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Annual Financial Report 30 June 2013 The Northcott Society (A company limited by guarantee) and its controlled entity ABN 87 302 064 152


Contents

The Northcott Society and its controlled entity Directors’ report.....................................................................1 1. Directors.........................................................................................................................................................1 2. Company secretary.........................................................................................................................................3 3. Director’s meetings.........................................................................................................................................3 4. Principal activities, objectives and strategies...................................................................................................4 5. Operating and financial review.........................................................................................................................6 6. Events subsequent to reporting date...............................................................................................................6 7. Likely developments........................................................................................................................................6 8. Environmental regulation.................................................................................................................................6 9. Indemnification and insurance of officers.........................................................................................................7 10. Lead auditor’s independence declaration........................................................................................................7 The Northcott Society and its controlled entity Statements of comprehensive income.................................8 The Northcott Society and its controlled entity Statements of changes in equity...........................................9 The Northcott Society and its controlled entity Statements of financial position..........................................10 The Northcott Society and its controlled entity Statements of cash flows....................................................11 The Northcott Society and its controlled entity Notes to the consolidated financial statements.................12 1. Reporting entity.............................................................................................................................................12 2. Basis of preparation......................................................................................................................................12 3. Significant accounting policies.......................................................................................................................13 4. Determination of fair values...........................................................................................................................19 5. Expenses......................................................................................................................................................20 6. Net financing income....................................................................................................................................20 7. Cash and cash equivalents...........................................................................................................................20 8. Trade and other receivables..........................................................................................................................21 9. Inventories....................................................................................................................................................21 10. Other financial assets....................................................................................................................................21 11. Other assets.................................................................................................................................................21 12. Property, plant and equipment......................................................................................................................22 13. Intangible assets...........................................................................................................................................24 14. Investment property......................................................................................................................................24 15. Trade and other payables..............................................................................................................................25 16. Employee benefits.........................................................................................................................................25 17. Other liabilities...............................................................................................................................................32 18. Capital and reserves......................................................................................................................................32 19. Operating leases...........................................................................................................................................33 20. Consolidated entities.....................................................................................................................................34 21. Key management personnel disclosures.......................................................................................................34 22. Segment reporting........................................................................................................................................34 23. Subsequent events.......................................................................................................................................34 24. Fundraising appeals conducted during the financial year...............................................................................35 The Northcott Society and its controlled entity Declaration by Chief Executive Officer in respect of fundraising appeals.....................................................................................................................37 The Northcott Society and its controlled entity Directors’ declaration..........................................................38 Independent auditor’s report to the members of The Northcott Society and its controlled entity...............39 Lead auditor’s independence declaration........................................................................................................41


The Northcott Society and its controlled entity Directors’ report

The directors present their report together with the financial report of The Northcott Society (“the Society”) and of the Group being The Society and its controlled entity for the year ended 30 June 2012 and the auditor’s report thereon.

1. Directors The directors of the Society at any time during or since the end of the financial year are: Name and qualifications

Experience, special responsibilities and other directorships

Mr. Michael Briggs B Comm, ACA, ACIS, MBA Chairman

Appointed 27 March 2003 Chairman, The Northcott Society Member, Finance and Properties Committee Member, Nomination Committee Director, Antec Engineering Pty Limited Director , Anchorage Capital Partners Pty Limited Director, SCECGS Redland Limited Director, Dick Smith Electronics Pty Ltd Chairman, Acrow Formwork and Scaffolding Pty Limited

Mr. Tony Abrahams B Com (Hons) LLB MPhil (Econ) MBA MAICD

Appointed 21 September 2010 Member, Nomination Committee Co-founder and CEO, Access Innovation Media Member, Australian Institute of Company Directors Rhodes Scholar Young Global Leader by the World Economic Forum - 2013

Ms. Kirsten Armstrong M.Ec, M.PH, FIAA

Appointed 7 January 2013 Co-founder and Director, Three Rivers Fellow, Institute of Actuaries of Australia Member of the International Health Economics Association

Mr. Richard Blaiklock B Comm, MBA

Appointed 19 November 2003 Chair, Nomination Committee Chairman, Baresque Australia Pty Ltd Group and affiliated companies

Mr. Nick Cardno MA (Hons) CA MAICD

Appointed 7 February 2013 Chair, Finance and Properties Committee Partner, Ernst & Young Director, Ernst & Young Transaction Advisory Services Ltd Member, Institute of Chartered Accountants (Scotland) Member, Institute of Chartered Accountants (Australia) Member, Australian Institute of Company Directors

Ms. Debra Heitmann B Admin, MBA,FCA,FTIA FCA – Financial Planning Specialist, Registered Tax Agent (Resigned 25 October 2012)

Appointed 1 April 2009 Chair, Finance and Properties Committee Director and Chair Finance Committee, Joint Accreditation System of Australia and New Zealand CEO, Hado Investments Pty Limited Member, Venture Capital Committee of Innovation Australia Board Director, Ayers Alliance Holdings Pty Limited Key Responsible Manager, Ayers Alliance Australian Financial Services Licence Financial Year ending 30 June 2013

1


The Northcott Society and its controlled entity Directors’ report (continued)

Name and qualifications

Experience, special responsibilities and other directorships

Dr. Christopher Janssen MB BS (Sydney), MBA (IMD), FAICD

Appointed 27 November 1986 Member, Finance and Properties Committee Managing Director, GPC Electronics Pty Limited and affiliated companies Director, The Warren Centre for Advanced Engineering Ltd Member, Advisory Board, Centor Holdings Pty Limited. Registered (non-practising) Medical Practitioner Fellow of the Australian Institute of Company Directors

Mr. Jeyan Jeevaratnam B Eng (Hons 1), MBA, M Eng Sc, MAICD

Appointed 3 May 2012 Managing Director, Avanade Director, of AIIA (Australian Information Industry Association) Member, Technical Advisory Committee, Copyright Agency Member, Australian Institute of Company Directors

Mr. Andrew Mansour B Ec LLB (Hons)

Appointed 30 August 2010 Partner, Energy, Resources and Infrastructure Group, Allens

Ms. Debra Richards BA (Lib Studies), Graduate Diploma (Arts), MA MAICD

Appointed 1 December 2012 CEO, Ausfilm (International Inc); Director, Communications & Media Law Association Director, International Institute of Communications Member, Alcohol Beverages Advertising Code Adjudication Panel Member, Australian Institute of Company Directors

Dr. Rob Silberstein LLB (Hons) MHL MBBS MIP GDipLegPrac, FIPTA

Appointed 1 April 2009 Australian and New Zealand Intellectual Property Counsel for Alphapharm Pty Ltd Director and Chairman, Mobility 2000 (Australia) Limited

Ms. Kerry Stubbs Managing Director and Chief Executive Officer BA (Hons), MA (Hons), Grad Cert Writing, MAICD

Appointed 27 February 2008 Member, Finance and Properties Committee Member, Nomination Committee Telstra Business Women’s Awards – 2007 NSW IBM Community & Government Award Winner Director, NSW Health Services Association Ltd Director, SpineCare Foundation Ltd Director, Cerebral Palsy Australia Director, Water for Sensitive Cities CRC Chair, National Accreditation Authority for Translators and Interpreters Ltd Member, Finance and Investment Committee, University of Western Sydney Board of Trustees

Mr. John Surian BA (Econ), G.DipAppFin (Sec Inst), F Fin

Appointed 14 December 2000 Member, Finance and Properties Committee Licensee and Principal, Raine & Horne Commercial Parramatta

Dr. Hugh Taylor MB, BS (Resigned 13 September 2012)

Appointed 19 April 1990 Director and Founder of the Taylor Group of Investment Companies

In accordance with the Society’s Constitution, one third of the directors retire from the Board of directors at the forthcoming Annual General Meeting of members and being eligible, offer themselves for re-election.

