UNITING COMMUNITIES UNITINGCARE WESLEY ADELAIDE INCORPORATED AND CONTROLLED ENTITIES FINANCIAL REPORT 30 JUNE 2015 CONTENTS

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1 UNITINGCARE WESLEY ADELAIDE INCORPORATED AND CONTROLLED ENTITIES FINANCIAL REPORT 30 JUNE 2015 CONTENTS Report of the Board Members Statement of Board Members Independent Auditor's Report Statement of Profit or Loss Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to and forming part of the financial statements 1

2 BOARD MEMBERS REPORT 30 JUNE 2015 The Board members present their report on the financial statements of the economic entity and its controlled entities for the year ended 30 June Board Members The names of the board members in office at any time during or since the end of the year are: Dr Joanne Baulderstone (Chair) Mr Mark Miller Ms Tania Sargent Ms Joanna Andrew (resigned July 2015) Ms Cathie Brown Mr John Byrne Mr. Jason Ting Dr. Sue King Mr Simon Schrapel (Executive) Rev Peter McDonald (Executive) Board members have been in office since the start of the financial year to the date of this report unless otherwise stated. Activities The principal continuing activities of the economic entity during the financial year were the provision of counselling, residential care and other community services. The economic entity's principal objective is not the generation of profit. Operating Results The consolidated operating surplus of the economic entity for the financial year amounted to $2,316,789, (2014 Surplus $1,784,399). Total consolidated operating revenue for the financial year was $60,692,017 (2014 $56,513,831). Income from Government sources towards operating expenditure was $44,667,524 equal to 73% of total revenue. State of Affairs There have been no significant changes in the state of affairs of the economic entity during the financial year. 2

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5 ,^I, EdwardsMarshatt INDEPENDENT AUDITOR'S REPORT To THE MEMBERS OF UNITINGCARE WESLEY ADELAiDE INCORPORATED AND CONTROLLED ENTITIES Report on the Financial Report We have audited the accompanying financial report of UnitingCare We SIey Adelaide Inc and Controlled Entities ('the Association'), which comprises the Statement of Financial Position as at 30 June 201.5, Statement of Profit or Loss, Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, notes comprising a summary of significant accounting policies, other explanatory information, and the Statement of Board Members. Board's Responsibility for the Financial Report The Board of UnitingCare We SIey Adelaide Inc and Controlled Entities is responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards, the Associotions Incorporotion Act 1985 and the AUStrolion Chorities ond Notfor-profits Commission Act The Board's responsibility also includes such internal control as they determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We have conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor'sjudgement, including the assessment of the risks of material misstatement to the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstance, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. independence In conducting our audit, we have complied with the independence requirements of the Australian professional ethical pronouncements.,^i^^ Celebrating 50 years /3 Liability limited by a scheme approved under Professional Standards Legislation Edwords Marshallis on Independent member of Nexio Internotion04 o worldwide network oilndependent DCcounting und consulhhgjirms, IN T E R N ATIO N A L Level3 153 F1inders Street Adelaide SA 5000 GPO Box 2163 Adelaide SA 5001 P +6188/ f +6188/ w edwardsmarshall. comau

6 ,^^ EdwardsMarsha.. INDEPENDENT AUDITOR'S REPORT To THE MEMBERS OF UNITINGCARE WESLEY ADELAiDE INCORPORATED AND CONTROLLED ENTITIES (CONT) Opinion In our opinion: (a) the financial report is prepared in accordance with Division 60 of the AUStrofion Chorities ond Notforprofits Commission Act 2012, including: (i) (ii) giving a true and fair view of Uniting Care We SIey Adelaide Inc and Controlled Entities' financial position as at 30 June and of its performance and cash flows for the Year then ended; and complying with Australian Accounting Standards, the Associotions Incorporotion Act1985 and Division 60 of the AUStroffon Choriti^s ond Notfor-profits Commission Regulotion We have obtained allof the information and explanations required from the Association. 8, ^, 0+-,^, 77^.,,,,,,, Edwards Marshall Chartered Accountants I' Brett Morkunas Partner Adelaide South Australia 24 September 2015,^;^, Celebrating 50 years /3 Liability limited by a scheme approved under Professional Standards Legislation Edwords Marshollis onindependent member of NEXjA o worldwide network of independent accounting ond consulting firms IN T E R N ATIO N A L Level3 153 F1inders Street Adelaide SA 5000 GPO Box 2163 Adelaide SA / P f +6188/ w edwardsmarshall. comau

