liability. In accordance with the requirements of the
revised standard, the provision for annual leave is now measured based on
the remuneration rates expected to be paid when the liability is settled.
The effect of the revised policy has been to decrease consolidated
retained profits and increase employee benefit liabilities at the
beginning of the year by $170,562. In addition, current year profits have
decreased by $75,969 due to an increase in the employee benefits expense.
Current provisions at 30 June 2003 have also increased by $246,531 as a
result of the change in accounting policy.
8
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
-------- -------- -------- --------
3 NOTES TO THE STATEMENTS OF FINANCIAL PERFORMANCE:
Operating revenues:
Services 689,007 701,769 492,856 510,453
Goods 94,761 89,443 80,901 74,384
-------- -------- -------- --------
783,768 791,212 573,757 584,837
-------- -------- -------- --------
Other revenue:
Interest from other persons 1,790 2,826 1,138 1,860
Distribution from Breakwater Island Trust -- -- -- 547
Dividends and distributions from wholly owned group -- -- 51,931 13,995
Proceeds from sale of property, plant and equipment 1,306 189 1,252 45
Other 848 2,046 55 188
-------- -------- -------- --------
3,944 5,061 54,376 16,635
-------- -------- -------- --------
Depreciation and amortisation expense:
Depreciation of:
Buildings 1,486 1,172 -- --
Plant and equipment 36,244 38,701 21,861 22,845
Amortisation of:
Leased assets 5,958 4,892 5,958 4,892
Goodwill 7,812 7,848 -- --
Management contract 524 524 524 524
Deferred borrowing costs 1,944 1,285 1,944 1,285
-------- -------- -------- --------
53,968 54,422 30,287 29,546
-------- -------- -------- --------
Borrowing costs:
Bank loans and overdraft 2,493 2,750 2,367 2,426
Reset preference shares classified as liabilities 15,499 3,453 15,499 3,453
Unsecured notes 19,403 19,420 17,603 17,627
Interest penalty - Australian Taxation Office -- 4,531 -- 4,531
Finance charges relating to leases 81 196 81 196
-------- -------- -------- --------
37,476 30,350 35,550 28,233
-------- -------- -------- --------
Other expenses:
Property lease rentals 5,435 5,533 6,112 6,080
Bad debts written off and provision for
doubtful debts 5,197 394 4,862 380
9
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
--------- --------- --------- ---------
4 RETAINED PROFITS AND DIVIDENDS:
RETAINED PROFITS
Retained profits at the beginning of the financial year 127,592 123,881 125,235 124,322
Net profit 58,519 78,069 91,382 74,667
Adjustment arising from adoption of revised Accounting
Standard:
AASB 1028 "Employee Benefits" (170) -- (96) --
AASB 1044 "Provisions, contingent liabilities and
contingent assets" 22,902 -- 22,902 --
Interim dividend of 11 cents per share, fully franked at
30% (2001: 10 cents per share, fully franked at 30%) (22,195) (24,136) (22,195) (24,136)
Final dividend in prior year of 11 cents per share, fully
franked at 30% -- (22,148) (22,148)
Dividends and other equity distribution paid (22,902) -- (22,902) --
Final distribution in prior year of 1 cent per unit,
fully franked at 30%, paid by Breakwater
Island Trust to outside equity interests -- (754) -- --
Over provision of prior year final distribution payable by
Breakwater Island Trust to outside equity interests -- 150 -- --
Share buy-back -- (27,470) -- (27,470)
Reclassification of retained earnings on acquisition of
controlled entity 2,264 -- -- --
--------- --------- --------- ---------
Retained profits at the end of the financial year 166,010 127,592 194,326 125,235
========= ========= ========= =========
EQUITY
Total equity at the beginning of the financial year 469,407 620,644 435,692 590,447
Total changes in equity recognised in the Statements of
Financial Performance 58,519 78,069 91,382 74,667
Adjustment arising from adoption of revised Accounting
Standard AASB 1028 "Employee Benefits" (170) -- (96) --
Transactions with owners - dividends (22,195) (47,038) (22,195) (46,284)
- share buy-back -- (183,138) -- (183,138)
- share issue 2,497 -- 2,497 --
Over provision of prior year final distribution payable by
Breakwater Island Trust to outside equity interests -- 150 -- --
Outside equity interests in net profit -- 720 -- --
Cessation of outside equity interest (refer Note 20 (d)) (31,358) -- -- --
Reclassification of retained earnings on acquisition of
controlled entity 2,264 -- -- --
--------- --------- --------- ---------
Total equity at the end of the financial year 478,964 469,407 507,280 435,692
========= ========= ========= =========
10
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
-------- ------- ------- -------
4 RETAINED PROFITS AND DIVIDENDS (CONT'D):
FRANKING CREDITS
Balance of franking account adjusted for franking credits which will
arise from the payment of income tax provided for as Current Tax
Liabilities in the financial report 108,512 82,215 80,642 69,580
======== ======= ======= =======
Allowing for the Company's final dividend declared at the date of signing
this Financial Report, the balance of the Company's franking account would
be $70.2 million and that of the Consolidated Entity would be $98.1
million.
DIVIDEND REINVESTMENT PLAN
On 21 February 2003, the Company introduced a dividend reinvestment plan
(the "Plan"). Under the Plan, shareholders could elect to receive ordinary
shares in the Company in lieu of any ordinary dividend. In respect of the
ordinary dividend paid in February 2003, 738,625 ordinary shares were
acquired on market in accordance with calculations in the Plan rules. The
Plan was suspended on 12 June 2003.
5. EARNINGS PER SHARE:
Only ordinary shares are included in the calculation of basic earnings per
share. Reset preference shares are classified as liabilities and are not
included in ordinary shares for the purposes of calculating either basic
or diluted earnings per share (refer Note 16). Options outstanding under
the executive share option plan are considered potential ordinary shares
and have been included in diluted earnings per share (refer Note 22).
Earnings used in the calculation of basic and diluted earnings per share
comprise the net profit attributable to members of the Company of
$58,518,685 (2002: $78,069,335). The weighted average number of ordinary
shares of 201,521,688 (2002: 232,587,741) and 201,849,140 (2002:
232,852,111) has been used in the calculation of basic and diluted
earnings per share, respectively.
11
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
-------- -------- -------- --------
6 INCOME TAX:
The difference between income tax expense provided in the financial
report and the prima facie income tax expense is reconciled as
follows:
Prima facie income tax expense calculated at 30% on profit
from ordinary activities 26,724 37,592 32,848 32,726
Tax effect of permanent differences:
Dividends from controlled entities -- -- (15,579) (4,198)
Amortisation of goodwill 2,344 2,354 -- --
Brisbane hotel/casino rental disallowed 800 6,731 800 6,731
Merger costs (refer Note 29) 1,186 -- 1,186 --
Other (1,041) (161) (1,142) (839)
-------- -------- -------- --------
Income tax expense 30,013 46,516 18,113 34,420
======== ======== ======== ========
On 25 June 2002, the Full Federal Court of Australia ruled in favour of
the Australian Taxation Office to disallow certain rental deductions
claimed by the Company in relation to the lease of the Brisbane
hotel/casino complex. The cumulative effect of this decision was
recognised in the year ended 30 June 2002.