2

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Directors’ report (continued)

2. Company secretary Mr Lee Carpenter (ACMA, Grad Cert Bus Admin, CPA, MBA, MAICD, CGMA) was appointed to the position of company secretary in May 2008. Mr Carpenter is the Chief Operating Officer of the Northcott Society and also a Director of SpineCare Foundation.

3. Director’s meetings The number of directors’ meetings and number of meetings attended by each of the directors of Northcott during the financial year are: Director

Board Meetings Attended

Held*

Finance and Properties Committee Meetings Attended

Held*

Nomination Committee Meetings Attended

Held*

Mr R Blaiklock

7

7

-

-

3

3

Mr M Briggs

7

7

5

5

3

3

Dr C Janssen

7

7

4

5

-

-

Mr JF Surian

6

7

5

5

-

-

Dr HEC Taylor

1

1

-

-

-

-

Mr A Abrahams

7

7

-

-

3

3

Ms K Stubbs

7

7

5

5

3

3

Ms D Heitmann

1

1

1

1

-

-

Mr A Mansour

7

7

-

-

-

-

Dr R Silberstein

4

7

-

-

-

-

Ms K Armstrong

3

4

-

-

-

-

Mr N Cardno

3

3

3

3

-

-

Mr J Jeevaratnam

6

7

-

-

-

-

Ms D Richards

4

5

-

-

-

-

* Number of meetings held during the time the director held office during the period.

Financial Year ending 30 June 2013

3


The Northcott Society and its controlled entity Directors’ report (continued)

4. Principal activities, objectives and strategies The principal activities of the consolidated entity during the course of the financial year were the provision of individual and family support, respite, recreation and leisure programs, day programs, accommodation, employment, equipment and technology, specialist services and therapy services to people with disabilities in New South Wales. There were no significant changes in the nature of the activities of the Group during the year.

The Society’s long term objective: The Society’s long term objective is to help build an inclusive society. We do this in partnership with our clients and stakeholders to ensure we provide services that are professional, client-focused and designed to assist people with disabilities and their communities achieve their goals and aspirations.

In order to ensure the long term objectives are being met, the Society will: „„ Be innovative in our service delivery, to ensure service „„ Develop our knowledge and expertise in person provision best meets the needs of our clients. centred planning, which involves identifying what is important to our clients and acting upon it, as well as „„ Strive to become a provider of choice for both piloting some person centred services in new areas. current and prospective clients. „„ Develop a number of mechanisms to encourage „„ Grow our services in areas of identified need, research development, including a targeted and particularly regional NSW and within indigenous holistic program which translates research into communities. practice. This ensures the services we offer our „„ Develop mutual and long-term partnerships with our clients are indicative of best practice and are stakeholders, to ensure our clients have access to validated and measured. the best level of service delivery. „„ Develop a client consultation strategy, so that clients can be more meaningfully involved in planning services and evaluating what we do.

4

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Directors’ report (continued)

The Society’s short term objectives: The Society’s short term objectives are based on the organisation’s 2011-2014 Strategic Plan, which identifies four key priorities for Northcott: 1. Grow and evolve services that drive inclusion, innovation and scale

3. Drive a dynamic person-centred workforce, workplace and culture

„„ Evaluate and improve existing services to drive and „„ A workforce enabled to deliver person centred lift social inclusion approaches „„ Explore and deliver new service opportunities „„ Explore and develop innovative services „„ Strengthen our regional footprint 2. Lead and influence the sector and public to change for the benefit of clients and the community „„ Well positioned and connected Northcott „„ A credible research voice „„ Profile and presence in the sector

„„ Invest in our workforce and workplace to enhance delivery „„ A culture more aligned with our values 4. Build a sustainable organisation fit for the future „„ A future focussed, external looking organisation „„ Broaden and grow our revenue base „„ Systems to sustain our capacity and growth „„ Improve the evaluation of organisational performance „„ Improved social responsibility effort

Company performance is constantly measured against the following KPI’s: „„ A range of Financial indicators. „„ Investment returns compared to benchmarks. „„ Client activity performance including client numbers, client outputs and unit costs. „„ Staffing measures including the number of staff, full time equivalents, recruitment and retention. „„ Occupational Health and Safety measures including the number and type of incidents and lost time injuries.

„„ Fundraising performance and cost of fundraising ratio. „„ Client Satisfaction measures including compliments and complaints. „„ Government income to cover direct cost and contribute appropriately to overheads. „„ The ratio of successful tenders over tenders applied for.

Northcott also undertakes regular surveys of Client and Staff satisfaction.

Financial Year ending 30 June 2013

5


The Northcott Society and its controlled entity Directors’ report (continued)

5. Operating and financial review Review and result of operations The operations for the year ended 30 June 2013 resulted in a consolidated net surplus of $3,243,194 (2012: $3,938,297). Income from government funding was greater than that achieved last year, primarily due to an expansion in Ageing, Disability and Home Care (ADHC) programs. Income from estates and bequests was lower than last year, mainly due to a significant sum received from one estate in the prior year. Investment returns on managed funds generated a positive return. Expenditure on client programmes was significantly higher than last year mainly due to an increase in the expenses associated with setting up and running the new programs. Expenditure in all other areas was in accordance with expectations.

Significant changes in the state of affairs In the opinion of the directors there were no significant changes in the state of affairs of the Group that occurred during the financial year under review.

6. Events subsequent to reporting date There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Society, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.

7. Likely developments The directors do not believe that there will be any significant change in the Group’s operations for the next twelve months.

8. Environmental regulation The Group’s operations are not subject to any significant environmental regulation under either Commonwealth or State legislation. However, the Board believes that the Group has adequate systems in place for the management of its environmental requirements and is not aware of any significant breaches of those requirements as they apply to the Group.