7 STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2015 Consolidated Parent Notes $ $ $ $ REVENUE 3 60,692,017 56,513,831 58,161,559 55,069,177 EMPLOYEE BENEFITS EXPENSES (39,498,851) (35,414,064) (39,498,851) (35,414,064) DEPRECIATION EXPENSES (2,257,160) (2,327,275) (1,816,792) (1,790,879) OTHER EXPENSES 4 (16,619,217) (16,988,092) (16,841,863) (16,934,466) SURPLUS/(DEFICIT) FOR THE YEAR 2,316,789 1,784,399 4, ,769 The accompanying notes form part of these financial statements 7

8 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015 Consolidated Parent $ $ $ $ SURPLUS/(DEFICIT) FOR THE YEAR 2,316,789 1,784,399 4, ,769 Other Comprehensive Income: Net Gain/(Loss) on revaluation of financial assets 642,204 3,403,419 (6,610) - Net Gain/(Loss) on revaluation of land and buildings - (2,686,013) - - Total Other Comprehensive income 642, ,406-6,610 - TOTAL COMPREHENSIVE INCOME FOR THE YEAR 2,958,993 2,501,805 (2,557) 929,769 Total comprehensive income attributable to members of the entity 2,958,993 2,501,805 (2,557) 929,769 The accompanying notes form part of these financial statements 8

9 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015 Consolidated Parent Notes ASSETS $ $ $ $ CURRENT ASSETS Cash & Cash Equivalents 5 2,934,829 3,393, , ,186 Trade and Other Receivables 6 4,592,493 2,826,771 16,849,824 16,675,335 Inventories 7 28,097 79,358 28,097 79,358 Other assets 377, , , ,618 Assets held for sale 9 3,500,000 4,400, Total Current Assets 11,432,566 11,154,592 18,195,196 17,784,497 NON-CURRENT ASSETS Financial Assets 8 39,119,920 37,217,152 28,332 64,336 Property, Plant & Equipment 9 39,863,597 40,796,388 3,846,848 4,286,387 Intangibles 9 1,454,910 1,510,816 1,454,910 1,510,817 Total Non-Current Assets 80,438,427 79,524,357 5,330,089 5,861,540 TOTAL ASSETS 91,870,993 90,678,949 23,525,285 23,646,037 LIABILITIES CURRENT LIABILITIES Trade & Other Payables 10 17,944,545 18,073,550 17,942,926 18,071,626 Provisions 11 2,286,376 1,989,435 2,286,376 1,989,435 Total Current Liabilities 20,230,921 20,062,985 20,229,302 20,061,061 NON-CURRENT LIABILITIES Provisions , , , ,473 Borrowings 12-1,641, Total Non-Current Liabilities 568,036 2,496, , ,473 TOTAL LIABILITIES 20,798,957 22,559,295 20,797,338 20,915,534 NET ASSETS 71,072,037 68,119,653 2,727,946 2,730,503 EQUITY Capital Donations Reserves 20 12,055,130 11,419,536 3,198,995 3,205,605 Retained Profits 59,016,897 56,700,108 (471,049) (475,102) TOTAL EQUITY 71,072,037 68,119,653 2,727,946 2,730,503 The accompanying notes form part of these financial statements 9

