EACH Housing Limited ABN Financial report for the year ended 30 June 2018

Transcription

1 EACH Housing Limited Financial report for the year ended 30 June 2018

2 TABLE OF CONTENTS Financial Statements Directors' report 3 5 Auditor's Independence Declaration 6 Statement of Profit or Loss and Other Comprehensive Income 7 Statement of Financial Position 8 Statement of Changes in Equity 9 Statement of Cash Flows 10 Notes to the Financial Statements 1121 Directors' Declaration 22 Independent Audit Report 2324

3 DIRECTORS' REPORT Your directors present this report on the company for the financial year ended 30 June Directors The names of each person who has been a director during the year and to the date of this report are: Mrs. Judith Lillian Woodland (Chair) Mr. David Leslie Agnew (Secretary) Mr. Leslie Philip Smart Ms Dorothy Anne Barber Mr. Shane Smith Ms. Dawn InmanWyness Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Principal Activities The principal activity of the company during the financial year was providing social housing to a specialised sector of tenants primarily in the outer east of Melbourne. Through an integrated process, EACH Housing Limited (EHL) tenants are predominantly referred by EACH Mental Health and Family support teams with continuing support provided to the tenants. Short term and long term objectives The company's shortterm objectives include the following: To explore further Specialist Disability Accommodation projects Through partnerships, to ensure our tenants are well supported in relation to the transition to the NDIS The company's longterm strategic objectives are to undertake the following: To continue to grow housing stock for accommodation for the most disadvantaged in our communities. To ensure housing sustainability for tenants and to support the development of their health and social inclusion. Key Performance Measures The company measures its own performance through the use of both quantitative and qualitative assessment. The benchmarks are used by the directors to assess the financial sustainability of the company and whether the company's strategic objectives are being achieved Properties Tenancies Number of Occupants Average Occupancy Rate 97% 95% Average Length of Tenancy 3.30 yrs 3.27 yrs Percent of Tenancies > 5 yrs 14.91% 18.18% Arrears as Percent of Rental Income 0.5% 0.0% Page 3

4 DIRECTORS' REPORT DIRECTORS' REPORT Information on Directors Mrs. Judith Lillian Woodland Chair (nonexecutive) Qualifications Qualified Speech Pathologist Postgraduate Certificate in Assessment and Evaluation Experience Judith gained experience in both the community and public sectors through an evolving career with experience in direct service delivery, management of multidisciplinary teams, and statewide program management and policy development. She has experience in various sectors including, health, welfare, community services and education. Mr. David Leslie Agnew Secretary (nonexecutive) Qualifications Barrister and solicitor Graduate Diploma in Legal Studies Experience More than 25 years of experience as a corporate lawyer and as a senior manager in the financial services and insurance industry before joining the not for profit sector in He was CEO of Very Special Kids for 8 years before retiring in Mr. Leslie Philip Smart Director Qualifications Certified Practising Accountant (retired) Registered Auditor (retired) Inspector of Municipalities (retired) Experience More than 50 years of business experience involving professional accounting, tax, audit and management with former directorates and/or senior management roles in companies involving insurance, agriculture pursuits, private equity management, educational materials, publishing, construction, property development and building material manufacture. Ms. Dorothy Anne Barber Qualifications Experience Director Bachelor of Social Work Extensive experience in social welfare and previous directorships in community health and mental health services. Involvement and advocacy for community projects and groups. Mr Shane Smith Qualifications Experience Director MBA Bachelor of Business (Economics) Graduate Australian Institute of Company Directors Shane has extensive experience in finance and budget management and service delivery across health, human and consumer services having worked in governent and notforprofit sectors for more than 20 years. He is currently the Director of Social Impact Mangement, a boutique management advisory firm that focuses on improving social outcomes for vulnerable cohorts. Page 4

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6 Declaration To the Directors of EACH Housing Limited I declare that, to the best of my knowledge and belief, during the year ended 30 June 2018 there have been: (i) (ii) No contraventions of the auditor independence requirements as set out in the Australian Charities and Notforprofits Commission Act 2012, in relation to the audit, and No contraventions of any applicable code of professional conduct in relation to the audit. ShineWing Australia Chartered Accountants Hayley Underwood Partner Melbourne, 19 October 2018 ShineWing Australia ABN Liability limited by a scheme approved under Professional Standards Legislation. ShineWing Australia is an independent member of ShineWing International Limited members in principal cities throughout the world.