6

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Directors’ report (continued)

9. Indemnification and insurance of officers Indemnification Northcott has agreed to indemnify the current and former directors of the Society and its controlled entity against all liabilities to another person (other than Northcott or a related body corporate) that may arise from their position as directors of the Society and its controlled entity except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the Society will meet the full amount of any such liabilities, including costs and expenses.

Insurance premiums Since the end of the previous financial year the Society has paid insurance premiums in respect of directors’ and officers’ liability and legal expenses’ insurance contracts, for current and former directors and officers, including executive officers of the Society and directors and executive officers and secretaries of its controlled entity. The insurance premiums relate to: „„ costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever their outcome; and

„„ other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty or improper use of information or position to gain a personal advantage.

Under the terms of the contract of insurance, further details of the insurance cover are not permitted to be disclosed.

10. Lead auditor’s independence declaration The Lead auditor’s independence declaration is set out on page 41 and forms part of the directors’ report for financial year ended 30 June 2013. This report is made with a resolution of the directors:

__________________________ M. Briggs Director Dated at Sydney this 19 September 2013

Financial Year ending 30 June 2013

7


The Northcott Society and its controlled entity Statements of comprehensive income

In AUD

Consolidated

The Society

2013

2012

2013

2012

Revenue from government funding

30,812,324

28,264,494

30,812,324

28,264,494

Revenue from capital grant income

3,087,363

1,845,110

3,087,363

1,845,110

796,194

1,052,155

796,194

1,052,155

1,236,193

1,543,824

1,236,193

1,543,824

1,481,738

1,177,317

1,461,388

1,155,587

Non - monetary

411,307

1,045,623

411,307

1,045,623

Revenue from rental and accommodation

660,577

700,056

660,577

700,056

Revenue from royalties

83,185

82,055

83,185

82,055

Profit from sale of non-current assets

30,348

62,619

30,348

62,619

Other income

938,614

890,485

960,571

890,450

Total revenue

39,537,843

36,663,738

39,539,450

36,641,973

Cost of sales

(900,447)

(908,398)

(900,447)

(908,398)

(27,781,643)

(24,635,972)

(27,781,643)

(24,635,972)

(915,716)

(826,966)

(915,716)

(826,966)

(8,444,781)

(7,200,869)

(8,412,457)

(7,081,059)

1,495,256

3,091,533

1,529,187

3,189,578

1,747,938

846,764

1,540,957

779,553

Net financing income

1,747,938

846,764

1,540,957

779,553

Surplus for the period

3,243,194

3,938,297

3,070,144

3,969,131

(25,493)

8,966

(25,493)

8,966

3,217,701

3,947,263

3,044,651

3,978,097

Note

Revenue from estates and bequests Revenue from sale of goods Revenue from fundraising and donations Monetary

Client programme expenses Fundraising expenses Corporate support expenses Surplus before financing income

Financial income

6

Other comprehensive income Defined benefit plan actuarial (losses)/profit Total comprehensive income for the year

16

The statements of comprehensive income are to be read in conjunction with the notes to the financial statements set out on pages 12 to 36.

8

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Statements of changes in equity

Consolidated In AUD

Reserves

Accumulated funds

Total equity

26,076,222

200,170

26,276,392

Surplus for the period

-

3,938,297

3,938,297

Actuarial gains on defined benefit superannuation plans

-

8,966

8,966

Other comprehensive income for the period

-

-

-

Balance at 30 June 2012

26,076,222

4,147,433

30,223,655

Balance at 1 July 2012

26,076,222

4,147,433

30,223,655

-

3,243,194

3,243,194

Actuarial losses on defined benefit superannuation plans -

(25,493)

(25,493)

(26,076,222)

26,076,222

-

-

33,441,356

33,441,356

26,076,222

(2,104,994)

23,971,228

-

3,969,131

3,969,131

Actuarial gains on defined benefit superannuation plans -

8,966

8,966

-

-

-

26,076,222

1,873,103

27,949,325

26,076,222

1,873,103

27,949,325

Surplus for the period

-

3,070,144

3,070,144

Actuarial losses on defined benefit superannuation plans

-

(25,493)

(25,493)

(26,076,222)

26,076,222

-

-

30,993,976

30,993,976

Balance at 1 July 2011 Total comprehensive income for the period

Total comprehensive income for the period Surplus for the period

Transfer to accumulated funds Balance at 30 June 2013

The Society In AUD Balance at 1 July 2011 Total comprehensive income for the period Surplus for the period

Other comprehensive income for the period Balance at 30 June 2012

Balance at 1 July 2012 Total comprehensive income for the period

Transfer to accumulated funds Balance at 30 June 2013

The statements of changes in equity are to be read in conjunction with the notes to the financial statements set out on pages 12 to 36.

Financial Year ending 30 June 2013

9


The Northcott Society and its controlled entity Statements of financial position

In AUD

Consolidated

The Society

Note

2013

2012

2013

2012

Cash and cash equivalents

7

6,870,372

2,891,169

5,144,196

2,152,235

Trade and other receivables

8

1,647,990

1,338,895

1,657,081

905,488

Inventories

9

322,801

420,945

322,801

420,945

Other financial assets

10

13,043,645

16,220,330

12,296,945

15,610,880

Other current assets

11

331,841

253,176

331,841

253,176

22,216,649

21,124,515

19,752,864

19,342,724

8

-

21,554

-

-

Other financial assets

10

-

495,358

-

-

Employee benefits

16

227,644

216,841

227,644

216,841

Intangible assets

13

4,843,623

1,819,466

4,843,623

1,819,466

Investment property

14

-

850,000

-

850,000

Property, plant and equipment

12

20,304,567

19,823,150

20,304,567

19,823,150

Total non-current assets

25,375,834

23,226,369

25,375,834

22,709,457

Total assets

47,592,483

44,350,884

45,128,698

42,052,181

Assets

Total current assets Trade and other receivables

Liabilities Trade and other payables

15

2,450,671

2,582,461

2,434,266

2,558,088

Employee benefits

16

2,870,114

2,540,008

2,870,114

2,540,008

Other

17

8,588,758

8,818,490

8,588,758

8,818,490

13,909,543

13,940,959

13,893,138

13,916,586

241,584

186,270

241,584

186,270

241,584

186,270

241,584

186,270

Total liabilities

14,151,127

14,127,229

14,134,722

14,102,856

Net assets

33,441,356

30,223,655

30,993,976

27,949,325

Total current liabilities Employee benefits

16

Total non-current liabilities

Accumulated funds General accumulated funds

18

33,441,356

4,147,433

30,993,976

1,873,103

Reserves

18

-

26,076,222

-

26,076,222

33,441,356

30,223,655

30,993,976

27,949,325

Total accumulated funds

The statement of financial position are to be read in conjunction with the notes to the financial statements set out on pages 12 to 36.

