THE ESSINGTON SCHOOL DARWIN LTD and CONTROLLED ENTITIES Company Limited by Guarantee SPECIAL PURPOSE FINANCIAL STATEMENTS 31 DECEMBER 2016 CONTENTS PAGE DIRECTOR S REPORT 2-5 STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME 6 STATEMENT OF FINANCIAL POSITION 7 STATEMENT OF CASH FLOWS 8 STATEMENT OF CHANGES IN EQUITY 9 10-25 AUDITOR S INDEPENDENCE DECLARATION 26 INDEPENDENT AUDITOR S REPORT 27-28 DIRECTOR S DECLARATION 29 1
STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME Notes CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD 2016 2015 2016 2015 $ $ $ $ Revenues from continuing operations 3 24,059,142 24,801,945 24,056,604 24,573,663 Administration expenses (2,213,924) (2,466,781) (2,184,651) (2,429,219) Borrowing costs expense (292,408) (402,978) (292,408) (400,387) Bad and Doubtful Debts (50,980) (112,869) (21,912) (112,869) Classroom/Teaching (1,497,990) (1,606,710) (1,497,990) (1,606,710) Cost of Sales (84,483) (175,776) (84,483) (175,776) Depreciation and amortisation expense (725,743) (639,549) (701,020) (613,582) Discounts (1,454,738) (813,862) (1,454,738) (813,861) Employment expenses (15,839,881) (16,613,517) (15,756,963) (16,340,947) Occupancy expenses (1,111,226) (1,320,500) (1,162,709) (1,334,531) Miscellaneous expenses (359,330) (189,048) (358,100) (165,647) SURPLUS FOR THE YEAR BEFORE CAPITAL GRANTS 428,439 460,355 541,630 580,134 Capital Grants Income 1,071,019 37,315 1,071,019 37,315 SURPLUS FOR THE YEAR 1,499,458 497,670 1,612,649 617,449 INCOME TAX EXPENSE 0 0 0 0 SURPLUS FOR THE YEAR 1,499,458 497,670 1,612,649 617,449 Other Comprehensive Income 0 0 0 0 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,499,458 497,670 1,612,649 617,449 The Statement Profit and Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 6
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016 Notes CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD 2016 2015 2016 2015 ASSETS $ $ $ $ CURRENT ASSETS Cash and cash equivalents 4 3,273,111 2,262,827 3,236,584 2,225,548 Trade and other receivables 5 1,054,212 1,159,355 1,195,802 1,106,206 Inventories 6 249,867 237,485 249,867 237,485 Prepayments 351,183 9,541 351,183 9,541 TOTAL CURRENT ASSETS 4,928,373 3,669,208 5,033,436 3,578,780 NON-CURRENT ASSETS Investment in related entity 0 0 1 1 Property, plant and equipment 7 21,340,861 21,872,464 20,744,461 21,249,631 Intangible assets 8 25,862 35,735 25,862 35,735 TOTAL NON-CURRENT ASSETS 21,366,723 21,908,199 20,770,324 21,285,367 TOTAL ASSETS 26,295,096 25,577,407 25,803,760 24,864,147 LIABILITIES CURRENT LIABILITIES Trade and other payables 9 709,877 1,200,677 890,336 1,287,008 Interest-bearing loans and borrowings 10 1,332,233 1,069,647 1,332,233 1,069,647 Provisions 11 2,324,082 2,023,622 2,324,082 2,014,367 TOTAL CURRENT LIABILITIES 4,366,192 4,293,946 4,546,651 4,371,022 NON CURRENT LIABILITIES Interest-bearing loans and borrowings 10 7,448,521 8,298,447 7,448,521 8,298,447 Provisions 11 424,584 428,674 424,584 423,324 TOTAL NON CURRENT LIABILITIES 7,873,105 8,727,121 7,873,105 8,721,771 TOTAL LIABILITIES 12,239,297 13,021,067 12,419,756 13,092,793 NET ASSETS 14,055,799 12,556,340 13,384,004 11,771,354 EQUITY Capital Reserves 19,500 19,500 0 0 Accumulated Funds 14,036,299 12,536,841 13,384,004 11,771,355 TOTAL EQUITY 14,055,799 12,556,341 13,384,004 11,771,355 The Statement of Financial Position should be read in conjunction with the accompanying notes. 7
STATEMENT OF CASH FLOWS Notes CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from students and others 12,731,606 13,815,865 12,661,770 13,577,209 Payments to suppliers and employees (23,146,937) (22,965,363) (22,997,264) (22,659,649) Income tax refunded (paid) 0 13,256 0 0 Interest received 51,196 45,217 51,196 45,189 Grants received 12,439,801 11,458,131 12,428,026 11,447,571 Borrowing costs (292,408) (341,371) (292,408) (338,780) NET CASH FLOWS FROM OPERATING ACTIVITIES 16 (b) 1,783,258 2,025,735 1,851,320 2,071,540 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (197,453) (4,608,194) (197,453) (4,599,625) Proceeds from sale of property, plant and equipment 11,819 464 11,818 464 Advances to related parties 0 0 (130,942) (10,648) NET CASH FLOWS (USED IN) INVESTING ACTIVITIES (185,634) (4,607,730) (316,577) (4,609,809) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from borrowings/(repayment of borrowings) (587,340) 3,679,501 (587,340) 3,760,037 Net proceeds from borrowings/(repayment of borrowings) from related parties 0 0 63,633 (113,998) NET CASH FLOWS (USED IN) FINANCING ACTIVITIES (587,340) 3,679,501 (523,707) 3,646,039 NET INCREASE/(DECREASE) IN CASH AND CASH 1,010,284 1,097,506 1,011,036 1,107,770 EQUIVALENTS Cash and cash equivalents at beginning of period 2,262,827 1,165,321 2,225,548 1,117,778 CASH AND CASH EQUIVALENTS AT END OF PERIOD 16 (a) 3,273,111 2,262,827 3,236,584 2,225,548 The Statement of Cash Flows should be read in conjunction with the accompanying notes 8
STATEMENT OF CHANGES IN EQUITY CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD Accumulated Funds Reserves Total Accumulated Funds Reserves Total $ $ $ $ $ $ Balance as at 1 January 2015 12,039,171 19,500 12,058,671 11,153,906 0 11,153,906 Surplus for the year 497,670 0 497,670 617,449 0 617,449 Balance as at 31 December 2015 12,536,841 19,500 12,556,341 11,771,355 0 11,771,355 Surplus for the year 1,499,458 0 1,499,458 1,612,649 0 1,612,649 Balance as at 31 December 2016 14,036,299 19,500 14,055,799 13,384,004 0 13,384,004 9
1. CORPORATE INFORMATION The financial report of The Essington School Darwin Ltd and its controlled entities for the year ended 31 December 2016 was authorised for issue in accordance with a resolution of the directors on 07 April 2017. The Essington School Darwin Ltd is a company limited by guarantee incorporated and domiciled in Australia. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation The directors have prepared the financial statements on the basis that the company is a non-reporting entity because there are no users dependent on general purpose financial statements. The financial statements are therefore special purpose financial statements that have been prepared in accordance with the Australian Charities and Not-for-profits Commission Act 2012. The Company is a not-for-profit entity for financial reporting purposes under Australian Accounting Standards. The financial statements have been prepared in accordance with the mandatory Australian Accounting Standards applicable to entities reporting under the Australian Charities and Not-for-profits Commission Act 2012 and the significant accounting policies disclosed below, which the directors have determined are appropriate to meet the needs of the members. Such accounting policies are consistent with those of the previous period unless otherwise stated. This report has been prepared on an accrual basis and under the historical cost convention. The financial report is presented in Australian dollars and all values are rounded to the nearest dollar. (b) Principles of Consolidation The consolidated financial statements are those of the consolidated entity, comprising The Essington School Darwin Limited (the parent company) and all entities that The Essington School Darwin Limited controlled from time to time during the year and at reporting date. Information from the financial statements of subsidiaries is included from the date the parent company obtains control until such time as control ceases. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which the parent company has control. Subsidiary acquisitions are accounted for using the purchase method of accounting. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered. (c) Significant Accounting Judgments and Estimates The Directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the consolidated entity. (d) New Accounting Standards for Application in Future Periods Australian Accounting Standards and Interpretations that have recently been issued or amended but that are not yet effective have not been adopted by the Company at 31 December 2016, and are not likely to have a material impact in the future. 10