7 STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE $ $ Income Rental income 539, ,791 Interest income 15,728 13,180 Grants income 4,561,993 Other income 42,119 8,068 Total Income 597,268 4,997,032 Expenses Occupancy expense 18,797 13,167 Employee benefit expense 141, ,357 Project expenses 6,850 Impairment charges 82,500 Asset usage charges 11,835 7,328 Depreciation 369, ,762 Finance charges 1, Corporate charges 92,082 53,674 Site costs 51,642 41,996 Utilities 12,707 29,037 Audit fees 24,233 19,760 Other administrative expenses 174, ,618 Total Expenses 898, ,745 Surplus/(Deficit) Before Income Tax (300,739) 4,325,287 Income tax expense Net Current Year Surplus/(Deficit) (300,739) 4,325,287 Other Comprehensive Income: Total Other Comprehensive Income (300,739) 4,325,287 Total Comprehensive Income/(Loss) (300,739) 4,325,287 Total Comprehensive (Loss)/Income attributable to members of the entity (300,739) 4,325,287 The accompanying notes form part of these financial statements. Page 7

8 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 Note $ $ Assets Current Assets Cash and Cash Equivalents 2 191,678 23,367 Financial Assets 3 673,497 Accounts Receivable and Other Debtors 4 5,088 13,253 Total Current Assets 196, ,117 NonCurrent Assets Property, plant and equipment 5 9,511,735 9,892,898 Total NonCurrent Assets 9,511,735 9,892,898 Total Assets 9,708,501 10,603,015 Liabilities Current Liabilities Trade and Other Payables 6 16,529 60,380 Shortterm Provisions 6 2,520 5,831 Intercompany Loan Due to EACH 6 247, ,378 Total Current Liabilities 266, ,589 NonCurrent Liabilities Intercompany Loan Due to EACH 10 2,768,677 2,768,617 Total NonCurrent Liabilities 2,768,677 2,768,617 Total Liabilities 3,035,431 3,629,206 Net Assets 6,673,070 6,973,809 Equity Retained Surplus 6,673,070 6,973,809 Total Equity 6,673,070 6,973,809 The accompanying notes form part of these financial statements. Page 8

9 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018 Note Retained Total Surplus Equity $ $ 2016/17 Balance at 1 July ,648,522 2,648,522 Comprehensive Income Surplus/(Loss) attributable to members of the entity 4,325,287 4,325,287 Other Comprehensive Income for the year Total Comprehensive Income/(Expense) attributable to members of the entity 4,325,287 4,325,287 Balance at 30 June ,973,809 6,973, /18 Balance at 1 July ,973,809 6,973,809 Comprehensive Income Surplus/(Loss) attributable to members of the entity (300,739) (300,739) Other Comprehensive Income for the year Total Comprehensive Income/(Expense) attributable to members of the entity (300,739) (300,739) Balance at 30 June ,673,070 6,673,070 The accompanying notes form part of these financial statements. Page 9

10 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018 Note $ $ Cash flows from Operating Activities Receipts from rental and other income 589,705 4,976,365 Payments to suppliers and employees (563,778) (1,694,135) Interest Received 15,728 13,180 Net cash (used in)/generated from operating activities 7 41,655 3,295,410 Cash Flows from Investing Activities Purchase of property, plant and equipment (12,063) (7,317,994) Net cash used in investing activities (12,063) (7,317,994) Cash Flows from Financing Activities Proceeds from related party loans 3,562,995 Repayment of related party loans 7(c) (534,778) Net cash proceeds / (used in) financing activities (534,778) 3,562,995 Net (decrease)/increase in cash held (505,186) (459,589) Cash at the beginning of the financial year 696,864 1,156,453 Cash at the end of the financial year 2,3 191, ,864 The accompanying notes form part of these financial statements. Page 10