10

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Statements of cash flows

In AUD

Consolidated Note

The Society

2013

2012

2013

2012

42,728,405

33,337,779

42,265,990

33,366,525

Cash flows from operating activities Cash receipts from customers, donations and grants Cash paid to suppliers and employees

(38,828,016) (33,624,447)

(38,787,755) (33,755,377)

Cash generated from/(used in) operations

3,900,389

(286,668)

3,478,235

(388,852)

Managed fund distribution received

1,300,518

1,176,040

1,300,518

1,176,040

167,852

233,682

107,115

180,949

5,368,759

1,123,054

4,885,868

968,137

163,360

282,582

163,360

282,582

3,951,611

63,639

3,447,260

49,410

Acquisition of property, plant and equipment and intangible assets

(5,504,527)

(3,688,538)

(5,504,527)

(3,688,538)

Net cash from/(used in) investing activities

(1,389,556)

(3,342,317)

(1,893,907)

(3,356,546)

Net increase/(decrease) in cash and cash equivalents

3,979,203

(2,219,263)

2,991,961

(2,388,409)

Cash and cash equivalents at 1 July

2,891,169

5,110,432

2,152,235

4,540,644

6,870,372

2,891,169

5,144,196

2,152,235

Interest received Net cash from operating activities

Cash flows from investing activities Proceeds from sale of non-current assets Proceeds from sale of managed fund investments held for trading

Cash and cash equivalents at 30 June

7

The statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 12 to 36.

Financial Year ending 30 June 2013

11


The Northcott Society and its controlled entity Notes to the consolidated financial statements

1. Reporting entity The Northcott Society (the ‘Society’ or ‘Company’) is a not-for-profit company limited by guarantee and domiciled in Australia. The consolidated financial report of the Society for the financial year ended 30 June 2013 comprises the Society and its controlled entity (together referred to as the ‘Group’).

2. Basis of preparation a. Statement of compliance The financial report is a tier 2 general purpose financial report which has been prepared in accordance with Australian Accounting Standards – Reduced Disclosure Requirements (AASBs) (including Australian Accounting Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The Company early adopted AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Standards arising from Reduced Disclosure Requirements for the financial year beginning on 1 July 2012 to prepare Tier 2 general purpose financial statements. The statements were approved by the board of directors on the 17 September 2013.

b. Basis of measurement The financial report is presented in Australian dollars. The financial report is prepared on the historical cost basis except for financial instruments classified as held for trading which are stated at their fair value.

c. Estimates and judgements 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. The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. .

12

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

3. Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements, by the Company and its controlled entity.

a. Basis of consolidation (i) Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. (ii) Transactions eliminated on consolidation Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.

b. Financial Instruments (i) Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below. Cash and cash equivalents comprise cash balances and call deposits. Where payment terms for disposed assets are deferred for more than twelve months, the receivable is discounted to its present value. The unwinding of the discount is recognised as interest income. Financial assets at fair value through profit or loss An instrument is classified as at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Upon initial recognition, attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss. Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

Financial Year ending 30 June 2013

13


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

c. Property, plant and equipment (i) Owned assets Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation (see below) and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Impairment of assets is discussed in Note 3 (e). Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. (ii) Leased assets Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Other leases are classified as operating leases. Lease payments are accounted for as described in accounting policy in Note 3 (l). (iii) Subsequent costs The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred. (iv) Depreciation With the exception of freehold land, depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the entity will obtain ownership by the end of the lease term. The estimated useful lives in the current and comparative periods are as follows: „„ Buildings

40 years

„„ Leasehold improvements 3 years „„ Plant and equipment

4 – 10 years

The residual value, the useful life and the depreciation method applied to an asset are reassessed at least annually.

d. Investment property Investment property is property held either to earn rental income or for capital appreciation for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost or if donated at fair value, on initial recognition and subsequently at fair value with any change therein recognised in profit or loss. Cost includes expenditure that is directly attributable to the acquisition of the investment property. Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit and loss.

14

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

e. Intangible assets Intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred. Intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives, from the date that they are available for use. The estimated useful lives for the current and comparative years are as follows: „„ Service concessions

20

years

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

f. Inventories Inventories of raw material, parts, supplies and work in progress expended and assembled by Northcott are valued using the weighted average cost method and are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Cost includes direct materials, direct labour and other direct costs necessary to bring inventories to their present location and condition.

g. Impairment (i) Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in profit or loss.

Financial Year ending 30 June 2013

15


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

(ii) Non-financial assets The carrying amounts of the Group’s non-financial assets, other than inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. As the Group is a not-for-profit organisation, value in use is determined as being the asset’s depreciated replacement cost. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

h. Employee benefits (i) Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as a personnel expense in profit or loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. (ii) Defined benefit plans A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on AA credit-rated or government bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognised asset is limited to the total of any unrecognised past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Group if it is realisable during the life of the plan, or on settlement of the plan liabilities. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss. The Group recognises all actuarial gains and losses arising from defined benefit plans directly in equity immediately.

16

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

(iii) Other long term employee benefits The Group’s net obligation in respect of long-term employee benefits other than defined benefit plans is the amount of future benefit that employees have earned in return for their service in the current and prior periods plus related on-costs. (iv) Short term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (v) Termination benefits Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.

i.

Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

j.

Revenue

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) payable to the taxation authority. (i) Sale of goods Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. (ii) Goods sold and services rendered The stage of completion is assessed by reference to estimates of work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, the costs incurred or to be incurred cannot be measured reliably, there is a risk of return of goods or there is continuing management involvement with the goods. (iii) Rental and accommodation Revenue from rental and accommodation is recognised in the income statement on a straight line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income.

Financial Year ending 30 June 2013

17


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

(iv) Government funding Government funding comprises grants for ongoing funding and specific purposes. These are recognised as income in the income statement in the period to which the funding relates to the extent that expenditure has been incurred in accordance with the terms and conditions attaching to individual government grants. Where funding in a period exceeds related expenditure, unspent amounts are either: „„ Deferred and recognised as „„ Deferred and recognised as „„ Recognised as income if the unearned income in the balance unearned income in the balance amounts are not repayable and sheet if they are repayable to sheet if amounts are not no obligation exists to incur related government bodies repayable but related expenditure expenditure in accordance with under the terms and conditions has not yet been incurred in specified terms and conditions. of the funding; accordance with the terms and conditions of the funding; or Amounts deferred are presented within “Current liabilities – Other”. Grants received on the condition that specified services are delivered, or conditions are fulfilled, are considered reciprocal. Such grants are initially recognised as a liability and revenue is recognised as services are performed or conditions fulfilled. Revenue from non-reciprocal grants is recognised when the company obtains control of the funds. (v) Disposal of non-current assets The net gain on disposal of non-current assets is recognised as revenue at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal (including incidental costs). (vi) Donations Donations are recognised as they are received or, where special terms and conditions are attached to these, in accordance with those terms and conditions. (vii) Contribution of assets Contribution of assets and contributions to assist in the acquisition of assets, being non-reciprocal transfers, are recognised as revenue at the fair value of the asset received when the Group gains control of the contribution. (viii) Estates and bequests Estates and bequests received are recognised as income by the Group in accordance with the terms and conditions of the bequests. Where no specific terms and conditions exist, these are recognised as income as follows: „„ Cash distributions from estates at the time of receipt; and „„ Shares, real property and other securities at the estimated market value when the risks and benefits pass to the Society. (ix) Dividends Managed fund income distributions are recognised in the period in which they are receivable.

