CONTENTS Financial Statements Statement of Comprehensive Income 1 Statement of Financial Position 2 Statement of Changes in Equity 3 Statement of Cash Flows 4 5-18 Responsible Entities' Declaration 19 Independent Audit Report 20 Page
Statement of Comprehensive Income Revenue 2 14,652,280 11,657,574 Other income 2 70,726 1,858 Employee benefits expense (8,965,625) (7,639,044) Depreciation and amortisation expense (567,947) (541,758) Program operation costs 3 (2,320,720) (2,241,542) Repairs and maintenance (440,432) (423,494) Contribution 18 (235,000) - Other expenses (370,031) (435,418) Note 2015 2014 (12,899,755) (11,281,256) Surplus for the year 1,823,251 378,176 Other comprehensive income Items that will be reclassified to profit or loss when specific conditions are met: Net gain on revaluation of financial assets 155,604 140,639 Other comprehensive income for the year 155,604 140,639 Total comprehensive income for the year 1,978,855 518,815 The accompanying notes form part of these financial statements. 1
Statement of Financial Position As At 30 June 2015 ASSETS CURRENT ASSETS Cash and cash equivalents 5 585,297 400,957 Trade and other receivables 6 239,568 296,616 Inventories 7 20,997 12,542 Other financial assets 8 5,154,968 3,618,485 Other assets 9 85,739 44,002 TOTAL CURRENT ASSETS 6,086,569 4,372,602 NON-CURRENT ASSETS Financial assets 8 3,343,161 2,387,565 Property, plant and equipment 10 12,350,597 12,101,132 TOTAL NON-CURRENT ASSETS TOTAL ASSETS Note 2015 2014 15,693,758 14,488,697 21,780,327 18,861,299 LIABILITIES CURRENT LIABILITIES Trade and other payables 11 1,174,710 800,759 Employee benefits 12 914,681 828,316 Other liabilities 13 818,895 330,455 TOTAL CURRENT LIABILITIES 2,908,286 1,959,530 NON-CURRENT LIABILITIES Employee benefits 12 85,540 94,123 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS 85,540 94,123 2,993,826 2,053,653 18,786,501 16,807,646 EQUITY Retained surplus 16,098,162 14,274,911 Reserves 2,688,339 2,532,735 TOTAL EQUITY 18,786,501 16,807,646 The accompanying notes form part of these financial statements. 2
Statement of Changes in Equity 2015 Retained Surplus Asset Revaluation Surplus Financial Assets Reserve Balance at 1 July 2014 14,274,911 2,700,365 (167,630) 16,807,646 Surplus for the year 1,823,251 - - 1,823,251 Other comprehensive income - - 155,604 155,604 Balance at 30 June 2015 16,098,162 2,700,365 (12,026) 18,786,501 Total 2014 Retained Surplus Asset Revaluation Surplus Financial Assets Reserve Balance at 1 July 2013 13,896,735 2,700,365 (308,269) 16,288,831 Surplus for the year 378,176 - - 378,176 Other comprehensive income - - 140,639 140,639 Balance at 30 June 2014 14,274,911 2,700,365 (167,630) 16,807,646 Total The accompanying notes form part of these financial statements. 3
Statement of Cash Flows Note 2015 2014 Cash from operating activities: Receipts from government, fees, donations and other revenue 15,932,113 12,094,193 Payments to suppliers and employees (13,009,199) (11,419,065) Interest received 11,312 10,042 Net cash provided by operating activities 17(a) 2,934,226 685,170 Cash flows from investing activities: Proceeds from sale of plant and equipment 76,326 8,866 Purchase of property, plant and equipment (823,012) (196,104) Purchase of investments (2,003,200) (350,713) Net cash used in investing activities (2,749,886) (537,951) Net increase in cash held 184,340 147,219 Cash at beginning of financial year 400,957 253,738 Cash at end of financial year 5 585,297 400,957 The accompanying notes form part of these financial statements. 4
1 Summary of Significant Accounting Policies (a) General information The financial report covers Prahran Mission (the Mission) as an individual entity. The Mission, which is domiciled in Australia, is an agency of the Uniting Church in Australia and is not separately incorporated. The following is a summary of the material accounting policies adopted by the Mission in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. (b) Basis of preparation The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Australian Charities and Not-for-profits Commission Act 2012. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated. The financial report has been prepared on an accruals basis and is based on historical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. (c) Comparatives When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (d) Inventories Inventories are measured at cost adjusted when applicable for loss of service potential. Inventories received at no or nominal cost are initially recognised at current replacement cost at date of acquisition. (e) Property, plant and equipment Each class of property, plant and equipment is carried at cost as indicated less, where applicable, any accumulated depreciation and impairment losses. Property Freehold land and buildings are shown at cost. The carrying value is reviewed periodically to ensure the carrying value does not exceed the depreciated replacement cost. 5