(e) Property, Plant and Equipment Cost Property, plant, equipment and motor vehicles are measured at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Depreciation Depreciation is provided on a straight line and diminishing value basis on all property, plant and equipment at rates calculated to allocate the cost or valuation of the assets against revenue over their estimated useful lives to the economic entity. Major depreciation periods are: 2016 2015 - Freehold buildings 10 to 40 years 10 to 40 years - Plant & equipment 3 to 30 years 3 to 30 years - Furniture & Fittings 3 to 10 years 3 to 10 years - Motor Vehicles 4 to 6 years 4 to 6 years - Library Books 3 years 3 years Impairment The carrying values of property, plant & equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. Capitalisation threshold All fixed assets with a cost greater than $5,000 are capitalised. (f) 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 The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased items, are recognised as an expense in the income statement on a straight line basis over the lease term. Finance Leases Leases which effectively transfer substantially all the risks and benefits incidental to ownership of the leased item to the company are capitalised at the present value of the minimum lease payments and disclosed as property, plant and equipment. A lease liability of equal value is also recognised. Capitalised assets are depreciated over the shorter of the estimated useful life of the assets and the lease term. Minimum lease payments allocated between interest expense and reduction of the lease liability, with the interest expense calculated using the interest rate implicit in the lease and recognized directly in net profit. (g) Income Tax The company is exempt from paying income tax. However, some of the company s controlled entities are considered to be taxable. (h) Cash and Cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call-with bank, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position. 11
(i) Trade and other receivables Trade receivables are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for impairment is made when there is objective evidence that the Company will not be able to collect the debts. Bad debts are written off when identified. Receivables from related parties are recognised and carried at the nominal amount due. (j) Goods and Services Tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except: i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or ii. for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. (k) Financial Instruments Recognition Financial assets and liabilities are recognised and derecognised upon trade date. When financial assets are recognised initially, they are measured at fair value. In the case of assets not at fair value through profit and loss, directly attributable transaction costs are taken into account. Financial assets are derecognised when the contractual rights to the cash flow from the financial assets expire or the asset is transferred to another entity. In the case of transfer to another entity, it is necessary that the risks and rewards of ownership are also transferred. Financial assets Financial assets are classified as either financial assets at amortised cost or available-for-sale financial assets. Financial Assets at amortised cost Trade and other receivables, which generally have 30 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less an allowance for impairment. Collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectable are written off when identified. An impairment provision is recognised when there is objective evidence that the Corporation will not be able to collect the receivable. Available-for-sale financial assets Available-for-sale financial assets are those non-derivative financial assets, principally equity securities that are designated as available-for-sale or are not classified as any of the other three categories of financial assets. After initial recognition, available-for sale financial assets which do not have a quoted market price and where fair value cannot be reliably measured are recorded at cost. Financial liabilities Financial liabilities are classified as either financial liabilities at fair value through profit and loss or other financial liabilities. Other financial liabilities Other financial liabilities, including payables and borrowings are initially measured at fair value, net of any transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method, with interest expense recognised on an effective yield basis. Impairment Financial assets are assessed for impairment at each balance date. If there is objective evidence that an impairment loss has been incurred for financial assets held at amortised cost or available-for-sale financial assets, the amount of the impairment loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the asset s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in profit or loss. 12