Consolidated Company
------------ -------
2003 2002 2003 2002
$ $ $ $
------- ------- ------- -------
7 REMUNERATION OF AUDITORS AND OPERATOR:
AUDITORS
The following remuneration was received or receivable by the auditor of the
Consolidated Entity, excluding Centrebet Pty Ltd, in respect of:
Audit of the financial report - Arthur Andersen -- 206,000 -- 81,000
Audit of the financial report - Ernst & Young 474,782 157,000 210,361 99,000
Regulatory and tax compliance services - Arthur Andersen -- 417,000 -- 272,000
Regulatory and tax compliance services - Ernst & Young 490,245 49,000 353,345 35,000
Internal audit - Arthur Andersen -- 238,000 -- 238,000
Internal audit - Ernst & Young 168,689 40,000 140,139 40,000
Taxation advice re merger-Ernst & Young (refer Note 29) 418,132 -- 418,132 --
Taxation advice re Centrebet divestment - Ernst & Young 54,410 -- 54,410 --
Other - Arthur Andersen -- 236,000 -- --
Other - Ernst & Young 143,859 -- -- --
Other includes international tax advice and information
technology related services (2002: tax and other
services in connection with the share buy-back and issue
of reset preference shares in the year ended 30 June 2002)
The following remuneration was received or receivable by the auditor of
Centrebet Pty Ltd, Howarth NT, in respect of audit of the financial report 25,000 25,000 -- --
12
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
-------- ------- -------- -------
7 REMUNERATION OF AUDITORS AND OPERATOR (CONT'D):
OPERATOR
Fees are payable to the Operator, B.I. Gaming Corporation,
pursuant to a Management Agreement for the operation of Conrad
Jupiters and a Management Agreement and Licence Agreement for
the operation of Conrad Treasury as follows:
Management fees 18,549 20,109 18,549 20,109
Other services 921 1,034 921 1,034
Reimbursable expenses 4,053 3,409 4,053 3,409
8 RECEIVABLES:
Trade debtors 31,263 20,304 19,273 10,365
Less provision for doubtful debts (12,472) (7,275) (10,967) (6,106)
------- ------ ------- ------
18,791 13,029 8,306 4,259
Other receivables 2,972 5,391 2,588 9,070
------- ------ ------- ------
21,763 18,420 10,894 13,329
======= ====== ======= ======
13
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
--------- --------- --------- ---------
9 OTHER CURRENT ASSETS:
Prepayments 12,104 11,096 9,793 8,964
Security deposit (refer Note 13) 5,000 5,000 5,000 5,000
Centrebet non current assets to be sold 14,745 -- -- --
--------- --------- --------- ---------
31,849 16,096 14,793 13,964
========= ========= ========= =========
10. FINANCIAL ASSETS:
Securities quoted on prescribed stock exchanges:
Units in controlled entity - at cost -- -- -- 22,131
Securities not quoted on prescribed stock exchanges:
Units/shares in controlled entities - at cost -- -- 548,119 496,976
--------- --------- --------- ---------
-- -- 548,119 519,107
========= ========= ========= =========
11. PROPERTY, PLANT AND EQUIPMENT:
LAND, BUILDINGS AND CASINO LICENCES:
Cost
Opening balance 650,201 650,201 279,880 279,880
Disposal (1,025) -- (1,025) --
--------- --------- --------- ---------
649,176 650,201 278,885 279,880
--------- --------- --------- ---------
Accumulated depreciation and amortisation
Opening balance 37,669 33,189 24,581 21,273
Depreciation and amortisation 6,291 4,480 4,835 3,308
--------- --------- --------- ---------
Closing balance 43,960 37,669 29,416 24,581
--------- --------- --------- ---------
Net book value 605,216 612,532 249,469 255,299
Transfer security deposit and prepaid rent relating to Brisbane
Hotel/Casino to other non current assets (refer Note 13) (44,528) (45,194) (44,528) (45,194)
--------- --------- --------- ---------
560,688 567,338 204,941 210,105
========= ========= ========= =========
PLANT AND EQUIPMENT:
Cost
Opening balance 456,810 412,065 260,171 224,654
Additions 64,292 46,723 47,816 36,052
Disposals (4,866) (1,978) (3,930) (535)
--------- --------- --------- ---------
Closing balance 516,236 456,810 304,057 260,171
--------- --------- --------- ---------
Accumulated depreciation
Opening balance 279,021 241,918 137,978 114,840
Depreciation 29,836 37,103 19,142 23,138
--------- --------- --------- ---------
Closing balance 308,857 279,021 157,120 137,978
--------- --------- --------- ---------
Net book value 207,379 177,789 146,937 122,193
Transfer to other current assets pending Centrebet sale
(refer Note 9) (9,464) -- -- --
--------- --------- --------- ---------
197,915 177,789 146,937 122,193
========= ========= ========= =========
LEASED EQUIPMENT:
Cost (no movements) 8,164 8,164 8,164 8,164
--------- --------- --------- ---------
Accumulated amortisation
Opening balance 6,424 4,840 6,424 4,840
Amortisation 1,501 1,584 1,501 1,584
--------- --------- --------- ---------
Closing balance 7,925 6,424 7,925 6,424
--------- --------- --------- ---------
Net book value 239 1,740 239 1,740
--------- --------- --------- ---------
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET 758,842 746,867 352,117 334,038
========= ========= ========= =========
14
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
11. PROPERTY, PLANT AND EQUIPMENT (CONT'D):
From 1 July 2001, amounts paid in connection with the rental of the
Brisbane hotel/casino complex have been reclassified (refer Note 13). This
reclassification is reflected in the opening balances of cost and
accumulated depreciation and amortisation for land, buildings and casino
licences above.
Land, buildings and casino licences, at cost, comprise the freehold land
and buildings (including casino licence) of Conrad Jupiters on the Gold
Coast (including proximate lands), the leasehold improvements (including
casino licence) of Conrad Treasury in Brisbane and the freehold land and
buildings (including casino licence) of Breakwater Island Trust. The land,
buildings and casino licence of Breakwater Island Trust are carried at the
cost to the Consolidated Entity when those assets were first consolidated
at 30 June 2000.
These assets were valued using a discounted cashflow methodology by the
Directors at $1,110 million on 30 June 2003. This valuation is
incorporated in the financial report by way of note only.
The valuations reflect the future business cashflows anticipated from the
properties and do not determine individual values for land and buildings
nor specifically ascribe a value to the casino licences. Accordingly, an
accurate or meaningful assessment of separate values of the land and
casino licences cannot be made.
Land and buildings (including the casino licence) in respect of Conrad
Treasury are subject to a 75 year lease from the Queensland Government
which commenced in April 1995.
As most assets are integral to the operations of the Consolidated Entity
and as there is no intention to sell them, capital gains tax has not been
taken into account.
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
--------- --------- -------- --------
12. INTANGIBLES:
Goodwill, at cost 123,028 123,971 -- --
Accumulated amortisation (29,851) (22,040) -- --
--------- --------- -------- --------
Goodwill, net 93,177 101,931 -- --
Transfer to current assets pending Centrebet sale
(refer Note 9) (4,919) -- -- --
--------- --------- -------- --------
88,258 101,931 -- --
--------- --------- -------- --------
Management contract, at cost 11,820 11,820 11,820 11,820
Accumulated amortisation (2,146) (1,623) (2,146) (1,623)
--------- --------- -------- --------
Management contract, net 9,674 10,197 9,674 10,197
--------- --------- -------- --------
Deferred borrowing expenses, at cost 14,923 14,923 14,923 14,923
Accumulated amortisation (6,164) (4,220) (6,164) (4,220)
--------- --------- -------- --------
Deferred borrowing expenses, net 8,759 10,703 8,759 10,703
--------- --------- -------- --------
Total intangibles, net 106,691 122,831 18,433 20,900
========= ========= ======== ========
15
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
------- ------- ------- -------
13. OTHER NON CURRENT ASSETS:
Security deposit -- 5,000 -- 5,000
Prepaid rent 39,000 34,666 39,000 34,666
Hedge receivable - restatement of unsecured notes
hedge (refer Notes 1 and 17) -- 24,052 -- 24,052
------- ------- ------- -------
Total other non current assets 39,000 63,718 39,000 63,718
======= ======= ======= =======
In 1995, at the commencement of the 75 year lease of the Brisbane
hotel/casino, a security deposit of $50.0 million was paid to the
Queensland Government to secure future lease rentals. The deposit is
refunded in each of the first ten years of the lease at $5.0 million per
annum.
