FORM 2016 Financial Report

FORM building a state of creativity inc

FINAN CIAL R EP O RT

2016

Pg 1

FORM building a state of creativity inc

Pg 3

FORM building a state of creativity inc

2 0 1 6 ANNUAL F INANCIAL STATE M ENTS

Co n t e n t s

At Python Pool, Yuko Fujita, gum tree bark, silver, acrylic paint, from Worn Land, 2016. Photograph by Bewley Shaylor, 2016.

FORM building a state of creativity inc

Statement by Executive Board

1

Income Statement

2

Balance Sheet

3

Cash Flow Statement

4

Statement of Changes In Equity

5

Notes to Financial Statements

6

1. Summary of Significant Accounting Policies

9

2. Gallery Sales, Visitor Centre, CafĂŠ and Spinifex Hill Studio Income

Independent Audit Report

10

3. Operating, Project and Subsidies Grant Income

11

4. Net Surplus

11

5. Prepayments

11

6. Receivables

11

7. Inventories

12

8. Property, Plant and Equipment

13

9. Payables

13

10. Other Current Liabilities

13

11. Provisions

14

12. Retained Surplus

14

13 (a). Components of cash and cash equivalents

14

13 (b). Reconciliation of net surplus to net cash (used in) /provided by operating activities

15

14. Operating Rental / Lease Commitments

15

15. External Project Funds

16

16. Financial Instruments

16

17. Association Details

17

Auditors Independence Declaration 18

FORM building a state of creativity inc

STATE M ENT BY E X ECUTIVE B O A R D

Pg 1

FORM building a state of creativity inc

INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2016

2016 $

2015 $

1,239,031 (676,278)

1,458,936

562,753

719,105

1,219,785 3,512,462 1,120,130 77,415

1,024,062 2,928,618 1,159,888 128,431

525,032 12,802 1,885,181

Sundry income

115,844 14,544 1,726,773 31,320

Total income

8,381,026

8,456,594

(2,297,950) (170,677) (2,637,889)

(2,238,711) (161,415) (2,707,315)

Aboriginal design and artistic development

(657,233)

(526,095)

Regional artistic capacity-building

(252,934)

(265,207)

Marketing and promotion Gallery and retailing

(465,391) (895,209)

(486,601) (1,260,199)

External project expenditure

(738,818)

(790,137)

(8,116,100) (8,116,101)

(8,435,680)

264,925 264,926

20,915

NOTES Sales Revenue from sales

2

Cost of sales

2

Gross profit Other revenue Operating and project grants Sponsorships Project and service fees Membership and workshop fees

3

Other income Donations Interest received Insurance and expense recoveries

Other expenses Administration Depreciation Perth creative development

Total expenses 4, 13

Net surplus

The accompanying notes form part of this financial report.

Pg 2

(739,831)

73,475

FORM building a state of creativity inc

BALANCE SHEET AS AT 31 DECEMBER 2016

2016 $

2015 $

950,572 33,777 540,403 212,299 212,298

679,624 98,685 830,516

1,737,050

1,861,464

1,282,700 1,282,699 253,017

1,327,414 286,243

Total non-current assets

1,535,716 1,535,717

1,613,657

Total assets

3,272,766 3,272,767

3,475,121

603,667 1,070,429 57,475

732,709 1,416,939

Total current liabilities

1,731,571

2,198,852

Total liabilities

1,731,571

2,198,852

Net Assets

1,541,197 1,541,196

1,276,270

1,276,270 264,926 264,925

1,255,354

1,541,197 1,541,196

1,276,270

Current Assets Cash and cash equivalents Prepayments Receivables

13(a) 5 6

Inventories

7

Total current assets

252,640

Non-Current Assets Building Property, plant and equipment

8 8

Other

Current Liabilities Payables Other liabilities

9 10

Provisions

11

Equity Prior Year Retained surplus

12

Total Equity

The accompanying notes form part of this financial report.

