Grand Pacific Health Limited

Transcription

1 Financial Statements

2 Contents Financial Statements Directors' Report 1 Auditor's Independence Declaration 7 Financial Report Statement of Profit or Loss and Other Comprehensive Income 8 Balance Sheet 9 Statement of Changes in Equity 10 Statement of Cash Flows Directors' Declaration 31 Independent Audit Report 32 Page

3 Directors' Report 30 June 2016 The directors present their report on for the financial year ended 30 June Information on directors The names of each person who has been a director during the year and to the date of this report are: J Keast Qualifications Experience Special responsibilities D Fornasier Qualifications Experience Special responsibilities D Fuller Qualifications Experience Special responsibilities BComm, CPA, MBA, GAICD, Cert IV Training & Assessment Management consultant; NFP Training Services Manager; former Director of Governance & Business Planning, Commonwealth Department of Human Services; former Director of Governance, Risk Management and Internal Audit, Child Support Agency. Deputy Chair Chair, Finance, Audit & Risk Management Committee Nominations and Evaluation Committee BN, RN, CDE Diabetes Educator and Nurse Practitioner (endorsed); Clinical experience in remote rural medicine, intensive care, diabetes and primary care. Governance and Policy Committee B. Ed., M.A, MAICD., MIAM CEO - WEA Illawarra, Chairman - Community Colleges Australia, Advisory Council member - Asian Science Park Association; Past President, Technology Parks Australia & New Zealand Inc; Past President, Australia and New Zealand Regional Science Association International Inc. Chair of the Board Chair, Nomina ons and Evalua on Commi ee 1.

4 Directors' Report 30 June 2016 Information on directors (Continued) K Manderson Qualifications Experience Special responsibilities B Med Sc. MBBS (Hons), MPH, DAvMed, FRACGP,FACAsM, GAICD Senior Lecturer University of Wollongong; Senior Aviation Medical Officer Navy Reserve; President, Australasian Society of Aerospace Medicine and Director, Australasian College of Aerospace Medicine, General Practitioner Chair, Governance and Policy Committee R Rolleston (Resigned 20/7/15) Qualifications Experience RN, ICNI, BHSc, Cert IV Training & Assessment Registered Nurse, Intensive Care Nursing Certificate, Bachelor of Health Science, Certificate IV Training & Assessment, Member Australian College of Nursing Community and Primary Health Care Advisory Committee, Member Australian Primary Health Care Nurses Association Education and Professional Development Advisory Committee B Thomson Qualifications Experience Special responsibilities MBBS (Hons), FACRRM, FARGP, FRACGP, DRANZCOG (Adv), MAICD Clinical Associate Professor University of Wollongong; Director Coast City Country GP Training; Member Shoalhaven Clinical Council and NSW AMA Council; General Practitioner Finance, Audit & Risk Management Committee J Petty (Resigned 26/11/15) Qualifications Experience Special responsibilities FCPA, FCA B. Comm (Hons), M. Bus Lecturer in Business Management, University of Technology, Sydney; Client Director, Bentleys NSW; Chairman/NED of Sprintquip Pty Ltd, Bio-Gill Pty Ltd and NED of Chesterfield Pty Ltd; Member of Audit Committee, Surf Life Saving (NSW), Anglicare NSW and AMLA (formerly AGPN); Business Coach SSHED and presenter of ICAA CFO of Future series; Previously Australia s Representative in IFAC PAIB Committee Former Chair, Finance, Audit & Risk Management Commi ee 2.

5 Directors' Report 30 June 2016 Information on directors (Continued) B Smith (Appointed 17 December 2015) Qualifications Experience Diploma Project Management Cert IV Occupational Health and Safety Cert IV Front Line Management Cert IV Assessment and Workplace Training Diploma, Aboriginal Health Worker Completed the National Indigenous Leadership Program Member Australian Institute of Company Directors MAICD Chairperson/Director Aboriginal Legal Service (NSW/ACT); Compliance Manager, Dale & Hitchcock Civil Engineering and Landscaping. member of the Safety Institute of Australia. Former Chairperson, Katungul Aboriginal Medical Service; former Deputy Chairperson, Southern New South Wales Medicare Local; former Australian Institute of Aboriginal & Torres Strait Islander Studies, Ethics Committee Member F Quinlan (Appointed 17 December 2015) Qualifications Experience BA, B.Th. CEO Mental Health Australia; former Executive Director Catholic Social Services Australia; former CIO Australian Medical Association & Australasian Medical Publishing Company; former Guest Lecturer ANU Master of Public Policy program; Member Australian National Advisory Council on Alcohol and Drugs (ANACAD) Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Review of operations The operating surplus of the Company for the year was 743,035 (2015: 786,296). The company is exempt from income tax. Principal activities The principal activities of during the financial year were those of a non-profit health promotion and community services organisation, offering a diverse range of primary health care services. 3.