1 Summary of Significant Accounting Policies continued (e) Property, plant and equipment continued Property continued Plant and equipment Plant and equipment are measured on the cost basis less depreciation. Depreciation The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is depreciated on a straight-line basis over the asset's useful life to the Mission commencing from the time the asset is held ready for use. Leasehold properties are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The estimated useful lives used for each class of depreciable assets are: Class of Fixed Asset Useful Life Buildings Furniture, Fixtures and Fittings Motor Vehicles Leasehold properties up to 40 years up to 5 years up to 5 years up to 30 years The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. (f) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. (g) Employee benefits Provision is made for the Mission'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. Employee benefits payable later than one year have been measured at present value of the estimated future cash outflows to be made for those benefits. These cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows. (h) Income taxes The Mission is an income tax exempt charitable entity under Subdivision 50-B of the Income Tax Assessment Act 1997. 6
1 Summary of Significant Accounting Policies continued (i) Revenue Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. Grant revenue is recognised in the income statement when it is controlled. When there are conditions attached to the grant revenue relating to the use of those grants for specific purposes it is recognised in the statement of financial position as a liability until such conditions are met. Interest revenue and distribution income from investments is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Donations and bequests are recognised as revenue when received unless they are designated for a specific purpose, in which case they are carried forward as deferred income. Revenue from the rendering of services is recognised upon the delivery of the service to the customer. All revenue is stated net of the amount of goods and services tax (GST). (j) 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 statement of financial position are shown inclusive of GST. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. (k) Financial instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the Mission becomes a party to the contractual provisions to the instrument. For financial assets, this is the equivalent to the date that the Mission commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transactions costs, except where the instrument is classified 'at 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 either of 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 7
1 Summary of Significant Accounting Policies continued (k) Financial instruments continued techniques are adopted. Amortised cost is calculated as: (a) (b) (c) (d) the amount at which the financial asset or financial liability is measured at initial recognition; less principal repayments; plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and less any reduction for impairment. The effective interest 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, 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 value with a consequential recognition of an income or expense in profit or loss. The Mission does not designate any interest as being subject to the requirements of accounting standards specifically applicable to financial instruments. (i) Financial assets at fair value through profit or loss Financial assets are classified at fair value through profit or loss when they are either held for trading for the purpose of short-term profit taking, 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 or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss. (ii) 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. Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period. (All other loans and receivables are classified as non-current assets.) (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Mission's intention to hold these investments to maturity. They are subsequently measured at amortised cost. 8
