National Association of Community Legal Centres Financial report For the year ended 30 June 2016
TABLE OF CONTENTS Financial report Statement of profit or loss and other comprehensive income... 1 Statement of financial position... 2 Statement of changes in equity... 3 Statement of cash flows... 4 Notes to financial statements... 5-17 Directors' declaration... 18 Auditor's independence declaration... 19 Independent auditor's report... 20-21
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Note 2016 2015 $ $ Revenue 4 9,688,516 7,783,562 Less: expenses Depreciation and amortisation expense 5 (314,745) (311,118) Employee benefits expense (5,062,030) (4,575,224) Occupancy expense (439,739) (452,839) Conference expense (242,264) (319,740) Operating expense (699,721) (543,156) Project expense (207,521) (355,615) Consultants expense (501,550) (526,565) Recruitment expense (51,777) (124,518) Travel expense (551,929) (665,266) (8,071,276) (7,874,041) Surplus / (deficit) before income tax expense 1,617,240 (90,479) Other comprehensive income for the year - - Total comprehensive income 1,617,240 (90,479) The accompanying notes form part of these financial statements. - 1 -
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016 Note 2016 2015 $ $ Current assets Cash and cash equivalents 6 1,616,259 2,656,433 Receivables 7 121,468 176,741 Other financial assets 8 1,843,400 2,425,000 Other assets 11 233,567 229,498 Total current assets 3,814,694 5,487,672 Non-current assets Other financial assets 8 225,075 276,075 Intangible assets 10 339,748 - Property, plant and equipment 9 256,359 438,911 Other assets 11 12,086 36,716 Total non-current assets 833,268 751,702 Total assets 4,647,962 6,239,374 Current liabilities Payables 12 478,691 590,982 Provisions 13 298,099 257,212 Other liabilities 14 1,403,923 4,507,604 Total current liabilities 2,180,713 5,355,798 Non-current liabilities Provisions 13 90,768 124,335 Total non-current liabilities 90,768 124,335 Total liabilities 2,271,481 5,480,133 Net assets 2,376,481 759,241 Equity Reserves 15 137,500 87,500 Accumulated surplus 16 2,238,981 671,741 Total equity 2,376,481 759,241 The accompanying notes form part of these financial statements. - 2 -
STATEMENT OF CHANGES IN EQUITY Accumulated Reserves surplus Total equity $ $ $ Balance as at 1 July 2014 87,500 762,220 849,720 Deficit for the year - (90,479) (90,479) Total comprehensive income for the year - (90,479) (90,479) Balance as at 1 July 2015 87,500 671,741 759,241 Profit for the year - 1,617,240 1,617,240 Total comprehensive income for the year - 1,617,240 1,617,240 Transfers 50,000 (50,000) - Balance as at 30 June 2016 137,500 2,238,981 2,376,481 The accompanying notes form part of these financial statements. - 3 -
STATEMENT OF CASH FLOWS Note 2016 2015 $ $ Cash flow from operating activities Receipts from customers 7,010,048 8,868,321 Payments to suppliers and employees (8,281,060) (8,744,513) Interest received 79,350 106,941 Net cash provided by / (used in) operating activities 17(b) (1,191,662) 230,749 Cash flow from investing activities Proceeds from term deposits 632,600 681,700 Payment for property, plant and equipment (141,364) (45,078) Payment for intangible asset (339,748) - Net cash provided by investing activities 151,488 636,622 Reconciliation of cash Cash at beginning of the financial year 2,656,433 1,789,062 Net increase / (decrease) in cash held (1,040,174) 867,371 Cash at end of financial year 17(a) 1,616,259 2,656,433 The accompanying notes form part of these financial statements. - 4 -
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES This financial report is a special purpose financial report prepared in order to satisfy the financial report preparation requirements of the Australian Charities and Not-for-profits Commission Act 2012. The directors have determined that the company is not a reporting entity. The financial report is for the entity National Association of Community Legal Centres as an individual entity. National Association of Community Legal Centres is a company limited by guarantee, incorporated and domiciled in Australia. National Association of Community Legal Centres is a not-for-profit entity for the purpose of preparing the financial statements. The financial report has been prepared in accordance with the requirements of the Australian Charities and Not-for-profits Commission Act 2012 and the following Accounting Standards: AASB 101: Presentation of Financial Statements AASB 107: Statement of Cash Flows AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors AASB 1048: Interpretation of Standards AASB 1054: Australian Additional Disclosures The following specific accounting policies, which are consistent with the previous period unless otherwise stated, have been adopted in the preparation of this report: (a) Basis of preparation of the financial report Historical Cost Convention The financial report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes of assets and liabilities as described in the accounting policies. Significant accounting estimates The preparation of the financial report requires the use of certain estimates and judgements in applying the entity's accounting policies. Those estimates and judgements significant to the financial report are disclosed in Note 3. (b) Revenue Grant income, conference and insurance is recognised as revenue in the year to which the associated expenditure and grant funding agreement relates. Accordingly, the income received in the current year for expenditure in future years are treated as grants or income in advance. Unexpected specific grant income at 30 June each year is disclosed as a liability in the financial statements. The amount brought to account as income is equivalent to that amount expensed by the Company during the financial year. Where surplus funds are required to be repaid, they will remain as a liability in the financial statements until repayment. Grants received in relation to acquisition or construction of a capital asset have been taken to income on receipt of the grant. - 5 -
