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1 Aggregated Special Purpose Financial Report for the year ended 30 June 2014

2 Contents Page Financial Report 3 Auditor s Independence Declaration 6 Statement of Comprehensive Income 7 Statement of Financial Position 8 Statement of Changes in Equity 9 Statement of Cash Flows 10 Notes to the Financial Statements 11 Directors Declaration 27 Independent Audit Report 28 2

3 Financial Report The Limited and the companies listed below form the Aggregated Group ( the Aggregated Group") which has been established for the purpose of listing on the ASX. The Aggregated Group comprises multiple entities with various shareholders and directors as set out below. The Aggregated Group has been restructured as at 1 July 2014 and will result in a single parent entity being Limited that will own all of the shares in the entities below. This Aggregated Special Purpose Financial Report has been prepared to reflect the position that would have been in place, had all of the entities forming part of the newly established Limited, been subsidiaries for the year ended 30 June For the purpose of this report, the Aggregated Group includes the following entities: Limited Skydive the Beach Hybrid Trust Bill & Ben Investments Pty Limited Aircraft Maintenance Centre Pty Limited Skydive Holdings Pty Limited Skydive the Beach Melbourne Discretionary Trust Skydive the Beach Central Coast Discretionary Trust Skydive the Hunter Valley Pty Limited Skydive Perth Discretionary Trust Melbourne Skydive Centre Discretionary Trust B & B No. 2 Pty Limited Skydive the Beach Great Ocean Road Discretionary Trust Skydive the Beach Arlie Beach Pty Limited Directors The names of the directors of Limited in office from incorporation date of 19 December 2013 to the end of the year: Anthony Boucaut Anthony Ritter John Diddams Tim Radford Principal activities The principal activity of the Aggregated Group consisted of operating various Skydiving jump zones located in New South Wales, Victoria, Queensland and Western Australia. No significant change in the nature of these activities occurred during the year. Review of operations The profit of the Aggregated Group for the year ended after providing for income tax amounted to 2,028,902 (2013: 1,511,679). Events subsequent to the end of the reporting period On 1 July 2014, the businesses of the operating Trusts in the Aggregated Group were transferred to wholly owned companies, and these companies were subsequently acquired by Limited with the existing operating companies of the group as part of the restructure. On 17 October 2014, Skydive Holdings Pty Limited entered into a non-binding indicative offer with the operator of a complementary skydive business and its shareholders for the acquisition by Skydive Holdings Pty Ltd or its nominee of all of the shares in that target company, subject to certain preconditions. The preconditions to completion of the transaction include, among other things: 3

4 Financial Report Events subsequent to the end of the reporting period (continued) (a) completion of due diligence satisfactory to the purchaser; (b) approval to the transaction by the purchaser's shareholders; (c) any third party consents being obtained and encumbrances removed, including without limitation the obtaining of relevant consents from any government authorities to the transaction; and (d) any additional matters reasonably required by the purchaser following completion of the due diligence. The transaction is also subject to finance. The parties are negotiating formal documents to reflect the transaction, which are likely to be entered into during December Among other things, the formal documentation will require that, prior to the acquisition being completed in or about March 2015, each of the subsidiaries of target company will need to be demerged or deregistered and selected assets of those subsidiaries transferred to the target company. The consideration for the transaction is payable partly by way of a non-refundable deposit (in 2 instalments), the payment of an amount at completion of the transaction, and a further amount payable over the following 3 years. The purchaser will assume a limited amount of the debt of the target company at completion. Usual vendor (and related entity) warranties and restraints are proposed to apply. Other than the above, no matters or circumstances have arisen since the end of the period which significantly affected or may significantly affect the operations of the Aggregated Group, the results of those operations, or the state of affairs of the Aggregated Group in future financial years. Likely developments and expected results of operations Likely developments in the operations of the Aggregated Group and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Aggregated Group. Environmental regulations The Aggregated Group s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a state or territory. Options No options over issued shares or interests in the Aggregated Group were granted during or since the end of the period and there were no options outstanding at the date of this report. Indemnification of officers No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for any person who is or has been an officer or auditor of the Aggregated Group. Proceedings on behalf of the Group No person has applied for leave of court to bring proceedings on behalf of the Aggregated Group or intervene in any proceedings to which the Aggregated Group is a party for the purpose of taking responsibility on behalf of the Aggregated Group for all or any part of those proceedings. 4