The rental payments under the lease comprise $8.0 million per annum in
each of the first ten years of the lease and $1.0 million per annum in
each of the remaining 65 years of the lease. In order to match the expense
with the economic benefits expected to be consumed from the leased asset
in each period, rent expense of $3.7 million per annum is recognised in
each of the first ten years of the lease and $1.7 million per annum is to
be recognised in each of the remaining 65 years of the lease. The excess
of the cash rental payments over the rent expense recognised during the
first ten years of the lease gives rise to prepaid rent which will reduce
after the initial ten year period.
The security deposit and prepaid rent amounts were previously included in
property, plant and equipment.
14. PAYABLES:
Trade creditors 33,947 31,340 16,036 12,684
Other creditors and accruals 53,539 60,412 36,268 40,841
------ ------ ------ ------
87,486 91,752 52,304 53,525
====== ====== ====== ======
16
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
------- ------- ------- -------
15. PROVISIONS:
CURRENT:
Employee benefits 12,802 13,473 11,615 9,660
Dividends -- 22,148 -- 22,148
Self insurance - Queensland workers' compensation 2,565 -- 2,392 --
Other 4,829 2,701 340 208
------- ------- ------- -------
20,196 38,322 14,347 32,016
======= ======= ======= =======
NON-CURRENT:
Employee benefits 9,705 10,622 7,273 9,487
======= ======= ======= =======
Aggregate employee benefits 22,507 24,095 18,888 19,147
======= ======= ======= =======
The number of employees on a full time equivalent basis
as at 30 June was: 4,235 4,164 3,365 3,369
In accordance with the WorkCover Queensland Act 1996, the Consolidated
Entity has obtained insurance from a third party to limit its exposure in
respect of any individual claim to a maximum of $0.5 million. In
accordance with that Act the Consolidated Entity has provided a Bank
Guarantee in favour of WorkCover Queensland for $5.0 million. WorkCover
Queensland has funded the Consolidated Entity for workers' compensation
claims related to injuries sustained by its Queensland employees prior to
1 July 2002 to a limit of $2.2 million.
16. INTEREST BEARING LIABILITIES:
Unsecured notes 202,096 238,474 202,096 238,474
Reset preference shares - unsecured 190,174 190,174 190,174 190,174
Commercial bills - unsecured 45,000 -- 45,000 --
Commercial bills - secured -- 2,700 -- --
Lease liabilities - secured 347 2,174 347 2,174
-------- -------- -------- --------
437,617 433,522 437,617 430,822
Less current maturities:
Lease liabilities (347) (1,827) (347) (1,827)
Commercial bills - unsecured (45,000) -- (45,000) --
-------- -------- -------- --------
(45,347) (1,827) (45,347) (1,827)
-------- -------- -------- --------
Non-current borrowings 392,270 431,695 392,270 428,995
======== ======== ======== ========
17
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
16. INTEREST BEARING LIABILITIES (CONT'D):
At 30 June 2003, the Consolidated Entity had committed financing
facilities available to it of $622.6 million (2002: $628 million)
comprising unsecured notes repayable in March 2006, reset preference
shares, an unsecured revolving credit facility which expires in April
2004, an unsecured commercial bill standby facility, overdraft facilities
and lease facilities.
The notes were issued to institutional investors in the United States of
America in March 1999 at a face value of US$135 million and will mature in
March 2006. The notes were registered for trading with the U.S. Securities
and Exchange Commission in September 1999 and are unsecured senior debt of
the Consolidated Entity. The notes rank equally with all other unsecured
senior debt of the Consolidated Entity, are primary obligations of
Jupiters Limited and are guaranteed by its operating controlled entities.
The notes were issued in U.S. dollars at a fixed coupon of 8.5% and at a
discount of 0.64%. A cross currency interest rate swap agreement has been
entered into to convert the principal and coupon into Australian dollars
at a fixed rate of 9.0% until March 2004.
The notes are issued under an indenture which sets out specific covenants.
The full amount outstanding under the indenture becomes payable in various
circumstances detailed in the indenture including if coupon payments are
not made when due or when transactions are entered into that would cause
certain covenants relating to interest cover to be breached.
1,901,735 reset preference shares ("RPS") were issued on 11 April 2002 at
a face value of $100 each with a coupon of 8.15% per annum. The coupon is
payable semi-annually, is cumulative and ranks senior to the payment of
ordinary dividends. The RPS have a ten year term with specified terms able
to be reset by the Company at the end of year five. Holders of RPS have
the ability to request conversion of their securities to ordinary shares
in Jupiters Limited and the Company may convert, repurchase such
securities or sell them to a third party. Furthermore, the Company may
repurchase the securities at the time of reset, maturity or if the coupon
ceases to be tax deductible. Holders of RPS generally have no voting
rights except in limited circumstances. The rights of holders of RPS are
subordinated to all claims except ordinary shareholders. The RPS are
quoted for trading on the Australian Stock Exchange. TABCORP Holdings
Limited has offered to acquire the RPS (refer Note 29).
The unsecured revolving credit facility is for $150 million and is
provided by a bank syndicate. The average interest rate applicable to
amounts drawn under this facility during the financial year was 4.76%
(2002: 4.68%).
The full amounts outstanding under the revolving credit facility and the
commercial bill facilities become immediately payable (at the lenders'
option) in various circumstances detailed in the facility agreements
including if repayments are not made when due or certain financial
covenants relating to interest cover and gearing levels are breached.
The lease liabilities are secured by the specific assets that are subject
to the finance leases that had a carrying value of $0.2 million at balance
date. The implicit interest rates on finance leases range from 5.87% to
6.18%. Refer to Note 21(c) for details on the timing and amount of future
lease payments.
In addition to the revolving credit facility, the Consolidated Entity has
access to a commercial bill standby facility of $50 million. $7 million of
this facility has been applied towards a bank guarantee in favour of the
State of Queensland in connection with the Company's performance
undertakings related to the development of a convention and exhibition
centre. A further $5 million of this facility has been applied towards a
bank guarantee in favour of WorkCover Queensland in connection with the
Consolidated Entity's self insurance of its Queensland workers'
compensation liabilities (refer Notes 1 and 15). The commercial bill
standby facility is an unsecured facility that is provided on a revolving
basis. To the extent that the amounts owing under the facility are repaid,
the facility is available to be redrawn.
The Consolidated Entity also has a working capital facility for the
purposes of normal operating activities. That facility includes various
electronic banking capabilities, credit card services and minor temporary
overdraft limits.
The above facilities are subject to periodic review by the provider and
the terms of the facilities may be extended at each review.