(l) Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized: Grant funding When grant revenue is received whereby the entity incurs an obligation to deliver economic value directly back to the contributor, this is considered a reciprocal transaction and the grant revenue is recognised in the statement of financial position as a liability until the service has been delivered to the contributor, otherwise the grant is recognised as income on receipt. Tuition fees Fees are recognised upon provision of tuition services in the year in which those services relate. Childcare fees Childcare fees and Childcare Benefit Rebates are recognised upon provision of childcare services in the year in which those services relate. Donations Recognised upon receipt of the donations. (m) Intangibles Software Computer software is carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis over the assets estimated useful life of 5 years. (n) Economic Dependency The future operations of the company are dependent upon the continuation of adequate funding from the Commonwealth and Northern Territory Governments in respect of operational and capital grants. (o) Employee Entitlements The contributions made to superannuation funds are charged against profits when due. Contributions are paid to HESTA, AMP, Australian Super and other superannuation funds, all of which are accumulation funds. The amount paid for the year was $1,319,101 (2015: $1,417,645). Liabilities for employees entitlements to wages and salaries, annual leave and other current employee entitlements are accrued at normal amounts calculated on the basis of current wage and salary rates. Liabilities for other employee entitlements, which are not expected to be paid or settled within 12 months of balance date, are accrued in respect of all employees at the present value of future amounts expected to be paid based on a projected weighted average increase in wage and salary rates. Present values are calculated using discount rates based on corporate bonds with similar maturity terms. (p) Inventories Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. (q) Trade and other Payables Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided prior to the end of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services. (r) Interest-bearing loans and borrowings All loans and borrowings are initially measured at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised. 13
3. REVENUE FROM CONTINUING OPERATIONS Notes CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD 2016 2015 2016 2015 $ $ $ $ Government funding Commonwealth 12 8,435,205 8,492,759 8,435,205 8,492,759 Government funding Northern Territory 12 2,933,577 3,005,886 2,921,802 2,979,437 Gross tuition fees 8,256,790 8,449,151 8,256,790 8,449,151 After School Care 1,103,704 1,013,783 1,103,704 1,013,783 Bus to School Income 66,197 138,048 66,197 138,048 Childcare fees and rebates 19,423 284,531 0 0 Canteen Sales 206,997 206,079 206,997 206,079 Donations received 15,746 13,483 15,746 10,214 Excursion income 727,616 747,340 727,616 747,340 Interest and Capital Subsidies 51,196 45,189 51,196 45,189 Levies 1,630,691 1,730,210 1,630,691 1,730,210 Uniforms 178,112 210,722 178,112 210,722 Other income 433,888 464,764 462,548 550,731 Total Revenue from continuing operations 24,059,142 24,801,945 24,056,604 24,573,663 THE PROFIT BEFORE TAX IS ARRIVED AT AFTER CHARGING THE FOLLOWING ITEMS: Amortisation of non-current assets - software 9,873 9,873 9,873 9,873 Depreciation of non-current assets: Borrowing costs: - Plant, Equipment and Motor Vehicles 180,993 178,273 180,172 176,741 - Buildings 534,877 451,403 510,975 426,968 - Interest expense 292,408 402,978 292,408 400,387 Bad and doubtful debts 50,980 112,869 21,912 112,869 Remuneration of auditor - Auditing or reviewing the financial report 25,750 25,000 15,450 15,000 - Taxation and other services 29,309 15,690 17,258 5,880 Operating Lease Rental 3,087 4,995 3,087 4,995 14