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6 RSM Bird Cameron Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T F AUDITOR S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of for the year ended 30 June 2014, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) (ii) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and any applicable code of professional conduct in relation to the audit. RSM BIRD CAMERON G N Sherwood Director Sydney NSW Dated: 4 December Liability limited by a scheme approved under Professional Standards Legislation Birdanco Nominees Pty Ltd ABN Practising as RSM Bird Cameron ABN Major Offices in: Perth, Sydney, Melbourne, Adelaide, Canberra and Brisbane RSM Bird Cameron is a member of the RSM network. Each member of the RSM network is an independent accounting and advisory firm which practises in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

7 Aggregated Statement of Comprehensive Income for the Year Ended 30 June 2014 Notes Revenue 2 18,025,942 15,384,600 Cost of sales (9,307,943) (9,650,494) Gross profit 8,717,999 5,734,106 Other income 2 422,396 1,746,598 Administration expenses (1,329,353) (851,459) Occupancy expenses (739,002) (844,382) Depreciation and amortisation expenses (905,615) (640,326) Marketing and advertising expenses (1,801,955) (1,687,465) Repairs and maintenance expenses (97,115) (350,399) Finance costs (426,322) (375,639) Other expenses (718,900) (551,135) Profit before income tax expense 3,122,133 2,179,899 Income tax expense 4 (1,093,231) (668,220) Profit for the year 2,028,902 1,511,679 Other comprehensive income for the year - - Total comprehensive income for the year 2,028,902 1,511,679 The accompanying notes form part of these financial statements. 7

8 Aggregated Statement of Financial Position as at 30 June 2014 Notes ASSETS Current assets Cash and cash equivalents 5 1,191, ,100 Trade and other receivables 6 1,203,337 1,461,415 Inventories 7 802, ,680 Other assets 8 121,587 33,734 Total current assets 3,318,723 2,139, Non-current assets Plant and equipment 9 10,096,928 6,688,989 Intangible assets 10 1,545, ,448 Investments accounted for using the equity method Total non-current assets 11,642,376 7,592,437 Total assets 14,961,099 9,732,366 LIABILITIES Current liabilities Trade and other payables 11 1,967, ,328 Borrowings 12 1,292, ,999 Provisions current ,026 7,792 Current tax liabilities , ,539 Total current liabilities 4,301,528 1,849,658 Non-current liabilities Borrowings 12 5,269,217 4,597,523 Provisions non current 13 47,825 - Deferred tax liabilities , ,510 Total non-current liabilities 5,737,366 5,016,033 Total liabilities 10,038,894 6,865,691 Net assets 4,922,205 2,866,675 Equity Issued capital 15 26, Retained earnings 16 4,895,334 2,866,432 Total equity 4,922,205 2,866,675 The accompanying notes form part of these financial statements. 8

9 Aggregated Statement of Changes in Equity for the Year Ended 30 June 2014 Notes Issued capital Retained earnings Total Balance at 1 July ,980,247 1,980,470 Comprehensive income Profit for the year - 1,511,679 1,511,679 Other comprehensive income for the year Total comprehensive income for the year - 1,511,679 1,511,679 Transactions with owners, in their capacity as owners Issued shares Distributions paid 16 - (625,494) (625,494) 20 (625,494) (625,474) Balance as at 30 June ,866,432 2,866,675 Balance at 1 July ,866,432 2,866,675 Comprehensive income Profit for the year - 2,028,902 2,028,902 Other comprehensive income for the year Total comprehensive income for the year - 2,028,902 2,028,902 Transactions with owners, in their capacity as owners Issued shares 26,628-26,628 Distributions paid or provided for ,628-26,628 Balance as at 30 June ,871 4,895,334 4,922,205 The accompanying notes form part of these financial statements. 9