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Membership fees are recognised as revenue when no significant uncertainty as to its collectability exists, if the fee relates only to membership and all other services or products are paid for separately, or if there is a separate annual subscription. Membership fees are recognised on a basis that reflects the timing, nature and value of the benefit provided if the fee entitles the member to services or publications to be provided during the membership period, or to purchase goods or services at prices lower than those charged to nonmembers. Revenue from organising and hosting events is recognised in the period in which the events are held. Interest revenue is recognised when it becomes receivable on a proportional basis taking in to account the interest rates applicable to the financial assets. All revenue is measured net of the amount of goods and services tax (GST). (c) Income tax No provision for income tax has been raised as the company is exempt from income tax under Division 50 of the Income Tax Assessment Act 1997. (d) Cash and cash equivalents Cash and cash equivalents include cash on hand and at banks, short-term deposits with an original maturity of three months or less held at call with financial institutions, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. (e) Financial instruments Classification The company classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the nature of the item and the purpose for which the instruments were acquired. Management determines the classification of its financial instruments at initial recognition. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and the company intends to hold the investments to maturity. They are subsequently measured at amortised cost using the effective interest rate method. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are subsequently measured at amortised cost using the effective interest rate method. - 6 -
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (f) Property, plant and equipment Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and any accumulated impairment losses. Plant and equipment Plant and equipment is measured on the cost basis. Depreciation The depreciable amount of all property, plant and equipment is depreciated over their estimated useful lives commencing from the time the asset is held ready for use. Land and the land component of any class of property, plant and equipment is not depreciated. Class of fixed asset Depreciation rates Depreciation basis Leasehold improvements at cost 33.33% Straight line Office equipment at cost 10.00%- 33.33% Straight line Computer equipment at cost 33.33% Straight line (g) Impairment Assets are assessed for impairment whenever events or circumstances arise that indicate the asset may be impaired. An impairment loss is recognised when the carrying amount of an asset exceeds the asset's recoverable amount. The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and value in use. Impairment losses in respect of individual assets are recognised immediately in profit or loss unless the asset is carried at a revalued amount such as property, plant and equipment, in which case the impairment loss is treated as a revaluation decrease in accordance with the applicable Standard. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to present values in determining recoverable amounts. (h) Provisions Provisions are recognised when the company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. - 7 -
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) Leases Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership. Operating leases Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as an expense on a straight-line basis over the term of the lease. Lease incentives received under operating leases are recognised as a liability and amortised on a straightline basis over the life of the lease term. (j) Employee benefits (i) Short-term employee benefit obligations Liabilities arising in respect of wages and salaries, annual leave, accumulated sick leave and any other employee benefits (other than termination benefits) expected to be settled wholly before twelve months after the end of the annual reporting period are measured at the (undiscounted) amounts based on remuneration rates which are expected to be paid when the liability is settled. The expected cost of shortterm employee benefits in the form of compensated absences such as annual leave and accumulated sick leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables in the statement of financial position. (ii) Long-term