AUSTRALIAN AND NEW ZEALAND ASSOCIATION OF NEUROLOGISTS EDUCATION & RESEARCH FOUNDATION INC. A.B.N FINANCIAL REPORT

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1 AUSTRALIAN AND NEW ZEALAND ASSOCIATION OF NEUROLOGISTS EDUCATION & FINANCIAL REPORT

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6 STATEMENT OF COMPREHENSIVE INCOME Note Revenue 2 601, ,210 Expenses (51,262) (161,373) Profit before income tax 3 550,638 44,837 Income tax expense relating to ordinary activities Profit from operations after income tax 550,638 44,837 Net gain (loss) on revaluation of financial assets 59,056 (37,045) Other comprehensive income for the year net of tax 59,056 (37,045) Total comprehensive income for the year 609,694 7,792 Total comprehensive income attributable to members of the entity 609,694 7,792 The accompanying notes form part of these financial statements Page 6

7 BALANCE SHEET AS AT 28 FEBRUARY 2013 Note CURRENT ASSETS Cash and cash equivalents 4 69,028 94,751 Other current assets ,735 TOTAL CURRENT ASSETS 69, ,486 NON-CURRENT ASSETS Financial assets 6 2,440,480 1,798,924 TOTAL NON-CURRENT ASSETS 2,440,480 1,798,924 TOTAL ASSETS 2,510,104 1,900,410 TOTAL LIABILITIES - - NET ASSETS 2,510,104 1,900,410 EQUITY Reserves 7 86,213 27,157 Accumulated Funds 8 2,423,891 1,873,253 TOTAL EQUITY 2,510,104 1,900,410 The accompanying notes form part of these financial statements Page 7

8 STATEMENT OF CHANGES IN EQUITY Retained Financial Earnings Asset Reserve Balance 1 March ,738,421 (169,088) Profit for the 2010 year 89,995 - Revaluation increment (decrement) - 110,797 Balance as at 28 February ,828,416 64,202 Profit for the 2012 year 44,837 - Revaluation increment (decrement) - (37,045) Balance as at 28 February ,873,253 27,157 Profit for the 2013 year 550,638 - Revaluation increment (decrement) - 59,056 Balance as at 28 February ,423,891 86,213 The accompanying notes form part of these financial statements Page 8

9 CASH FLOW STATEMENT AS AT 28 FEBRUARY 2013 Note Cash flows from operating activities Receipts from customers 532, ,657 Interest received 33,088 13,721 Payments to suppliers (58,261) (157,313) Tax (paid) received 6,999 1,205 Net cash inflow (outflow) from operating activities 514,323 50,270 Cash flows from investing activities Proceeds from sale of Investments 1,342,142 1,645,765 Purchase of investments (1,882,188) (2,016,732) Net cash inflow (outflow) from investing activities (540,046) (370,967) Net decrease in cash held (25,723) (320,697) Cash at beginning of the year 94, ,448 Cash at the end of the year 4 69,028 94,751 CASH FLOW INFORMATION Reconciliation of Cash Flow from operations with Profit from ordinary activities after income tax. Profit from ordinary activities after income tax 550,638 44,837 Non Cash items (Profit) Loss on sale of investments 42,455 5,265 Changes in Assets and Liabilities: Decrease (increase) in receivables 6, Net cash Provided by Operating Activities 514,323 50,270 Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flow is reconciled to items in the statement of financial position as follows: Cash at bank 69,028 97,751 (b) The company has no credit stand-by or financing facilities in place. (c) There were no non-cash financing or investing activities during the year The accompanying notes form part of these financial statements Page 9

10 NOTES TO THE FINANCIAL STATEMENTS 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES This financial report is a general purpose financial report prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board and the requirements of the Association Incorporation Act (WA) The financial report covers the Australian and New Zealand Association of Neurologists Education & Research Foundation Inc. as an individual entity. The Australian and New Zealand Association of Neurologists Education & Research Foundation Inc. is an association incorporated in Western Australia under the Association Incorporation Act (WA) The financial report has been prepared on an accruals basis and is based on historic costs and does not take into account changing money values, or except where specifically stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. The following is a summary of the material accounting policies adopted by the Foundation in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. Income Tax The Foundation is exempt from income tax under Section 50-5 of the Income Tax Assessment Act, 1997, as a non-profit Foundation established for the encouragement of science. Cash and cash equivalents For the purposes of the Statement of Cash Flows, cash includes cash on hand, at banks and on deposit. Financial Instruments Initial recognition and measurement Financial assets, comprising trade and other receivables, cash and cash equivalents, financial assets and trade and other payables, are initially measured at fair value on trade date, which includes transaction costs, when the related contractual rights or obligations exist except where the instrument is classified at fair value through profit & loss in which case transaction costs are expensed to profit & loss immediately. Classification and subsequent measurement Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest rate 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: 1 the amount at which the financial asset or financial liability is measured at initial recognition 2 less principal repayments 3 plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognized and the maturity amount calculated using the effective interest method; and 4 less any reduction for impairment Page 10