18
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
-------- --------- -------- ---------
17 OTHER CURRENT LIABILITIES:
Hedge payable - restatement of unsecured notes
hedge (refer Notes 1 and 13) 12,326 -- 12,326 --
======== ========= ======== =========
18 CONTRIBUTED EQUITY:
ORDINARY SHARES
Balance at beginning of year 310,457 466,125 310,457 466,125
Shares issued - exercise of options 67 -- 67 --
Shares issued - consideration for takeover of
Breakwater Island Trust 2,430 -- 2,430 --
Shares bought back - 40,011,700 shares -- (155,668) -- (155,668)
-------- --------- -------- ---------
Balance at end of year
201,784,202 ordinary shares (2002: 201,345,729) 312,954 310,457 312,954 310,457
======== ========= ======== =========
SHARE BUY-BACK
On 11 April 2002 a buy-back was completed of 40,011,700 ordinary shares,
representing 16.6% of ordinary shares on issue on that date, under the
terms of buy-back agreements approved by shareholders. The total
consideration paid for shares bought back plus incidentals was
$183,138,776 being an average cost of $4.54 per share. In accordance with
a private ruling from the Australian Taxation Office, 85% (ie.
$155,667,960) of the total consideration was allocated as a return of
share capital and 15% (ie. $27,470,816) was treated as a fully franked
dividend and allocated against retained profits.
TERMS AND CONDITIONS
Holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at shareholders'
meetings. In the event of winding up of the Company, ordinary shareholders
rank after all other shareholders and creditors and are fully entitled to
any proceeds of liquidation. TABCORP Holdings Limited has offered to
acquire the issued ordinary shares (refer Note 29).
During the previous year, reset preference shares were issued and are
classified as interest bearing liabilities (refer Note 16).
19. OUTSIDE EQUITY INTEREST:
At 30 June 2002, the outside equity interest in the Consolidated Entity's
retained profits was $5,071,000 and in the Consolidated Entity's
contributed equity was $26,287,000 (total: $31,358,000).
19
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
---- ---- ---- ----
20. NOTES TO THE STATEMENTS OF CASHFLOWS:
(a) For the purposes of the Statements of Cash Flows, cash includes
cash on hand and in banks and investments in money market
instruments, net of outstanding bank overdrafts. Investments in
money market instruments mature within approximately 30 days and
had an average yield of 4.70% (2002: 4.65%).
(b) Reconciliation of net cash provided by operating activities to
net profit before outside equity interest.
Net profit before outside equity interest 59,068 78,789 91,382 74,667
Depreciation of property, plant and equipment 43,688 39,873 27,819 22,845
(Profit)/loss on sale of plant and equipment (14) 144 (32) 151
Amortisation of other non-current
assets 10,280 14,549 2,468 6,701
Dividends through intercompany loan
accounts -- -- (51,931) (13,995)
Decrease/(increase) in assets (5,193) 38,788 (1,956) 7,133
Increase/(decrease) in liabilities (1,082) (15,370) 1,043 6,548
Decrease in income tax provisions and deferred
tax balances (21,186) (20,583) (16,914) (19,598)
------ ------- ------ ------
Net cash provided by operating activities 85,561 136,190 51,879 84,452
====== ======= ====== ======
(c) Details of the Consolidated Entity's financing facilities are
included in Note 16.
(d) In December 2002, the Consolidated Entity increased its controlling
interest of Breakwater Island Trust from 47.5% to 100%. The cash
consideration paid including acquisition costs totalled $26.6
million. Assets acquired included current assets, property, plant
and equipment totalling $64.5 million, offset by current and non
current liabilities acquired totalling $8.1 million. The resulting
discount on acquisition was $0.6 million. Shares to the value of
$2.4 million (423,723 Jupiters Limited ordinary shares) were issued
as part of the consideration.
20
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
Consolidated Company
------------ -------
2003 2002 2003 2002
$000 $000 $000 $000
---- ---- ---- ----
21. COMMITMENTS:
(A) CAPITAL EXPENDITURE COMMITMENTS
At 30 June 2003, orders had been placed for the completion of
building works and purchase of furniture and equipment amounting to
$14.1 million (2002: $15 million) and are payable within one year.
The Company has entered into an agreement with the Queensland
Government to develop the State funded Gold Coast Convention &
Exhibition Centre.
(B) NON-CANCELLABLE OPERATING LEASES
Future non-cancellable operating leases not provided for in the
financial report are payable as follows:
Not later than one year 6,181 6,383 3,200 3,200
Later than one year but not later than five years 8,861 12,401 4,800 6,800
Later than five years 73,200 74,400 73,200 74,400
------ ------ ------ ------
88,242 93,184 81,200 84,400
====== ====== ====== ======
(C) FINANCE LEASES
Finance lease expenditure is payable as follows:
Not later than one year 356 1,919 356 1,919
Later than one year but not later than five years -- 356 -- 356
------ ------ ------ ------
356 2,275 356 2,275
Future finance charges (9) (101) (9) (101)
------ ------ ------ ------
Net finance lease liability 347 2,174 347 2,174
------ ------ ------ ------
Reconciled to:
Current liability 347 1,827 347 1,827
Non-current liability -- 347 -- 347
------ ------ ------ ------
Total lease liability (Note 16) 347 2,174 347 2,174
====== ====== ====== ======
21
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
22. REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS:
Consolidated Company
------------ -------
2003 2002 2003 2002
---- ---- ---- ----
(A) DIRECTORS' REMUNERATION
The numbers of Directors of the Company who were paid, or were due
to be paid, income directly or indirectly from the Company or any
related party, as shown in the following bands, were:
$ 0 - $ 9,999 -- 1
$ 10,000 - $ 19,999 -- 1
$ 50,000 - $ 59,999 -- 2
$ 80,000 - $ 89,999 -- 1
$ 90,000 - $ 99,999 1 --
$ 100,000 - $ 109,999 -- 1
$ 110,000 - $ 119,999 2 1
$ 220,000 - $ 229,999 1 1
$ 1,140,000 - $ 1,149,999 -- 1
$ 1,210,000 - $ 1,219,999 1 --
The aggregate income of the Directors referred
to above: $1,755,332 $1,788,355
========== ==========
The total of all income paid or payable, directly or indirectly,
from the respective entities of which they are a Director, or from
any related party, to all the Directors of each entity in the
Consolidated Entity was $1,901,096 (2002: $1,842,355).
(B) EXECUTIVE OFFICERS' REMUNERATION
Number of executive officers whose remuneration
was within the following bands:
$ 410,000 - $ 419,999 1 -- 1 --
$ 420,000 - $ 429,999 -- 1 -- 1
$ 540,000 - $ 549,999 -- 1 -- 1
$ 550,000 - $ 559,999 1 -- 1 --
$ 570,000 - $ 579,999 -- 1 -- 1
$ 610,000 - $ 619,999 1 -- 1 --
The aggregate income of the executives referred
to above: $1,589,188 $1,532,776 $1,589,188 $1,532,776
========== ========== ========== ==========
In addition, under management agreements for the operation of
Conrad Jupiters and Conrad Treasury, the Operator provides services
through executive employees of the Operator.
Directors and executive officers' income does not include insurance
premiums paid by the Consolidated Entity in respect of Directors'
and Officers' liabilities insurance contracts, as the insurance
policies do not specify premiums paid in respect of individual
executives.
