annual report to members for the year 1 july 2013 30 june 2014 · 2019. 2. 6. · president’s...

ASSOCIATION OF INDEPENDENT RETIREES (A.I.R.) LIMITED (ACN 102 164 385)

Annual Report to Members

For the year 1 July 2013 – 30 June 2014

Directors’ Supplementary Report

and

Financial Statements

Board of Directors 2013 - 2014

Max Barton President Nov. 12 to present

Barry Ritchie Deputy President Jan 13 - present

Robert Curley New South Wales Nov 10 to present

Ken McKay Queensland Nov 12 to present

John Yard South Australia April 11 to present

Rob Cleary Tasmania Nov 12 to present

Linda Martin Victoria Nov 10 to present

Tom Rollo Western Australia Dec 11 to Nov 13

Elizabeth Grant Secretary Dec 12 to Nov 13

Charles O’Donnell Western Australia Nov 13 to present

John Wenban Treasurer Nov 12 to Nov 13

Secretariat Commerce Management Services Sue Hart (Non Board member)

President’s Report – Max Barton

2013 - 201414 Overview

Our Association (A.I.R.) has a diversified membership that is united by the common bond of an independent retirement lifestyle that is not fully reliant on the established social welfare system for their day to day needs. While many onlookers regard this as a ‘privileged’ position it has only come about by the careful planning and savings undertaken over our working life. The fundamental objective of the A.I.R. Board is to provide an effective organisation that can respond and act in the best interests of current and future retirees. The ABS estimates (2013) the number of Australians aged 65 years and over was 3,337,600. Approximately 50% of people in this component of the population either partly or fully self-fund their retirement. A.I.R. must reach these potential members and recruit them to our ranks. External influences were challenging in the year 2013-14 to our established independent lifestyle. The action by the Federal Government in applying hasty and quick-fix measures as solutions to a current Budget deficit problem surprised many members despite months of media and political debate and speculation. The Board made every effort to counter the adverse media comments that questioned the entitlements of self-funded retirees (SFR). A coordinated program of media statements with clear and simple facts debunked many of the exaggerated claims. Self-funded retirees, whether partly or wholly self-sufficient, took quite a hit in the 2014 Federal budget with a bigger hit on those about to retire. A more sympathetic transitional process was expected in the removal of concessions and entitlements and the application of grandfathering provisions. The impact on retirees and those about to retire will cause many to rethink their retirement plans. The 2013 amendments to the A.I.R. Constitution brought about internal changes within the Association’s administration and management procedures. The Constitutional change was achieved after 12 months of survey, consultation and input from members. The process was driven entirely by the majority views expressed by members. It has brought about optimism and enthusiasm. I would like to place on record the Board’s appreciation of the work undertaken by the independent Peer Review Panel in its examination of the draft Constitution and its preparation of explanatory presentation material. Clearly the value of a collaborative process allows A.I.R. to be a member driven organisation. A.I.R. will and must remain a member driven organisation to be viable and survive as a credible retiree organisation. As a consequence of the Constitutional changes the Board membership was reduced from thirteen to eight and the Treasurer and Secretary positions became redundant. Charles O’Donnell was welcomed as the WA Director on the National Board replacing Tom Rollo. Board members are no longer involved in performing routine administrative roles. Administrative functions performed by Board members previously are now undertaken by a combination of appointed officers and outsourced specialist service providers. The savings accruing from the reduction of the number of Board members was applied to meet the additional costs of outsourced services. Appointed officers and service providers have no voting rights and will only attend Board meetings by invitation. A wider vision and objective set was included in the 2014 strategic plan viz.:

A program of reconnecting the membership with the Board decisions.

Increasing awareness of A.I.R. activities in the retiree community through regular media releases.

Adding personal representation and interaction with decision makers to the advocacy program.

Exploring opportunities for resource sharing with external agencies and NFP organisations.

Direct involvement with Branches dealing with membership promotion and retention.

All Directors have contributed to the effort to rebuild and simplify A.I.R. activities and operations. The Board has an underlying teamwork approach and has conducted its activities in a spirit of harmony and cooperation. For me and the Board members it is important to be aware of the individual points of view held by our Branches and their members. All Directors will be available for one-on-one discussions both before and after the AGM.