Pg 3

49,203

20,915

FORM building a state of creativity inc

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2016

Cash Flows From Operating Activities Payments to suppliers and employees Goods and services tax paid Operating and project grant receipts Receipts from members Sponsorship received Receipts from sales and other income

2016 $

2015 $

(7, 695, 740)

(8,966,342) (782,284) 949,605 128,431 2,380,547 3,743,019

(848,849) 1,305,368 77,415 3,457,962 2,877,567 669,697

Project fees and services receipts Interest received Input tax credits received

14,544 412,986

1,744,295 12,802 487,997

270,948

(301,930)

Investment-artwork purchases

-

Net cash used in investing activities

-

(113,767) (113,767) -

Net cash (used in)/provided by operating activities

13 (b)

Cash Flows From Investing Activities Fixed assets purchases

Cash Flows From Financing Activities Repayments of financing

-

-

Net cash used in financing activities

-

-

Net (decrease)/increase in cash held

270,948

(415,697)

679,624

1,095,321

950,572

679,624

Cash at the beginning of the financial year 13(a)

Cash at the end of the financial year

Pg 4

FORM building a state of creativity inc

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2016

Retained Earnings Balance at 1 January Net Surplus Balance at 31 December

2016 $

2015 $

1,276,270

1,255,355

264,926 264,925

20,915

1,541,196

1,276,270

The accompanying notes form part of this financial report.

Pg 5

FORM building a state of creativity inc

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 1. (a)

Summary of Significant Accounting Policies Basis of preparation

This financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Urgent Issues Group Consensus Views and other authoritative pronouncements of the Australian Accounting Standards Board and the requirements of the Association Incorporations Act 1987 of Western Australia. Australian Accounting Standards include Australian Equivalents to International Financial Reporting Standards (AIFRS).

The financial report covers FORM building a state of creativity Inc. (FORM) as an individual entity.

FORM is an association incorporated in Western Australia under the Associations Incorporations Act 1987 of Western Australia.

The financial report is presented in Australian Dollars; has been prepared on an accruals basis; is based on historical costs; and does not take into account changing money values or current values of non-current assets unless otherwise stated. Cost is based on the fair value of consideration given in exchange for assets.

The annual financial statements for FORM have been prepared on a Going Concern basis. FORM’s ability to continue as a Going Concern is dependent on the continued funding support from State and Federal Governments and other government bodies together with private entities.

The accounting policies noted below have been consistently applied to all periods presented, unless otherwise stated. (b)

Statement of compliance

The financial report complies with AIFRS. Compliance with AIFRS ensures that the financial report is in compliance with International Financial Reporting Standards (IFRS). (c)

Income tax

Income tax has not been provided in this financial report as the association is a not-for-profit organisation for the promotion of art and culture and as such is exempt from income tax under section 50.45 of the Income Tax Assessment Act 1997.

Pg 6

FORM building a state of creativity inc

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 1. (d)

Summary of Significant Accounting Policies (continued) Property, plant and equipment

Plant and equipment Plant and equipment are recorded at cost less applicable accumulated depreciation and impairment losses.

Depreciation Fixed assets are depreciated on a straight line basis, over the assets useful life commencing from the time the asset is held ready for use. Indicative depreciation rates used for each class of depreciable assets are: Class of fixed asset - office furniture & equipment - computer equipment - office and gallery refurbishment - buildings (e)

Depreciation rate 33% and 20% 33% and 20% 20% 4%

Investments

Non-current investments are recorded at cost. The carrying amount of investments is reviewed annually to ensure they do not exceed the recoverable amount. (f)

Employee entitlements

Provision is made for FORM’s employee entitlement liabilities arising from services rendered by employees up to and including balance date. Employee entitlements expected to be settled within one year together with entitlements arising from wages and salaries and annual leave, which will be settled after one year, have been measured at their nominal amount. Other employee entitlements payable later than one year have been measured at the net present value of their estimated future cashflows.

FORM adopts the policy of accruing pro-rata long service leave entitlements after an employee has attained seven years continuous service. Contributions are made by FORM to an employee nominated superannuation fund and are charged as expenses when incurred. (g)

Inventories

Inventories are measured at the lower of cost and net realisable value. Costs are assigned on a specific identification basis and include direct costs.

Pg 7

FORM building a state of creativity inc

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

Summary of Significant Accounting Policies (continued)

1. (h)

Leases Lease payments under operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the period in which they are incurred.

(i)

Cash For the purposes of the Cash Flow Statement, cash includes cash on hand, at banks and term deposits.

