Annual Report - Screen Australia

FILM FINANCE CORPORATION AUSTRALIA LIMITED
16. REMUNERATION OF DIRECTORS, DIRECTOR AND DIRECTOR-RELATED
TRANSACTIONS AND OTHER DIRECTOR DISCLOSURES (CONTINUED)
(c) Director-related transactions
Transactions involving directors and director-related entities occurred in the ordinary course of the FFC’s business
since the board includes directors actively involved in the film and television industries. The FFC’s policy was that
transactions involving directors and director-related entities were to be on commercial terms that were no more
favourable than those available to others and consistent with the FFC’s investment guidelines.
The processes applied by the FFC in dealing with conflicts of interest are set out in the Corporate Governance
Statement contained in this Annual Report.
To identify when a director had a material personal interest in a transaction, the board adopted a set of
principles, some more stringent than the law requires. The board acknowledged that no code of practice could
be exhaustive, and that the onus was always upon each director to declare any personal interest that may not
have been covered by the code of practice.
The board considered that a director had a material personal interest in a film in the following circumstances:
(i) where the director, or the partner or child of the director, had a production role in the film;
(ii) where the director was an officer (a director, secretary, executive officer or employee) of:
(a) the production company or the parent of that company; or
(b) a company acquiring commercial exploitation rights in the film;
(iii) where the director or the director’s firm acted as the solicitor, accountant, auditor or advisor for:
(a) any person with a production role in the film;
(b) the production company;
(c) a company acquiring commercial exploitation rights in the film; or
(d) an investor in the film;
(iv) where the director, or a company of which the director is a shareholder or an officer (other than the FFC),
was entitled to receive a payment from the budgeted cost of the film; and
(v) where the director had an ownership interest either directly or indirectly exceeding 5% in any entity which
transacted with the FFC.
The following transactions in the current year involved directors or director-related companies. The amounts
stated are the FFC’s investment in the relevant film and television productions.
Peter Davey
In 2007/08 investments totalling $7,245,000 in two features films in which distribution rights were acquired by a
subsidiary of Village Roadshow Ltd where Peter Davey is head of corporate development.
Mr Davey did not receive relevant board papers and was not present during board discussions on Producer Tax
Offset Applications, Evaluation Letters of Intent, or investment proposals where any subsidiary of Village
Roadshow Ltd has an interest.
Mao’s Last Dancer $4,500,000
The Square (comprising investment and distribution guarantee) $2,745,000
In 2006/07 investments totalling $6,848,945 were approved comprising $6,500,000 for the feature film
Dirt Music and a contract variation of $348,945 for December Boys, a previously approved investment
in which distribution rights were acquired by a subsidiary of Village Roadshow Ltd where Mr Davey is head
of corporate development.
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17. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE
(a) Terms, conditions and accounting policies
Financial instrument Nature of underlying instrument (including
terms and conditions affecting the amount,
timing and certainty of cash flows)
ABN 22 008 642 564
Accounting policies and methods (including
recognition criteria and measurement basis)
Financial assets Financial assets are recognised when control over
future economic benefits is established and the
amount of the benefit can be reliably measured.
Cash Funds are deposited at call with the company’s
bank. Temporarily surplus funds are deposited into
bank at-call money market accounts. Interest is
earned on daily balances on bank and money
market accounts and is credited at month-end.
Committed Funds Note 5.
Bank accepted
commercial bill
This bank deposit matured in 3 days with an
effective interest rate of 6.23% pa (2007 only).
Bank term deposit These bank deposits mature in 7 days with an
effective interest rate of 7.70% pa.
Bank term deposit
(relating to distribution
guarantee)
The bank term deposit matures in 2011 with an
effective interest rate of 6.54% pa.
Note 4. Cash at bank and on hand is recognised at
nominal amounts. Interest is credited to revenue as it
accrues.
This deposit was stated at the lower of cost and
effective accrued interest and net realisable value.
Effective accrued interest is recognised in sundry
receivables.
The deposits are stated at the lower of cost and net
realisable value. Effective interest is recognised in
sundry receivables.
The term deposit is stated at the lower of cost and
accumulated interest and net realisable value.
Receivables Credit terms are net 30 days. Note 6. These sundry receivables (other than accrued
interest) are recognised at the nominal amounts less
any allowance for impairment.
Allowances for impairment are made when
collection is judged to be less rather than more likely.
Film Loans These loans are largely unsecured. Interest may be
charged on loans depending on the particular
arrangements.
Equity film investments These investments are largely unsecured.
Recoupment of investments generally are from
earnings for the film projects following release
which could be two years or more from initial
production funding.
Note 7. These loans are recognised at cost less any
allowance for impairment to recoverable values.
Notes 1(i) and 8. These accounting policies are set
out in Note 1(i).
Financial liabilities Financial liabilities are recognised when a present
obligation to another party is entered into and the
amount of the liability can be reliably measured.
Payables Settlement is usually made net 30 days. Note 10. Payables and accruals are recognised at
their nominal amounts, being the amounts at which
the liabilities will be settled. Liabilities are recognised
to the extent that goods or services have been
received.
Lease incentive Lease incentive liability reduces from
commencement of rental payments in June 2005
over the remainder of the lease to June 2013.
Distribution guarantee Settlement will be made in 2011 together with
interest accumulating at 6.54% pa (2007 6.54%
pa).
Note 12. The lease incentive liability is recognised at
the nominal amount at which the liability will be
settled.
Note 5. The distribution guarantee to investors in a
film project is recognised at the amount equal to the
value of the corresponding term deposit including
accrued interest.
Onerous film contracts Relates to funds committed under film contracts. Notes 1(k) and 11. The accounting policies are set
out in Note 1(k).
Provision for make good
on leased premises
Leases, with options for renewals, end in 2009 and
2013. A borrowing cost rate of 5.8% pa (2007
5.8% pa) has been used in determining the
provision required at reporting date.
Note 11. Leased premises are required to be returned
to the lessor in original condition. The provision is
measured over the periods of the leases at the
expected cost of refurbishment at each reporting
date.
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