1 Summary of Significant Accounting Policies continued (k) Financial instruments continued Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months are the end of the reporting period. (All other investments are classified as current assets.) If during the period the Mission sold or reclassified more than an insignificant amount of the held-to-maturity investments before maturity, the entire held-to-maturity investments category would be tainted and reclassified as available-for-sale. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. Available-for-sale financial assets are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period. (All other financial assets are classified as current assets) (v) Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. 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 stated at amortised cost using the effective interest rate method. Held-to-maturity investments These investments have fixed maturities, and it is the Mission's intention to hold these investments to maturity. Any held-to-maturity investments held by the Mission are stated at amortised cost using the effective interest rate method. Available-for-sale financial assets Available-for-sale financial assets include any financial assets not included in the above categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models. 9
1 Summary of Significant Accounting Policies continued (l) Impairment of assets Assets are tested for recoverability whenever events of changes in circumstances indicate that its carrying value may not be fully recoverable. The Mission monitors the recoverability of assets, based on factors such as current market value, future asset utilisation, business climate and future undiscounted cash flows expected to result from the use of the related assets. The Mission's policy is to record an impairment loss in the period when it is determined that the carrying amount of the asset may not be recoverable. The impairment loss is calculated as the amount by which the carrying amount of the asset exceeds the undiscounted estimate of future cash flows from the asset. To 30 June 2015, no impairment losses have been recorded. (m) Critical accounting estimates and judgments The Board evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and based on current trends and economic data, obtained both externally and within the Mission. (n) Economic dependence Prahran Mission is dependent on the Department of Health for a significant proportion of its revenue used to operate the Mission. At the date of this report the Board has no reason to believe the Department of Health will not continue to support Prahran Mission. (o) Adoption of new and revised accounting standards During the current year, the Mission 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 not had a significant impact on the recognition, measurement and disclosure of transactions. (p) New accounting standards for application in future periods The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods. The Mission has decided against early adoption of these Standards, but does not expect the adoption of these standards to have any significant impact on the reported position or performance of the Mission. 10
2 Revenue and Other Income Revenue - sale of goods 1,420,225 1,427,166 - provision of services 255,778 684,783 - interest income 344,587 308,635 - Uniting Church contributions 80,829 109,704 - operating grants 10,440,303 7,684,951 - donations 1,093,973 917,372 - bequest 832,671 152,497 - other revenue 183,914 372,466 Total Revenue 14,652,280 11,657,574 Other Income - net gain on disposal of plant and equipment 70,726 1,858 3 Program Operation Costs - cartage 8,894 5,365 - consultants 462,518 149,357 - client related costs and purchases 720,699 858,319 - food supplies 393,526 474,803 - materials 5,258 4,661 - motor vehicle expenses 161,791 118,536 - office and administration 460,909 488,907 - travel 6,049 39,091 - utilities 72,115 75,481 - audit and accounting fees 20,280 19,500 - other 8,681 7,522 Total program operations costs 2,320,720 2,241,542 4 Other Expenses Other expenses include the following specific expense: - rental expense on operating leases 187,608 241,977 5 Cash and Cash Equivalents Cash on hand 6,450 6,600 Cash at bank 578,847 394,357 Total cash and cash equivalents 585,297 400,957 11