Relationships

The change of Government that came with the 2013 Federal Government election was a significant milestone in the Australian political landscape and set a turning point in time for the Australian economy. The Association indicated early in the term of the newly elected Federal Government a desire to work with Government policy makers in respect to the major issues confronting self-funded retirees. This was seen as a natural progression of the Association’s policy of engagement avoiding a direct confrontational approach. Several Directors represent A.I.R. on National, State and regional advisory/reference groups providing direct input to policy formulation on issues related to retirees. In recent times COTA has taken a self-proclaimed role as the peak body collectively representing retiree organisations. The COTA coordinating role may be desirable for issues of common interest. However for specific SFR issues A.I.R. must stand alone avoiding the threat of being overridden by the majority view that might come from collective representation. A.I.R. must retain its identity as the organisation representing self-funded retirees. The Board has been pursuing a policy of engagement with the major political parties during and beyond the Federal election campaign. The Board produced a series of fact sheets and media statements to explain the matters contained in its Pre-Election Statement (PES) and other issues related to recently announced policies of the major political parties. A.I.R. released 10 fact sheets and policy comments as part of its pre-election advocacy campaign. Across Australia the Branch network reinforced the Board’s efforts by engaging local candidates and members at every opportunity using the information contained in the fact sheets and media statements. Following the successful affiliation with Australian Shareholders Association (ASA) in December 2013 a similar arrangement was pursued with the Australian Investors Association (AIA). On 30 April a Memorandum of Understanding was signed forming a Strategic Alliance between AIA and A.I.R. This Alliance provides expanded opportunities for A.I.R. members to undertake all forms of investment education and receive investment information. Informal discussions have also been held with National Seniors Australia (NSA) to exchange information in respect to both organisations’ activities and explore opportunities for shared common interest on a range of issues and services. The outcome of the NSA discussions has led to an informal cooperative approach as the first stage in a process to set up an arrangement for advocacy on common interest issues. The Branch Ideas Network (BIN) initiated by Director Ken McKay has been an outstanding success. It provides a mechanism for distributing and sharing ideas and activities between Branches. Most Branches are involved and the information is well received by participating Branches. The program of reconnecting the Board activities to the members’ needs included a series of Branch visits in 2013-14. I was staggered by the level of enthusiasm and hospitality encountered in all the Branches I visited. Board members were equally impressed with the multitude of ideas and suggestions that have flowed from the branch visit program. A similar program is planned for 2014-15. I had the pleasure of awarding an Honorary Life Membership to Tony Cowley (Macarthur Branch NSW) at the 2013 AGM. Tony contributed in his 20 years period of membership to roles in his local Macarthur branch, the NSW Division and a number of national activities.

Corporate Services

It has taken over three years to develop the full A.I.R. IT System Package. It has effectively brought the administrative and management operations into the electronic age moving away from the previous hard copy reporting system. Generally the integrated IT system works well with real time information available to visitors and users of the website.

The website is the hub for accessing the membership registers, the bulk emailer and the Integrated Banking System (IBS). There were some difficulties and delays in updating some information on the website due to time constraints on available resources. It is expected to be overcome with the formation of an expanded IT Management Team.

The Branch membership registers is pivotal to the operation of the IT Systems Package. The Branch membership database register is the backbone of the system. It is apparent that a few Branches do not maintain up to date information on their Branch registers. BMO’s are requested to ensure these vital details are entered into the database. Nominated Branch delegates must be shown as financial on their Branch register to vote at the division and national AGMs. The Registrar role performed by Eddie Childs will now pass to Sue Shea in 2014/15. The Board records its appreciation of Eddie’s efforts over recent years.

Development of the bulk emailer facility within the IT Systems Package took considerable time and effort in 2013/14. Several Branches are now utilising the facility for the distribution of information to their Branch members. This has the advantage of removing the need for time consuming manual compilation and updating of local circulation lists. Branches can arrange to join the bulk emailer system by contacting the IT Coordinator.