10 Aggregated Statement of Cash Flows for the Year Ended 30 June 2014 Notes Cash flows from operating activities Receipts from customers 17,749,348 15,197,820 Payments to suppliers and employees (12,342,376) (14,145,676) Finance costs (426,322) (375,639) Income tax paid (386,114) (86,410) Net cash provided by operating activities 17 4,594, ,095 Cash flows from investing activities Payment for plant and equipment (4,955,554) (2,335,069) Net cash used in investing activities (4,955,554) (2,335,069) Cash flows from financing activities Distributions paid - (625,494) Proceeds from issued capital 26, Proceeds from borrowings 1,210,937 2,237,105 Net cash provided by financing activities 1,237,565 1,611,631 Net increase / (decrease) in cash held 876,547 (133,343) Cash at beginning of financial year 315, ,443 Cash at end of financial year 5 1,191, ,100 The accompanying notes form part of these financial statements. 10

11 1. Summary of significant accounting policies Statement of compliance These financial statements of the are aggregated special purpose financial statements which have been prepared to comply with all recognition and measurement requirements, but not disclosure requirements of Australian accounting standards with the exception of AASB 10 'Consolidated Financial Statements' as if the aggregated financial report was being prepared to meet the requirements of the Corporations Act. The financial statements comprise the aggregated financial statements of the. For the purposes of preparing the aggregated financial statements, the is a for-profit entity. The financial statements were authorised for issue on 4 December 2014 by the directors of the Aggregated Group. Basis of preparation The aggregated financial statements have been prepared on the basis of historical cost. Historical cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted. Basis of aggregation The Limited and the entities listed at note 18 form the Aggregated Group ( the Aggregated Group") which has been established for the purpose of listing on the ASX. The Aggregated Group comprises multiple entities with various shareholders and directors as set out below. The Aggregated Group has been restructured as at 1 July 2014 and will result in a single parent entity being Limited that will own all of the shares in the entities below. This Aggregated Special Purpose Financial Report has been prepared to reflect the position that would have been in place, had all of the entities forming part of the newly established Limited, been subsidiaries for the year ended 30 June Consistent accounting policies are employed by each entity in the Aggregated Group in the presentation and preparation of their consolidated financial information. All inter-company balances and transactions between entities in the Aggregated Group, including any unrealised profits or losses, have been eliminated on aggregation. Accounting policies a) Business combinations Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the Aggregated Group, liabilities incurred by the Aggregated Group to the former owners of the acquiree and the equity instruments issued by the Aggregated Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that: i. deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with AASB 112 'Income Taxes' and AASB 119 'Employee Benefits' respectively; ii. liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with AASB 2 'Share-based Payment' at the acquisition date; and iii. assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 'Non-current Assets Held for Sale and Discontinued Operations' are measured in accordance with that Standard. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. 11