6 Directors' Report 30 June 2016 Principal activities (Continued) The company's activities include delivering and resourcing mental health, aged care and chronic disease services. Grand Pacific Health Ltd operates two youth health services (headspace Illawarra and headspace Shoalhaven) as well as a Wellness Centre in the Shoalhaven which supports chronic disease management. Grand Pacific Health Ltd owns and operates two purpose built GP Super Clinics in the Shellharbour and Shoalhaven municipalities. No significant changes in the nature of the Company's activity occurred during the financial year. Short and long term objectives and strategies The Company's short and long term objectives are to enhance the health status of the community through the delivery of health care services in an effective, integrated and dynamic primary health care sector. The Company's vision is to the best primary health care organisation. The Company's mission is to lead and support the primary health care sector in achieving significant improvements in the health and wellbeing of our community. The strategic aspirations of the Company are: To ensure we thrive as an organisation so that we are able to deliver for the community. Optimising the use of public resources to improve health outcomes. To multiply our influence by successfully integrating with other providers to work together to improve health outcomes. Be the advocate for community wellness to ensure patients are aware of what wellness requires. 4.

7 Directors' Report 30 June 2016 Short and long term objectives and strategies (Continued) Operations: The entity strives to attract and retain quality staff who are committed to working with members and the community. The entity believes that attracting and retaining quality staff will assist with the success of the entity in both the short and long term. Staff work in partnership with a range of members and community stakeholders, and this is evidenced by ongoing support of the company's programs and initiatives. The staff strive to meet consistent standards of best practice and provide clear expectations of professional accountabilities and responsibilities to all stakeholders. This is evidenced by the performance of staff being assess based on these accountabilities and ensures staff are operating in the best interests of members, the community and the Company. The entity is focused on strengthening governance procedures and sustainability of the organisation by improving financial, quality and risk management systems and enhancing clinical and corporate governance systems. Members guarantee is a company limited by guarantee. In the event of, and for the purpose of winding up of the company, the amount capable of being called up from each members and any person or association who ceased to be a member in the year prior to the winding up, is limited to 5, subject to the provisions of the company's constitution. At 30 June 2016 the collective liability of members was 2,800 (2015: 2,800). Future developments and results Likely developments in the operations of the Company and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Company. 5.

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10 Statement of Profit or Loss and Other Comprehensive Income Note Operating grants 15,890,421 14,949,365 Capital grants 243, ,335 Rendering of services 3,721,840 2,680,587 Sale of goods 257, ,278 Donations and gifts 11,388 5,107 Other income 2 1,214, ,141 21,338,995 18,376,813 Employee benefits expense (11,832,331) (10,101,667) Clinical service delivery (4,835,173) (4,264,872) Occupancy expenses (1,080,623) (827,896) Information, communications and technology expense (1,076,595) (510,732) Depreciation and amortisation expense 6 (384,115) (379,181) Cost of sales (193,502) (134,204) Net loss on disposal of fixed assets - (206,578) Impairment expense - (200,000) Other expenses (1,193,621) (965,387) (20,595,960) (17,590,517) Result for the year 743, ,296 Other comprehensive income for the year - - Total comprehensive income for the year 743, ,296 The accompanying notes form part of these financial statements. 8.

11 Balance Sheet As at 30 June 2016 Note ASSETS CURRENT ASSETS Cash and cash equivalents 4 5,774,595 6,216,955 Trade and other receivables 5 790, ,982 TOTAL CURRENT ASSETS 6,565,474 7,191,937 NON-CURRENT ASSETS Trade and other receivables 5 975,000 1,000,000 Property, plant and equipment 6 8,940,013 8,641,529 TOTAL NON-CURRENT ASSETS 9,915,013 9,641,529 TOTAL ASSETS 16,480,487 16,833,466 LIABILITIES CURRENT LIABILITIES Trade and other payables 7 3,261,775 4,452,120 Employee benefits 8 777, ,538 TOTAL CURRENT LIABILITIES 4,039,004 5,258,658 NON-CURRENT LIABILITIES Trade and other payables 7 8,658,014 8,554,755 Employee benefits 8 349, ,777 TOTAL NON-CURRENT LIABILITIES 9,007,172 8,883,532 TOTAL LIABILITIES 13,046,176 14,142,190 NET ASSETS 3,434,311 2,691,276 EQUITY Reserves 127, ,929 Retained earnings 3,306,382 2,563,347 TOTAL EQUITY 3,434,311 2,691,276 The accompanying notes form part of these financial statements. 9.