18

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

k. Finance income and expense Finance income comprises interest income on funds invested, managed fund income distributions and changes in the fair value of financial assets at fair value through profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Finance expenses changes in the fair value of financial assets at fair value through profit or loss, and impairment losses recognised on financial assets.

l.

Expenses

(i) Operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense and spread over the lease term.

m. Income tax The Group is exempt from income tax under the Income Tax Assessment Act, 1997, as amended.

n. Segment reporting A segment is a distinguishable component of the Group that is engaged in either providing goods or services (business segment) or in providing goods and services within a particular economic environment (geographical segment), which is subject to risk and rewards that are different from those of other segments.

o. Goods and services tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

4. Determination of fair values A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. (i) Investment in equity securities The fair value of financial instruments classified as held for trading is their quoted bid price at the balance sheet date.

Financial Year ending 30 June 2013

19


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

5. Expenses In AUD

Consolidated

The Society

2013

2012

2013

2012

1,925,910

1,981,211

1,925,910

1,981,211

4,485

-

4,485

-

666,587

453,948

666,587

453,948

21,380,241

19,430,753

21,380,241

19,430,753

(36,295)

(31,575)

(36,295)

(31,575)

1,860,321

1,735,996

1,860,321

1,735,996

Increase in liability for annual leave

182,294

33,704

182,294

33,704

Increase in liability for long service leave

187,003

89,902

187,003

89,902

23,573,564

21,258,780

23,573,564

21,258,780

167,852

233,682

107,115

180,949

1,300,518

1,176,040

1,300,518

1,176,040

279,568

(562,958)

133,324

(577,436)

Financial income

1,747,938

846,764

1,540,957

779,553

Net financing income

1,747,938

846,764

1,540,957

779,553

17,970

16,770

17,970

16,770

6,852,402

2,374,399

5,126,226

2,135,465

-

500,000

-

-

6,870,372

2,891,169

5,144,196

2,152,235

Depreciation Impairment loss (reversal) on trade receivables Operating lease rental expense Personnel expenses Wages and salaries (Decrease) in asset for defined benefit superannuation plans Contributions to defined contribution superannuation plans

6. Net financing income Interest income – other parties Managed fund income distribution Gain from managed fund investments

7. Cash and cash equivalents Current Cash on hand Cash at bank Short term deposits Cash and cash equivalents in the statements of cash flows

20

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

8. Trade and other receivables In AUD

Consolidated

The Society

2013

2012

2013

2012

Trade receivables

657,446

912,980

667,254

482,166

Less: Impairment losses

(13,981)

(9,496)

(13,981)

(9,496)

643,465

903,484

653,273

472,670

1,004,525

435,411

1,003,808

432,818

1,647,990

1,338,895

1,657,081

905,488

-

21,554

-

-

-

21,554

-

-

Current

Other receivables

Non-current Other receivables

Non-current receivables have been discounted in the prior year to their present value using a discount rate of 5.0%.

9. Inventories Raw materials, supplies and parts – at cost

189,979

331,857

189,979

331,857

Less: Provision for inventory obsolescence

(17,239)

(73,655)

(17,239)

(73,655)

Work in progress

150,061

162,743

150,061

162,743

322,801

420,945

322,801

420,945

13,043,645

16,220,330

12,296,945

15,610,880

-

495,358

-

-

10. Other financial assets Current Financial assets designated at fair value through profit or loss Non-current Financial assets designated at fair value through profit or loss

The financial assets designated at fair value through profit or loss are equity securities that otherwise would have been classified as available for sale.

11. Other assets Current Prepayments

331,841

253,176

331,841

253,176

Financial Year ending 30 June 2013

21


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

12. Property, plant and equipment In AUD

Consolidated Freehold

Buildings

Leasehold

Land

Capital Work

Improvements in Progress

Plant and Equipment

Total

Cost Balance at 1 July 2011

2,137,193

16,566,418

359,353

423,942

8,349,771

27,836,677

Acquisitions

-

551,073

-

-

1,312,205

1,863,278

Disposals

-

-

-

-

(440,323)

(440,323)

Transfer

-

38,144

-

(38,144)

-

-

Balance at 30 June 2012

2,137,193

17,155,635

359,353

385,798

9,221,653

29,259,632

Balance at 1 July 2012

2,137,193

17,155,635

359,353

385,798

9,221,653

29,259,632

Acquisitions

-

1,410,831

118,482

261,664

622,568

2,413,546

Disposals

-

-

-

-

(241,836)

(241,836)

2,137,193

18,566,466

477,835

647,462

9,602,385

31,431,342

-

3,425,410

196,324

-

4,059,691

7,681,425

Depreciation charge for the year -

415,406

93,193

-

1,466,818

1,975,417

Balance at 30 June 2013 Depreciation Balance at 1 July 2011

Disposals

-

-

-

-

(220,360)

(220,360)

Balance at 30 June 2012

-

3,840,816

289,517

-

5,306,149

9,436,482

Balance at 1 July 2012

-

3,840,816

289,517

-

5,306,149

9,436,482

Depreciation charge for the year -

497,708

84,214

-

1,277,194

1,859,116

Disposals

-

(39,434)

-

-

(129,390)

(168,824)

Balance at 30 June 2013

-

4,299,090

373,731

-

6,453,953

11,126,744

At 1 July 2011

2,137,193

13,141,008

163,029

423,942

4,290,080

20,155,252

At 30 June 2012

2,137,193

13,314,819

69,836

385,798

3,915,504

19,823,150

At 1 July 2012

2,137,193

13,314,819

69,836

385,798

3,915,504

19,823,150

At 30 June 2013

2,137,193

14,267,376

104,104

647,462

3,148,432

20,304,567

Carrying amounts

22

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

In AUD

The Society Freehold

Buildings

Leasehold

Land

Capital Work

Improvements in Progress

Plant and Equipment

Total

Cost Balance at 1 July 2011

2,137,193

16,566,418

359,353

423,942

8,349,771

27,836,677

Acquisitions

-

551,073

-

-

1,312,205

1,863,278

Disposals

-

-

-

-

(440,323)

(440,323)

Transfer

-

38,144

-

(38,144)

-

-

Balance at 30 June 2012

2,137,193

17,155,635

359,353

385,798

9,221,653

29,259,632

Balance at 1 July 2012

2,137,193

17,155,635

359,353

385,798

9,221,653

29,259,632

Acquisitions

-

1,410,831

118,482

261,664

622,568

2,413,546

Disposals

-

-

-

-

(241,836)