employee benefit obligations The provision for other long-term employee benefits, including obligations for long service leave and annual leave, which are not expected to be settled wholly before twelve months after the end of the reporting period, are measured at the present value of the estimated future cash outflow to be made in respect of the services provided by employees up to the reporting date. Other long-term employee benefit obligations are presented as current liabilities in the statement of financial position if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur. All other long-term employee benefit obligations are presented as non-current liabilities in the statement of financial position. (k) Goods and services tax (GST) Revenues, expenses and purchased assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax 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 statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. - 8 -
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Comparatives Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures. (m) Adoption of new and amended accounting standards that are first operative There are no new and amended accounting standards effective for the financial year beginning 1 July 2015 which affect any amounts recorded in the current or prior year. NOTE 2: ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the company. The company has decided not to early adopt any of these new and amended pronouncements. The company's assessment of the new and amended pronouncements that are relevant to the company but applicable in future reporting periods is set out below. AASB 9: Financial Instruments (applicable for annual reporting periods commencing on or after 1 January 2018). The Standard will replace AASB 139: Financial Instruments: Recognition and Measurement. The key changes that may affect the company on initial application of AASB 9 and associated amending Standards include:! simplifying the general classifications of financial assets into those carried at amortised cost and those carried at fair value;! permitting entities to irrevocably elect on initial recognition to present gains and losses on an equity instrument that is not held for trading in other comprehensive income (OCI);! requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity's own credit risk in OCI, except when it would create an 'accounting mismatch'; and! requiring impairment of financial assets carried at amortised cost to be based on an expected loss approach. Although the directors anticipate that the adoption of AASB 9 may have an impact on the company's financial instruments, it is impracticable at this stage to provide a reasonable estimate of such impact. - 9 -
AASB 15: Revenue from Contracts with Customers (applicable for annual reporting periods commencing on or after 1 January 2018). AASB 15 will provide a single source of accounting requirements for all contracts with customers, thereby replacing all current accounting pronouncements on revenue. The standard provides a revised principle for recognising and measuring revenue. Under AASB 15, revenue is recognised in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the provider of the goods or services expects to be entitled. Although the directors anticipate that the adoption of AASB 15 may have an impact on the company's reported revenue, it is impracticable at this stage to provide a reasonable estimate of such impact. AASB 16: Leases (applicable for annual reporting periods commencing on or after 1 January 2019). AASB 16 will replace AASB 117: Leases and introduces a single lessee accounting model that will require a lessee to recognise right-of-use assets and lease liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Right-of-use assets are initially measured at their cost and lease liabilities are initially measured on a present value basis. Subsequent to initial recognition:! right-of-use assets are accounted for in accordance with a cost model unless the underlying asset is accounted for on a revaluation basis, in which case if the underlying asset is;! investment property, the lessee applies the fair value model in AASB 140: Investment Property to the right-of-use asset; or! property, plant or equipment, the lessee can elect to apply the revaluation model in AASB 116: Property, Plant and Equipment to all of the right-of-use assets that relate to that class of property, plant and equipment; and! lease liabilities are accounted for on a similar basis as other financial liabilities, whereby interest expense is recognised in respect of the liability and the carrying amount of the liability is reduced to reflect lease payments made. Although the directors anticipate that the adoption of AASB 16 may have an impact on the company s accounting for its operating leases, it is impracticable at this stage to provide a reasonable estimate of such impact. - 10 -
NOTE 3: SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS In the application of the Company's accounting policies, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. NOTE 4: REVENUE AND OTHER INCOME 2016 2015 $ $ Operating revenue Contributions from centres 708,028 664,196 Other revenue Bank interest 72,014 112,189 Grants 8,462,642 6,618,472 Conference income 350,063 268,903 Revaluation surplus 32,986-8,917,705 7,268,466 Other Income Sundry income 62,783 119,802 9,688,516 8,052,464 NOTE 5: OPERATING SURPLUS / (DEFICIT) Surplus / (deficit) before income tax has been determined after: Depreciation - leasehold improvements 170,821 173,469 - office furniture and equipment 140,591 137,650 - computer equipment 3,333-314,745 311,119 Bad debts - trade debtors - 1,170-11 -