The agreement with Westpac to develop the software to support an Integrated Banking System (IBS) completed the final component in the IT System Package. The IBS has the potential to align bank accounts across the whole of A.I.R. operations. It includes on-line member payment of annual subscriptions. Within the IBS Branches and Divisions retain exclusive control over the funds they administer and by using the reserve accounts can achieve better interest rates on the funds they hold. There are other advantages in audit and administration cost savings that will accrue to A.I.R. by Branches participating in the IBS program. The IBS became effective on 1July 2014. To preserve membership in the face of several A.I.R. Branch closures the Board has moved to provide a Members-at-Large (MAL) register for members displaced, or through incapacity, or any other reasons cannot attend a Branch meeting. The establishment of the national MAL register had the support from all Divisions with the exception of Queensland. The MAL register took effect on 1 July 2014 with John Wenban appointed to the role of coordinator. The lack of members volunteering to fill executive positions within their Branches appears to be a common cause of some Branch closures. This is a problem that will continue to threaten the existence of Branches generally. Many Branch members consider the tasks of regular and repetitive reporting to be onerous and deters members from taking executive positions. Some tasks are a carryover from the days of hard copy paper reporting. With electronic communication and processing a review of current practices must be undertaken to reduce the workloads on Branch officers. Congratulations go to the editor of the A.I.R. magazine “In Touch” Patsy Haywood for her work and effort in compiling content for the publication. Branches are encouraged to submit articles dealing with local Branch activities, events and achievements for inclusion in the publication. Similarly Sue Hart (A.I.R. Secretariat) has made a valuable contribution in compiling content for the monthly AIR Active newsletter. Subscription rates for all classes of membership are now set by the Board in advance of the AGM to allow the rates for the ensuing year to be advised at the AGM. These changes will allow Branches and Divisions to plan their individual budgets well ahead of the close of the financial year.

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Finance Report – Director Robert Cleary

[John Wenban held the position of A.I.R. Treasurer for the period 1 July 2013 to 26 November 2013 after which time the function passed to the A.I.R. National Secretariat in accordance with Constitutional changes agreed at the 2013 Annual General Meeting. Oversight of A.I.R.’s finances is undertaken by A.I.R. Director Robert Cleary.]

Finance Report for the year ended 30 June 2014

The overall result for the financial year was a small surplus of $5,311. The combined Divisions and Branches operated at a loss of $23,741 which was covered by the National Board’s surplus of $29,052. Total Revenue and Expenditure were less than the previous year as no Conference was held only an AGM. Whilst on the surface the surplus of $5,311 would appear to be a satisfactory result analysis of the income details is a cause for concern due to the small increase in Subscription Income despite a significant increase in the level of the Subscription for the year. This in the main was due to a decline in membership of approx. 15% (8403 to 7188) Of the other income, Interest Received was $3,016 greater than the previous year and the $9,000 Project Marketing Income was transferred from Queensland, New South Wales and the South Australia Divisions to support the production of marketing materials by the National Board. These amounts were significant components of the National Board surplus and contributed to the Divisions and Branches loss. In regard to National Board expenditures the major variations on the previous year were due to: not holding a Conference; savings in the cost and distribution of publications; an increase in the cost of Insurance; and the cost of upgrading Marketing materials. In light of the 2013-14 results the continuity of AIR will be dependent on maintaining a sufficient number of members willing to pay a subscription level that will provide between $180,000 and $200,000 per annum to fund the National Board’s operation at its current level.

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Membership – Director Ken McKay

Marketing

In November 2013, Delegates to the AGM endorsed the 2012/14 National Marketing Plan for A.I.R. This important document outlines the guiding principles of our company and the things we need to do to achieve our goals. The plan highlighted four areas that the Board could implement quickly to assist Branches and Divisions with their recruitment efforts. I now want to report the progress against each of these initiatives:

1. “The development of new national advertising material for use by Branches and Divisions”

A new range of promotional material was introduced in January 2014. The new material reflects a new, younger and modern, image for A.I.R. using the slogan Sharing information to help you plan and enjoy your retirement and the tag line Working for Australians in Retirement. Branches have overwhelmingly endorsed the new material, with orders now exceeding 20,000 – all supplied at no cost to Branches and Divisions.