12 Statement of Changes in Equity General fund Donations reserve Total Balance at 1 July ,563, ,929 2,691,276 Result for the year 743, ,035 Transfer to/(from) donations reserve Balance at 30 June ,306, ,929 3,434,311 Balance at 1 July ,782, ,822 1,904,980 Result for the year 786, ,296 Transfer to/(from) donations reserve (5,107) 5,107 - Balance at 30 June ,563, ,929 2,691,276 The accompanying notes form part of these financial statements. 10

13 Statement of Cash Flows Note CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from: Receipts from customers and funding bodies 21,917,644 17,422,870 Interest received 101,270 80,489 Payments to suppliers and employees (21,778,675) (18,664,334) Interest paid - (508) Net cash provided by/(used in) operating activities ,239 (1,161,483) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (682,599) (5,060,220) Net cash used by investing activities (682,599) (5,060,220) CASH FLOWS FROM FINANCING ACTIVITIES: Net cash used by financing activities - - Net increase/(decrease) in cash and cash equivalents held (442,360) (6,221,703) Cash and cash equivalents at beginning of year 6,216,955 12,438,658 Cash and cash equivalents at end of financial year 4 5,774,595 6,216,955 The accompanying notes form part of these financial statements. 11.

14 The financial report covers as an individual entity. is a not-for-profit Company limited by guarantee, incorporated and domiciled in Australia. The functional and presentation currency of is Australian dollars. Comparatives are consistent with prior years, unless otherwise stated. 1 Basis of Preparation The financial statements are general purpose financial statements that have been prepared in accordance with the Australian Accounting Standards - Reduced Disclosure Requirements and the Australian Charities and Not-for-Profits Commission Act The financial statements have been prepared on an 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. Significant accounting policies adopted in the preparation of these financial statements are presented in note 19 and are consistent with prior reporting periods unless otherwise stated. 2 Other income Rental income 382, ,063 Interest income 101,270 80,489 Project management income - 31,936 Corporate services income 603,565 - Other income 126,835 66,653 1,214, ,

15 3 Result for the Year Expenses Superannuation contributions 1,011, ,626 Rental expense on operating leases - minimum lease payments 609, ,631 4 Cash and cash equivalents Cash on hand and at bank 528, ,286 Short term deposits 5,246,042 5,334,669 5,774,595 6,216,955 5 Trade and other receivables Current Trade receivables 437, ,567 Provision for impairment (11,607) (1,353) 425, ,214 Prepayments 364, ,518 Other receivables , ,

16 5 Trade and other receivables (Continued) Non-current Prepayments 975,000 1,000,000 Reconciliation of changes in the provision for impairment of receivables is as follows: Balance as at 1 July 1,353 2,004 Additional impairment loss recognised 10,254 - Debtors written off - (651) Balance at end of the year 11,607 1,

17 6 Property, plant and equipment Freehold land and buildings At cost 9,377,539 8,764,156 Accumulated depreciation (434,747) (225,620) Impairment (200,000) (200,000) 8,742,792 8,338,536 Furniture, fixtures and fittings At cost 375, ,891 Accumulated depreciation (307,685) (264,401) 67,694 70,490 Motor vehicles At cost 23,192 23,192 Accumulated depreciation (22,689) (18,052) 503 5,140 Office equipment At cost 97,773 69,044 Accumulated depreciation (57,321) (36,974) 40,452 32,070 Computer equipment At cost 136, ,437 Accumulated depreciation (126,147) (111,683) 10,289 24,754 Computer software At cost 396, ,659 Accumulated depreciation (318,375) (226,120) 78, ,539 Total property, plant and equipment 8,940,013 8,641,

18 6 Property, plant and equipment (Continued) (a) Movements in Carrying Amounts Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year: Freehold Land and Buildings Furniture, Fixtures and Fittings Motor Vehicles Office Equipment Computer Equipment Computer Software Total Year ended 30 June 2016 Balance at the beginning of year 8,338,536 70,490 5,140 32,070 24, ,539 8,641,529 Additions 613,383 40,487-28, ,599 Depreciation expense (209,127) (43,283) (4,637) (20,347) (14,465) (92,256) (384,115) Balance at the end of the year 8,742,792 67, ,452 10,289 78,283 8,940,