11 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 The financial statements cover EACH Housing Limited as an individual entity, incorporated and domiciled in Australia. EACH Housing Limited is a company limited by guarantee. The financial statements were authorised for issue on 18 October 2018 by the directors of the company. NOTE1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation The financial statements have been prepared on the basis that the company is a nonreporting entity because there are no users who are dependent on its general purpose financial statements. These financial statements are therefore special purpose financial statements that have been prepared in order to meet the requirements of the Australian Charities and Notforprofits Commission Act The company is a notforprofit entity for financial reporting purposes under Australian Accounting Standards. The financial statements have been prepared in accordance with the mandatory Australian Accounting Standards applicable to entities reporting under the Australian Charities and Notforprofits Commission Act 2012 and the significant accounting policies discussed below, which the directors have determined are appropriate to meet the needs of members. Such accounting policies are considered with these of previous periods unless stated otherwise. The financial statements, except for the cash flow information, have been prepared on an accrual basis and are based on historical costs unless otherwise stated in the notes. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise. The amounts presented in the financial statements have been rounded to the nearest dollar. Going Concern For the year ended 30 June 2018, the company had an operating deficit of $300,739 (2017: Surplus $4,325,287) and a net current asset deficiency of $69,988 (2017: $150,472) The financial statements have been prepared on a going concern basis because EACH (parent entity) has committed to providing financial assistance where required to EACH Housing Limited to continue to pay its debts as when they fall due. Accounting Policies a. Revenue Nonreciprocal grant revenue is recognised in the profit or loss when the entity obtains control of the grant and it is probable that the economic benefits gained from the grant will flow to the entity 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 entity 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. EACH Housing Limited receives nonreciprocal contributions of assets from the government and other parties for zero or a nominal value. These assets are recognised at a fair value on the date of acquisition in the statement of financial position, with a corresponding amount of income recognised in the profit or loss. Donations and bequests are recognised as revenue when received. Page 11

12 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Note 1: Summary of Significant Accounting Policies (continued) Interest revenue is recognised as it accrues using the effective interest 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. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. Rental income is recognised on an accrual basis and is determined based on when the right to receive is established. All revenue is stated net of the amount of goods and services tax. b. Property, Plant and Equipment Land and Buildings Each class of property, plant and equipment is carried at cost or fair value as indicated, less, where applicable, accumulated depreciation and any impairment losses. Freehold land and buildings are shown at fair value based on periodic valuation, with at least triennial valuation by external independent valuers. When land and buildings are purchased as a single property, a valuation for splitting the price of the land and building is done at the time of recording the asset. In periods when the freehold land and buildings are not subject to an independent valuation, the directors conduct directors' assessment to ensure the carrying amount for the land and buildings is not materially different to the fair value. Increases in the carrying amount arising on revaluation of land and buildings are recognised in other comprehensive income and accumulated in the revaluation surplus in equity. Revaluation decreases that offset previous increases of the same class of assets shall be recognised in other comprehensive income under the heading of revaluation surplus. All other decreases are recognised in profit or loss. Any accumulated depreciation at the date of the revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Freehold land and buildings that have been contributed at no cost or for nominal cost are valued and recognised at the fair value of the asset at the date it is acquired. Furniture and equipment Furniture and equipment are measured on a cost basis less depreciation and any impairment losses. The carrying amount of furniture and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets' employment and subsequent disposal. The expected net cash flow have been discounted to their present values in determining recoverable amounts. In the event that the carrying amounts of furniture and equipment is greater that the 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(e) for details of impairment). Furniture and equipment that have been contributed at no cost, or for nominal cost, are recognised at the fair value of the asset at the date it is acquired. Capital work in progress The cost of development properties includes expenditure incurred in acquiring the property, preparing it for use and borrowing costs incurred, where applicable. Depreciation The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a straightline basis over the assets 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 Furniture and equipment 10.0 to 40.0% Buildings 2.5 to 5.0% Leasehold improvements 5.0 to 15.0% 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 that its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are recognised in profit or loss in the period in which they arise. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained surplus. Page 12

13 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Note 1: Summary of Significant Accounting Policies (continued) c. Leases Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset (but not the legal ownership) that are transferred to entities in the economic entity, are classified as finance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the 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 straightline basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses on a straightline basis over the lease term. d. 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 company commits itself to either purchase or sales of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs except where the instrument is classified "at a fair value through profit or loss", in which case transaction costs are expensed to 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. 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 equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through 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 an income or expense item in profit or loss. Fair value is the price the company would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models. (i) Loans and receivables Loans and receivables are nonderivative 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. Page 13

14 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Note 1: Summary of Significant Accounting Policies (continued) (ii) Financial liabilities Nonderivative 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. Impairment At the end of each reporting period, the company assesses whether there is objective evidence that a financial asset has been impaired. A financial asset (or a group 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 flow of the financial asset(s). In the case of availableforsale financial assets, a significant or prolonged decline in the market value will be immediately reflected in the profit or loss. Also, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified into 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 the management establishes that the carrying amount cannot be recovered by any means, at that point the writtenoff 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 accounts. When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the company recognises that the impairment for such financial assets by taking into account the original terms as it 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 rights to receipt of cash flows expire 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, which is extinguished or transferred to another party, and the fair value of consideration paid, including the transfer of noncash assets or liabilities assumed, is recognised in profit or loss. e. Impairment of Assets At the end of each reporting period, the entity reviews the carrying amount of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair amount less costs of disposal and value in use, is compared 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. 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. Page 14

