TEAR AUSTRALIA INC. AUDITED GENERAL PURPOSE FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE
INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE Note Revenue from Ordinary Activities 2 15,990,873 15,502,614 Funds to Overseas Projects 9,327,436 11,321,119 Australian Indigenous Projects 193,606 149,420 Other Projects Expenses 777,784 757,627 Community Education 1,438,088 1,180,272 Fundraising - Public 329,239 335,885 Fundraising - Government 12,393 9,700 Administration 905,408 924,175 Surplus (Deficit) for the Year 3,006,919 824,416 The accompanying notes form part of these financial statements. 1
BALANCE SHEET AS AT 30 JUNE ASSETS CURRENT ASSETS Note Cash and cash equivalents 6 5,667,756 3,178,982 Trade and other receivables 7 32,337 44,498 Inventories 8 16,795 20,219 Other current assets 9 117,646 167,806 TOTAL CURRENT ASSETS 5,834,534 3,411,505 NON-CURRENT ASSETS Financial assets 10 0 115,000 Property, plant and equipment 11 2,348,555 1,936,046 TOTAL NON-CURRENT ASSETS 2,348,555 2,051,046 TOTAL ASSETS 8,183,089 5,462,551 CURRENT LIABILITIES Trade and other payables 12 61,061 96,971 Short-term provisions 13 407,794 417,682 TOTAL CURRENT LIABILITIES 468,855 514,653 NON-CURRENT LIABILITIES Long-term provisions 13 32,364 20,592 TOTAL NON-CURRENT LIABILITIES 32,364 20,592 TOTAL LIABILITIES 501,219 535,245 NET ASSETS 7,681,870 4,927,306 EQUITY Reserves 14 215,549 467,904 Retained earnings 7,466,321 4,459,402 TOTAL EQUITY 7,681,870 4,927,306 The accompanying notes form part of these financial statements. 2
STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE Note Retained Profits Special Purpose Grant Reserve Foreign Currency Reserve Balance at 1 July 2007 3,634,986 467,904-4,102,890 Surplus(Deficit) 824,416 - - 824,416 Transfers to and from reserves - - - - Balance at 30 June 4,459,402 467,904-4,927,306 Surplus(Deficit) 3,006,919 - - 3,006,919 Transfers to and from reserves - - (252,355) (252,355) Balance at 30 June 7,466,321 467,904 (252,355) 7,681,870 Total 3
CASH FLOW FROM OPERATING ACTIVITIES CASH FLOW STATEMENT FOR YEAR ENDED 30 JUNE Donations received 11,915,141 13,873,607 Bequests and legacies received 2,018,706 69,390 Operating grant receipts 1,879,884 1,339,707 Other income received 95,320 62,880 Payments to suppliers and employees (3,429,993) (3,024,141) Distributions to overseas partners and fieldworkers (9,521,042) (11,470,539) Interest received 108,121 157,030 Net cash provided by (used in) operating activities 16 (b) 3,066,137 1,007,934 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment (2,262) 5,336 Purchase of property, plant and equipment (476,746) (1,815,599) Net cash provided by (used in) investing activities (479,008) (1,810,263) CASH FLOW FROM FINANCING ACTIVITIES Net cash provided by (used in) financing activities (98,355) 62,000 Net increase in cash held 2,488,774 (740,329) Cash at beginning of year 3,178,982 3,919,311 Cash at end of year 6,16 (a) 5,667,756 3,178,982 Note The accompanying notes form part of these financial statements. 4
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Note 1: Statement of Significant Accounting Policies The financial report is a general purpose financial report that has been prepared in accordance with Accounting Standards, Australian Accounting interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Associations Incorporation Act 1981. The financial report covers the Association of TEAR Australia Inc. as an individual entity. TEAR Australia Inc. is an association incorporated in Victoria under the Associations Incorporation Act 1981. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. The following is a summary of the material accounting policies adopted by the Association in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. Basis of Preparation Reporting Basis and Conventions The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied. Accounting Policies a. Income Tax No current or deferred income tax assets or liabilities have been raised by the Association as it is exempt from income tax under division 50 of the Income Tax Assessment Act. b. Inventories Inventories are measured at the lower of cost and net realisable value. c. Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Property Freehold land and buildings are shown at cost less subsequent depreciation for buildings. Plant and equipment Plant and equipment are measured on the cost basis less depreciation and impairment losses. The carrying amount of plant and equipment is reviewed annually by the Board members to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is the asset s depreciated replacement cost. Depreciation The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the Association commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Buildings 2.5% Office Furniture & Equipment 5-17% Computer Systems 34% Motor Vehicles 5-15% Depreciation Rate 5