11 NOTES TO THE FINANCIAL STATEMENTS 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The effective interest rate method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transa ction 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 value with a consequential recognition of an income or expense in profit or loss. Financial assets at fair value through profit & loss Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking, or when they are derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management strategy. Such assets are subsequently measured at fair value with changes in carrying value included in profit or loss. 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. Available-for-sale financial assets Available for sale assets 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 determinable payments. Held to maturity These investments have fixed maturities, and it is the company s intention to hold these investments to maturity. Any held to maturity investments held by the company are stated at amortised cost using the effective interest rate method. Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Fair value 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. Impairment At each reporting date, the board assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the statement of comprehensive income. Impairment of Assets At each reporting date, the board reviews the carrying values of it 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 assets fair value less cost to sell and value in use, is compared to the assets carrying value. Any excess of the assets carrying value over its recoverable amount is expensed to the statement of comprehensive income. Page 11

12 NOTES TO THE FINANCIAL STATEMENTS 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES De-recognition Financial assets are de-recognised 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 de-recognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and their fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. Revenue Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the investments. Donations are recognised on a receipts basis. Goods & 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. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST. Adoption of New and Revised Accounting Standards During the current year, the Foundation has adopted all of the new and revised Australian Accounting Standards and Interpretations applicable to its operations which became mandatory. The adoption of these standards has impacted the recognition, measurement and disclosure of certain transactions. The following is an explanation of the impact the adoption of these Standards and Interpretations has had on the financial statements of the Australian and New Zealand Association of Neurologists Research Foundation. AASB 9: Financial Instruments (December 2010) and AASB : Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) {AASB 1,3,4,5,7,101,102,108,112,118,120,121,127,128,131,132,136,137,139,1023 & 1038 and Interpretations 2,5,10,12,19& 127} (applicable for annual reporting periods commencing on or after 1 January 2013). These Standards are applicable retrospectively and include revised requirements for the classification and measurement of financial instruments, as well as recognition and de-recognition requirements for financial instruments. The key changes made to accounting requirements include: - simplifying the classification of financial assets into those carried at amortised cost and those carried at fair value; - simplifying the requirements for embedded derivatives ; - removing the tainting rules associated with held-to-maturity assets; - removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost; During the current year the company adopted all of the new and revised Australian Accounting Standards and Interpretations applicable to its operations which became mandatory. Page 12

13 NOTES TO THE FINANCIAL STATEMENTS 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Note The adoption of these standards has not impacted the recognition, measurement and disclosure of any transactions. The following is an explanation of the impact the adoption of these standards and interpretations has had on the financial statements of the Australian & New Zealand Association of Neurologists Education & Research Foundation Inc. The company s financial statements now contain a statement of comprehensive income. Other comprehensive income - The revised AASB 101 introduces the concept of other comprehensive income which comprises income and expenses that are not recognised in profit or loss as required by other Australian Accounting Standards. Items of other comprehensive income are to be disclosed in the statement of comprehensive income. Entities are required to disclose the income tax relating to each component of other comprehensive income. The previous version of AASB 101 did not contain an equivalent concept. 2 REVENUES Donations received 440, ,141 Gain on sale of investments 42,455 - Interest received 33,088 7,332 Portfolio income 86,357 88, , ,211 3 PROFIT Profit before income tax expense has been determined after: Charging as Expense: Audit & accountancy fees 2,635 2,400 Awards 23, ,000 Investment advisor fees 10,459 16,708 Brain School fees 15,000 20,000 Loss on disposal of Investments - 5,265 4 CASH & CASH EQUIVALENTS Cash at bank 69,025 94,751 5 OTHER CURRENT ASSETS GST receivable 596 6,735 Credit risk The Foundation has no significant concentration of credit risk with respect to any single counterparty or group of counterparties. The main source of credit risk to the Foundation is considered to relate to the class of assets described as advertising receivable. The following table details the Foundation s advertising receivable exposed to credit risk with ageing analysis and impairment provided thereon. Amounts are considered as past due when the debt has not been settled within the terms and conditions agreed between the Foundation and the member counterparty to the transaction. Page 13