15 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Note 1: Summary of Significant Accounting Policies (continued) Where it is not possible to estimate the recoverable amount of a class of asset, the entity estimates the recoverable amount of the cashgenerating unit to which the asset belongs. Where an impairment loss on a revalued asset is identified, this is debited 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 same class of asset. f. Employee Provisions Shortterm Employee Benefits Provision is made for the company's obligation for shortterm 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 on 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 company's obligation for shortterm employee benefits such as wages, salaries and sick leave are recognised as a part of accounts payable and other payables in the statement of financial position. g. h. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held atcall with banks, other shortterm highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within shortterm borrowings in current liabilities on the statement of financial position. Accounts Receivable and Other Debtors Accounts receivable and other debtors include amounts due from tenants and any outstanding grant receipts. 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 noncurrent assets. i. 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 flow 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 j. Income Tax No provision for income tax has been raised as the entity is exempt from income tax under DIV 50 of the Income Tax Assessment Act k. Provisions Provisions are recognised when the 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. Page 15

16 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Note 1: Summary of Significant Accounting Policies (continued) l. m. Comparative Figures Where required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Accounts Payable 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 company during the reporting period which remain unpaid. The balance is recognised as a current liability with the amount being normally paid within 30 days of recognition of the liability. n. 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 as reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the company. The entity has recognised project expenses and grants income where it is considered likely to be recoverable. o. New Accounting Standards for Application in Future Periods Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Company, together with an assessment of the potential impact of such pronouncements on the Company when adopted in future periods, are discussed below: AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after 1 January 2018) AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and includes revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for financial instruments, revised impairment requirements and simplified requirements for hedge accounting. The revised requirements include: simplifications to the classification of financial assets simplifications to the accounting of embedded derivatives an expected loss impairment model the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of nonfinancial items. The financial assets and liabilities of the Company consist of cash, receivables and payables. Therefore, the directors do not expect a material impact on transition to AASB 9. AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January 2018) [1] NFP entities applicable date is 1st January This Standard will replace the current accounting requirements applicable to revenue with a single, principlesbased 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 nonmonetary 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 fivestep 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 obligation in the contract; and recognise revenue when (or as) the performance obligation is satisfied. Page 16

17 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Note 1: Summary of Significant Accounting Policies (continued) o. New Accounting Standards for Application in Future Periods continued The directors have made a preliminary/detailed assessment of the impact, which will result in the following adjustments on transition identification and categorisation of performance obligations on each contract, which would influence the timing of revenue recognition on each contract deliverable capitalisation of costs incurred in procuring a contract that is expensed under the existing accounting policies; upfront estimation of credit risk applicable to each customer and factoring the same in the revenue recognition of each contract; and estimation of the variable consideration in the transaction price and including that portion in the revenue recognition on the contract for the current year. The revenue of the company is derived from rental income which the performance obligations are satisfied as rental services are provided. Therefore, the directors expect that there will be no material impact on transition to AASB 15. AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019). When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases. The main changes introduced by the new Standard include: recognition of a righttouse asset and liability for all leases (excluding shortterm leases with less than 12 months of tenure and leases relating to lowvalue assets); depreciation of righttouse assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components; variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date; by applying a practical expedient, a lessee is permitted to elect not to separate nonlease components and instead account for all components as a lease; and additional disclosure requirements. The directors expect that the adoption of AASB 16 will result in lease assets and liabilities being recognised on balance sheet and a change in how related expenses are incurred. The financial impact of this has not yet been determined. AASB 1058: Income of NotforProfit Entities (applicable to annual reporting periods beginning on or after 1st January 2019). AASB 1058 applies to transactions where the consideration to purchase an asset is significantly less than its fair value in order to support the entity to further its objectives. It also applies to volunteer services. The following are the key requirements in this standard: Income arising from the excess of the initial carrying amount of an asset over the related contributions by owners, increases in liabilities, decreases in assets, and revenue should be immediately recognised in profit or loss. For this purpose assets, liabilities and revenue are to be measured in accordance with the applicable standard; A liability is recognised for the excess of the initial carrying amount of a financial asset (received in a transfer to enable the entity to acquire or construct a recognisable nonfinancial asset that is to be controlled by the entity) over any related amounts recognised in accordance with other standards. This liability has to be amortised to profit or loss as the entity satisfies its obligations under the transfer; and An entity may elect to recognise volunteer services or a class of volunteer services as an accounting policy choice if the fair value of those services can be measured reliably, whether or not the services would have been purchased if they had not been donated. Recognised volunteer services shall be measured at fair value and any excess over the related amounts (such as contribution by owners or revenue) should be immediately recognised in profit or loss. Although the directors anticipate that the adoption of AASB 1058 may have an impact on the Company's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact. AASB 20168: Amendments to Australian Accounting Standards Australian Implementation Guidance for NotforProfit Entities (applicable to annual reporting periods beginning on or after 1 st January 2019) This standard adds appendix F to AASB 15 to provide additional guidance on the application of AASB 15 in the context of notforprofit entities. It also adds Appendix C to AASB 9. Although the directors anticipate that the above amendments may have an impact on the Company's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact. Page 17