12 1. Summary of significant accounting policies (continued) a) Business combinations (continued) Where the consideration transferred by the Aggregated Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with AASB 139, or AASB 137 'Provisions, Contingent Liabilities and Contingent Assets', as appropriate, with the corresponding gain or loss being recognised in profit or loss. Where a business combination is achieved in stages, the Aggregated Group's previously held interests in the acquired entity are re-measured to fair value at the acquisition date (i.e. the date the attains control) and the resulting gain or loss, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting year in which the combination occurs, the reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement year, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. The measurement year is the year from the date of acquisition to the date the obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year. b) Goodwill Goodwill arising in a business combination is recognised as an asset and carried at cost as established at the date that control is acquired (the acquisition date) less accumulated impairment losses, if any. Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Aggregated Group's cash-generating units (CGU's), or groups of CGU's, expected to benefit from the synergies of the business combination. CGU's or groups of CGU's to which goodwill has been allocated are tested for impairment annually or more frequently if events or changes in circumstances indicate that goodwill might be impaired. If the recoverable amount of the CGU or group of CGU's is less than the carrying amount of the CGU or groups of CGU's, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU or groups of CGU's and then to the other assets of the CGU or groups of CGU's pro-rata on the basis of the carrying amount of each asset in the CGU or groups of CGU's. An impairment loss recognised for goodwill is recognised immediately in profit or loss and is not reversed in a subsequent year. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal of the operation. c) Income tax Income tax expense or benefit represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable profit for the year for each stand alone entity. Taxable profit differs from profit as reported in the statement of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Aggregated Group's liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting year. 12

13 1. Summary of significant accounting policies (continued) c) Income tax (continued) Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at the end of each reporting year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting year. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Aggregated Group expects, at the end of the reporting year, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Aggregated Group intends to settle its current tax assets and liabilities on a net basis. d) Fair value of assets and liabilities The Aggregated Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Aggregated Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (ie the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs). For non-financial assets, the fair value measurement also takes into account a market participant s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use. e) Inventories Inventories are measured at the lower of cost and net realisable value. Net realisable value represents the estimated selling prices of inventories less all estimated costs to make the sale. f) Property, plant and equipment Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis and are therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount. A formal assessment of recoverable amount is made when impairment indicators are present (refer to Note 1(h) for details of impairment). 13

14 1. Summary of significant accounting policies (continued) Plant and equipment Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets, including building and capitalised lease assets but excluding freehold land, is depreciated on a straight-line basis over the asset s useful life to the entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of depreciable assets are: Class of fixed asset Depreciation rate Plant and equipment 5 25% Aircraft 5% Office equipment 25% Motor vehicles 10% Leasehold improvements 2.5% The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are recognised immediately in profit or loss. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained earnings. g) Leases Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset (but not the legal ownership) are transferred to the Group, are classified as finance leases. Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the Group will obtain ownership of the asset, or over the term of the lease. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term. 14

15 1. Summary of significant accounting policies (continued) h) Impairment of assets At the end of each reporting period, the Aggregated Group assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information and internal sources of information. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset s fair value less costs to sell and value in use, to the asset s carrying amount. Any excess of the asset s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (eg in accordance with the revaluation model in AASB 116: Property, Plant and Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard. Where it is not possible to estimate the recoverable amount of an individual asset, the Aggregated Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. i) Intangibles other than goodwill Trademarks and licences Trademarks and licences are capitalised only when it is clear that they will deliver future economic benefits and these benefits can be measured reliably. Capitalised trademarks and licences are amortised on a systematic basis matched to the future economic benefits over their useful life. j) Employee benefits Short-term employee benefits Provision is made for the Aggregated Group s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled. The Aggregated Group s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as a part of current trade and other payables in the statement of financial position. Other long-term employee benefits Provision is made for employees long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that approximate the terms of the obligations. Upon the remeasurement of obligations for other long-term employee benefits, the net change in the obligation is recognised in profit or loss as a part of employee benefits expense. The Aggregated Group s obligations for long-term employee benefits are presented as non-current provisions in its statement of financial position, except where the Aggregated Group does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions. 15

16 1. Summary of significant accounting policies (continued) k) Provisions Provisions are recognised when the company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured at the best estimate of the amounts required to settle the obligation at the end of the reporting period. l) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. m) Revenue and other income Revenue is measured at the fair value of the consideration received or receivable. Revenue from the rendering of a service is recognised once the service has been provided. Interest revenue is recognised using the effective interest method, which, for floating rate financial assets is the rate inherent in the instrument. Revenue recognition relating to the provision of services is determined with reference to the stage of completion of the transaction at the end of the reporting period and where outcome of the contract can be estimated reliably. Stage of completion is determined with reference to the services performed to date as a percentage of total anticipated services to be performed. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent that related expenditure is recoverable. All revenue is stated net of the amount of goods and services tax. n) Trade and other receivables Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non-current assets. Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Refer to Note 1(h) for further discussion on the determination of impairment losses. o) Trade and other payables Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. 16