4. CASH AND CASH EQUIVALENTS Notes CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD 2016 2015 2016 2015 $ $ $ $ Cash on hand 11,315 24,199 11,315 24,199 Operating accounts 1,747,023 1,162,081 1,710,496 1,124,802 Cash management account 0 9,078 0 9,078 Building account 33,193 32,146 33,193 32,146 Library account 14,081 9,873 14,081 9,873 Overseas student fees account 0 10,576 0 10,576 Term deposit 1,034,695 1,000,000 1,034,695 1,000,000 Bond Account 0 14,874 0 14,874 Child Care 7,745 0 7,745 0 Future fund 408,974 0 408,974 0 Bursury and scholarship funds 16,085 0 16,085 0 3,273,111 2,262,827 3,236,584 2,225,548 5. TRADE AND OTHER RECEIVABLES Trade debtors 1,223,686 1,233,311 1,223,686 1,194,870 Less provision for doubtful debts (254,426) (254,426) (254,426) (254,426) GST Receivable 0 31,101 0 29,110 Owing from the Essington Early Childhood Centre 0 0 141,590 10,648 Others (5,555) 57,804 (5,555) 34,439 Academy of Youth Arts Debtors 90,507 91,565 90,507 91,565 1,054,212 1,159,355 1,195,802 1,106,206 (a) Impaired receivables. Movement in the provision for impaired receivables are as follows: Balance at beginning of year 254,426 153,266 254,426 153,266 Provision for impairment recognised during the year 50,980 112,870 21,912 112,870 Receivables written off during the year as uncollectible (50,980) (11,710) (21,912) (11,710) Balance at end of year 254,426 254,426 254,426 254,426 6. INVENTORIES Uniform stock on hand 249,867 237,485 249,867 237,485 249,867 237,485 249,867 237,485 15
CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD 2016 2015 2016 2015 $ $ $ $ 7. PROPERTY, PLANT AND EQUIPMENT Land at cost 2,549,141 2,549,141 2,549,141 2,549,141 Work in Progress 57,353 7,616 57,353 7,616 Building & leasehold improvements at cost 21,032,303 20,963,672 20,075,155 20,006,523 Accumulated depreciation (3,124,704) (2,589,827) (2,763,956) (2,252,981) 17,907,599 18,373,845 17,311,199 17,753,542 Furniture and equipment - at cost 1,506,172 1,470,519 1,506,172 1,445,150 Accumulated depreciation (837,704) (737,371) (837,704) (714,532) 668,468 733,148 668,468 730,618 Library books - at cost 119,161 101,100 119,161 101,100 Accumulated depreciation (101,037) (99,101) (101,037) (99,101) 18,124 1,999 18,124 1,999 Motor Vehicle - at Cost 543,681 582,552 543,681 582,552 Accumulated depreciation (403,505) (375,837) (403,505) (375,837) 140,176 206,715 140,176 206,715 TOTAL WRITTEN DOWN AMOUNT 21,340,861 21,872,464 20,744,461 21,249,631 16
ABN 082 486 904 CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD 2016 2015 2016 2015 $ $ $ $ MOVEMENTS IN CARRYING AMOUNTS Land Carrying amount at the end of the year 2,549,141 2,549,141 2,549,141 2,549,141 Building & leasehold improvements Carrying amount at beginning of the year 18,373,845 13,611,130 17,753,542 12,971,067 Additions 68,632 4,349,671 68,632 4,344,996 WIP transferred in 0 864,447 0 864,447 Depreciation Expense (534,877) (451,403) (510,975) (426,968) Carrying amount at end of the year 17,907,599 18,373,845 17,311,199 17,753,542 WIP Carrying amount at the beginning of the year 7,616 872,063 7,616 872,063 Additions 49,737 0 49,737 0 WIP transferred out 0 (864,447) 0 (864,447) Carrying amount at the end of the year 57,353 7,616 57,353 7,616 Furniture and equipment Carrying amount at beginning of the year 733,148 690,450 730,618 686,701 Additions 61,021 151,093 61,021 151,093 Disposals (1,709) 0 0 0 Depreciation Expense (123,992) (108,395) (123,171) (107,176) Carrying amount at end of the year 668,468 733,148 668,468 730,618 Library Books Carrying amount at beginning of the year 1,999 7,283 1,999 7,283 Additions 18,062 683 18,062 683 Depreciation Expense (1,937) (5,967) (1,937) (5,967) Carrying amount at end of the year 18,124 1,999 18,124 1,999 Motor Vehicles Carrying amount at beginning of the year 206,715 171,756 206,715 171,756 Additions 0 98,559 0 98,559 Disposals (11,475) 0 (11,475) 0 Depreciation Expense (55,064) (63,600) (55,064) (63,600) Carrying amount at end of the year 140,176 206,715 140,176 206,715 TOTAL 21,340,861 21,872,464 20,744,461 21,249,631 17