10 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2015 Economic Entity Capital Retained Specific Consolidated Donations Earnings Donations Reserves Total $ $ $ $ $ Balance as at 1 July ,915,709-10,702,129 65,617,848 Surplus/(Deficit) attributable to members - 1,784, ,784,399 Total Other Comprehensive Income for the Year , ,406 Balance as at 30 June ,700,108-11,419,535 68,119,653 Surplus/(Deficit) attributable to members - 2,316, ,316,789 Total Other Comprehensive Income for the Year , ,595 Balance as at 30 June ,016,897-12,055,130 71,072,037 Parent Entity Capital Retained Specific Consolidated Donations Earnings Donations Reserves Total $ $ $ $ $ Balance as at 1 July (1,404,871) - 3,205,605 1,800,734 Surplus/(Deficit) attributable to members - 929, ,769 Total Other Comprehensive Income for the Year Balance as at 30 June (475,102) - 3,205,605 2,730,503 Surplus/(Deficit) attributable to members - 4, ,053 Total Other Comprehensive Income for the Year (6,610) (6,610) Balance as at 30 June (471,049) - 3,198,995 2,727,946 The accompanying notes form part of these financial statements 10

11 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015 Consolidated Parent Notes $ $ $ $ Cash Flows from Operating Activities Government Subsidies 45,512,514 42,938,691 45,512,514 42,938,691 Sale of Goods 7,225,965 8,215,498 7,225,965 8,215,498 Donations Received 1,086, ,437 1,086, ,437 Interest Received 190, ,087 14,626 56,331 Employee expenses (39,488,347) (35,112,748) (39,488,347) (35,112,748) Payments to Suppliers (18,630,983) (16,541,434) (18,518,158) (16,404,946) Rent Income 18, Interest on borrowing (52,818) (203,102) (29,140) - Resident deposits received 2,750,791 1,325,267 2,750,791 1,325,267 Resident deposits refunded (2,166,466) (1,877,535) (2,166,466) (1,877,535) Other Income 5,244,532 4,178,770 5,244,532 4,178,770 Net GST received/(paid) (2,599,853) (1,857,231) (2,608,443) (1,766,938) Investment Income/(Loss) 1,102, , Imputation Credits Received 153, , Grants Made - (49,450) - - Net Cash Provided by/(used in) Operating Activities ,768 2,599,826 (975,676) 2,127,087 Cash Flows from Investing Activities (Payments) for property, plant & equipment and Intangibles (2,054,510) (3,159,465) (1,526,477) (2,908,398) Proceeds for sale of property, plant & equipment and Intangibles 1,833, , , ,349 Payments for Investments (1,055,664) Redemption of Investments 2,112,989 1,375,612 29,394 - Net Cash Provided by/(used in) Investing Activities 835,977 (1,356,504) (1,063,920) (2,481,049) Cash Flows from Financing Activities Advances to associated entities - - (17,469,189) (17,311,602) Repayment of borrowings from associated entities ,866,726 16,200,000 Repayment of borrowings (1,641,837) (1,358,163) - - Net Cash Provided by/(used in) Financing Activities (1,641,837) (1,358,163) 2,397,537 (1,111,602) Net Increase/(Decrease) in cash held (459,092) (114,841) 357,941 (1,465,565) Cash and cash equivalents at beginning of financial year 3,393,921 3,508, ,186 2,047,751 Cash and cash equivalents at end of financial year 5 2,934,829 3,393, , ,186 The accompanying notes form part of these financial statements 11

12 FOR THE YEAR ENDED 30 JUNE 2015 This financial report includes the consolidated financial statements and notes of UnitingCare Wesley Adelaide Incorporated and Controlled Entities ( economic entity ) and the separated financial statements and notes of UnitingCare Wesley Adelaide Incorporated as an individual parent entity ( Parent Entity ). The financial statements were authorised for issue on 24 September 2015 by the Board. NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation These financial statements are general purpose financial statements that have been prepared in accordance with the Associations Incorporation Act(SA) 1985, Division 60 of the Australian Charities and Not-for-profits Commission Act 2012 and Australian Accounting Standards and Interpretations of the Australia Accounting Standards Board. The association is a not for profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated. The financial statements, except for the cash flow information, have been prepared on accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The amounts presented in the financial statements have been rounded to the nearest dollar. Accounting Policies a) Principles of Consolidation A controlled entity is any entity controlled by UnitingCare Wesley Adelaide Incorporated. Control exists where UnitingCare Wesley Adelaide Incorporated is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity. Details of the controlled entitles are contained in Note 15. All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. Where a controlled entity has entered or left the economic entity during the year its operating results have been included from the date control was obtained or until the date control ceased. b) Fair Value of Assets and Liabilities The association 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 association 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 the principal market for the asset or liability (ie the market with the greatest volume and level of activity for the asset or liability). In the absence of such a market, information is extracted from the most advantageous market available to the entity at the reporting date (ie the market that maximises the receipts from the sale of the asset or minimises the payment 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. The fair value of liabilities and the entity s own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of an identical or similar financial instrument, by reference to observable market information where identical or similar instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements. 12