(j)

Revenue  Revenue from the sale of goods is recognized upon the delivery of goods to customers.  Operating grant, capital grant and sponsorship revenue is recognized to the extent that the funds have been expended. Unexpended grant and sponsorship money is recorded as a liability.  Revenue and expenses related to in-kind sponsorship is recognized in the accounts when the sponsorship is measurable and of a material amount.

(k)

Goods and Services Tax (GST) Revenue, expenses and assets are recognized net of GST, except where the GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognized as part of the cost of acquiring the asset. Receivables and Payables in the balance sheet are shown inclusive of GST. A Business Activity Statement (BAS) is submitted quarterly to the ATO.

Pg 8

FORM building a state of creativity inc

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 2. Gallery Sales, Visitor Centre, Café and Spinifex Hill Studio Income The Gallery Sales, Visitor Centre, Cafe and SHS commissions are at: 2015 $ 276,329

Cost of sales

2016 $ 62,905 (41,097)

(108,290)

Gross Profit

21,808

168,039

35%

61%

262,991 (178,324)

(197,426)

84,667

92,663

32%

32%

260,394

Cost of sales

236,843 (132,320)

(153,994)

Gross Profit

104,524

106,400

44%

41%

213,587 (138,977)

(122,943)

74,610

67,784

35%

36%

416,545 (165,498)

441,398 (157,178)

251,048

284,220

60%

64%

Perth retail sales

% of sales

Port Hedland retail sales Cost of sales Gross Profit % of sales

Visitor Centre Sales

% of sales

Spinifex Hill Studio Sales Cost of sales Gross Profit % of sales

Pretty Pool Provedore Café Sales Cost of sales Gross Profit % of sales

Cost of sales

46,158 (20,062)

Gross Profit

26,096

The Goods Shed retail sales

290,089

190,727

57%

% of sales Total Sales

1,239,031

1,458,936

Cost of sales

(676,278)

(739,831)

562,753

719,105

45%

49%

Gross Profit Average % of sales

Pg 9

FORM building a state of creativity inc

NOTES NOTES TO THE TOFINANCIAL THE FINANCIAL STATEMENTS STATEMENTS FOR THE FORYEAR THE YEAR ENDED ENDED 31 DECEMBER 31 DECEMBER 2016 2016 3.

1.

1.Operating, Operating, Project and Subsidy Income Project and Subsidy GrantGrant Income

Unex-UnexUnex-UnexNet grant Net grant Net grant Net grant pended pended Grants Grants pended pended income incomeincome income grants grants 2016 2016grants grants 2016 2016 2015 2015 b/f b/f c/f c/f $ $ $ $ $ $ $ $ $ $ Department Department of Culture of CultureCore Core Funding Funding State State VisualVisual Arts Arts 293,904 293,904 & the &Arts the Arts and Craft and Craft Strategy Strategy Organisations Organisations Investment Investment 308,599 308,599 308,599 308,599 Program Program Funding Funding Project 140,050 140,05070,050 70,050 70,000 70,000 15,000 15,000 Project GrantGrant 448,649 448,64970,050 70,050378,599 378,599308,904 308,904

Department Department of Culture of Culture & the&Arts theTotal Arts Total Australia Australia Council Council

Core Core Funding Funding Federal Federal VisualVisual Arts and ArtsCraft and Craft Strategy Strategy Project Project GrantGrant

Australia Australia Council Council TotalTotal Federal Federal Government Government OfficeOffice of theofArts the Arts Department Department of Communication of Communication and the andArts the Arts Federal Federal Government Government TotalTotal OtherOther State State and Local and LocalDepartment Department of Regional of Regional Government Government Funding Funding Development Development Lotteries Lotteries Commission Commission Pilbara Pilbara Develop Develop Commission Commission Goldfeilda Goldfeilda Esperance Esperance Development Development Commission Commission City ofCity Kalgoorlie-Boulder of Kalgoorlie-Boulder Tourism Tourism WA WA