22
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
22. REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS (CONT'D):
(C) EXECUTIVE SHARE OPTION PLAN
An executive share option plan permitted full time and permanent part
time employees of the Consolidated Entity to be issued with options
over the unissued ordinary shares of Jupiters Limited. The options
are issued for a term of 10 years and are exercisable beginning on
the third anniversary of the date of grant. The options cannot be
transferred and are not quoted on the Australian Stock Exchange. The
percentage of options which can be exercised will be determined by
the Company's performance as measured by Total Shareholder Return
("TSR") relative to the TSR's of the individual companies in a peer
group. TSR is calculated according to a formula based on a
combination of share price appreciation and dividends. The peer group
comprises 50 listed industrial companies nearest in size to Jupiters
Limited (25 on either side) in terms of market capitalisation of
ordinary shares, excluding companies whose sole activity or business
is that of funds management, investment, trusteeship or internet
business. After three years have elapsed from the date of issue of
the options, 50% of the options vest in the relevant employee and may
be exercised where TSR equals the TSR of 55% of the companies in the
peer group. An additional 2% of the options vest and may be exercised
for each percentage point exceeding the TSR of 55% of companies in
the peer group. 100% of the options vest and may be exercised where
TSR equals or exceeds the TSR of 80% of companies in the peer group.
Unvested options lapse.
The options were valued at $1.13 on average on the initial grant date
based on a calculation using the internationally accepted Black
Scholes option pricing methodology performed by an independent
specialist. However, the percentage of options which can be exercised
will be determined by the Company's performance as measured by Total
Shareholder Return ("TSR") relative to the TSR's of the individual
companies in a peer group. TABCORP Holdings Limited has offered to
acquire all outstanding options (refer Note 29).
For the purposes of valuing income of Directors and Executive
Officers in Note 22(a) and 22 (b) above, a pro rata portion of the
full options valuation determined at the initial grant date has been
allocated to the year ended 30 June 2003 (one third). Comparatives
have been restated for consistency. These allocations of option
values have not been expensed in the Statements of Financial
Performance.
There were no options granted during the year. 75,250 options were
forfeited during the year and 14,750 options were exercised. The
closing balance of options on issue at 30 June 2003 was 1,570,000.
The market value of the Company's ordinary shares at 30 June 2003 was
$6.41 each.
23. RELATED PARTIES:
The names of the Directors of Jupiters Limited holding office during the
year were:
Mr L.J. Willett, AO - Chairman
Mr R.A. Hines - Managing Director
Sir F. Moore, AO - Director
Ms P. Morris, AM - Director
Mr J.D. Story - Director
Mr J.D. Story is a Partner of Corrs Chambers Westgarth, the Consolidated
Entity's solicitors. During the year amounts were paid or are payable to
the solicitors, representing legal fees incurred on a normal commercial
basis and amounted to $3,311,040 (2002: $2,525,312). Of this amount
$502,871 (2002: $132,435) was owing at 30 June 2003.
Mr J. D. Story is Chairman of the committee established to oversee the
sale of the business of Centrebet Pty Ltd. As compensation for his
services to this committee, Mr Story will receive $10,000 at the earliest
of the completion of the sale or 19 December 2003.
Ms P. Morris is Chairman of the committee established to oversee due
diligence in respect of the merger with TABCORP Holdings Limited. Ms
Morris will receive $25,000 at the earliest of the completion of the
merger or 19 December 2003.
23
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
23. RELATED PARTIES (CONT'D):
The Company entered into the following transactions during the year with
related parties in the wholly owned group:
- loans were advanced and repayments received on intercompany accounts;
- gaming technology and related services were provided;
- royalties were paid in respect of the keno rights held by Breakwater
Island Trust;
- keno agency commissions were paid to Breakwater Island Trust; and
- management fees were paid by Breakwater Island Trust.
A $20 million loan advanced by Jupiters Limited to a controlled entity in
a prior period has no fixed term and attracts interest of 9.0% per annum.
All other loans were provided interest free with no fixed terms. The
other transactions within the wholly owned group were conducted on
commercial terms and conditions.
Apart from the details disclosed in these financial reports, no Director
has entered into a material contract with the Company or the Consolidated
Entity since the end of the previous financial year and there were no
contracts involving Directors' interests existing at year end.
The following table shows the interests of Directors in the Company's
ordinary shares as at 30 June 2003 and the movements in any such holdings
since 1 July 2002.
2003 2002
------- --------
Directors:
Opening balance 114,330 206,973
Purchases 326 34,962
Retirement of Director -- (127,605)
------- -------
Closing balance 114,656 114,330
======= =======
Directors also hold 530 Reset Preference Shares
Details of other related party transactions are referred to in Notes 22
and 24
24
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
24. CONTROLLED ENTITIES:
INVESTMENT IN CONTROLLED ENTITIES:
Entity Note Class of Equity Ownership
------ ---- --------------- ---------
2003 2002
% %
---- ----
Jupiters Trust Units 100 100
Breakwater Island Trust Units 100 48
Breakwater Island Limited Ord. Shares 100 100
Jupiters Custodian Pty Ltd Ord. Shares 100 100
Jupiters Gaming Pty Ltd Ord. Shares 100 100
Jupiters Machine Gaming Pty Ltd Ord. Shares 100 100
Centrebet Pty Ltd Ord. Shares 100 100
Jupiters Internet Gaming Pty Ltd Ord. Shares 100 100
jupiters.com Pty Ltd Ord. Shares 100 100
AWA Limited (a) Ord. Shares 100 100
Jupiters International Pty Ltd (a) Ord. Shares 100 100
AWA Wagering Systems Pty Ltd (a) Ord. Shares 100 100
ATL Pty Ltd (a) A,B & Pref. 100 100
AWA Research and Development Pty Ltd (a) Ord. Shares 100 100
AWA Research Marketing Pty Ltd (a) Ord. Shares 100 100
AWA Gaming Services Pty Ltd (a) Ord. Shares 100 100
AWA Infosec Pty Ltd (a) Ord. Shares 100 100
AWA Infosec Trust Units 100 100
Jupiters Gaming (NSW) Pty Ltd Ord. Shares 100 100
(formerly Club Gaming Systems Pty Ltd)
Club Gaming Systems (Holdings) Pty Ltd Ord. Shares 100 100
The CGS Trust Units 100 100
Palatron Pty Ltd (a) Ord. Shares 100 100
Syndicate (Co.1) Pty Ltd (a) Ord. Shares 100 100
AWA Enterprises Pty Ltd (a) Ord. Shares 100 100
AWA Enterprises Trust Units 100 100
AWA Investor (No.2) Pty Ltd (a) Ord. Shares 100 100
AWA Investor (No.4) Pty Ltd (a) Ord. Shares 100 100
AWA Investor (No.5) Pty Ltd (a) Ord. Shares 100 100
AWA Investor (No.6) Pty Ltd (a) Ord. Shares 100 100
AWA Gaming Machines Pty Ltd (a) Ord. Shares 100 100
AWA Microelectronics Pty Ltd Ord. Shares 100 89
AWA New Media Pty Ltd Ord. Shares 100 100
Hotel Gaming Systems Pty Ltd Ord. Shares 100 100
Sunshinelink Pty Ltd Ord. Shares 100 100
Radcoy (No.1) Limited Ord. Shares 100 100
Expanse Electronics Limited Ord. Shares 100 100
Millers Mechanical Equipment (NZ) Limited Ord. Shares 100 100
Penchant Pty Ltd Ord. & Pref. Shares 100 100
Macquarie Syndication (No.1) Pty Ltd Ord. & Pref. Shares 100 100
Jupiters UK Limited Ord. Shares 100 100
A.C.N. 082 231 383 Pty Ltd Ord. Shares 100 100
(formerly Jupiters Gaming (NSW) Pty Ltd)
Centrebet Limited Ord. Shares 100 --
AWA Technology & Environmental Services Pty Ltd Ord. Shares 100 --
25
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
24. CONTROLLED ENTITIES (CONT'D):
NOTES:
(a) These companies are parties to a Deed of Cross Guarantee under
which each company guarantees the debts of the others. By
entering into the deed, the wholly owned entities have been
relieved from the requirements to prepare a financial report
and Directors' Report under Class Order 98/1418 (as amended by
Class Order 98/2017) issued by the Australian Securities and
Investments Commission. These companies represent a "Closed
Group" for the purposes of the Class Order and as there are no
other parties to the Deed of Cross Guarantee that are
controlled by AWA Limited, they also represent the "Extended
Closed Group".