13 FOR THE YEAR ENDED 30 JUNE 2015 c) Income Tax All Associations comprised in the economic entity have been endorsed as Income Tax Exempt Charities by the Australian Taxation Office and Board Members are therefore of the opinion that there is no liability for the payment of income tax. d) Inventories Inventories are measured at the lower of cost and net realisable value. e) Land and Buildings Held for Sale Land and buildings held for sale are valued at the lower of its carrying amount and fair value less cost to sell. f) Property, Plant and Equipment and Intangibles Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Property Freehold land and buildings are carried at their fair value (being the amount for which an asset could be exchanged between knowledgeable willing parties in an arm s length transaction), based on periodic, but at least triennial, valuations by external independent valuers, less accumulated depreciation for buildings. Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation surplus in equity. Decreases that offset previous increases of the same asset are recognised against revaluation surplus directly in equity; all other decreases are recognised in profit or loss. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. 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 losses. 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 and impairment losses are recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present. The cost of fixed assets constructed within the consolidated association includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. 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 association and the cost of the item can be measured reliably. All other repairs and maintenance are recognised as expenses in profit or loss in the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets including building and capitalised lease assets, is depreciated on a straight-line basis over the asset's useful life, 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 deprecation rates used for each class of depreciable asset are: All buildings are depreciated at 2.5% per annum. Leasehold improvements are depreciated at 20% per annum. Motor vehicles are depreciated at 25% per annum. Plant and equipment are depreciated at a rate between 7.5% % per annum. The asset's residual values and useful lives are reviewed and adjusted, if appropriate, at each balance date. 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 and losses are included in the statement of comprehensive income. Gains and losses are recognised in the profit or loss when the item is derecognised. Intangibles Software is recorded at cost. It has a finite life and is carried at cost less accumulated amortisation and any impairment losses. Software has an estimated useful life of between one and ten years. It is assessed annually for impairment. Previously, software was recorded in property, plant and equipment. The comparative figure has been adjusted to conform with the classification as intangible assets. 13

14 FOR THE YEAR ENDED 30 JUNE 2015 g) Financial Instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the association commits itself to either purchase or sell the asset (ie trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified "at fair value through profit or loss" in which case transaction costs are recognised as expenses in profit or loss immediately. Classification and subsequent measurement Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of income or expense in profit or loss. (i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised. (ii) Available-for-sale investments Available-for-sale investments are non-derivative financial assets that are either not capable of being classified into other categories of financial assets due to their nature or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. They are subsequently measured at fair value with any remeasurements other than impairment losses and foreign exchange gains and losses recognised in other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss. Available-for-sale financial assets are classified as non-current assets when they are not expected to be sold within 12 months after the end of the reporting period. All other available-for-sale financial assets are classified as current assets. (iii) Financial liabilities Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial liability is derecognised. 14

15 FOR THE YEAR ENDED 30 JUNE 2015 Impairment A financial asset (or a association of financial assets) is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events (a loss event ) having occurred, which has an impact on the estimated future cash flows of the financial asset(s). In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the instrument is considered to constitute a loss event. Impairment losses are recognised in profit or loss immediately. Also, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at this point. In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments; indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic conditions that correlate with defaults. For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced directly if no impairment amount was previously recognised in the allowance account. When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the association recognises the impairment for such financial assets by taking into account the original terms as if the terms have not been renegotiated so that the loss events that have occurred are duly considered. Derecognition Financial assets are derecognised where the contractual right to receipt of cash flows expires or the asset is transferred to another party, whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. h) Employee Benefits Short-term employee benefits Provision is made for the association s obligation for short-term employee benefits. Shortterm 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. Shortterm employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled. The association 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 annual leave entitlements not expected to be settled wholly before 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 end-ofreporting-period market yields on government bonds that have maturity dates approximating the terms of the obligations. Any remeasurements of other long-term employee benefit obligations due to changes in assumptions are recognised in profit or loss in the periods in which the changes occur. The association s obligations for long-term employee benefits are presented as noncurrent provisions in its statement of financial position, except where the association does not have an unconditional right to defer settlement for at least 12 months after the reporting date, in which case the obligations are presented as current provisions. i) Cash and Cash Equivalents Cash and cash equivalents include cash on hand and deposits held at-call with banks. 15