17 1. Summary of significant accounting policies (continued) p) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. q) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers. r) Adoption of new and revised accounting standards The Aggregated Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current year. New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Aggregated Group include: AASB 13 'Fair Value Measurement'. and AASB 'Amendments to Australian Accounting Standards arising from AASB 13' AASB 119 'Employee Benefits'. (2011) and AASB 'Amendments to Australian Accounting Standards arising from AASB 119 (2011)' AASB 'Amendments to Australian Accounting Standards Disclosures Offsetting Financial Assets and Financial Liabilities' Impact of the application of AASB 13 The Aggregated Group has applied AASB 13 for the first time in the current year. AASB 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of AASB 13 is broad; the fair value measurement requirements of AASB 13 apply to both financial instrument items and non-financial instrument items for which other AASBs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of AASB 2 'Share-based Payment' leasing transactions that are within the scope of AASB 117 'Leases' and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes). AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under AASB 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, AASB 13 includes extensive disclosure requirements. AASB 13 requires prospective application from 1 January In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the initial application of the Standard. The application of AASB 13 has not had any material impact on the amounts recognised in the aggregated financial statements. 17

18 1. Summary of significant accounting policies (continued) r) Adoption of new and revised accounting standards (continued) Impact of the application of AASB 119 In the current year, the Aggregated Group has applied AASB 119 (as revised in 2011) 'Employee Benefits'. and the related consequential amendments for the first time. AASB 119 (as revised in 2011) changes the accounting for defined benefit plans and termination benefits. These changes have not had a material impact on the amounts recognised in the aggregated financial statements for the comparative period. Furthermore, AASB 119 (as revised in 2011) changes the accounting for short term employee benefits. This change has resulted in a change to the way annual leave entitlements are measured, with all amounts expected to be settled over a period greater than 12 months from reporting date needing to be discounted back to present value with an allowance for further salary increases. While this change has impacted the measurement of annual leave entitlements, such entitlements continues to be classified in the Aggregated Statement of Financial Performance as current liabilities. s) Standards and Interpretations in issue not yet adopted At the date of authorisation of the financial report, the Standards and Interpretations listed below were in issue but not yet effective: Effective for annual reporting periods beginning Expected to be initially applied Standard/Interpretation on or after AASB 9 'Financial Instruments', and the relevant amending standards 1 January June 2018 AASB 1031 'Materiality' (2013) 1 January June 2015 AASB 'Amendments to Australian Accounting Standards 1 January June 2015 Offsetting Financial Assets and Financial Liabilities' AASB 'Amendments to AASB 135 Recoverable Amount Disclosures for Non-Financial Assets' AASB 'Amendments to Australian Accounting Standards Novation of Derivatives and Continuation of Hedge Accounting' AASB 'Amendments to Australian Accounting Standards Conceptual Framework, Materiality and Financial Instruments' 1 January June January June January June 2015 INT 21 'Levies' 1 January June 2015 The AASB has issued the following versions of AASB 9 and the relevant amending standards; AASB 9 'Financial Instruments' (December 2009), AASB 'Amendments to Australian Accounting Standards arising from AASB 9', AASB 'Amendments to Australian Accounting Standards Mandatory Effective Date of AASB 9 and Transition Disclosures' AASB 9 'Financial Instruments' (December 2010), AASB 'Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)', AASB 'Amendments to Australian Accounting Standards Mandatory Effective Date of AASB 9 and Transition Disclosure'. In December 2013 the AASB issued AASB 'Amendment to Australian Accounting Standards Conceptual Framework, Materiality and Financial Instruments', Part C Financial Instruments. This amending standard has amended the mandatory effective date of AASB 9 to 1 January For annual reporting periods beginning before 1 January 2017, an entity may early adopt either AASB 9 (December 2009) or AASB 9 (December 2010) and the relevant amending standards. At the date of authorisation of the financial statements, the following IASB Standards and IFRIC Interpretations were also in issue but not yet effective, although Australian equivalent Standards and Interpretations have not yet been issued. 18