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Note 1 Cont. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. d. Financial Instruments Recognition Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below. Held-to-maturity investments These investments have fixed maturities, and it is the Association s intention to hold these investments to maturity. Any held-to-maturity investments held by the Association are stated at face value. 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 group 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 an impairment has arisen. Impairment losses are recognised in the income statement. e. Employee Benefits Provision is made for the Association s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. f. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. g. Revenue Donation revenue is recognised when the Association has received the donation. Grant revenue is recognised in the income statement when it is controlled. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. All revenue is stated net of the amount of goods and services tax (GST). 6
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Note 1 Cont. h. 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. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. i. Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Note 2: Revenue Note Operating activities Donations 11,915,141 13,873,607 Legacies and Bequests 2,018,706 69,390 AusAID grants 1,879,884 1,339,707 Other Australian agencies - - Grants from overseas agencies - - Other income 69,021 62,880 Non-operating activities Interest received 108,121 157,030 Total Revenue 15,990,873 15,502,614 Note 3: Surplus(Deficit) from Ordinary Activities a. Expenses Depreciation of property, plant and equipment 64,237 58,659 Net loss on disposal of property, plant and equipment 2,262 5,328 Rental expense 16,591 77,951 Total 83,090 141,938 7
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Note 4: Key Management Personnel Compensation Key Management Personnel National Director Steve Bradbury (resigned Feb. ) Matthew Maury (commenced Feb. ) Other Key Management Personnel Peter Fitzgerald Ashley Humphreys Lyn Jackson (part-time.8) Barbara Deutschmann (part-time.6) Ben Thurley (resigned Sep. ) John McKinnon* Phil Wilkerson* International Program Coordinator Office & Finance Administrator Australian Program Coordinator Indigenous Program Coordinator Advocacy Coordinator NSW State Coordinator Asst. International Program Coordinator *Joined management team from existing staff. Their full-year salaries are included in the figures below. Salary & Fees Superannuation Total compensation of Key Management Personnel Bonus Non-Cash Benefits Total 346,841 55,204-125,725 527,770 271,364 43,691-96,300 411,355 Note 5: Auditors Remuneration Remuneration of the auditor of the Association for: auditing or reviewing the financial report 7,875 8,207 7,875 8,207 Note 6: Cash Assets Cash at bank and in hand 5,667,756 3,178,982 Cash on Deposit - - 5,667,756 3,178,982 8
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Note 7: Receivables Sundry Debtors 4,792 31,441 Net Tax Receivable 27,545 13,057 32,337 44,498 Note 8: Inventories Stock of publications, at cost 16,795 20,219 Note 9: Other Assets Treasury Bonds 115,000 154,000 Prepayments 2,646 13,806 117,646 167,806 Note 10: Other Financial Assets Treasury Bonds held to maturity 0 115,000 Note 11: Property, Plant and Equipment Office Furniture and Equipment at cost 98,047 91,794 Accumulated depreciation 61,530 54,434 36,517 37,360 Computer Systems at cost 191,672 185,589 Accumulated depreciation 162,246 138,740 29,426 46,849 Motor Vehicles at cost 148,615 148,194 Accumulated depreciation 55,262 44,103 93,353 104,091 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Note 11 Cont. Land and Buildings Freehold land at cost 1,500,000 1,500,000 700,106 250,000 Buildings at cost Accumulated Depreciation 10,847 2,254 689,259 247,746 Total Land and Buildings 2,189,259 1,747,746 Total Property, Plant and Equipment 2,348,555 1,936,046 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 Land & Buildings Office F & F Comp. Sys. Balance at the beginning of year 1,747,746 37,360 46,849 104,091 1,936,046 Additions 450,106 9,599 10,686 23,856 494,247 Disposals 0 230 1,159 16,112 17,501 Depreciation expense 8,593 10,212 26,950 18,482 64,237 Carrying amount at the end of year 2,189,259 36,517 29,426 93,353 2,348,555 M/V Total Note 12: Payables Unsecured liabilities Trade creditors and accruals 58,588 63,372 Payments received in advance 2,473 33,599 61,061 96,971 Note 13: Provisions Employee Entitlements Balance at the beginning of year 438,274 377,916 Additional provisions raised during year 166,445 155,990 Amounts used 164,561 95,632 Balance at the end of year 440,158 438,274 10