6 Trade and Other Receivables CURRENT Trade receivables 211,537 230,189 Provision for impairment (10,000) (10,000) Net trade receivables 201,537 220,189 Other receivables 38,031 76,427 Total trade and other receivables 239,568 296,616 Current trade receivables are generally on 30 day terms. It is expected that these balances will be received when due. The balances do not contain any assets that are not impaired and are past due. 7 Inventories CURRENT At Cost Finished goods 20,997 12,542 8 Other Financial Assets Designated at Fair Value Uniting Church growth portfolio - non-current 3,343,161 2,387,565 Available-for-sale financial assets comprise of investments in UCA growth portfolio. There are no fixed returns or fixed maturity date attached to these investments. Available for sale financial assets 3,343,161 2,387,565 Held-to-maturity financial assets 8(a) 5,154,968 3,618,485 8,498,129 6,006,050 Current portion 5,154,968 3,618,485 (a) Held-to-maturity Investments Comprise: Uniting Church cash portfolio - current 5,154,968 3,618,485 9 Other Assets CURRENT Prepayments 85,739 44,002 12
2015 2014 10 Property, Plant and Equipment LAND AND BUILDINGS Freehold land at cost 211 Chapel St Prahran 2,350,000 2,350,000 698-700 Malvern Rd Prahran 1,000,000 1,000,000 Total freehold land 3,350,000 3,350,000 Buildings and improvements at cost 211 Chapel St Prahran 8,234,604 8,216,422 698-700 Malvern Rd Prahran 350,000 350,000 Accumulated depreciation (1,364,990) (1,150,308) Total buildings 7,219,614 7,416,114 Total land and buildings 10,569,614 10,766,114 PLANT AND EQUIPMENT Leasehold properties At cost 1,064,214 944,295 Accumulated depreciation (316,113) (285,986) Total leasehold properties 748,101 658,309 Furniture, fixture and fittings At cost 1,772,211 1,489,755 Accumulated depreciation (1,214,887) (1,024,953) Total furniture, fixture and fittings 557,324 464,802 Motor vehicles At cost 852,855 620,836 Accumulated depreciation (377,297) (408,929) Total motor vehicles 475,558 211,907 Total plant and equipment 1,780,983 1,335,018 Total property, plant and equipment 12,350,597 12,101,132 Leasehold properties include buildings in Glen Waverley and Blackburn South on land leased from Monash City Council and the Uniting Church respectively. 13
2015 2014 10 Property, Plant and Equipment continued (a) Movement in carrying amounts Movement in the carrying amount for each class of property, plant and equipment between the beginning and the end of the current financial year Freehold Land Buildings and Improvements Leasehold Properties Furniture, Fixtures and Fittings Motor Vehicles Current Year Balance at the beginning of year 3,350,000 7,416,114 658,309 464,802 211,907 12,101,132 Additions - 18,182 119,919 282,457 402,454 823,012 Disposals - written down value - - - - (5,600) (5,600) Depreciation expense - (214,682) (30,127) (189,935) (133,203) (567,947) Carrying amount at the end of year Total 3,350,000 7,219,614 748,101 557,324 475,558 12,350,597 Prior Year Balance at the beginning of year 3,350,000 7,626,777 681,547 499,316 296,154 12,453,794 Additions - 5,710-170,340 20,054 196,104 Disposals - written down value - (2,156) - (4,490) (362) (7,008) Depreciation expense - (214,217) (23,238) (200,364) (103,939) (541,758) Carrying amount at the end of year 3,350,000 7,416,114 658,309 464,802 211,907 12,101,132 (b) Beneficial use The land and buildings recorded on the statement of financial position of the Mission are registered in the name of The Uniting Church in Australia Property Trust (Victoria). The Mission has beneficial use of the properties for the purpose of running the Mission's programs but at the same time, the Mission is responsible for any renovations and maintenance. 11 Trade and Other Payables CURRENT Unsecured liabilities Trade payables 642,005 181,802 Sundry payables and accrued expenses 532,705 618,957 Total trade and other payables 1,174,710 800,759 14
2015 2014 12 Employee Benefits Current liabilities Provision for long service leave 274,628 292,441 Provision for annual leave 640,053 535,875 Total current employee Benefits 914,681 828,316 Non-current liabilities Provision for long service leave 85,540 94,123 Total current employee Benefits 85,540 94,123 13 Other Liabilities Unexpended grants Specific purpose donations, trusts and others 818,895 330,455 Total other Liabilities 818,895 330,455 Unexpended grants relate to amounts for a specific purpose and are recognised in revenue when the related expenses are incurred. 14 Capital Management The Board manages cash to ensure that adequate cash flows are generated to fund the operations of the Mission. Management procedures include estimation of cash flows and future cash requirements. 15 Reserves (a) Asset revaluation reserve The asset revaluation reserve was used to record increments and decrements in the value of non-current assets. The reserve reflects historical revisions to the carrying value of land and buildings. (b) Financial assets reserve The financial assets reserve records revaluations of available for sale financial assets. 16 Operating Lease Commitments Non-cancellable operating leases contracted for but not capitalised in the financial statements Payable - minimum lease payments - not later than 12 months 79,472 54,283 - between 12 months and 5 years 223,358 144,592 302,830 198,875 15