18 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 2: CASH AND CASH EQUIVALENTS $ $ CURRENT Cash at bank 191,678 23, ,678 23,367 NOTE 3: FINANCIAL ASSETS $ $ CURRENT Short term bank deposits 673, ,497 NOTE 4: ACCOUNTS RECEIVABLE AND OTHER DEBTORS $ $ CURRENT Accounts receivable 5,088 1,133 GST receivable 7,780 Other debtors 4,340 Total current accounts receivable and other debtors 5,088 13,253 NOTE 5: PROPERTY, PLANT AND EQUIPMENT $ $ Furniture and equipment: At cost 63,492 55,169 Less accumulated depreciation (21,389) (12,660) Total Furniture and Equipment 42,103 42,509 Buildings: At cost 2,557,278 2,552,087 Less accumulated impairment loss (82,500) (82,500) Less accumulated depreciation (102,986) (4,200) Total Buildings 2,371,792 2,465,388 Leasehold Improvements: At cost 3,891,310 3,891,310 Less accumulated depreciation (362,470) (76,761) Total Leasehold Improvements 3,528,840 3,814,549 Land: At cost 3,569,000 3,569,000 Total Land 3,569,000 3,569,000 Capital Works in Progress: At cost 1,452 Total Capital Works in Progress 1,452 Total Property, Plant and Equipment 9,511,735 9,892,898 Page 18

19 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE NOTE 6: ACCOUNTS PAYABLE AND OTHER PAYABLES CURRENT $ $ Creditors and Accrued expenses 16,529 6,200 Intercompany Loan due to EACH 247, ,378 Other Current payables 54,180 Total Trade and Other Payables 264, ,759 Shortterm Provisions 2,520 5,831 Total Current Liabilities 266, ,589 NOTE 7: CASHFLOW INFORMATION (a) Reconciliation of Cash $ $ Cash at the end of the financial year as shown in the statement of Cash Flows is reconciled in the Statement of Financial Position as follows: Cash and Cash Equivalents 191,678 23,367 Short Term Bank Deposits 673, , ,864 (b) Reconciliation of cash flows from operations with net current year surplus $ $ Net current year surplus (300,739) 4,325,287 Noncash flows Other noncash adjustments 381, ,788 Changes in assets and liabilities (increase)/decrease in accounts receivable and other debtors 8,165 (7,487) increase/(decrease) in accounts payable and other payables (43,850) (1,198,350) increase/(decrease) in employee provisions payable (3,311) 5,172 Cash flows (used in)/provided by operating activities 41,655 3,295,410 (c) Reconciliation of Liabilities arising from Financing Activities 1Jul17 Cash Flows Foreign Exchange Movement Fair Value Changes Other 30Jun18 $ $ $ $ $ $ Intercompany Loan 3,562,995 (534,778) 11,835 3,016,382 Payable Total Liabilities from 3,562,995 (534,778) 11,835 3,016,382 financing activites Page 19