ABN 082 486 904 8. INTANGIBLES Notes CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD 2016 2015 2016 2015 $ $ $ $ Software at cost 49,363 49,363 49,363 49,363 Accumulated Amortisation (23,501) (13,628) (23,501) (13,628) TOTAL WRITTEN DOWN AMOUNT 25,862 35,735 25,862 35,735 MOVEMENTS IN CARRYING AMOUNTS Software Carrying amount at beginning of the year 35,735 41,312 35,735 41,312 Additions 0 4,296 0 4,296 Amortisation Expense (9,873) (9,873) (9,873) (9,873) Carrying amount at the end of the year 25,862 35,735 25,862 35,735 9. TRADE AND OTHER PAYABLES Creditors 151,506 177,048 152,707 172,133 Superannuation Payable 161,122 176,448 161,122 172,327 PAYG 0 335,388 0 328,642 GST payable 90,202 0 95,772 0 Owing to the Essington Foundation Ltd 0 0 204,946 141,313 Other creditors 57,571 294,053 41,018 271,376 Bonds Refundable 14,145 52,131 (560) 35,608 Income in advance 235,331 165,609 235,331 165,609 709,877 1,200,677 890,336 1,287,008 The amounts owing to the related parties are non-interest bearing and have no fixed repayment terms. Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value. 18
ABN 082 486 904 10. INTEREST-BEARING LOANS AND BORROWINGS Current: Notes CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD 2016 2015 2016 2015 $ $ $ $ NAB Bank Fully Drawn Advances Secured 905,368 1,010,368 905,368 1,010,368 Hunter Premium Funding 377,105 0 377,105 0 Lease liability finance lease 49,760 59,279 49,760 59,279 Non-Current: 1,332,233 1,069,647 1,332,233 1,069,647 NAB Bank Fully Drawn Advances Secured 7,442,922 8,243,290 7,442,922 8,243,290 Lease liability finance lease 5,599 55,157 5,599 55,157 7,448,521 8,298,447 7,448,521 8,298,447 The National Australian Bank loan is secured by a 1st registered mortgage over: - 22 Chapman Road, Nightcliff NT (CT Volume 778 Folio 784) from The Essington School Darwin Ltd - 29 Cummins Street, Rapid Creek NT (CT Volume 663, Folio 779) from The Essington Foundation Ltd On issue of title 1st registered mortgage is to be taken over the following properties: - Lot 9781 (A) Rossiter Street, Rapid Creek NT (Condition subsequent) - Lot 9438 Chrisp Street, Rapid Creek NT (Condition subsequent) The finance leases are secured by a chattel mortgage over the assets to which they relate. 11. PROVISIONS Current: Annual Leave 1,814,635 1,660,956 1,814,635 1,651,701 Long Service Leave 509,447 362,666 509,447 362,666 2,324,082 2,023,622 2,324,082 2,014,367 Non Current: Long Service Leave 424,584 428,674 424,584 423,324 424,584 428,674 424,584 423,324 19
Notes CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD 2016 2015 2016 2015 $ $ $ $ 12. GRANTS RECEIVED Northern Territory Government: Severely Disabled Grant 81,305 0 81,305 0 Operating grants - per capita 2,797,268 2,939,171 2,797,268 2,939,171 NT Childcare Subsidy 45,431 56,154 43,229 40,266 Miscellaneous grants 9,573 10,561 0 0 Total NT Government Grants 2,933,577 3,005,886 2,921,802 2,979,437 Commonwealth Government: Remote Allowance and Indigenous Support 0 406,386 0 406,386 Per capita recurrent funding 8,435,205 8,086,373 8,435,205 8,086,373 Total Commonwealth Government Grants 8,435,205 8,492,759 8,435,205 8,492,759 Capital Grants Income 1,071,019 37,315 1,071,019 37,315 TOTAL GRANTS RECEIVED 12,439,801 11,535,960 12,428,026 11,509,511 20
CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD 13. EXPENDITURE COMMITMENTS a) Operating leases: 2016 2015 2016 2015 $ $ $ $ - not later than one year 227,954 233,325 227,954 233,325 - later than one year and not later than five years 607,299 835,254 607,299 835,254 Aggregate lease expenditure contracted for at balance date 835,253 1,068,579 835,253 1,068,579 b) The School entered a lease agreement from 1 January 2011 with Charles Darwin University to lease a two storey building on its campus for 10 years, with a possible extension for another 10 years for $103,840 per annum, excluding GST, subject to CPI review. 14. INTERESTS IN SUBSIDIARIES Name Country of incorporation Percentage of equity interest held by consolidated entity Investment 2016 2015 2016 2015 % % $ $ The Essington Foundation Ltd Australia 100 100 0 0 The Essington Early Childhood Centre Pty Ltd Australia 100 100 1 1 15. SEGMENT INFORMATION The company operates in one industry segment and one geographic location, being the provision of pre-school, primary and secondary education in the Darwin region, of the Northern Territory of Australia. During the financial year ended 31 December 2016, there were 234 employees (2015: 276). 21