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Note 13 Cont. Current 407,794 417,682 Non-current 32,364 20,592 440,158 438,274 Note 14: Reserves a. Special Purpose Grant Reserve The Special Purpose Grant Reserve was established for certain purposes. A purpose could include: A contribution towards the purchase of a suitable property To meet a critical need of an overseas partner when current available funds are not adequate To provide for essential funding commitments after a sudden or prolonged downturn in income receipts b. Foreign Currency Reserve The Foreign Currency Reserve holds movements in currency valuations as at balance date. Any gains/losses on transactions made in foreign currency are recorded in the Income Statement on the date of transaction. Note 15: Related Party Transactions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. The following payments were made to TEAR Board members for services rendered in relation to project consultancies or legal services. Payments for services rendered to Board members are made in accordance with Board policy. Marjorie Quinn 0 2,000 Deborah Storie 0 5,600 Paul Holdway (partner of Lewis Holdway Lawyers) 825 0 825 7,600 11
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Note 16: Cash Flow Information a. Reconciliation of Cash Cash at bank 5,667,756 3,178,982 b. Reconciliation of Cashflow from Operations with Profit after Income Tax Profit after income tax 3,006,919 824,416 Non cash flows Depreciation and amortisation 64,237 58,659 Loss on sale of assets 2,262 5,328 Changes to provisions 1,884 60,358 Changes in assets and liabilities (Increase)/decrease in receivable and other assets 26,745 114,301 Increase/(decrease) in trade and other payables (35,910) (55,127) Cash flows provided by operating activities 3,066,137 1,007,934 Note 17: Financial Instruments a. Financial Risk Management The group s financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable, loans, bills and leases. The main purpose of non-derivative financial instruments is to raise finance for group operations. The group does not have any derivative instruments at 30 June. i. Financial Risks The main risks the Association is exposed to through its financial instruments are liquidity risk and credit risk. Liquidity risk The Association manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained. Credit risk The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements. The Association does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the Association. 12
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Note 17 Cont. b. Interest Rate Risk The Association 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 the effective weighted average interest rates on those financial assets and financial liabilities, is as follows: Financial Assets: Cash and cash equivalents Weighted Average Effective Interest Rate % % Fixed Interest Rate Maturing Floating Interest Rate Within 1 Year 1 to 5 Years 4.3 5.9 4,570,112 3,166,065 - - - - Bonds 6.3 6.2 - - 115,000 154,000-115,000 Total Financial Assets 4,570,112 3,166,065 115,000 154,000-115,000 Financial Assets: Cash and cash equivalents Non-interest Bearing % % Total 1,097,644 12,917 5,667,756 3,178,982 Receivables 4,792 31,441 4,792 31,441 Total Financial Assets 1,102,436 44,358 5,672,548 3,210,423 Note 18: Table of Cash Movements for Designated Purposes Cash available at beginning of year Cash raised during year Cash disbursed during year Cash available at end of year Tsunami Appeal* (540,852) 0 0 (540,852) Total for other purposes 3,719,834 16,017,172 13,528,398 6,208,608 Total 3,178,982 16,017,172 13,528,398 5,667,756 *The balance of funds used for Tsunami relief and rehabilitation were sourced from general funds. There were no appeals for a designated purpose that raised more than 10% of total revenue in the financial year. 13