Donaco International Limited / 2017 Annual Report Donaco International Limited / 2017 Annual Report 78 79 79 Donaco International Limited / 2017 Annual Report Donaco International Limited / 2017 Annual Report 78 Notes to the Financial Statements for the year ended 30 June 2017 Notes to the Financial Statements for the year ended 30 June 2017 Set out below are summaries of options outstanding under the plan during the year ended 30 June 2017: Grant date Expiry date Exercise price Balance at start of the year Granted Exercised Expired forfeited/other Balance at the end of the year 01/07/2014 01/07/2016 $0.59 1,365,960 – – (1,365,960) – 01/07/2014 01/07/2017 $0.59 1,294,836 – – (100,000) 1,194,836 01/07/2014 01/07/2018 $0.59 1,249,716 – – (99,999) 1,149,717 01/07/2015 01/07/2017 $0.89 457,047 – – – 457,047 01/07/2015 01/07/2018 $0.89 395,208 – – – 395,208 01/07/2015 01/07/2019 $0.89 349,376 – – – 349,376 25/08/2015 01/07/2018 $0.77 1,385,700 – – – 1,385,700 25/08/2015 01/07/2019 $0.77 1,156,784 – – – 1,156,784 25/08/2015 01/07/2020 $0.77 1,008,025 – – – 1,008,025 8,662,652 – – (1,565,959) 7,096,693 Set out below are the options exercisable at the end of the financial year: 2017 2016 Grant date Expiry date Exercise price Number Number 01/07/2014 01/07/2017 $0.59 2,344,553 1,294,836 01/07/2015 01/07/2017 $0.89 457,047 457,047 01/07/2015 01/07/2018 $0.89 395,208 – 25/08/2015 01/07/2018 $0.77 1,385,700 – 4,582,508 1,751,883 Note 37. Earnings per share Consolidated 2017 2016 $ $ Earnings per share for profit/(loss) from continuing operations Profit/(loss) after income tax 31,189,049 78,873,384 Non-controlling interest (198,751) (149,883) Profit/(loss) after income tax attributable to the owners of Donaco International Limited 30,990,298 78,723,501 Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 831,211,424 831,087,477 Adjustments for calculation of diluted earnings per share: Options over ordinary shares – 376,433 Weighted average number of ordinary shares used in calculating diluted earnings per share 831,211,424 831,463,910 Cents Cents Basic earnings per share 3.73 9.47 Diluted earnings per share 3.73 9.47 An additional 7,096,693 options over ordinary shares and 12,339,408 shares subject to warrants are antidilutive and have been excluded from the above calculations as the exercise price of these warrants exceeds the average market share price during the year. Note 38. Share-based payments Employee options Employee option allocation FY14 At the Annual General Meeting on 21 November 2013, shareholders approved the establishment of a long-term incentive (LTI) plan for executives, consisting of the annual grant of units under an option share trust (OST). On 23 December 2013, the Company announced that it had issued options amounting to 1% of its then issued capital (a total of 4,010,511 options) under the LTI plan. Approval for the issue of these options under an employee incentive scheme was obtained pursuant to ASX Listing Rule 10.14. These options were not contributed to the OST until 1 July 2014. Accordingly employees were not allocated units in the OST until 1 July 2014. Employee option allocation FY15 Pursuant to the approval granted by shareholders at the FY13 Annual General Meeting, further options were contributed to the OST for FY15. These options were not contributed to the OST until 1 July 2015, and accordingly employees were not allocated additional units in the OST until 1 July 2015. Employee option allocation FY16 Pursuant to the approval granted by shareholders at the FY13 Annual General Meeting, further options were contributed to the OST for FY16. These options were contributed to the OST and employees were allocated additional units on 25 August 2015. The weighted average share price during the financial year was $0.43 (2016: $0.65). The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.27 years (2016: 1.89 years). The weighted average exercise price for all outstanding options is $0.73 (2016: $0.71). Note 39. Contingent liabilities As part of the agreement for the purchase of the Star Vegas Resort & Club, the vendor of the business will manage the business for two full years following completion on 1 July 2015. The vendor also provided a guarantee that the EBITDA of the business would be not less than USD60 million per year for the two full years following the acquisition, being FY16 and FY17. If the target EBITDA of USD60 million is not met, the vendor will top up the shortfall in cash. However, if the target is met, the vendor will receive a management fee in return for the management services provided, in the sum of 25% of the NPAT of the business. No other management fee is payable for the management services. These arrangements are set out in a Share Sale Agreement and Management Agreement dated on 23 January 2015, a Supplemental Share Sale Agreement dated 22 May 2015, and an Amending and Restating Deed dated 18 June 2015. At 31 December 2016, the possible obligation to pay a management fee in respect of the December 2016 half year was disclosed as a contingent liability as a reliable estimate of the amount payable could not be made. A contingent liability is ‘a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity’. At 30 June 2017, the earnings met the EBITDA target and a management fee was payable by the consolidated entity. A management fee of $19,045,688 has been recognised in the Statement of Comprehensive Income and as a liability by the consolidated entity at 30 June. The consolidated entity has no contingent liabilities at 30 June 2017 (2016: nil)