19 7 Trade and other payables CURRENT Trade payables 437, ,924 Accruals 744,011 1,146,823 Deferred income 2,080,153 3,166,727 Other payables - 5,646 3,261,775 4,452,120 NON-CURRENT Deferred income 8,658,014 8,554,755 8 Employee Benefits Current liabilities Provision for employee benefits 777, ,538 Non-current liabilities Long service leave 349, ,777 9 Reserves Donations Reserve The Donations reserve was established in 2009 by a gift from the Glenn Tobin Memorial Fund to be used for youth mental health. 10 Capital and Leasing Commitments (a) Operating Leases Minimum lease payments under noncancellable operating leases: - not later than one year 505, ,811 - between one year and five years 71,919 5, , ,

20 10 Capital and Leasing Commitments (Continued) (a) Operating Leases (Continued) Operating leases have been taken out for land and buildings, and office equipment. These leases have an average life of between three and five years with an option for a further three years included in some contracts. There are no restrictions placed upon the lessee upon entering into these leases. (b) Contracted Capital Commitments At the previous reporting date the Company has entered into contracts for capital expenditure that have not been provided for in the financial statements. The amounts were funded through a capital grant from the Department of Health. All amounts are expected to be paid within one year Contracted capital commitments - 1,046, Financial Risk Management The main risks is exposed to through its financial instruments are market risk consisting of interest rate risk. The Company's financial instruments consist mainly of deposits with banks, accounts receivable and payable, bank loans and leases. 18.

21 11 Financial Risk Management (Continued) 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 and cash equivalents 5,774,595 6,216,956 Loans and receivables 426, ,464 Total financial assets 6,200,840 6,481,420 Financial Liabilities Financial liabilities at amortised cost - Trade and other payables 1,181,622 1,285, Key Management Personnel Disclosures The total remuneration paid to key management personnel of the Company is 382,363 (2015: 513,510). 13 Contingencies The land and buildings owned by the Company relate to GP Super Clinics in Shellharbour and Nowra funded by a combination of capital grants from the Department of Health (DoH) and bank borrowings. Both contracts with DoH specify capital grants must be repaid should the Company fail to comply with any of its obligations under the contract, including using and running the property as a GP Super Clinic. If a GP Super Clinic is closed within twenty years proportional repayment of the Grant would be required. As at 30 June 2016 the applicable proportional repayment for the GP Super Clinic Shellharbour would be 1,869,625 (2015: 2,100,000) and the GP Super Clinic Nowra would be 7,540,342 (2015: 7,000,000). The Company has no plans to close either of the GP Super Clinics. 19.

22 14 Related Parties (a) The Company's main related parties are as follows: Key management personnel: Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity are considered key management personnel. For details of remuneration disclosures relating to key management personnel, refer to Note 12: Key Management Personnel Disclosures. Other transactions with KMP and their related entities are shown below. (b) Transactions with related parties Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. No amounts are payable to or receivable from directors or director-related entities at the reporting date (2015: Nil) Payments made to directors and director-related entities for services provided - 1,008 After hours practice incentive payments provided to director related entities 12,632 60,

23 15 Cash Flow Information Reconciliation of result for the year to cashflows from operating activities Result for the year 743, ,296 Cash flows excluded from profit attributable to operating activities Non-cash flows in profit: - depreciation 384, ,181 - impairment of property, plant and equipment - 200,000 - net gain on disposal of property, plant and equipment - 206,578 Changes in assets and liabilities: -(increase)/decrease in trade and other receivables 209,103 (1,665,967) - increase/(decrease) in trade and other payables (1,087,086) (1,310,253) - increase/(decrease) in employee benefits (8,928) 242,682 Cashflow from operations 240,239 (1,161,483) 21.