14 NOTES TO THE FINANCIAL STATEMENTS Note Receivables that are past due are assessed for impairment by ascertaining their willingness to pay and are provided for where there are specific circumstances indicating that the debt may not be fully repaid to the Foundation. The balances of receivables that remain within initial terms (as detailed in the table) are considered to be of high credit quality Gross Amount Past due & impaired Past due but not impaired (Days overdue) < >90 $ Within initial trade terms Trade receivables Total Gross Amount Past due & impaired Past due but not impaired (Days overdue) < >90 $ Within initial trade terms Trade receivables 6, ,221-5,514 - Interest receivable Total 6, ,221-5,514 - Trade and other receivables The Foundation does not hold any financial assets whose terms have been renegotiated, but which would otherwise be past due or impaired. Collateral held as security No collateral is held as security for any of the trade and other receivables. Page 14

15 NOTES TO THE FINANCIAL STATEMENTS Financial assets classified as loans and receivables Note Trade and other receivables - total current 596 6, ,735 6 FINANCIAL ASSETS Available for sale financial assets 2,440,480 1,798,924 Available for sale financial assets comprise: Bonds at fair value - 450,000 Managed funds at fair value 2,440,480 1,348,924 Total available-for-sale financial assets 2,440,480 1,798,924 7 RESERVES Financial asset reserve Balance at beginning of the year 27,157 64,202 Revaluation of financial assets to fair value 59,056 (37,045) Total available-for-sale financial assets 86,213 27,157 The financial asset reserve records revaluations of financial assets 8 ACCUMULATED FUNDS Accumulated funds at the beginning of the year 1,873,253 1,828,416 Net profit attributable to members of the foundation 550,638 44,837 Accumulated funds at the end of the year 2,423,891 1,873,253 9 CHARITABLE FUNDRASING INFORMATION Total income received by the Foundation comprises fundraising income from other sources. All income received is applied towards the funding of medical research into neurological diseases. The following information on income and expenses of fundraising appeals is disclosed in accordance with the requirements of the Best Practice Guidelines for charitable organisations. Fundraising Comparisons by percentage % % Cost of fundraising to total income from fundraising - - Surplus from fundraising to gross income from fundraising Costs of fundraising services to total expenditure - - Costs of fundraising services to total income received - - Page 15

16 Related party transactions NOTES TO THE FINANCIAL STATEMENTS Note No Director member receives directly or indirectly any fees, bonuses or other remuneration as a consequence of their appointment to the Board. 11. Financial instruments Financial risk management The Foundation s financial instruments consist mainly of deposits with banks, local money market instruments and short-term investments, accounts receivable and payable. The Foundation does not have any derivative financial instruments at 28 February Financial Risk Management Policies The Director s overall risk management strategy seeks to assist the Foundation in meeting its financial targets, whilst minimising potential adverse effects on financial performance. Risk management policies are approved and reviewed by the Directors on a regular basis. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows: Financial assets Cash & cash equivalents 69,028 94,751 Short term deposits - - Trade & other receivables 596 6,735 69, ,486 Financial liabilities Trade & other payables i. Treasury risk management A finance committee consisting of senior Board members meet on a regular basis to analyse currency and interest rate exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. ii. Financial risks The main risks the Foundation is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk. Interest rate risk All financial assets and liabilities are non interest bearing except for the following: Cash assets at an average interest rate for the year of 4.85% ( %) Foreign currency risk The Foundation is not exposed to fluctuations in foreign currencies Interest rate risk The Foundation s exposure to interest rate risk, which is the risk that a financial instrument s value will fluctuate as a result of changes in market interest rates and will affect future cash flows or the fair value of fixed rate financial instruments. Page 16

17 NOTES TO THE FINANCIAL STATEMENTS Note Floating rate instruments Cash & cash equivalents 69,028 94,751 69,028 94,751 Liquidity risk Liquidity risk arises from the possibility that the Foundation might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities The Foundation manages this risk through the following mechanisms: - preparing forward-looking cash flow analysis in relation to its operational, investing and financing activities; - obtaining funding from various sources - maintaining a reputable credit profile - managing credit risk related to financial assets - only investing surplus cash with major financial institutions - comparing the maturity profile of financial liabilities with the realisation profile of financial assets. Financial liability and financial asset maturity analysis Within one year Financial liabilities due for payment: Trade & other payables excluding annual leave and deferred income - - Total expected outflows - - Financial assets cash flows realisable: Cash & cash equivalents 69,028 94,751 Trade & other receivables 596 6,735 Total anticipated inflows 69, ,486 Net (outflows) inflows on financial instruments 69, ,486 Foreign exchange risk The Foundation is not exposed to fluctuations in foreign currencies following the closure of the New Zealand denominated accounts during the year. Credit risk Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contractual obligations that could lead to a financial loss to the Foundation. Credit risk is managed through maintaining procedures ensuring, to the extent possible, that customers and counterparties to transactions are of sound credit worthiness and includes utilisation of systems for that approval, granting and renewal of credit limits, the regular monitoring of exposures against such limits and the monitoring of the financial stability of significant customers and counterparties. Such monitoring is used in assessing receivables for impairment. Credit terms are normally days from the date of invoice. Customers that do not meet the Foundation s strict credit policies may only purchase in cash or using recognised credit cards. Page 17