15. SEGMENT INFORMATION (contd) Business segments Education Childcare services Resourcing of educational programs and activities Eliminations Consolidated 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 $ $ $ $ $ $ $ $ $ $ Revenue Sales to external customers 9,360,494 9,462,934 19,423 284,531 0 0 0 0 9,379,917 9,761,299 Grant revenue 12,428,026 11,509,512 11,775 (11,509,512) 0 0 0 0 12,439,801 11,520,400 Other revenues 3,310,436 3,552,533 7 3,303 0 0 0 0 3,310,443 3,552,561 Inter-segment revenue 28,667 86,000 0 0 70,000 97,756 (98,667) (183,756) 0 0 Total segment revenue 25,127,623 24,610,979 31,206 314,282 70,000 97,756 (98,667) (183,756) 25,130,161 24,834,260 Results Segment result 1,612,649 617,449 (156,065) (186,440) 42,874 66,661 0 0 1,499,458 497,670 Surplus before tax and finance costs 1,913,666 1,027,824 (156,065) (186,440) 42,874 66,661 0 0 1,800,475 908,045 Finance costs (301,017) (410,375) Income tax expense 0 0 Net surplus/(deficit) for the year 1,499,458 497,670 Assets Segment assets 25,803,760 24,864,148 90,927 153,681 773,651 724,597 (365,961) (165,018) 26,302,377 25,577,408 Liabilities Segment liabilities 12,419,756 13,092,793 235,860 86,925 12,547 6,367 (365,961) (165,018) 12,302,202 13,021,067 Other segment information: Depreciation 691,147 603,709 3,897 4,252 20,826 21,715 715,870 629,676 Amortisation 9,873 9,873 0 0 0 0 9,873 9,873 22
16. CASH FLOW STATEMENT RECONCILIATION Notes CONSOLIDATED THE ESSINGTON SCHOOL DARWIN LTD a) Reconciliation of cash 2016 2015 2016 2015 $ $ $ $ Cash balance comprises: Cash on hand 4 11,315 24,199 11,315 24,199 Other cash at bank 4 3,261,796 2,238,628 3,225,269 2,201,349 Closing Cash Balance 3,273,111 2,262,827 3,236,584 2,225,548 b) Reconciliation of the surplus after tax to the net cash flows provided by operations: Net surplus for the year 1,499,458 497,670 1,612,649 617,449 Adjustments for: Depreciation and amortisation 725,743 639,549 701,020 613,582 Loss/(Profit) on disposal of fixed assets 1,367 3,118 (342) (464) Changes in assets and liabilities: (Increase)/Decrease in trade and other receivables 195,345 693,317 90,783 672,354 (Increase)/Decrease in inventories (12,382) 92,238 (12,382) 92,238 (Increase)/Decrease in prepaid expenses (341,642) 231,899 (295,307) 231,898 Increase/(Decrease) in trade creditors and other liabilities (650,723) (358,626) (625,798) (369,353) Increase/(Decrease) in current tax liability 0 13,256 0 0 Increase/(Decrease) in provision for employee entitlements 296,370 238,290 310,975 238,812 Increase/(Decrease) in income in advance 69,722 (24,976) 69,722 (24,976) NET CASH FLOWS USED IN OPERATING ACTIVITIES 1,783,258 2,025,735 1,851,320 2,071,540 23
17. RELATED PARTY TRANSACTIONS a. Inter-Entity Transactions During the year, the Company entered into transactions with the Essington Early Childhood Centre Pty Ltd and the Essington Foundation Ltd: 2016 2015 Revenue Transactions $ $ Essington Early Childhood Centre Pty Ltd Other Income 28,667 86,000 Expense Transactions Essington Foundation Ltd - Rent 70,000 70,000 Trade and Other Receivables as at 31 December 2016 Essington Early Childhood Centre Pty Ltd 141,590 10,648 Trade and Other Payables as at 31 December 2016 Essington Early Childhood Centre Pty Ltd 0 0 Essington Foundation Ltd 204,946 141,313 445,203 307,961 b. Other Transactions with Directors or Director Related Entities During the year, the Company entered into transactions with companies controlled by Directors of the Essington School Darwin Limited: 2016 2015 Directors Name Company Name $ $ Chris O Brien Dreamedia Events 23,870 29,880 Chris O Brien Dreamedia Solutions 42,539 14,685 Steve Margetic Sitzler Pty Ltd 60,275 4,301,970 Martin Kendall DoubleTree by Hilton Esplanade 0 35,567 Darwin Michael Hannon Buslink 482,713 0 Sitzler Pty Ltd payments of $60,275 in 2016 relate to building costs associated with the construction of canteen and classroom ($60,275). Dream Media Solutions payments of $42,539 made in 