24 16 Change in Accounting Policy During the current financial year, the Company elected to early-adopt accounting standard AASB 120 Accounting for Government Grants and Disclosure of Government Assistance. This accounting standard now allows for grants related to assets to be recognised through profit or loss over a systematic basis over the life of the asset. In accordance with the Accounting Standards, the effective date applied for the accounting of this change in this financial report has been from 1 July 2014, as if the Standard had always been in place. The aggregate effect of the change in accounting policy on the financial statements for the years ended 30 June 2015 and 30 June 2014 is as follows: Previously stated 2015 Adjustments Restated Income Statement Capital grant revenue 5,950,943 (5,663,608) 287,335 Total revenue and other income 24,040,421 (5,663,608) 18,376,813 Net surplus for the year 6,449,904 (5,663,608) 786,296 Previously stated 2014 Adjustments Restated Balance Sheet Deferred income 3,126,207 8,595,275 11,721,482 10,110,698 2,931,667 13,042,365 Total liabilities 5,546,915 8,595,275 14,142,190 12,278,094 2,931,667 15,209,761 Net assets 11,286,551 (8,595,275) 2,691,276 4,836,647 (2,931,667) 1,904,980 General funds 11,158,622 (8,595,275) 2,563,347 4,713,825 (2,931,667) 1,782,158 Total funds 11,286,551 (8,595,275) 2,691,276 4,836,647 (2,931,667) 1,904,

25 17 Events after the end of the Reporting Period The financial report was authorised for issue on 22 September 2016 by the Board of Directors. No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in future financial years. 18 Critical Accounting Estimates and Judgments The directors make estimates and judgements during the preparation of these financial statements regarding assumptions about current and future events affecting transactions and balances. These estimates and judgements are based on the best information available at the time of preparing the financial statements, however as additional information is known then the actual results may differ from the estimates. The significant estimates and judgements made have been described below. Key estimates - impairment of property, plant and equipment The Company assesses impairment at the end of each reporting period by evaluating conditions specific to the Company that may be indicative of impairment triggers. Key estimates - provisions As described in the accounting policies, provisions are measured at management s best estimate of the expenditure required to settle the obligation at the end of the reporting period. These estimates are made taking into account a range of possible outcomes and will vary as further information is obtained. Key estimates - receivables The receivables at reporting date have been reviewed to determine whether there is any objective evidence that any of the receivables are impaired. An impairment provision is included for any receivable where the entire balance is not considered collectible. The impairment provision is based on the best information at the reporting date. 19 Summary of Significant Accounting Policies (a) Income Tax The Company is exempt from income tax under Division 50 of the Income Tax Assessment Act

26 19 Summary of Significant Accounting Policies (Continued) (b) Leases Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses on a straight-line basis over the life of the lease term. (c) Revenue and other income Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the Company and specific criteria relating to the type of revenue as noted below, has been satisfied. Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates. All revenue is stated net of the amount of goods and services tax (GST). Grant revenue Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs they are compensating. Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the asset on a straight-line basis. Donations Donations and bequests are recognised as revenue when received. Rendering of services Revenue in relation to rendering of services is recognised depending on whether the outcome of the services can be estimated reliably. If the outcome can be estimated reliably then the stage of completion of the services is used to determine the appropriate level of revenue to be recognised in the period. If the outcome cannot be reliably estimated then revenue is recognised to the extent of expenses recognised that are recoverable. 24.

27 19 Summary of Significant Accounting Policies (Continued) (c) Revenue and other income (Continued) Rental income Rental income is recognised on a straight-line basis over a period of the lease term so as to reflect a constant periodic rate of return on the net investment. (d) Goods and services tax (GST) Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). Receivables and payable are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the balance sheet. Cash flows in the statement of cash flows are included on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. (e) Property, plant and equipment Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment. Under cost model, the asset is carried at its cost less any accumulated depreciation and any impairment losses. Costs include purchase price, other directly attributable costs and the initial estimate of the costs of dismantling and restoring the asset, where applicable. Depreciation Property, plant and equipment, excluding freehold land, is depreciated on a straight-line basis over the assets useful life to the Company, commencing when the asset is ready for use. 25.

28 19 Summary of Significant Accounting Policies (Continued) (e) Property, plant and equipment (Continued) The depreciation rates used for each class of depreciable asset are shown below: Fixed asset class Depreciation rate Buildings 2.5% Furniture and Fittings 20% Motor Vehicles 20% Office Equipment 20% Computer Equipment 33% Computer Software 33% At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any revisions are accounted for prospectively as a change in estimate. (f) Financial instruments Financial instruments are recognised initially using trade date accounting, i.e. on the date that the Company becomes party to the contractual provisions of the instrument. On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for instruments measured at fair value through profit or loss where transaction costs are expensed as incurred). Financial Assets Financial assets are divided into the following categories which are described in detail below: loans and receivables; financial assets at fair value through profit or loss; and held-to-maturity investments. Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of the instrument and its purpose. A financial instrument s category is relevant to the way it is measured and whether any resulting income and expenses are recognised in profit or loss or in other comprehensive income. All income and expenses relating to financial assets are recognised in the statement of profit or loss and other comprehensive income in the finance income or finance costs line item respectively. 26.