16 FOR THE YEAR ENDED 30 JUNE 2015 j) Accounts Receivable and Other Debtors Accounts receivable and other debtors include amounts due from members as well as amounts receivable from customers for goods sold 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. k) Revenue and Other Income 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. The following specific recognition criteria must also be met before revenue is recognised: Revenue from the sale of goods is recognised upon delivery of goods to customers. Government subsidies are brought to account as income during the year. To the extent Non-reciprocal grant revenue is recognised in the statement of profit or loss when the association obtains control of the grant and it is probable that the economic benefits gained from the grant will flow to the association and the amount of the grant can be measured reliably. If conditions are attached to the grant which must be satisfied before it is eligible to receive the contribution, the recognition of the grant as revenue will be deferred until those conditions are satisfied. When grant revenue is received whereby the association incurs an obligation to deliver economic value directly back to the contributor, this is considered a reciprocal transaction and the grant revenue is recognised in the statement of financial position as a liability until the service has been delivered to the contributor, otherwise the grant is recognised as income on receipt. Interest revenue is recognised using the effective interest rate method, which for floating rate financial assets is the rate inherent in the instrument. Dividend revenue is recognised when the right to receive a dividend has been established. Rent and fee income is brought to account as income during the year as the service is provided. To the extent that rents and fees are paid in advance, these are recognised as liabilities as at 30th June Donation income is recognised when received. Investment income is recognised when the income is received. All revenue is stated net of the amount of goods and services tax (GST). l) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Where the economic entity has retrospectively applied an accounting policy, made a retrospective restatement or reclassified items in its financial statements, an additional statement of financial position as at the beginning of the earliest comparative period will be disclosed. m) Accommodation bonds and Refundable Accommodation Deposits/Contributions Accommodation bonds are non-interest bearing deposits made by aged care facility residents to the economic entity upon their admission to low care and extra service accommodation. The liability for accommodation is carried at the amount that would be payable on exit of the resident. This is the amount received on entry of the resident less deductions for fees and retentions pursuant to the Aged Care Act Refundable Accommodation Deposits and Contributions are non-interest bearing deposits made by aged care facility residents to the economic entity upon their admission to accommodation. The liability for accommodation is carried at the amount that would be payable on exit of the resident. This is the amount received on entry of the resident less deductions for fees pursuant to the Aged Care Act Accommodation bonds, Refundable Accommodation Deposits and Contributions are classified as current liabilities as the economic entity does not have an unconditional right to defer settlement of the liability beyond 12 months after the reporting date. The obligation to settle could occur at any time. These amounts have been included in trade payables. Once a refunding event occurs the payable becomes interest bearing. The interest rate applied is the prevailing interest rate at the time as prescribed by the Department of Social Services. 16

17 FOR THE YEAR ENDED 30 JUNE 2015 n) Trade and Other Payables Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the economic entity during the reporting period, which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. o) Provisions Provisions are recognised when the economic entity 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 recognised represent the best estimate of the amounts required to settle the obligation at the end of the reporting period. p) Critical Accounting Estimates and Judgements The Board Members evaluate estimates and judgments incorporated into the financial report 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 economic entity. q) Impairment of Assets At the end of each reporting period, the association assesses whether there is any indication that an asset may be impaired. The assessment will consider both external 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 that asset, being the higher of the asset s fair value less costs to sell and its value-in-use, to the asset s carrying amount. Any excess of the asset s carrying amount over its recoverable amount is immediately recognised in profit or loss. Where the future economic benefits of the asset are not primarily dependent upon the asset s ability to generate net cash inflows and when the entity would, if deprived of the asset, replace its remaining future economic benefits, value in use is determined as the depreciated replacement cost of an asset. Where it is not possible to estimate the recoverable amount of an individual asset, the association estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where an impairment loss on a revalued asset is identified, this is recognised against the revaluation surplus in respect of the same class of asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that class of asset. 17