(b) All controlled entities are incorporated in Australia except
for Expanse Electronics Limited and Millers Mechanical
Equipment (NZ) Limited which are incorporated in New Zealand
and Centrebet Limited and Jupiters UK Limited which are
incorporated in the United Kingdom.
(c) The ultimate controlling entity of the Consolidated Entity is
Jupiters Limited.
Year Ended Year Ended
30 June 2003 30 June 2002
$000 $000
-------- --------
STATEMENT OF FINANCIAL PERFORMANCE OF THE CLOSED GROUP:
Revenue from ordinary activities:
Gaming equipment sales and technology services 45,738 41,638
Trust distribution 9,959 10,200
Other revenue 677 123
-------- --------
Total revenue from ordinary activities 56,374 51,961
Cost of goods sold (1,424) (1,983)
Employee related expenses (22,064) (17,381)
Depreciation and amortisation expense (1,248) (683)
Other expenses from ordinary activities (21,801) (22,799)
-------- --------
Profit from ordinary activities 9,837 9,115
Income tax expense (2,335) (568)
-------- --------
Net profit 7,502 8,547
======== ========
As at As at
30 June 2003 30 June 2002
$000 $000
---- ----
STATEMENT OF FINANCIAL POSITION OF THE CLOSED GROUP:
Total current assets 57,949 53,895
Total non-current assets 8,773 8,925
-------- --------
Total assets 66,722 62,820
-------- --------
Total current liabilities 11,543 10,966
Total non-current liabilities 50 4,268
-------- --------
Total liabilities 11,593 15,234
-------- --------
Net assets 55,129 47,586
======== ========
Contributed equity 42,931 42,931
Retained earnings/(accumulated losses) 12,198 4,655
-------- --------
Total equity 55,129 47,586
======== ========
26
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
25. SUPERANNUATION COMMITMENTS:
The Consolidated Entity contributed in respect of employees to the
Jupiters Limited Superannuation Fund, Host Plus Queensland Pty Ltd
trading as Host Super, Sunsuper Superannuation Fund, Superannuation Trust
of Australia, MLC Employee Retirement Plan, CARE Superannuation Plan and
JUST Super.
All funds provide lump sum accumulation type benefits payable on
retirement, early retirement, death, disablement and resignation.
Beyond the agreed contributions to the various funds, Jupiters Limited
has no financial commitment to the funds.
At 30 June 2003 Jupiters Limited Superannuation Fund had sufficient net
assets to satisfy all benefits that would have been vested in the event
of termination of the fund, voluntary termination of employment of all
members and compulsory termination of the employment of all members.
The Company self-funds retirement benefits for 4 non-executive Directors
(2002: 4). During the year ended 30 June 2003, a provision of $105,000
(2002: $117,500) was made in this regard. A controlled entity (Breakwater
Island Limited) also self-funds retirement benefits for all of its
Directors. During the year a provision of $237,377 (2002: $296,646) was
made in this regard.
26. SEGMENT INFORMATION:
(A) SEGMENT REPORTING
Inter-segment pricing is determined on the basis of cost or cost
plus a mark up of 10% to 30%. Segment results, assets and
liabilities include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
Unallocated items mainly comprise income-earning assets and
related revenue, borrowings and related expenses and goodwill and
related amortisation. Segment capital expenditure is the total
cost incurred during the year to acquire segment assets.
(B) BUSINESS SEGMENTS
The Consolidated Entity comprises the following business segments,
based on the Consolidated Entity's management reporting system.
Land Based Operations
Comprises hotel and casino operations at Hotel Conrad and Jupiters
Casino (Gold Coast), Hotel Conrad and Treasury Casino (Brisbane)
and Jupiters Townsville Hotel and Casino and Breakwater Marina
(Townsville).
Wide-Area Operations
Comprises keno operations in Queensland and New South Wales and
gaming machine monitoring and related activities in Queensland.
Technology Operations
Comprises national gaming and information technology service
provider AWA Technology Services and Jupiters Technology.
Sportsbetting Operations
Comprises Centrebet sportsbetting business.
(C) GEOGRAPHICAL SEGMENT
The Consolidated Entity's business segments operate predominantly
in one geographical segment, Australia.
27
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
26. SEGMENT INFORMATION (CONT'D):
SPORTS- NET
LAND BASED WIDE-AREA TECHNOLOGY BETTING INTEREST UNALLOCATED ELIMINATIONS CONSOLIDATED
BUSINESS SEGMENTS $000 $000 $000 $000 $000 $000 $000 $000
--------- ----------- ----------- --------- ---------- ----------- ----------- -----------
2003
REVENUE
External sales 599,241 122,861 30,301 30,818 1,790 2,701 -- 787,712
Intersegment revenue 838 -- 26,846 -- -- 51,931 (79,615) --
--------- ----------- ----------- --------- ---------- ----------- ----------- -----------
Total segment revenue 600,079 122,861 57,147 30,818 1,790 54,632 (79,615) 787,712
--------- ----------- ----------- --------- ---------- ----------- ----------- -----------
RESULT
Segment result 111,615 33,383 2,726 5,799 (35,685) (22,055) (6,702) 89,081
--------- ----------- ----------- --------- ---------- ----------- -----------
Income tax expense (30,013)
-----------
Net profit - before outside
equity interests 59,068
Net profit - attributable
to outside equity interests (549)
-----------
Net profit - attributable
to members of the Company 58,519
===========
ASSETS
Segment assets 902,806 46,309 20,367 30,765 -- 718,807 (666,638) 1,052,416
===========
LIABILITIES
Segment liabilities 59,299 17,336 8,643 14,355 -- 537,390 (63,571) 573,452
===========
OTHER INFORMATION
Acquisition of property,
plant and equipment
and intangible assets 46,851 7,761 2,430 6,773 -- 477 -- 64,292
===========
Depreciation and
amortisation 29,693 10,873 1,354 4,134 -- 11,018 (3,104) 53,968
===========
28
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
26. SEGMENT INFORMATION (CONT'D):
SPORTS- NET
LAND BASED WIDE-AREA TECHNOLOGY BETTING INTEREST UNALLOCATED ELIMINATIONS CONSOLIDATED
BUSINESS SEGMENTS $000 $000 $000 $000 $000 $000 $000 $000
--------- ----------- ----------- --------- ---------- ----------- ----------- -----------
2002
REVENUE
External sales 607,529 117,812 31,273 30,417 2,826 6,416 -- 796,273
Intersegment revenue 795 -- 22,907 -- 13,746 (37,448) --
--------- ----------- ----------- --------- ---------- ----------- ----------- -----------
Total segment revenue 608,324 117,812 54,180 30,417 2,826 20,162 (37,448) 796,273
--------- ----------- ----------- --------- ---------- ----------- ----------- -----------
RESULT
Segment result 142,103 25,306 (1,884) 11,631 (27,524) (12,467) (11,860) 125,305
--------- ----------- ----------- --------- ---------- ----------- -----------
Income tax expense (46,516)
-----------
Net profit - before
outside equity interests 78,789
Net profit -
attributable
to outside equity
interests (720)
-----------
Net profit -
attributable
to members of the
Company 78,069
===========
ASSETS
Segment assets 908,587 46,789 14,956 30,820 -- 652,678 (586,499) 1,067,331
===========
LIABILITIES
Segment liabilities 60,356 17,889 8,552 15,081 -- 491,824 4,222 597,924
===========
OTHER INFORMATION
Acquisition of
property, plant
and equipment
and intangible
assets 35,531 2,787 579 4,118 -- 3,708 -- 46,723
===========
Depreciation and
amortisation 26,969 13,972 851 3,109 -- 13,393 (3,872) 54,422
===========
29
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
27. FINANCIAL INSTRUMENTS:
(A) OBJECTIVES FOR HOLDING DERIVATIVE FINANCIAL INSTRUMENTS
The Consolidated Entity uses derivative financial instruments to
manage its exposure to the risk of movement in interest rates and
foreign currency on long term borrowings. In this regard, the
Consolidated Entity has entered into a cross currency interest
rate swap agreement (refer Note 16).