20 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 8: CONTINGENT LIABILITIES AND CONTINGENT ASSETS There are no bank guarantees or other contingent assets outstanding as at 30 June 2018 (2017: NIL). Please refer note 10(iii) for other contingent liabilities. NOTE 9: MEMBERS' GUARANTEE The company is incorporated under the Corporations Act 2001 and is a company limited by guarantee. If the company is wound up, the constitution states that each member is required to contribute a maximum of $20 towards meeting any outstanding obligations of the entity. At 30 June 2018, the number of members was 10. NOTE 10: RELATED PARTY TRANSACTIONS (i) Related Parties During the year the company engaged in the following transactions with the entities in which the Board members have a significant influence. The following directors of EHL are also directors in EACH: Mrs Judith Lillian Woodland Chair Mr David Leslie Agnew Secretary Mr. Leslie Philip Smart Director Ms. Dorothy Anne Barber Director (íi) Property and title EACH owns six (2017: six) properties used by EHL for the provision of social housing. The depreciation on the properties has been re charged to EHL's income statement as asset usage charges to reflect the true cost of operation. (iii) Capital Projects Two capital projects Greenwood Avenue, accommodation for six tenants and Officer, accommodation for two tenants have been completed and commenced operations in 2016/17. The land for both projects has been made available by EACH under a tripartite deed between EACH, EHL and the Supported Accommodation Innovation Fund (SAIF). EACH guarantees repayment of the funding in case of a material breach of the provisions of the funding agreement. The total value of the project is $3,891,310 and the funding received up to 30 June 2017 amounted to $3,212,870. The remaining balance was funded by a non current loan from EACH to the value of $708,740. The outstanding balance of this loan as at 30 June 2018 was $708,740 During 2016/17 EACH had loaned to EHL $2,059,877 towards the purchase of 16 properties under the Department of Health and Human Services (DHHS) funded programs. This loan is noncurrent and has no scheduled repayments. The balance of the properties cost was funded by DHHS. The outstanding balance of this loan as of 30 June 2018 was $2,059,877. The treatment of the above Rapid Housing loan is a non interest bearing loan to EHL from which the payable amount is determined with reference to the market value of the principal properties subject to the loan agreement between EACH and EHL. Page 20

21 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 10: RELATED PARTY TRANSACTIONS (Cont) (iv) Support Services EACH provided business support services to EHL during the financial year. The services charge by EACH to EHL was 11% of operating revenue (2017: 11%) (v) Asset usage charges to EHL for assets owned by EACH, amounts to $11,835 (2017: $7,328). This amount is the same as the depreciation charged in EACH's accounts. (vi) Amounts due to EACH of $247,705 (2017: $794,378) are temporary current account balances due to payroll / working capital funding that EACH has provided and will be settled in subsequent periods. Transactions between related parties are on a normal commercial terms and conditions and are no more favourable than those available to other persons unless otherwise stated. NOTE 11: ENTITY DETAILS The registered office of the company is: EACH Housing Limited Building 1 Level 1 20 Melbourne Street Ringwood VIC 3134 The principle place of business is: EACH Housing Limited Building 1 Level 1 20 Melbourne Street Ringwood VIC 3134 Page 21

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23 TO THE MEMBERS OF EACH HOUSING LIMITED Opinion We have audited the financial report of EACH Housing Limited Company financial position as at 30 June 2018, the statement of profit or loss and comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors declaration. In our opinion, the accompanying financial report of the Company is in accordance with Division 60 of the Australian Charities and Notforprofits Commission Act 2012, including: a) giving a true and fair view of the financial position as at 30 June 2018 and of its financial performance and cash flows for the year then ended; and b) complying with Australian Accounting Standards to the extent described in Note 1 and Division 60 of the Australian Charities and Notforprofits Commission Regulation Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Code of Ethics for Professional Accountants tralia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter Basis of Accounting We draw attention to Note 1 to the financial report, which describes the basis of accounting. The financial report has been prepared for the purpose of fulfilling the financial reporting responsibilities under the Australian Charities and Notforprofits Commission Act As a result, the financial report may not be suitable for another purpose. Our opinion is not modified in respect of this matter. Report Thereon The directors are responsible for the other information. The other information comprises the information included in annual report for the year ended 30 June 2018, but does not include the financial report and our port thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. ShineWing Australia ABN Liability limited by a scheme approved under Professional Standards Legislation. ShineWing Australia is an independent member of ShineWing International Limited members in principal cities throughout the world.

24 Responsibilities of the Directors for the Financial Report The directors are responsible for the preparation of the special purpose financial report that gives a true and fair view and have determined that the basis of preparation described in Note 1 to the financial report is appropriate to meet the requirements of the Australian Charities and Notfor Profits Commission Regulations 2013 and the Australian Charities and Notforprofits Commission Act 2012 and is appropriate to meet the needs of the members. l as the directors 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. In preparing the special purpose financial report, the directors are responsible for assessing the ability of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. We conclude on the appropriateness of the use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability to continue as a going concern. If we conclude that a material uncertainty such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained Company to cease to continue as a going concern. We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

25 We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them, all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. ShineWing Australia Chartered Accountants Hayley Underwood Partner Melbourne, 19 October 2018