19 1. Summary of significant accounting policies (continued) t) Critical accounting estimates and judgements The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Aggregated Group. Key estimates and judgements Inventories The Aggregated Group s inventory compromises mainly aircraft spare parts, workshop accessories, loose tools and other general equipment. The Aggregated Group did not previously have perpetual inventory records, and consequently a full inventory count was conducted during the year ended 30 June The Aggregated Group employed the services of an industry expert to assist with the identification of the inventory and the estimated cost of such inventory. Management used their judgement to estimate the years in which the inventory was acquired, and the inventory was accounted for on this basis. The Aggregated Group's directors has assessed that the value of inventories are not depreciable assets and instead form part of the entities inventories. Residual values The Aggregated Group s directors have considered the nature of the property, plant and equipment and have estimated the residual values to be nil. The determination was done on the bases that the Aggregated Group will continue to maintain and use its asses until such time as they reach the end of their useful lives and it is unlikely the assets will realise any significant net proceeds once sold. Asset components The Aggregated Group s directors have considered the nature of the assets and used their judgement to determine there are no individually significant components of the assets which have useful lives that are significantly different to the main assets. The Aggregated Group therefore depreciates all individual assets over their estimated useful lives. Property, plant and equipment subsequent costs The Aggregated Group has historically expensed its scheduled maintenance costs for the airplanes it operates, as opposed to recognising the cost of the scheduled maintence as an asset, and depreciating that cost over the service period. The directors have considered the potential impact of this practice on the financial statements and determined that the effect of such historical practice is not material. Recovery of deferred tax assets Deferred tax assets, including those arising from temporary differences and tax losses, are recognised only when it is considered probable that they will be recovered. Various factors are used to assess the recoverability of deferred tax assets including the nature and timing of their origination, future operating results, operational plans and compliance with relevant tax legislation associated with their recoupment. These judgements and assumptions are subject to risk and uncertainty; hence, there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised on the balance sheet. In such circumstances, some or all, of the carrying amount of recognised deferred tax assets may require adjustment, resulting in a corresponding charge to the statement of profit or loss and other comprehensive income. 19

20 2. Revenue and other income Revenue Sales of goods and services 18,025,942 15,384,600 Other income Grant income 98, ,004 Other income 323, ,594 Total revenue and other income 18,448,338 17,131, Profit for the year Profit before income tax from continuing operations includes the following specific expenses: Expenses: Cost of sales 9,307,943 9,650,494 Finance costs 426, ,639 Occupancy costs 739, ,382 Depreciation and amortisation 905, , Tax expense a) The components of tax expense comprise: Current tax expense 1,091, ,709 Deferred tax expense 1, ,511 1,093, ,220 b) The prima facie tax payable on profit before income tax is reconciled to the income tax expense as follows: Prima facie tax payable on profit before income tax at 30% (2013: 30%) 936, ,970 Add: Tax effect of: Other non-allowable items 122,988 1,411 Trust distribution / (losses) 10,379 (187,612) Under-provision for income tax - (227,943) Less: Tax effect of: Deferred tax on timing differences 23, ,394 Income tax attributable to entity 1,093, ,220 20

21 Cash and cash equivalents Current Cash on hand 8,254 1,965 Cash at bank 1,183, ,135 1,191, ,100 Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows: Cash and cash equivalents 1,191, ,100 1,191, , Trade and other receivables Current Trade receivables 527, ,094 Provision for impairment , ,094 Amounts receivable from related parties 589,854 1,124,678 Other receivables 67,573 52,615 GST receivables 18,222 33,028 1,203,337 1,461, Inventories Current Raw materials, spares and stores - at estimated cost 802, , Other assets Current Prepayments 108,014 20,472 Other current assets 13,573 13, ,587 33,734 21