(B) INTEREST RATE RISK EXPOSURES
The Consolidated Entity is exposed to interest rate risk through
primary financial assets and liabilities, modified through
derivative financial instruments such as interest rate swaps and
offset agreements. The following tables summarise interest rate
risk for the Consolidated Entity, together with effective interest
rates as at balance date.
30
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
27. FINANCIAL INSTRUMENTS (CONT'D):
(B) INTEREST RATE RISK EXPOSURES (CONT'D)
FIXED INTEREST
2003 RATE MATURING IN
- ---- ------------------------------
FLOATING OVER 1 MORE NON-
INTEREST 1 YEAR TO THAN INTEREST AVERAGE
RATE (I) OR LESS 5 YEARS 5 YEARS BEARING TOTAL INTEREST RATE
-------- ------- ------- ------- ------- ----- ------------------
$000 $000 $000 $000 $000 $000 FLOATING FIXED
% %
Financial Assets
Cash 77,933 -- -- -- -- 77,933 4.69% --
Trade debtors (net) -- -- -- -- 18,791 18,791 -- --
------ ------- -------- -------- ------- -------- ------ ------
Financial Liabilities
Trade creditors -- -- -- -- 33,947 33,947 -- --
Finance lease liabilities -- 347 -- -- -- 347 -- 5.98%
Unsecured notes (ii) -- -- 202,096 -- -- 202,096 -- 8.5%
Hedge payable - restatement of
unsecured notes hedge (ii) -- 12,326 -- -- -- 12,326 -- --
Unsecured commercial bills -- 45,000 -- -- -- 45,000 -- 5.59%
Reset preference shares -- -- -- 190,174 -- 190,174 -- 8.15%
------ ------- -------- -------- ------- --------
Net Financial Assets/(Liabilities) 77,933 (57,673) (202,096) (190,174) (15,156) (387,166)
------ ------- -------- -------- ------- --------
FIXED INTEREST
2002 RATE MATURING IN
- ---- -------------------------------
FLOATING OVER 1 MORE NON-
INTEREST 1 YEAR TO THAN INTEREST AVERAGE
RATE (I) OR LESS 5 YEARS 5 YEARS BEARING TOTAL INTEREST RATE
-------- ------- ------- ------- ------- ----- ----------------
$000 $000 $000 $000 $000 $000 FLOATING FIXED
% %
Financial Assets
Cash 80,301 -- -- -- -- 80,301 4.66% --
Bills of exchange -- 5,000 -- -- -- 5,000 -- 4.65%
Trade debtors (net) -- -- -- -- 13,029 13,029 -- --
Hedge receivable - restatement
of unsecured notes hedge (ii) -- -- 24,052 -- -- 24,052 -- --
------ ----- -------- -------- ------- -------- ----- -----
Financial Liabilities
Trade creditors -- -- -- -- 31,340 31,340 -- --
Finance lease liabilities -- 1,827 347 -- -- 2,174 -- 6.26%
Unsecured notes (ii) -- -- 238,474 -- -- 238,474 -- 8.50%
Reset preference shares -- -- -- 190,174 -- 190,174 -- 8.15%
Bill facilities -- -- 2,700 -- -- 2,700 -- 5.80%
------ ----- -------- -------- ------- --------
Net Financial Assets/(Liabilities) 80,301 3,173 (217,469) (190,174) (18,311) (342,480)
------ ----- -------- -------- ------- --------
(i) Floating interest rates represent the most recently determined rate
applicable to the instrument at balance date.
(ii) A cross currency interest rate swap converts the entire principal and
coupon of the unsecured notes into Australian dollars at a fixed rate of
interest until March 2004 net of the restatement of the unsecured notes
(refer Notes 13 and 17).
31
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
27. FINANCIAL INSTRUMENTS (CONT'D):
(C) CREDIT RISK EXPOSURES
Credit exposure represents the extent of credit related losses that
the Consolidated Entity may be subject to on amounts to be exchanged
under the cross currency interest rate swap agreement or to be
received from financial assets. The Consolidated Entity, whilst
exposed to credit related losses in the event of non-performance by
the counterparty to the cross currency interest rate swap agreement,
does not expect the counterparty to fail to meet its obligations
given its high credit rating. Receivables due from major
counterparties are not normally secured by collateral, however, the
creditworthiness of counterparties is regularly monitored.
The Consolidated Entity's exposures to items on the statement of
financial position credit risk are as indicated by the carrying
amounts of its financial assets.
The major geographic concentrations of credit risk arise from the
location of the counterparties to the Consolidated Entity's
financial assets as shown in the following table.
Location of Credit Risk - Net Trade Debtors Consolidated
------------
2003 2002
$ 000 $ 000
------- -------
Australia 12,458 11,186
Asia 6,122 1,504
Other 211 339
------ ------
Net Trade Debtors (Note 8) 18,791 13,029
====== ======
(D) NET FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The carrying amounts of financial assets and liabilities approximate
their estimated fair values except as noted below. The net fair
value of a financial asset or a financial liability is the amount at
which the asset could be exchanged, or liability settled in current
transactions between willing parties after allowing for transaction
costs. The net fair value of the cross currency interest rate swap
at 30 June 2003 is estimated to be $3.0 million and represents the
net amount receivable if the derivative was terminated at that date
(2002: $10.8 million receivable) (refer Note 13).
The net fair value of the reset preference shares at 30 June 2003 is
$107.20 per share (2002: $103.45) as determined by the closing value
on the Australian Stock Exchange at that date (including accrued
interest) (refer Note 16).
32
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
28. DISCONTINUING OPERATION:
On 5 March 2003, the Board of Directors decided to divest the
sportsbetting business trading as Centrebet. The business is expected to
be divested in the year ending 30 June 2004. The business to be divested
comprises the entire sportsbetting business segment described in Note 26.