(241,836)

2,137,193

18,566,466

477,835

647,462

9,602,385

31,431,342

-

3,425,410

196,324

-

4,059,691

7,681,425

Depreciation charge for the year -

415,406

93,193

-

1,466,818

1,975,417

Balance at 30 June 2013 Depreciation Balance at 1 July 2011

Disposals

-

-

-

-

(220,360)

(220,360)

Balance at 30 June 2012

-

3,840,816

289,517

-

5,306,149

9,436,482

Balance at 1 July 2012

-

3,840,816

289,517

-

5,306,149

9,436,482

Depreciation charge for the year -

497,708

84,214

-

1,277,194

1,859,116

Disposals

-

(39,434)

-

-

(129,390)

(168,824)

Balance at 30 June 2013

-

4,299,090

373,731

-

6,453,953

11,126,744

At 1 July 2011

2,137,193

13,141,008

163,029

423,942

4,290,080

20,155,252

At 30 June 2012

2,137,193

13,314,819

69,836

385,798

3,915,504

19,823,150

At 1 July 2012

2,137,193

13,314,819

69,836

385,798

3,915,504

19,823,150

At 30 June 2013

2,137,193

14,267,376

104,104

647,462

3,148,432

20,304,567

Carrying amounts

In June 2011, the company obtained independent valuations of land and buildings that were carried out on the basis of open market values. The valuations provided valuations in excess of the carrying costs reflected in these financial statements.

Financial Year ending 30 June 2013

23


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

13. Intangible assets In AUD

Consolidated

The Society

2013

2012

2013

2012

Balance at 1 July 2012

1,825,260

-

1,825,260

-

Acquisitions

3,090,981

1,825,260

3,090,981

1,825,260

Balance at 30 June 2013

4,916,241

1,825,260

4,916,241

1,825,260

5,794

-

5,794

-

Amortisation for the year

66,824

5,794

66,824

5,794

Balance at 30 June 2013

72,618

5,794

72,618

5,794

Balance at 1 July 2012

1,819,466

-

1,819,466

-

Balance at 30 June 2013

4,843,623

1,819,466

4,843,623

1,819,466

Cost

Amortisation Balance at 1 July 2012

Carrying amounts

The company has completed two building projects, one at Wagga Wagga in the previous year and another at Mount Hutton during the year. The building projects are to be utilised for disability housing. The company was awarded grants from the NSW government in the total amount of $4,493,900 to enable construction. Under the agreement, the company has a right to continued use of the properties for their intended purpose until such time as the company believes it is unable to continue to provide those services. The terms of the agreement establish that at such time, when either the property is sold or no longer used for its intended purpose, the government has a caveat that provides a 100% equitable interest. Accordingly the government has the right to take title of the land and the proceeds associated with the sale at this time. During the year, the Society recognised $2,881,900 (2012: $1,612,000) of capital grants income which was previously held as unearned income and recognised as an intangible asset of $3,090,982 (2012: $1,825,260) representing the cost of the project.

14. Investment property Cost Balance at 1 July 2012 Acquisitions Disposals Balance at 30 June 2013

850,000

-

850,000

-

-

850,000

-

850,000

(850,000)

-

(850,000)

-

-

850,000

-

850,000

A property was donated to Northcott in the prior year. The fair value model was applied to all investment property. The property was sold on 9 March 2013 and was settled on 8 July 2013.

24

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

15. Trade and other payables In AUD

Consolidated

The Society

2013

2012

2013

2012

Trade payables

1,135,645

1,629,337

1,135,645

1,623,652

Other Payables

1,315,026

953,124

1,298,621

934,436

2,450,671

2,582,461

2,434,266

2,558,088

84,767

68,644

84,767

68,644

Liability for long service leave

1,010,937

879,248

1,010,937

879,248

Liability for annual leave

1,774,410

1,592,116

1,774,410

1,592,116

Total liability for employee benefits

2,870,114

2,540,008

2,870,114

2,540,008

Liability for long-service leave

241,584

186,270

241,584

186,270

Total liability for employee benefits

241,584

186,270

241,584

186,270

(227,644)

(216,841)

(227,644)

(216,841)

Current

16. Employee benefits Current Other wages

Non-current

Recognised asset for defined benefit obligations

Financial Year ending 30 June 2013

25


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

a. Liability/(asset) for defined benefit obligation The Group makes contributions to two defined benefit superannuation plans that provide defined benefit amounts for employees upon retirement. In AUD

Consolidated

The Society

2013

2012

2013

2012

766,432

718,867

766,432

718,867

(1,240,141)

(1,043,470)

(1,240,141)

(1,043,470)

246,065

107,762

246,065

107,762

(227,644)

(216,841)

(227,644)

(216,841)

227,644

216,841

227,644

216,841

Liabilities

-

-

-

-

Net asset

227,644

216,841

227,644

216,841

(216,841)

(176,300)

(216,841)

(176,300)

(36,296)

(31,575)

(36,296)

(31,575)

25,493

(8,966)

25,493

(8,966)

(227,644)

(216,841)

(227,644)

(216,841)

766,432

718,867

766,432

718,867

(1,240,141)

(1,043,470)

(1,240,141)

(1,043,470)

Plan net surplus

473,709

324,603

473,709

324,603

Experience adjustments on plan liabilities

(14,378)

74,720

(14,378)

74,720

Experience adjustments on plan assets

(98,431)

72,881

(98,431)

72,881

Defined benefit superannuation plans Present value of funded obligations Fair value of plan assets - funded Surplus in excess of recovery available from plans Recognised net asset for defined benefit obligations

Amounts in the balance sheet: Assets

Movements in the net asset for defined benefit obligations recognised in the balance sheet Net asset for defined benefit obligations at 1 July Expense recognised in the income statement (Benefit)/expense recognised in equity Net asset for defined benefit obligations at 30 June

Amounts for the current and previous periods are as follows: Defined benefit obligation Plan assets

26

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

In AUD

Consolidated

Changes in the present value of the defined benefit obligation are as follows:

2013

2012

2013

2012

718,867

596,252

718,867

596,252

Service cost

30,682

25,624

30,682

25,624

Interest cost

21,576

30,704

21,576

30,704

(14,378)

74,720

(14,378)

74,720

Contributions by plan participants

12,797

11,012

12,797

11,012

Benefits paid

(3,112)

(19,445)

(3,112)

(19,445)

766,432

718,867

766,432

718,867

1,043,470

1,036,880

1,043,470

1,036,880

Expected return

88,554

87,904

88,554

87,904

Actuarial gains/(losses)

98,431

(72,881)

98,431

(72,881)

Contributions by plan participants

12,797

11,012

12,797

11,012

Benefits paid

(3,112)

(19,445)

(3,112)

(19,445)

1,240,140

1,043,470

1,240,140

1,043,470

(246,065)

(107,762)

(246,065)

(107,762)

994,075

935,708

994,075

935,708

Opening defined benefit obligation

Actuarial (gains)/losses

Closing defined benefit obligation

The Society

Changes in the fair value of plan assets are as follows: Opening fair value of plan assets

Surplus on excess of recovery available from plans .