2016 relate to expenditure for Website Design and management/support ($7,189) and additional design work and photography/video for marketing campaigns and graduation, and AGM recording ($15,329), and Media Centre Edit Suite ($20,021). Dream Media Events payments of $23,870 relate to costs associated with lighting, sound, video presentation and other stage management connected with events during the year including drama productions, Royal Darwin Show 2016, and screen hire for AGM. The transactions were of a commercial nature and were transacted on an arm s length basis. The respective Directors involved took no part in the relevant decisions of The Essington School Darwin Limited. c. Directors Remuneration The directors did not receive any remuneration for their participation at board meetings throughout the year. 24
19. Financial Risk Management (a) Net Fair Values The net fair values of assets and liabilities approximate their carrying value. No financial assets and financial liabilities are readily traded on organised markets in standardised form. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the balance sheet and in the notes to and forming part of the accounts. 20. Company Details The registered office of the Company is: The Essington School Darwin Ltd Chapman Road, Nightcliff, NT. The principal place of business is: The Essington School Darwin Ltd Chapman Road, Nightcliff, NT. 25
Auditor s Independence Declaration To the Directors of The Essington School Darwin Limited In relation to our audit of the financial statements of The Essington School Darwin Limited for the year ended 31 December 2016, I declare that, to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of section 60-40 of the Australian Charities and Not-for-profits Commission Act 2012; and b. No contraventions of any applicable code of professional conduct in relation to the audit. Merit Partners Matthew Kennon Partner Darwin Date: 7 April 2017 26
INDEPENDENT AUDITOR S REPORT To the members of The Essington School Darwin Limited Report on the Audit of the Financial Report Opinion We have audited the special purpose financial report of The Essington School Darwin Limited ( the Company ), which comprises the statement of financial position as at 31 December 2016, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors declaration of the consolidated entity comprising the Company and the entities it controlled at the year s end or from time to time during the financial year. In our opinion, the accompanying financial report of The Essington School Darwin Limited is in accordance with Division 60 of the Australian Charities and Not-for-profits Commission Act 2012, including: a) giving a true and fair view of The Essington School Darwin Limited and the consolidated entity s financial position as at 31 December 2016 and of their financial performance for the year ended; and b) complying with Australian Accounting Standards and Division 60 of the Australian Charities and Not-for-profits Commission Regulation 2013. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act) and the ethical requirements of the Accounting Professional and Ethical Standards Board s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter - Basis of Accounting We draw attention to Note 2 to the financial report, which describes the basis of accounting. The financial report has been prepared for the purpose of fulfilling the directors financial reporting responsibilities under the ACNC Act. As a result, the financial report may not be suitable for another purpose. Our opinion is not modified in respect of this matter. Directors Responsibilities for the Financial Report The directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards 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 is free from material misstatement, whether due to fraud or error. 27
In preparing the financial report, the directors are responsible for assessing the Company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Auditor s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit 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. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Merit Partners Matthew Kennon Partner Darwin Date: 7 April 2017 28