2003 2002
$ 000 $ 000
-------- --------
The financial performance of Centrebet for the year ended 30 June
2003 is as follows:
Revenues from ordinary activities 31,349 31,206
Expenses from ordinary activities (25,187) (18,866)
------- -------
Profit before income tax expense 6,162 12,340
Income tax expense relating to ordinary activities (2,880) (4,785)
------- -------
Profit from ordinary activities after income tax expense 3,282 7,555
======= =======
The carrying amounts of total assets to be disposed of and total
liabilities to be settled as at 30 June 2003 are as follows:
Total assets 31,172 31,433
Total liabilities 31,085 31,433
------- -------
Net assets 87 --
======= =======
The net cashflows attributable to Centrebet for the year ended 30 June
2003 are as follows:
Operating 6,255 14,193
Investing (6,187) (6,218)
Financing (3,917) (9,133)
------- -------
Net cash outflows (3,849) (1,158)
======= =======
29. MERGER WITH TABCORP HOLDINGS LIMITED:
On 5 March 2003, the Company and TABCORP Holdings Limited announced a
proposal to merge pursuant to schemes of arrangement under the
Corporations Act (2001).
On 12 June 2003, the Company and TABCORP Holdings Limited entered into an
agreement to implement the merger, following the conduct by each party of
detailed due diligence on the other party.
The proposed merger is to be implemented by way of schemes of arrangement,
requiring meetings of the Company's ordinary shareholders, reset
preference shareholders and option holders which are scheduled to be held
on 24 October 2003. The meetings are to be convened by the Supreme Court
of Queensland. The merger also requires the approval of the Queensland
State Government.
If the merger proceeds, the Company will become a controlled entity of
TABCORP Holdings Limited.
33
JUPITERS LIMITED
AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2003
29. MERGER WITH TABCORP HOLDINGS LIMITED (CONT):
The consideration offered by TABCORP Holdings Limited to holders of
ordinary shares in the Company is as follows:
For every 100 Jupiters ordinary shares held, it is proposed that Jupiters'
ordinary shareholders will receive:
- $285 in cash;
- 24 TABCORP Holdings Limited shares;
- a special dividend, being a total of $75 (fully franked); and
- after tax net proceeds from the sale of the Company's sportsbetting
business, Centrebet .
The form of payment of the consideration may vary depending on tax rulings
which have been requested from the Australian Taxation Office. In
addition, the Company's ordinary shareholders can elect to receive all
cash or all TABCORP Holdings Limited shares as consideration, however both
the cash and shares are subject to a cap.
TABCORP Holdings Limited has also offered consideration to reset
preference shareholders consisting of $105.26 for each reset preference
share held, plus any accrued dividends.
TABCORP Holdings Limited has offered cash consideration to option holders
of $2.07 per option for those expiring in August 2011 and $2.14 for those
expiring in November 2011.
If the proposed merger does not proceed, the Company has agreed to pay up
to $12.2 million of merger related costs incurred by TABCORP Holdings
Limited. Similarly, TABCORP Holdings Limited has agreed to pay up to $7.5
million of merger related costs incurred by the Company.
During the year ended 30 June 2003, the Company incurred costs totalling
$4.0 million in relation to the merger. These costs have been expensed in
the Statement of Financial Performance.
30. EVENTS SUBSEQUENT TO BALANCE DATE:
On 12 August 2003, the Directors of Jupiters Limited declared a final
dividend on ordinary shares in respect of the 2003 financial year. The
total amount of the dividend is $24,214,104 which represents a fully
franked dividend of 12 cents per share. The dividend has not been provided
for in the 30 June 2003 financial statements.
34
JUPITERS LIMITED
A.C.N. 010 741 045
AND ITS CONTROLLED ENTITIES
DIRECTORS' DECLARATION
The Directors declare that:
(a) the financial statements and associated notes comply with the Accounting
Standards and Corporations Regulations (2001);
(b) the financial statements and associated notes give a true and fair view of
the financial position as at 30 June 2003 and performance of the Company
and Consolidated Entity for the year then ended; and
(c) in the Directors' opinion:
(i) there are reasonable grounds to believe that the Company will be
able to pay its debts as and when they become due and payable, and
the entities who are party to the deed described in Note 24, will
together be able to meet any obligations or liabilities to which
they are, or may become subject to by virtue of the Deed of Cross
Guarantee dated 12 June 1992; and
(ii) the financial statements and notes are in accordance with the
Corporations Act (2001), including sections 296 and 297.
Made in accordance with a resolution of Directors.
/s/ L.J. WILLETT
L.J. WILLETT
Chairman
/s/ R.A. HINES
R.A. HINES
Managing Director
Brisbane
12 August 2003
35
[ERNST & YOUNG LETTERHEAD]
INDEPENDENT AUDIT REPORT TO MEMBERS OF JUPITERS LIMITED
SCOPE
THE FINANCIAL REPORT AND DIRECTORS' RESPONSIBILITY
The financial report comprises the statement of financial position, statement of
financial performance, statement of cash flows, accompanying notes to the
financial statements, and the directors' declaration for Jupiters Limited (the
company) and the consolidated entity, for the year ended 30 June 2003. The
consolidated entity comprises both the company and the entities it controlled
during that year.
The directors of the company are responsible for preparing a financial report
that gives a true and fair view of the financial position and performance of the
company and the consolidated entity, and that complies with Accounting Standards
in Australia, in accordance with the Corporations Act 2001. This includes
responsibility for the maintenance of adequate accounting records and internal
controls that are designed to prevent and detect fraud and error, and for the
accounting policies and accounting estimates inherent in the financial report.
AUDIT APPROACH
We conducted an independent audit of the financial report in order to express an
opinion on it to the members of the company. Our audit was conducted in
accordance with Australian Auditing Standards in order to provide reasonable
assurance as to whether the financial report is free of material misstatement.
The nature of an audit is influenced by factors such as the use of professional
judgement, selective testing, the inherent limitations of internal control, and
the availability of persuasive rather than conclusive evidence. Therefore, an
audit cannot guarantee that all material misstatements have been detected.
We performed procedures to assess whether in all material respects the financial
report presents fairly, in accordance with the Corporations Act 2001, including
compliance with Accounting Standards in Australia, and other mandatory financial
reporting requirements in Australia, a view which is consistent with our
understanding of the company's and the consolidated entity's financial position,
and of their performance as represented by the results of their operations and
cash flows.
We formed our audit opinion on the basis of these procedures, which included:
- - examining, on a test basis, information to provide evidence supporting the
amounts and disclosures in the financial report, and
- - assessing the appropriateness of the accounting policies and disclosures
used and the reasonableness of significant accounting estimates made by
the directors.
While we considered the effectiveness of management's internal controls over
financial reporting when determining the nature and extent of our procedures,
our audit was not designed to provide assurance on internal controls.
[ERNST & YOUNG LETTERHEAD]
We performed procedures to assess whether the substance of business transactions
was accurately reflected in the financial report. These and our other procedures
did not include consideration or judgment of the appropriateness or
reasonableness of the business plans or strategies adopted by the directors and
management of the company.
INDEPENDENCE
We are independent of the company, and have met the independence requirements of
Australian professional ethical pronouncements and the Corporations Act 2001. In
addition to our audit of the financial report, we were engaged to undertake the
services disclosed in the notes to the financial statements. The provision of
these services has not impaired our independence.
AUDIT OPINION
In our opinion, the financial report of Jupiters Limited is in accordance with:
(a) the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of Jupiters
Limited and the consolidated entity at 30 June 2003 and of their
performance for the year ended on that date; and
(ii) complying with Accounting Standards in Australia and the
Corporations Regulations 2001; and
(b) other mandatory financial reporting requirements in Australia.
Ernst & Young
Mark Hayward
Partner
Brisbane
12 August 2003