Financial Year ending 30 June 2013

27


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

In AUD

Consolidated

The Society

The major categories of plan assets as a percentage of total plan assets are as follows:

2013

2012

2013

2012

Australian equities

30%

28%

30%

28%

Overseas equities

26%

24%

26%

24%

Australian fixed interest securities

7%

5%

7%

5%

Overseas fixed interest securities

2%

3%

2%

3%

Property

8%

9%

8%

9%

Cash

13%

18%

13%

18%

Other

13%

13%

13%

13%

The Society’s defined benefit superannuation plans form part of wider multi-employer State Government plans. As such, the Group’s investment policies and strategies for the defined benefit superannuation plans are determined by State Government appointed fund managers, actuaries and administrators and do not use target allocations for the individual asset categories. The plans’ investment goals are to maximize returns subject to specific risk management policies. The funds address diversification by the use of underlying investments in domestic and international fixed income securities, domestic and international equity securities, property and cash. Expense recognised in the income statement Current service costs

30,682

25,624

30,682

25,624

Interest on obligation

21,576

30,704

21,576

30,704

(88,554)

(87,903)

(88,554)

(87,903)

-

-

-

-

(36,296)

(31,575)

(36,296)

(31,575)

Expected return on plan assets Surplus in excess of recovery available from shares

28

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

In AUD

Consolidated

The Society

2013

2012

2013

2012

(36,296)

(31,575)

(36,296)

(31,575)

25,493

(8,966)

25,493

(8,966)

Discount rate at 30 June

3.8%

3.0%

3.8%

3.0%

Expected return on plan assets backing current pension liabilities at 30 June

8.3%

8.3%

8.3%

8.3%

Expected return on plan assets backing other liabilities at 30 June

7.3%

7.3%

7.3%

7.3%

*4.0%

4.0%

*4.0%

4.0%

2.5%

2.5%

2.5%

2.5%

Nil%

Nil%

Nil%

Nil%

The expense is recognised in the following line items in the income statement: Client programme expenses

Amounts recognised in equity: Actuarial losses/(gains)

Principal actuarial assumptions at the balance sheet date:

Future salary increases Expected rate of CPI increases Proportion of employees opting for early retirement

The overall expected long-term rate of return on assets is 8.3%. The expected long-term rate of return is determined by weighting the expected long-term return for each asset class by the target allocation of assets to each class. The returns used for each class are net of investment tax and investment fees. *Future salary increases assumption is 2.7% p.a. for 6 years then 4.0% p.a.

Financial Year ending 30 June 2013

29


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

b. Surplus/(deficit) for each defined benefit superannuation plan on a funding basis - Group and The Society In AUD

2013 Fund assets (ii)

Accrued benefit (iv)

Plans sponsored by the Group: State Authorities Superannuation Scheme

968,172

640,524

327,648

0%

State Authorities Non-contributory Superannuation Scheme

271,969

125,908

146,061

0%

1,240,141

766,432

473,709

Total for plans sponsored by the Group

In AUD

Plan Contribution excess/ recommendations (deficit) (per year) (iii)

2012 Fund assets (i)

Accrued benefit (iv)

Plan excess/ (deficit)

Contribution recommendations (per year) (iii)

Plans sponsored by the Group: State Authorities Superannuation Scheme

820,903

593,141

227,762

0%

State Authorities Non-contributory Superannuation Scheme

222,567

125,726

96,842

0%

1,043,470

718,867

324,604

Total for plans sponsored by the Group

30

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

(i)

Fund assets at net market value, and accrued benefits have been calculated at 30 June 2012, being the date of the most recent financial statements of the funds.

(ii)

Fund assets at net market value and accrued benefits were calculated at 30 June 2013, being the date of the most recent financial statements of the funds.

(iii)

Contribution recommendations are based on a funding methodology that will result in adequate funding for payments expected to be made to existing members. The levels of the contributions to the plans are reassessed annually.

(iv)

Accrued benefits are benefits which the plans are presently obliged to pay at some future date, as a result of membership of the plans and calculated in accordance with AASB 25. Accordingly, the excess/(deficit) does not always equal the defined benefit obligation.

The Group has a legal liability to make up a deficit in the funds and to benefit from any surplus in the funds, in the form of a reduction in the required contribution rate, depending on the advice of the plan’s actuaries.

Consolidated

The Society

2013

2012

2013

2012

Expected return on plan assets backing current pension liabilities

8.3%

8.3%

8.3%

8.3%

Expected return on plan assets backing other liabilities

7.3%

7.3%

7.3%

7.3%

Future salary increases

4.0%

4.0%

4.0%

4.0%

Expected rate of CPI increase

2.5%

2.5%

2.5%

2.5%

The principal economic assumptions used in making these recommendations include:

* Future salary increases assumption is 2.7% p.a. for 6 years then 4.0% p.a.

Financial Year ending 30 June 2013

31


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

17. Other liabilities In AUD

Consolidated

Current Unearned income – government grants Unearned income – other sources

The Society

2013

2012

2013

2012

8,176,793

8,481,569

8,176,793

8,481,569

411,965

336,921

411,965

336,921

8,588,758

8,818,490

8,588,758

8,818,490

18. Capital and reserves In AUD

Reconciliation of movement in capital and reserves Allocated Services Estates and capital development bequests funds fund reserve

General Research and Accumulated Innovation funds reserve

Total equity

Consolidated Balance at 1 July 2012 Total recognised income and expense Transfers Balance at 30 June 2013

17,122,994

5,350,000

3,459,159

4,147,433

144,069 30,223,655

-

-

-

3,217,701

-

3,217,701

(17,122,994)

(5,350,000)

(3,459,159)

26,076,222

(144,069)

-

-

-

-

33,441,356

- 33,441,356

17,122,994

5,350,000

3,459,159

1,873,103

144,069 27,949,325

-

-

-

3,044,651

-

3,044,651

(17,122,994)

(5,350,000)

(3,459,159)

26,076,222

(144,069)

-

-

-

-

30,993,976

The Society Balance at 1 July 2012 Total recognised income and expense Transfers Balance at 30 June 2013

32

Northcott Annual Financial Report 2012-2013

- 30,993,976


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

Allocated capital funds The Board, in prior years, set aside from general accumulated funds a reserve to provide for the replacement of property, plant and equipment. The Board resolved to transfer the reserve back into general accumulated funds during the year. Services development fund The Board, in prior years, set aside from general accumulated funds a special reserve to provide funding for the acquisition and development of facilities to enhance services to persons with disabilities. The Board resolved to transfer the reserve back into general accumulated funds during the year. Estates and bequests reserve The Board, in prior years, set aside from general accumulated funds a special reserve to provide a fund to equalise the effect of major variations in the level of income from estates and bequests. The Board resolved to transfer the reserve back into general accumulated funds during the year. Research & Innovation reserve The Board, in prior years, set aside from general accumulated funds a special reserve to provide funding for Northcott’s research and innovation program. This reserve was established with the proceeds of Northcott’s 80th Anniversary Gala Ball in 2009, this sum has subsequently been supplemented by specific donations. The Board resolved to transfer the reserve back into general accumulated funds during the year.