2. “A number of initiatives to promote the benefits of email communication to members” Branches have been encouraged to promote the use of email to their membership as a much more cost effective and faster means of communication with members. The introduction of the Bulk Email service by the Board has greatly improved the distribution of the In Touch and AIR Active publications. The Bulk Email service is being rolled out to Branches in 2014/15.

3. “The promotion of the Special Interest Groups to current and prospective members” For the first time, our promotional material now lists the four special interest groups within A.I.R., and Branches have been much more active in promoting the existence of these Groups. Each of the Groups provides an ongoing flow of information to members who have elected to receive the information.

4. “A proposal to partner with external organisation/s to provide financial education material to A.I.R. members” In March 2014 a Memorandum of Understanding was signed with the Australian Investors Association (A.I.A.) to form a strategic alliance with A.I.R. This arrangement means that A.I.R. can now provide a new service to our members in the form of access to investment education via email or attendance at investment information forums.

Branch Ideas Network

I introduced the concept of a Branch Ideas Network (B.I.N.) to A.I.R. in January 2013 and the initiative has been widely accepted by Branches and Divisions in all states. As the National Coordinator of the service my monthly email is now distributed to around 50 Branches and Divisions – and has proved to be a very worthwhile means by which we can all share good ideas. It has been very encouraging during 2014 to see the number of Branches that have been prepared to try new ideas to recruit younger members. The introduction of Investment Discussion Groups and Baby Boomer Groups within their Branches is proving to be the most effective means of recruiting and retaining new members. Baby Boomer Group

I also have the role of National Coordinator of the Baby Boomer Group – an initiative I started in 2012 and which has now become the largest of the Special Interest Groups within A.I.R. with membership in excess of 300. The group provides me with the opportunity to communicate directly via email each month to our younger members, on issues which are relevant to their needs. This initiative also provides an ideal platform for our younger members to provide feedback to the Board through me. Summary

Each of these Board initiatives has been introduced to assist Branches and Divisions with their efforts to recruit new members. To date, we have been unsuccessful, with national membership numbers continuing to fall. It is clear that some Branches are working hard to find and retain new members through the use of the promotional material, forums, seminars, investment discussion groups and baby boomer groups, but these actions are being negated by the loss of older members and closures of other Branches. As I will be standing down from my position on the Board as Director Membership and Marketing at the 2014 AGM, I want to take this opportunity to express my thanks to the Divisions and Branches that have worked closely with me to build a better A.I.R. Your efforts to promote our organisation WILL be rewarded as we transition to a modern and relevant organisation in the 21st century.

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Policy Development and Federal Advocacy – Director Robert Curley The year commenced in Federal Election mode with strong activity at the Branch level with local candidates following up on our Pre-Election Statement that had been circulated to all parties and candidates on the issues of concern of our members in the lead up to the 2013 Federal Election. The election was held on 7 September 2013 with the outcome being a change in Government, with the new Coalition Government under Prime Minister Tony Abbott sworn in on18 September 2013. Highlights of key advocacy actions on members concerns / issues during 2013-14 were:

Media Releases:

Taxing of Superannuation Pension Income Opposed – July 2013

Self-Funded Retirees Support Rebuilding of Australia’s Private Business Sector – August 2013

Self-Funded Retirees Seek Policies that do not erode net income from investments – August 2013

Self-Funded Retirees Seek Optimal Superannuation Regulations – August 2013

A.I.R. Applauds Coalitions Decision to Index CSHC – August 2013

A.I.R. Calls for Review of Health Insurance Rebate Changes – March 2014

A.I.R. Welcomes Freeze on FoFA Changes – March 2014

Retirees Unfairly Blamed in Entitlements Debate - April 2014

Budget Sets Retirees Skidding Down a Slippery Slope to Disadvantage - May 2014

Self-funded Retirees Support Superannuation Choice Product DashBoard Delay - May 2014

Retirees Disadvantaged by Federal Budget - May 2014

Strategic Alliance for Self-Funded Retirees – May 2014

Formal Submissions:

Letter to the new Prime Minister – September 2013

Submission to the Personally Controlled Electronic Health Record Review Panel – September 2013

A.I.R. Response to Government Discussion Paper – Better Regulation and Governance, Enhanced Transparency and Improved Competition in Superannuation – November 2013

A.I.R. Submission to the National Commission of Audit - November 2013

2014-15 Pre-Budget Submission to the Federal Government - January 2014

Submission on Better Regulation in Superannuation - February 2014

Letter to the PM regarding changes to the FoFA proposed changes – April 2014 Going forward into 2014-2015:

The Federal Government has stated in policy documents and other communications that it recognises many self-funded retirees are not wealthy and are under financial pressure and that by looking after their own retirement needs save the Commonwealth Budget considerable pension costs. However, they have acted contrary to this philosophy by taking away benefits and not providing the support they have committed to provide. Also the action of successive Federal Governments has been to change and readjust the accumulation phase of superannuation and yet have done little to simplify or enhance the current restrictive drawdown phase of superannuation. The Government claims to be committed to:

1. Australia’s three-pillar retirement system: an Age Pension as a safety net, a compulsory system of retirement saving through superannuation, and tax incentives for voluntary savings; and

2. that the Government encourages as many Australians as possible to actively plan and save for their retirement, to take full advantage of the benefits the superannuation system provides and to work toward a self-funded retirement but this will be seriously questioned in 2014-15.

Yet we have a situation that impacts on our members where to qualify to receive financial concessions, health care and aged care one must meet an income and assets test with means tested co-contributions being required. We will continue to work to achieve equity for our members and at the beginning of 2014-15 A.I.R.’s policies cover the following areas to advance and protect the interests and independent lifestyle of our members.

1. Financial – maintaining retirement income and needed changes to taxation, CGT, superannuation, pensions and CSHC

2. Needed Aged Care Reform 3. Needed Health Care Reform 4. Social welfare In brief our Policies are:

That all retirees, no matter whether they accumulated their retirement assets within superannuation or outside superannuation, should have access to a specified tax-free component of their assets after retirement for their day to day living expenses, at least to the same extent as applies for those with superannuation.

That, for those 65 and over who commence a superannuation fund specifically to access an income stream pension that the sale of assets to be transferred should be exempt from capital gains tax.

That the age and work tests for retirees 65 years and over to set up and pay into superannuation be abolished.

That the Government reintroduce the personal tax exemption on $1,000 of financial instrument interest introduced in the 2010-2011 Budget.

That the Government take action to offset the financial impact on retirees arising from the rapidly increasing costs for federal, state and local government services.

That regulations are introduced to limit or eliminate the excessive use of Superannuation and Income Steam Products as a means of taxation minimised estate planning.

That the Government streamline regulation of the drawdown phase, including longevity financial management, to reduce the cost of superannuation fund management in the pension phase.

That the Government remove the 2013 base rate for calculation of the Private Health Insurance Rebate percentage introduced by the previous Government.

That the PBS Safety Net threshold for single retirees be set at 65% of the couples / families threshold level or at the same % difference between the threshold income limit to receive the aged pension for a single person and a couple.

That the Commonwealth Seniors Health Card for single retirees be set at % difference between the threshold income limit to receive the aged pension for a single person and a couple.

That the rapidly increasing out of pocket for Health Care costs for older Australians be addressed and reduced by the Government.

That there be a fundamental rethink of the central funding mechanisms for Health Care in Australia to address both the short and long term needs of preserving effective and efficient Medicare and Private Health Insurance.

That the Government introduce incentives to medical specialists to provide bulk billing to Aged Pensioners and Commonwealth Seniors Health Card holders.

That the National Health Reform Agenda be reconsidered on the basis of providing better and more affordable access to the services.

That the eHealth initiatives including the Personally Controlled Health Record current proposals be introduced.

That while the Aged Care Reform program commenced on 1 July 2014 has had significant progress, it is imperative that this reform program be continued and strengthened.

That there be an ongoing review on the impact of the fees and charges within the new regime on part age pensioners and self-funded retirees.