175,712 175,712

175,712 175,712 86,977 86,977

65,000 65,000 240,712 240,712

65,000 65,000 10,000 10,000 240,712 240,712 96,977 96,977 100,000 100,000

250,000 250,000

250,000 250,000

250,000 250,000

250,000 250,000100,000 100,000

110,000 110,000

110,000 110,000500,000 500,000

154,409 154,409 33,320 33,320

154,409 154,409 33,320 33,320 18,18118,181

20,000 20,000

20,000 20,000

9,5459,545 23,200 23,200

9,5459,545 23,200 23,200

350,474 350,474

StateState Government Government TotalTotal

350,474 350,474 518,181 518,181

1,289,835 1,289,83570,050 70,050 1,219,785 1,219,785 1,024,062 1,024,062

TotalTotal Operating Operating and Project and Project GrantGrant Income Income

Pg 10

FORM building a state of creativity inc

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

6 2015 $

2016 $ 0165 4.

Net Surplus The following disclosable items are included within Net Surplus: Remuneration of auditor – annual audit and review and grants acquittal Rental expense on operating rental/leases -minimum rental payments -sub lease payments

Employee benefits

5.

6.

7.

Prepayments Insurances Expenses Paid in Advance

Receivables Trade receivables Accrued income receivable Port Hedland rental bond Other receivable

Inventories Retail outlet stock - Perth Retail Stock – Port Hedland Courthouse Retail Stock – Port Hedland Visitor Centre Retail Stock – Spinifex Hill Studio Retail Stock – Pretty Pool Provedore

Pg 11

10,200

9,000

18,371 94,765 113,136

20,976 77,618 98,594

2,699,349

2,815,211

27,697 6,080 33,777

32,793 65,892 98,685

335,078 203,325 2,000 540,403

276,916 550,000 3,600 830,516

43,242 105,098 61,736 2,222 212,299 212,298

57,626 112,785 63,110 6,740 12,415 252,640

FORM building a state of creativity inc

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 8. Property, Plant and Equipment Office Equipment $

Year Ended December 2015 Carrying amount (1 January 2015) Additions Written off WDV Less: Depreciation Net carrying amount (31 December 2015) As at 31 December 2015 Property, Plant and Equipment - at Cost Less: Accumulated Depreciation Net carrying amount (31 December 2015) Year Ended December 2016 Carrying amount (1 January 2016) Additions Written off WDV Less: Depreciation Net carrying amount (31 December 2016) As at 31 December 2016 Property, Plant and Equipment - at Cost Less: Accumulated Depreciation Net carrying amount (31 December 2016)

Shop and Gallery equipment $

CafĂŠ $

1,068,527 303,425

30,060

Total $

279,411 78,903 (768) (103,956)

(10,839)

(44,538)

(3,716)

1,365,087 412,387 (768) (163,048)

253,590

6,310

1,327,414

26,344

1,613,658

601,342

54,193

1,416,474

30,060

2,102,069

(347,752)

(47,883)

(89,060)

(3,716)

(488,411)

253,590

6,310

1,327,414

26,344

1,613,658

253,590 121,577 (35,010) (112,368)

6,310

1,327,414

26,344 6,168

(6,310)

(44,714)

(7,285)

1,613,658 127,745 (35,010) (170,677)

227,790

-

1,282,700 1,282,699

25,227

1,535,717 1,535,716

663,464

54,193

1,416,474

36,228

2,170,359

(435,675)

(54,193)

(133,774)

(11,001)

(634,642)

227,790

-

1,282,700 1,282,699

25,277

1,535,717 1,535,716

Pg 12

17,148

Buildings $

FORM building a state of creativity inc

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

9.

2016 $

2015 $

415,500 162,260 25,908 603,667

554,827 165,312 22,570 742,709

70,050 110,309 194,754

28,437

562,500 132,817 1,070,429

600,500 778,002 1,406,939

Carrying amount at 1 January 2016 Net Movement for the year

49,203 8,271

50,190 (986)

Provision for bad debts Carrying amount at 1 January 2016 Net Movement for the year

-

-

57,475

49,203

36

38

Payables Trade payables Payroll and GST payables Project Retentions

10.

Other Current Liabilities State government in advance Federal government in advance Other government bodies Rental income in advance Sponsorships in Advance Other Funds in Advance

11.