19. Operating leases In AUD

Consolidated

Leases as lessee

2013

2012

The Society 2013

2012

Non-cancellable operating lease rentals are payable as follows: Less than one year

479,935 264,846

479,935

264,846

Between one and five years

465,679 226,806

465,679

226,806

945,614 491,652

945,614

491,652

The Group leases property under non-cancellable operating leases expiring from one to five years. Leases generally provide the Group with a right of renewal at which time all terms are renegotiated. During the financial year ended 30 June 2013, $666,587 was recognised as an expense in the income statement in respect of operating leases (2012: $453,948).

Leases as lessor The Group leases out part of its property under an operating lease. The future minimum lease payments under noncancellable leases are as follows: Less than one year

276,994

233,755

276,994

233,755

Between one and five years

379,477

442,551

379,477

442,551

More than five years

-

656,471

676,306

656,471

676,306

During the financial year ended 30 June 2013, $280,974 was recognised as rental income in the income statement (2012: $353,074).

Financial Year ending 30 June 2013

33


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

20. Consolidated entities Ownership interest 2013

2012

100%

100%

Parent entity The Northcott Society Subsidiary Spinecare Foundation

21. Key management personnel disclosures Transactions with key management personnel In addition to their salaries, the Group also contributes to post-employment defined contribution funds on behalf of key management personnel. Key management personnel compensation The key management personnel compensation included in personnel expenses are as follows: In AUD

Consolidated 2013

Short-term employee benefits Other long term benefits

The Society

2012

2013

2012

1,025,471

905,436

1,025,471

905,436

-

-

-

-

1,025,471

905,436

1,025,471

905,436

Other related party transactions From time to time directors of Northcott, or their director related entities, may purchase from or supply goods and services to Northcott. These dealings are on the same terms and conditions as those entered into by other Northcott employees, customers and suppliers. During the year there were no transactions with directors of Northcott or their director related entities.

22. Segment reporting The Group is engaged in the provision of goods and services to persons with disabilities and operates wholly within New South Wales.

23. Subsequent events There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Society, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.

34

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

24. Fundraising appeals conducted during the financial year Fundraising appeals conducted during the financial year included various fundraising projects and general receiving of indirectly solicited donations. In AUD

Consolidated 2013

(i)

The Society

2012

2013

2012

1,893,045

2,222,940

1,872,695

2,201,210

(915,716)

(826,996)

(915,716)

(826,966)

Net surplus obtained from fundraising appeals 977,329

1,395,974

956,979

1,374,244

27,781,643

24,635,972

27,781,643

24,635,972

8,444,781

7,200,869

8,412,457

7,081,059

36,226,424

31,836,841

36,194,100

31,717,031

Results of fundraising appeals Gross proceeds from fundraising Less: Direct costs of fundraising appeals

(ii) Application of net surplus obtained from fundraising appeals Distributions (expenditure on direct services) Recurrent administration expenses

(iii) Application of net surplus obtained from fundraising appeals The shortfall between the net surplus available from fundraising appeals and total expenditure was provided from the following sources: Government grants Financial income Gain from sale of goods Other income Transfer from/(to) general accumulated funds

33,899,687

30,109,604

33,899,687

30,109,604

1,747,938

846,764

1,540,957

779,553

335,746

635,426

335,746

635,426

2,555,153

2,787,370

2,577,110

2,787,335

(3,289,429)

(3,938,297)

(3,116,379)

(3,969,131)

35,249,095

30,440,867

35,237,121

30,342,787

Financial Year ending 30 June 2013

35


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

Consolidated

The Society

2012

2012

$

%

$

%

$

%

$

%

915,716

48

826,966

37

915,716

49

826,966

38

(iv) Comparisons of certain monetary figures and percentages Total cost of fundraising / Gross income from fundraising

Net surplus from fundraising / Gross income from fundraising

1,893,045

977,329

2,222,940

52

1,395,974

1,872,695

63

956,979

2,201,210

51

1,610,746

1,893,045

2,222,940

1,872,695

2,201,210

Total cost of services /

27,781,643

73 24,635,972

73 27,781,643

73 24,635,972

Total expenditure

38,042,587

33,572,205

38,010,263

33,452,395

Total cost of services /

27,781,643

70 24,635,972

67 27,781,643

70 24,635,972

Total income received from operating activities

39,553,731

36,601,119

39,555,338

36,579,354

36

Northcott Annual Financial Report 2012-2013

62

74

67


The Northcott Society and its controlled entity Declaration by Chief Executive Officer in respect of fundraising appeals

I, Kerry Stubbs, Chief Executive Officer of The Northcott Society, declare that in my opinion: a. The financial report gives a true and fair view of all income and expenditure of the Group with respect to fundraising appeal activities for the financial year ended 30 June 2013; b. The balance sheet gives a true and fair view of the state of affairs of the Group with respect to fundraising appeal activities as at 30 June 2013; c. The provisions of the Charitable Fundraising (NSW) Act 1991 and Regulations under the Act and the conditions attached to the authority have been complied with during the year ended 30 June 2013; and d. The internal controls exercised by the Group are appropriate and effective in accounting for all income received and applied by the Group from any of its fundraising appeals.

Dated at Sydney this 19 September 2013.

Signed in accordance with a resolution of the directors:

_______________________

Kerry Stubbs Chief Executive Officer

Financial Year ending 30 June 2013

37


The Northcott Society and its controlled entity Directors’ declaration

In the opinion of the directors of The Northcott Society (“the Society”): a. the financial statements and notes set out on pages 8 to 36 are in accordance with the Corporations Act 2001, including: i.

giving a true and fair view of the financial position of the Society and the Group as at 30 June 2013 and of their performance, as represented by the results of their operations and their cash flows for the financial year ended on that date; and

ii. complying with the Australian Accounting Standards – Reduced Disclosure Requirements (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and b. there are reasonable grounds to believe that the Society will be able to pay its debts as and when they fall due.

Dated at Sydney this 19 September 2013. Signed in accordance with a resolution of the directors:

_______________________

M Briggs Director

38

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

Financial Year ending 30 June 2013

39


40

Northcott Annual Financial Report 2012-2013


The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

Financial Year ending 30 June 2013

41


1800 818 286 www.northcott.com.au


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