18 NOTES TO THE FINANCIAL STATEMENTS Note Risk is also minimised through investing surplus funds in financial institutions that maintain high credit ratings or in entities that the finance committee has otherwise cleared as being financially sound. The maximum exposure to credit risk by class of recognised financial assets at balance date, excluding the value of any collateral or other security held, is equivalent to the carrying value and classification of those financial assets (net of any provisions) as presented in the balance sheet. The company has no significant concentration of credit risk with any single counterparty or group of counterparties. Trade & other receivables that are neither past due or impaired are considered to be of high credit quality aggregates of such amounts are as detailed in Note 5 The Foundation does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered in to by the Foundation. Credit risk related to balances with banks and other financial institutions is managed by the finance committee in accordance with approved Committee policy. Such policy requires that surplus funds are only invested in counterparties with a Standard & Poor s (S&P) rating of at least A. The following table provides information regarding the credit risk relating to cash based on S&P counterparty credit ratings. Cash and cash equivalents A-1 rated 8,818 87,375 A-1 rated 60,210 7,376 Price risk The company is not exposed to any material commodity price risk. Net fair values Fair value estimation The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their carrying values as presented in the balance sheet. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arms length transaction. Fair values derived may be based on information that is estimated or subject to judgement, where changes in assumptions may have a material impact on the amounts estimated, Areas of judgement and the assumptions have been detailed below. Differences between fair values and carrying values of financial instruments with fixed interest rates are due to the change in discount rates being applied by the market since their initial recognition by the company. Page 18

19 NOTES TO THE FINANCIAL STATEMENTS Net carrying Net carrying Net fair value value value Net fair value Financial assets Cash & cash equivalents 69,028 69,028 94,751 94,751 Trade & other receivables ,735 6,735 Financial assets 2,440,480 2,440,480 1,798,924 1,798,924 Total financial assets 2,510,104 2,510,104 1,900,410 1,900,410 Financial Liabilities Trade & other payables Total financial liabilities The fair values disclosed in the above table have been determined based on the following methodologies: (i) Cash and cash equivalents, trade and other receivables and trade and other payables are short term instruments in nature whose carrying value is equivalent to fair value. Sensitivity analysis The following table illustrates sensitivities to the company s exposures to changes in interest rates. The table indicates the impact on how profit and equity values reporting at the end of the reporting period would have been affected by changes in the relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the movement in a particular variable is independent of other variables. Profit Equity Year ended 28 February /- 2% in interest rates 13,621 13,621 +/- 10% in investments 211, ,970 Year ended 28 February /- 2% in interest rates 5,102 5,102 +/- 10% in investments 163, ,455 No sensitivity analysis has been performed on foreign exchange risk as the company is not exposed to foreign currency fluctuations 12. Contingent Liabilities and Contingent Assets The company is not aware of any contingent liabilities that are in existence at the date of the signing of this report. The Foundation has a contingent asset via an interest in the land and buildings of the Estate of the late Dorothy Wheldon. The receipt of the proceeds of the bequest is contingent upon the death of the life tenant. Given the uncertain timing of the receipt of the bequest, it is not possible to determine the fair value of the land & buildings as at balance date. 13. Events after the Balance Sheet Date There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material or unusual nature, which in the opinion of the Director s will affect significantly the operations of the company, the results of these operations or the state of affairs of company in future financial years. Page 19

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21 INCOME AND EXPENDITURE STATEMENT INCOME Donations 440, ,141 Portfolio income 86,357 88,738 Gain on disposal of investments 42,455 - Interest received 33,088 7, , ,210 EXPENDITURE Auditor s remuneration 2,635 2,400 Awards 23, ,000 Investment advisors fee 10,459 16,708 Bank fee Brain school fees 15,000 20,000 Loss on disposal of investments - 5,265 51, ,373 OPERATING PROFIT before Income Tax 550,638 44,837 This financial statement should be read in conjunction with the attached Compilation Report. Page 21