18 r) FOR THE YEAR ENDED 30 JUNE 2015 New Accounting Standards for Application in Future Periods The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the association. The association has decided not to early adopt any of the new and amended pronouncements. The association s assessment of the new and amended pronouncements that are relevant to the association but applicable in future reporting periods is set out below: AASB 9: Financial Instruments and associated Amending Standards (applicable for annual reporting periods commencing on or after 1 January 2018). The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for financial instruments, and simplified requirements for hedge accounting. The key changes that may affect the Association on initial application of include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for unexpected credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of this Standard, the application of such accounting would be largely prospective. Although the directors anticipate that the adoption of AASB 9 may have an impact on the Association s financial instruments, it is impracticable at this stage to provide a reasonable estimate of such impact. AASB 15: Revenue from Contracts with Customers (applicable for annual reporting periods commencing on or after 1 January 2017). When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers. The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process: - identify the contract(s) with a customer; - identify the performance obligations in the contract(s); - determine the transaction price; - allocate the transaction price to the performance obligations in the contracts; and - recognise revenue when (or as) the performance obligations are satisfied. This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue. Although the directors anticipate that the adoption of AASB 15 may have an impact on the Association s financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact. 18

19 FOR THE YEAR ENDED 30 JUNE 2015 NOTE 2 FINANCIAL RISK MANAGEMENT The economic entity s activities expose it primarily to the financial risks of liquidity, changes in interest rates and changes in market prices of listed equities and securities. The Board Members are responsible for the financial risks of the economic entity. They monitor these risks through regular meetings where monthly management accounts are presented and analysed. Liquidity Risk Liquidity risk is the risk that the economic entity will not be able to meet its financial obligations as they fall due. The economic entity has both short term and long term facilities which enable sufficient cash to be available to settle obligations as they fall due. The cash position of the economic entity is monitored on a weekly basis. Credit Risk Credit risk is the risk of financial loss to the economic entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The economic entity has exposure to credit risk through its receivables. Total credit risk for the economic entity is $3,748,087 (2014 $2,559,481). The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount of those assets, net of any provisions for doubtful debts, as disclosed in the balance sheet and the notes to the financial statements. The economic entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the economic entity. The economic entity does not hold any financial assets whose terms have been renegotiated, but for which would otherwise be past due or impaired. Market Risk Interest Rate Risk Interest rate risk is the risk that changes in interest rates will affect the economic entity s income or the value of its obligations, and arises on floating rate debt. The financial assets subject to floating interest rate risk are cash at bank and deposits. Other Market Risk Equity price risk arises from available for sale investments held by the economic entity in the form of investments in unlisted distributing trusts. The portfolio of investments is managed by external portfolio managers, who buy and sell equities based on their own analyses of returns. The funds are subject to risks of fluctuation in earnings and market values as a result of changes in the domestic and international markets. The asset position and returns are reported to the Board Members on a regular basis at the monthly board meeting. The Board Members monitor the effective returns, and instruct the fund managers to make any changes as required. 19