2015 2014 17 Cash Flow Information (a) Reconciliation of result for the year to cash flows from operating activities Surplus for the year 1,823,251 378,176 Non-cash flows in surplus Depreciation 567,947 541,758 Net gain on disposal of property, plant and equipment (70,726) (1,858) Reinvested interest and distribution revenue (333,275) (298,593) Changes in assets and liabilities (Increase)/decrease in trade and term receivables 57,048 (123,629) (Increase)/decrease in prepayments (41,737) 26,704 (Increase)/decrease in inventories (8,455) (1,340) Increase/(decrease) in trade payables and accruals 373,950 (9,456) Increase/(decrease) in unexpended grants 488,440 10,699 Increase/(decrease) in employee benefits 77,783 162,709 Cash flows from operations 2,934,226 685,170 18 Related Party Transactions During the year the Mission paid for insurance to Uniting Church of Australia 50,004 (2014: 46,517) and a Synod levy of 76,324 (2014: 69,742). Prahran Mission received from the Uniting Church of Australia contributions of 73,990 (2014: 109,704). The amounts invested with UCA Cash Portfolio and UCA Growth Portfolio are disclosed in Note 8. No remuneration or other benefits were received by members of the Board of Governance with the exception of salary paid to employees who served on the Board in their capacity as an employee of the Mission. The Mission contributed 235,000 to St KIlda Parish Mission towards the capital works at 101 Carlisle Street, St Kilda. 19 Financial Instruments Prahran Mission's financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable. A finance committee consisting of Board members meet on a regular basis to analyse financial risk exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. The main risks the Mission is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk. 16
19 Financial Instruments continued (a) Interest rate risk Exposure to interest rate risk arises on financial assets and financial liabilities recognised at reporting date whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. At 30 June 2015 Prahran Mission does not believe it is exposed to any material interest rate risk. (b) Credit risk 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 statement of financial position. Prahran Mission has no significant concentration of credit risk. (c) Liquidity risk - financial liability The table below reflects an undiscounted contractual maturity analysis for financial liabilities. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management's expectations that banking facilities will be rolled forward. The amounts disclosed in the table are the undiscounted contracted cash flows and therefore the balances in the table may not equal the balances in the statement of financial position due to the effect of discounting. Financial liability maturity analysis - Non-derivative Within 1 Year Total 2015 2014 2015 2014 Financial liabilities due for payment Trade and other payables (excluding statutory payables) 935,792 607,286 935,792 607,286 Total contractual outflows 935,792 607,286 935,792 607,286 The timing of expected outflows is not expected to be materially different from contracted cash flows. 20 Key Management Personnel Compensation Short-term Benefits Post-employme nt Benefit Total 2015 Total compensation 694,284 64,016 758,300 2014 Total compensation 663,395 60,837 724,232 17
21 Members of the Board of Governance Mr P Prasser Ms J Gibson Retired on 2nd September 2014 Mr D Airey Dr C Harvey Mr R Kent Cr J Klisaris Retired on 12th May 2015 Dr. N Abbott Ms A Brebner Ms I Daya Appointed on 2nd September 2014 Mr J McMorrow Appointed on 11th August 2015 Mr Q Pawson 22 Events after the Reporting Date No events or circumstances have arisen since the end of the year that significantly affected or may affect the operations of the Mission. 23 Mission Details Registered office The registered office of the Mission is: Prahran Mission 211 Chapel St Prahran VIC 3181 The principal activity of the Mission is the direct relief of poverty and hardship and the provision of support services to people with severe and long term mental illness and subsequent psychiatric disabilities. 18