22 9. Property, plant and equipment Plant and equipment: Plant and equipment - at cost 5,562,899 2,878,226 Less: accumulated depreciation (945,655) (248,026) 4,617,244 2,630,200 Aircraft: Aircraft - at cost 5,750,965 4,570,329 Less: accumulated depreciation (1,052,450) (1,160,139) 4,698,515 3,410,190 Office equipment: Office equipment - at cost 48,093 48,093 Less: accumulated depreciation (32,949) (27,177) 15,144 20,916 Leasehold improvements: Leasehold improvements - at cost 296, ,794 Less: accumulated depreciation (11,213) (3,555) 285, ,239 Motor vehicles: Motor vehicles - at cost 633, ,612 Less: accumulation depreciation (153,310) (99,168) 480, ,444 Total property, plant and equipment 10,096,928 6,688,989 22

23 10. Intangible assets Goodwill Cost 1,544, ,171 Accumulated impairment losses - - Net carrying amount 1,544, ,171 Reconciliation of goodwill Opening balance 902, ,171 Additions 642, ,000 Closing carrying amount 30 June ,544, ,171 Trademarks and licences Cost 1,277 1,277 Accumulated impairment losses - - Net carrying amount 1,277 1,277 1,545, , Trade and other payables Current Trade payables 977, ,328 Related party payables 125,047 1,421 Other payables 864,442 31,579 1,967, , Borrowings Current Bank loan secured 1,292, ,999 Total current borrowings 1,292, ,999 Non current Bank loan secured 5,269,217 4,597,523 Total non current borrowings 5,269,217 4,597,523 23

24 13. Provisions Current Employee benefits 173,026 7, ,026 7,792 Non current Employee benefits 47,825-47, Tax Current Current tax liabilities 868, ,539 Non current Deferred tax liabilities 420, ,510 Opening Charged to Closing balance income balance 2014 Deferred tax balances comprises of: Property, plant and equipment (418,613) (127,603) (546,216) Trade creditors Tax losses - 125, ,789 (418,510) (1,814) (420,324) 15. Issued capital Issued capital 26, Related earnings Retained earnings at the beginning of the financial year 2,866,432 1,980,247 Net profit attributable to members of the company 2,028,902 1,511,679 Distributions paid - (625,494) Retained earnings at the end of the financial year 4,895,334 2,866,432 24

25 Cash flow information Reconciliation of cash flow from operations with profit after income tax Profit after income tax 2,028,902 1,511,679 Non-cash flows in profit: Depreciation 905, ,326 Changes in assets and liabilities: (Increase) / decrease in trade and other receivables (Increase) / decrease in inventories (Increase) / decrease in other assets 258,078 (1,265,577) (472,472) (196,846) (87,853) (5,794) Decrease / (increase) in trade and other payables 1,042,090 (291,465) Decrease in provisions 213, ,300 Increase in income taxes payable 705, ,510 Increase in deferred tax assets 1,814 (384,038) 4,594, , Aggregated entities The entities that have been aggregated within these financial statements include: 2014 % 2013 % Limited Skydive the Beach Hybrid Trust Bill & Ben Investments Pty Limited Aircraft Maintenance Centre Pty Limited Skydive Holdings Pty Limited Skydive the Beach Melbourne Discretionary Trust Skydive the Beach Central Coast Discretionary Trust Skydive the Hunter Valley Pty Limited Skydive Perth Discretionary Trust Melbourne Skydive Centre Discretionary Trust B & B No. 2 Pty Limited Skydive the Beach Great Ocean Road Discretionary Trust Skydive the Beach Arlie Beach Pty Limited Investments accounted for using the equity method Associated entity (note 20)