Provisions Employee entitlements

Carrying amount at 31 December 2016 Number of employees at 31 December 2016 (Full Time Equivalent)

Pg 13

FORM building a state of creativity inc

NOTES TONOTES THE FINANCIAL STATEMENTS TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 ENDED DECEMBER 2016 FOR THE YEAR 31 DECEMBER 2016 2016

2016

2015

2015

12. Retained 12. Surplus Retained Surplus Retained surplus Retained at surplus the beginning at the beginning of the financial of theyear financial year Net surplus Net forsurplus the year for the year Retained surplus Retained at surplus the end at of the the end financial of theyear financial year

1,276,270 1,276,270 1,255,355 1,255,355 264,926 264,925 264,925 20,915 20,915 1,541,195 1,541,195 1,276,270 1,276,270 1,541,196

13. (a) Components 13. (a) Components of cash and ofcash cashequivalents and cash equivalents Cash on Hand Cash on Hand Cash at Bank Cash at Bank Total cashTotal and cash cashequivalents and cash equivalents

5,356 945,216 950,572

5,356 945,216 950,572

4,131 675,493 679,624

4,131 675,493 679,624

20,915 161,415

20,915 161,415

(b) Reconciliation (b) Reconciliation of net surplus of net tosurplus net cash to(used net cash in)/provided (used in)/provided by operating by operating activities activities Net Surplus Net Surplus Depreciation Depreciation Changes inChanges assets and in assets liabilities: and liabilities: Decrease/Decrease/ (increase) in (increase) receivables in receivables Decrease/Decrease/ (increase) in (increase) inventories in inventories Decrease/Decrease/ (increase) in (increase) prepayments in prepayments Decrease/Decrease/ (increase) in (increase) other assets in other assets (Decrease)/ (Decrease)/ increase inincrease payablesin payables (Decrease)/ (Decrease)/ increase inincrease other liabilities in other liabilities (Decrease)/ (Decrease)/ increase inincrease provisions in provisions Net cash (used Net cash in)/provided (used in)/provided by operating by activities operating activities

Pg 14

264,926 170,677

264,926 170,677

290,114 290,114 (445,886) (445,886) 40,341 40,341 (31,450) (31,450) 64,907 64,907 (23,222) (23,222) (92,735) (92,735) (409,986) (409,986) (1,535,981)(1,535,981) 304,253 304,253 1,060,429 1,060,429 9,250 9,250 8,271 8,271 (986) (986) 270,948 270,948 (415,697) (415,697)

FORM building a state of creativity inc

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

14.

2016 $

2015 $

113,136 12,177 17,977 143,290

84,562 9,457 2,304 96,322

Operating Rental / Lease Commitments Within one year After one year but not later than two years After two years but not later than five years

The Station Masters House property lease was entered into for 5 years starting the 1st of July 2016, with the option to extend to 2026 if required. Rent is payable in advance and subject to an annual review and adjustment if applicable.

No staff housing rents have been included in the above commitments.

15.

External project (hard infrastructure) funds The fund balances for hard infrastructure projects at 31 December 2016 are: 2016 $

2015 $

Current assets Cash and Cash Equivalents Trade Receivables

-

-

Current liabilities Trade Payables Unexpended Project funding

-

-

Net asset

-

-

Pg 15

FORM building a state of creativity inc

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

16.

Financial Instruments (a)

Cash at bank and term deposits Cash at bank are attracting floating interest rates of between 0.00% and 1.10% and term deposits are between 2.1% and 2.35%.

(b)

Interest rate risk FORM is exposed to interest rate risk due to the fact that its cash deposits are held in floating interest rate facilities. Other financial assets and liabilities such as trade creditors, other creditors and trade debtors are non-interest bearing.

(c)

Credit risk The maximum credit risk exposure to recognised financial assets of FORM, is the carrying amount, net of any provision for non-recoverability. These are disclosed in the balance sheet and notes to the financial statements.

FORM does not have any material credit risk exposure to any other debtor or group of debtors under financial instruments entered into by FORM.

(d)

17.

Net fair values The net fair value of the financial assets and liabilities approximates their carrying value.

Association Details The principal place of business of the association is: FORM building a state of creativity Inc. 357 Murray Street Perth WA 6000

Pg 16

FORM building a state of creativity inc

Pg 17

FORM building a state of creativity inc

Pg 18

FORM building a state of creativity inc

www. fo r m . n et . a u

Pg 19