20 NOTE 3 FOR THE YEAR ENDED 30 JUNE 2015 (Continued) Consolidated Parent $ $ $ $ REVENUE Operating Activities Government Subsidies 44,667,524 41,446,556 44,667,524 41,446,556 Sale of Goods 1,371,945 2,218,202 1,371,945 2,218,202 Fees Received 5,348,956 5,246,599 5,298,956 5,246,599 Donations 1,086, ,437 1,086, ,437 Other Income 4,873,401 4,638,562 4,873,391 4,638,560 Total Operating Activities 57,348,277 54,124,357 57,298,267 54,124,355 Non-Operating Activities Dividends Received 1,615 1,697 1,615 1,697 Imputation Credits Received 163, , Interest Received 308, , , ,284 Investment Income 2,271,745 1,375, Profit (loss) on asset disposal 140, , , ,581 Profit & Loss on Investment 458, , Total Non-Operating Activities 3,343,740 2,389, , ,823 60,692,017 56,513,831 58,161,559 55,069,177 NOTE 4 OTHER EXPENSES Profit has been determined after: Advertising 213, , , ,953 Audit Fees 37,875 48,375 33,125 44,375 Bank Charges 1 16, ,081 Borrowing Costs 52, ,477 29,140 29,375 Brokerage & Client Costs 2,059,592 1,719,703 2,059,592 1,719,703 Contractors & Consultants 4,957,590 4,862,489 4,902,539 4,829,798 Cost of Sales 180, , , ,016 Doubtful Debts (10,953) 14,055 (10,953) 14,055 Grants Made - 49, Energy 516, , , ,728 Freight & Motor Vehicle Costs 1,059,448 1,100,383 1,059,448 1,100,383 Fund Raising & Special Events 142, , , ,775 Impairment of Assets held for sale - 68, Lease payments for premises 1,318,007 1,545,967 1,875,985 2,123,449 Legal Expenses 118,310 74,312 57,171 71,799 Other Operating expenses 645, , , ,571 Materials, Equipment & Medical Supplies 1,052,762 1,118,177 1,052,762 1,088,177 Meal Costs 540, , , ,603 Office, Computer & Insurance 1,896,227 2,007,695 1,896,227 2,007,683 Project Costs 193, , , ,702 Rates & Taxes 142, , , ,549 Repairs and Maintenance 634, , , ,731 Social Assistance 44,408 68,009 44,408 68,009 Staff training 803, , , ,328 Valuation fees 20,427 3,641 1, ,619,217 16,988,092 16,841,863 16,934,466 20

21 NOTE 5 FOR THE YEAR ENDED 30 JUNE 2015 (Continued) Consolidated Parent $ $ $ $ CASH AND CASH EQUIVALENTS Cash at Bank 899, , , ,866 Cash on Deposit 1,994,702 2,811, Cash on Hand 40,520 43,320 40,520 43,320 2,934,829 3,393, , ,186 Reconciliation of cash Cash on hand 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 on hand 2,934,829 3,393, , ,186 NOTE 6 TRADE AND OTHER RECEIVABLES Trade & Other Receivables 4,592,493 2,826,771 4,436,038 1,974,675 Sundry Debtor Loan - Erwin Vogt Foundation ,413,786 14,700,660 4,592,493 2,826,771 16,849,824 16,675,335 NOTE 7 INVENTORIES Finished Goods 28,097 79,358 28,097 79,358 28,097 79,358 28,097 79,358 NOTE 8 FINANCIAL ASSETS Non-Current Available for sale financial assets Funds under Management (at fair value) 39,119,920 37,217,152 28,332 64,336 Total Financial Assets 39,119,920 37,217,152 28,332 64,336 21

22 NOTE 8 FOR THE YEAR ENDED 30 JUNE 2015 (Continued) Consolidated Parent $ $ $ $ FINANCIAL ASSETS cont FINANCIAL RISK 1) Price Risk Sensitivity analysis - other price risk Investments are in unlisted distributing trusts. The group s investments are subject to price risk due to movements in the prices of the invesment markets. A 5% (2014 5%) increase at the reporting date in the All Ordinaries Index (which includes the majority of the group and parent entity s investments) would have increased consolidated profit by $1,954,579 (2014 $1,857,641), and an equal change in the opposite direction would have decreased consolidated profit by $1,954,579 (2014 $1,857,641). The group's investment portfolio as at end of June 2015 is represented by the following asset allocation: Asset Allocation Market Current Mix Benchmark $M % % Australian Equities % 31% International Equities % 19% Emerging Markets 1.4 4% 3% Global Fixed Interest 2.6 7% 10% Infrastructure % 13% Commodities 3.1 8% 10% Australian Direct Property % 15% Total Asset allocation % 100% 2) Interest Rate Risk Sensitivity analysis - interest rate risk Price risk for fixed interest securities arises from changes in fixed interest rates in Australia. This sensitivity analysis has assumed that the issuers credit risk rating has remained the same and movements in fair value recognised in equity have only arisen from changes in interest rates. Cash and cash equivalents are subject to interest rate risk as they earn interest at floating rates. Weighted Average Floating Interest Rate Effective Interest Rate Financial Assets % % $ $ Cash on hand 0.00% 0.00% 40,520 43,320 Cash at bank 0.75% 1.25% 899, ,129 Deposits at call 2.92% 3.02% 1,994,702 2,811,472 Total Cash Assets 2,934,829 3,393,921 3) Fair Value The net fair values of unlisted distributing trusts has been valued at the quoted market bid price at balance date. For other assets and other liabilities the net fair value approximates their carrying value. No financial assets and financial liabilities are readily traded on organised markets in standardised form other than listed investments. Financial assets where the carrying amount exceeds net fair values have not been written down as the association intends to hold these assets to maturity, unless the assets are considered impaired. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the balance sheet and in the notes to the financial statements. The carrying amounts for the available for sale financial assets are the same as their fair values. 22