29 19 Summary of Significant Accounting Policies (Continued) (f) Financial instruments (Continued) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers but also incorporate other types of contractual monetary assets. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value is recognised in profit or loss. The Company s trade and other receivables fall into this category of financial instruments. Significant receivables are considered for impairment on an individual asset basis when they are past due at the reporting date or when objective evidence is received that a specific counterparty will default. The amount of the impairment is the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. In some circumstances, the Company renegotiates repayment terms with customers which may lead to changes in the timing of the payments, the Company does not necessarily consider the balance to be impaired, however assessment is made on a case-by-case basis. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets: acquired principally for the purpose of selling in the near future or designated by the entity to be carried at fair value through profit or loss upon initial recognition. Assets included within this category are carried in the balance sheet at fair value with changes in fair value recognised in finance income or expenses in profit or loss. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity. Investments are classified as held-to-maturity if it is the intention of the Company's management to hold them until maturity. 27.

30 19 Summary of Significant Accounting Policies (Continued) (f) Financial instruments (Continued) Held-to-maturity investments are subsequently measured at amortised cost using the effective interest method, with revenue recognised on an effective yield basis. In addition, if there is objective evidence that the investment has been impaired, the financial asset is measured at the present value of estimated cash flows. Any changes to the carrying amount of the investment are recognised in profit or loss. Financial liabilities Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities depending on the purpose for which the liability was acquired. The Company s financial liabilities include borrowings, trade and other payables, which are measured at amortised cost using the effective interest rate method. Impairment of financial assets At the end of the reporting period the Company assesses whether there is any objective evidence that a financial asset or group of financial assets is impaired. Financial assets at amortised cost If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of the estimated future cash flows discounted at the financial assets original effective interest rate. Impairment on loans and receivables is reduced through the use of an allowance accounts, all other impairment losses on financial assets at amortised cost are taken directly to the asset. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss. (g) Impairment of non-financial assets At the end of each reporting period the Company determines whether there is an evidence of an impairment indicator for non-financial assets. 28.

31 19 Summary of Significant Accounting Policies (Continued) (g) Impairment of non-financial assets (Continued) Where this indicator exists and regardless for indefinite life intangible assets and intangible assets not yet available for use, the recoverable amount of the asset is estimated. Where assets do not operate independently of other assets, the recoverable amount of the relevant cash-generating unit (CGU) is estimated. The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit. Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit or loss. Reversal indicators are considered in subsequent periods for all assets which have suffered an impairment loss. (h) Cash and cash equivalents Cash and cash equivalents comprises cash on hand, demand deposits and short-term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. (i) Employee benefits Provision is made for the Company's liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be wholly settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits expected to be settled more than one year after the end of the reporting period have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Cashflows are discounted using market yields on high quality corporate bond rates incorporating bonds rated AAA or AA by credit agencies, with terms to maturity that match the expected timing of cashflows. Changes in the measurement of the liability are recognised in profit or loss. 29.

32 19 Summary of Significant Accounting Policies (Continued) (j) Change in accounting policy The Company changed its accounting policy relating to recognition and measurement of government grants through the early adoption of AASB 120 Accounting for Government Grants and Disclosure of Government Assistance. The aggregate effect of the change in accounting policy on the annual financial statements for the year ended 30 June 2016 is a decrease in revenue of 316,398. Refer to note 16 for the effect on prior periods. (k) Economic dependence is dependent on direct and indirect funding from the Federal Department of Health for the majority of its revenue used to operate the business. At the date of this report the directors have no reason to believe the Federal Department of Health will not continue to support. 30.

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34 Independent Audit Report to the members of Report on the Financial Report We have audited the accompanying financial report of, which comprises the balance sheet as at 30 June 2016, the statement of profit or loss and other 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 and other explanatory information, and the directors' declaration. Directors' Responsibility for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards - Reduced Disclosure Requirements and the Australian Charities and Not-for-Profits Commission Act 2012 and for such internal control 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. Auditor s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We 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 about 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 s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation of the financial report that gives a true and fair view 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 Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. Independence In conducting our audit, we have complied with the independence requirements of the Australian Charities and Not-for-Profits Commission Act

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