NOTE 5: OPERATING SURPLUS / (DEFICIT) (CONTINUED) 2016 2015 $ $ Remuneration of auditors for: Audit and assurance services - Audit of the financial report and acquittal statements 15,150 10,975 NOTE 6: CASH AND CASH EQUIVALENTS Cash on hand 2,300 2,300 Cash at bank 1,613,959 2,654,133 1,616,259 2,656,433 NOTE 7: RECEIVABLES CURRENT Trade debtors 117,319 169,405 Other receivables 4,149 7,336 121,468 176,741 NOTE 8: OTHER FINANCIAL ASSETS CURRENT Held to maturity financial assets Term deposits 1,843,400 2,425,000 1,843,400 2,425,000 NON CURRENT Held to maturity financial assets Term deposits 225,075 276,075 225,075 276,075 Term deposits of $225,075 are utilised as security for lease commitments. - 12 -
NOTE 9: PROPERTY, PLANT AND EQUIPMENT NATIONAL ASSOCIATION OF COMMUNITY LEGAL CENTRES 2016 2015 $ $ Leasehold improvements At cost 622,865 522,317 Accumulated depreciation (459,741) (288,921) 163,124 233,396 Plant and equipment Office furniture and equipment at cost 469,830 448,186 Accumulated depreciation (383,262) (242,671) 86,568 205,515 Computer equipment at cost 10,000 - Accumulated depreciation (3,333) - 6,667 - Total plant and equipment 93,235 205,515 Total property, plant and equipment 256,359 438,911 NOTE 10: INTANGIBLE ASSETS CLASS Project 339,748 - (a) Reconciliations Reconciliation of the carrying amounts of intangible assets at the beginning and end of the current financial year CLASS Project Opening balance - - Additions 339,748 - Closing balance 339,748 - NOTE 11: OTHER ASSETS CURRENT Prepayments 138,209 129,689 Accrued income 94,750 99,520 Other current assets 608 289 233,567 229,498-13 -
NOTE 11: OTHER ASSETS (CONTINUED) NON CURRENT NATIONAL ASSOCIATION OF COMMUNITY LEGAL CENTRES 2016 2015 $ $ Other non-current assets Make good 12,086 36,716 12,086 36,716 NOTE 12: PAYABLES CURRENT Unsecured liabilities Trade creditors 26,507 83,893 GST liabilities 216,382 341,399 Accrued expenses 235,802 165,690 478,691 590,982 NOTE 13: PROVISIONS CURRENT Employee benefits (a) 298,099 257,212 298,099 257,212 NON CURRENT Employee benefits (a) 25,768 10,516 Make good 65,000 113,819 90,768 124,335 (a) Aggregate employee benefits liability 323,867 267,728 (b) Reconciliations Reconciliation of the carrying amounts of provisions at the beginning and end of the current financial year Make good (non current) Opening balance 113,819 82,153 Additional amounts recognised (derecognised) (48,819) 31,666 Closing balance 65,000 113,819-14 -
NOTE 14: OTHER LIABILITIES NATIONAL ASSOCIATION OF COMMUNITY LEGAL CENTRES 2016 2015 $ $ CURRENT Grants received in advance 1,207,687 4,158,097 National conference deposits 75,084 116,870 Company and PI insurances liability 121,152 232,637 1,403,923 4,507,604 NOTE 15: RESERVES General reserve 137,500 87,500 137,500 87,500 The general reserve is used to support the National Accreditation Scheme and the Management Support Online License. NOTE 16: ACCUMULATED SURPLUS Accumulated surplus at beginning of year 671,741 762,220 Net surplus/(deficit) 1,617,240 (90,479) Transfers (from)/to reserves (50,000) - 2,238,981 671,741-15 -
2016 2015 $ $ NOTE 17: CASH FLOW INFORMATION (a) Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position is as follows: Cash on hand 2,300 2,300 Cash at bank 1,613,959 2,654,133 1,616,259 2,656,433 (b) Reconciliation of cash flow from operations with surplus / (deficit) after income tax Surplus / (deficit) from ordinary activities after income tax 1,617,240 (90,479) Adjustments and non-cash items Depreciation 323,543 311,117 Changes in assets and liabilities (Increase) / decrease in receivables 55,273 247,770 (Increase) / decrease in other assets 20,562 152,594 Increase / (decrease) in payables (111,916) (257,344) Increase / (decrease) in other liabilities (3,103,681) (238,694) Increase / (decrease) in provisions 7,317 105,785 Cash flows from operating activities (1,191,662) 230,749-16 -
2016 2015 $ $ NOTE 18: CAPITAL AND LEASING COMMITMENTS (a) Operating lease commitments Non-cancellable operating leases contracted for but not capitalised in the financial statements: Payable - not later than one year 395,775 337,363 - later than one year and not later than five years 343,302 192,975 739,077 530,338 The property leases are non-cancellable leases with 3 and 5 year terms with rent payable monthly in advance. Contingent rental provisions within the lease agreements require that minimum lease payments shall be increased by between 0-4.25% per annum respectively. Balances exclude GST. NOTE 19: EVENTS SUBSEQUENT TO REPORTING DATE There has been no matter or circumstance, which has arisen since 30 June 2016 that has significantly affected or may significantly affect: (a) (b) (c) the operations, in financial years subsequent to 30 June 2016, of the company, or the results of those operations, or the state of affairs, in financial years subsequent to 30 June 2016, of the company. NOTE 20: COMPANY DETAILS The registered office of the company is: Suite 3, Level 10 307 Pitt Street SYDNEY NSW 2000-17 -