23 NOTE 9 FOR THE YEAR ENDED 30 JUNE 2015 (Continued) Consolidated Parent $ $ $ $ ASSETS HELD FOR SALE, PPE & INTANGIBLES ASSETS HELD FOR SALE Land & Buildings held for sale 3,500,000 4,400, ,500,000 4,400, PROPERTY, PLANT & EQUIPMENT Freehold Land at Valuation 18,640,000 19,125, ,640,000 19,125, Buildings at Cost 453, Less: Accumulated Depreciation (6,206) , Buildings at Valuation 17,282,162 17,385, Less: Accumulated Depreciation (434,162) ,848,000 17,385, L/hold Improvements at Cost 242, , , ,017 Less: Accumulated Depreciation (205,189) (334,933) (205,189) (334,933) 37,234 73,085 37,233 73,085 Plant and equipment at cost 8,344,116 7,865,840 8,344,116 7,865,840 Less: Accumulated Depreciation (7,147,595) (6,587,994) (7,147,595) (6,587,994) 1,196,521 1,277,846 1,196,521 1,277,846 Motor Vehicles at cost 3,397,930 3,307,036 3,397,930 3,307,036 Less: Accumulated Depreciation (1,737,747) (1,476,748) (1,737,747) (1,476,748) 1,660,183 1,830,288 1,660,183 1,830,288 Plant & Equip at Cost - Funded 4,020,000 3,765,631 4,020,000 3,765,631 Less: Accumulated Depreciation (3,069,941) (2,680,414) (3,069,941) (2,680,414) 950,060 1,085, ,060 1,085,217 M/Vehicle at Cost - Funded 189, , , ,787 Less: Accumulated Depreciation (187,038) (188,836) (187,038) (188,836) 2,850 19,951 2,850 19,951 Work in Progress 81, Total 54,066,920 53,523,481 17,609,801 17,013,481 Less: Accumulated Depreciation (14,203,321) (12,727,093) (13,762,953) (12,727,093) Property, Plant & Equipment 39,863,597 40,796,388 3,846,848 4,286,388 INTANGIBLES Software and Licenses 791, , , ,026 Less: Accumulated Amortisation (141,959) (215,768) (141,959) (215,768) 649, , , ,258 Work In Progress 805, , , ,559 Total 1,596,869 1,726,584 1,596,869 1,726,585 Less: Accumulated Depreciation (141,959) (215,768) (141,959) (215,768) Intangibles 1,454,910 1,510,816 1,454,910 1,510,817 Under the terms of the agreements with some funding bodies, should funding for the relevant programs cease, the assets, or the proceeds from the sale of the funded assets recorded above may need to be returned to the funding bodies. The following buildings were Heritage Listed: Forsyth House (carrying value of $838,500) heritage listed on 20/11/1986 and Maturin House (carrying value of $1,072,500) listed under the Heritage Places Act This heritage listing may impact the maintenance costs of these buildings, the valuation of the buildings and depreciation rates going forward. Land and Buildings held for sale comprise of Kuitpo, SA (sold on the 22nd of August 2014) Dry Creek, SA (currently on lease and contracted to be sold on 12th April 2016) These assets held for sale are presented in the Association's Other Operations Business Segment 23