That considerations of equity, fairness and reasonableness with the cost of residential care for part pensioners and self-funded retirees, including accommodation charges, be reconsidered at the next review phase.

That all 410 Visa holders who have resided in Australia for 10 or more years become entitled to permanent citizenship and able to become Australian Citizens.

That the Government reduce benefits payable under the proposed Paid Parental Leave Scheme.

That there be no changes or broadening of the GST without adequate and full compensation to offset any increase in the cost of living for those Australian who are retired and have limited fixed incomes.

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Member Services – Director John Yard

At 30 June 2014, A.I.R. offered the following benefits for members:

AIG Insurance: providing travel insurance for members at special discount prices. Go to the A.I.R. website for the link for online access. Please note that the link to AIG has recently changed.

Budget Business Club: information about the benefits and rates are listed on the A.I.R. website or can be obtained from your A.I.R. Division.

Hyundai: A.I.R. members are entitled to a fleet discount when purchasing new Hyundai vehicles. All you need is proof that you are a financial member of A.I.R. which can be obtained from your Branch Membership Officer.

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Special Interest Groups

410 Visa Group – Co-ordinator Peter Kerr

The timescale for this Report falls neatly into the first year of Government for the Federal Coalition. At the last of the Community Cabinets prior to the federal election, I had been impressed by the knowledge expressed by the Ministers closely connected with our advocacy issues. Indeed they had prepared so well that they were quizzing me about the vexed matter of Offshore visa holders who simply use the visa for visits to Australia. This is an explosive issue for Onshore visa holders, because it was being promulgated by the BERIA online web site discussion forum and was taking attention away from the primary goal here, so I simply reiterated that AIR represents Members living permanently in Australia who seek Permanent Residency (PR). I did, however, point out that the proposed 10 year “probationary” period would automatically exclude those Offshore who would not meet that requirement. Since the Coalition has come to power things have changed. Both the Immigration Minister, Scott Morrison, and his deputy, Senator Michaelia Cash, have been very negative up to now. They have both stated in writing that other more pressing issues take priority for the foreseeable future. Scott Morrison referred back to the Government Actuary Report on the assumed costs for PR. This information is, we believe, now irrelevant and a new way forward is being sought. The Federal Members for Moore and Pearce in WA, Ian Goodenough and Christian Porter, have recently come on Board through the offices of Mike Goodall, the Advocacy Group Representative for the Perth Northern Suburbs. They both recognise that 410s, as fully paid up Self-funded Retirees,

make huge contributions to the economy and are, after that minimum 10 years of residency, probably cost neutral. This has been backed up recently by Barry Ritchie’s presentation at the WA State Library where he confirmed the position in respect of SFRs and their contribution to the economy. The two Federal Members are trying to arrange a meeting with Scott Morrison to take our current concerns and thoughts forward. We believe that we can present a strong case for cost neutrality and that should open the way forward to the ultimate goal of PR. After all, it was Chris Evans, as the then Immigration Minister, who stated that cost was the only barrier left to obtaining our desired goal.

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Secretary’s Report

Elizabeth Grant AM held the position of A.I.R. Secretary for the period 1 July 2013 to 26 November 2013 after which time the function passed to the A.I.R. National Secretariat in accordance with Constitutional changes agreed at the 2013 Annual General Meeting. All compliance requirements and legal obligations have been met during the year.

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Division Reports

NSW Division – Robert Curley, Division President

2013-14 has been a challenging and successful year. We have been able to attract new members and this remains of extreme importance to the future growth on A.I.R. However the loss of older members and the closing of two Branches in June 2014 was a downside to the year. A plus is the new A.I.R. brochures and marketing material which are now available and being used with our promotions for new members. Attracting retired or about to retire Baby Boomers is critical for our long term success. Likewise having good communications and an effective and informative web site is also critical if we are to attract the newer generation tech savvy retirees. I believe we have a valid value proposition for those who partly or fully self-funded their retirement and are looking for an organisation to join that addresses issues and concerns they may have. Advocacy is the essence of our existence and we in the Division have been very busy in our direct advocacy and along with Branches in meetings with senior Ministers and local MPs at both State and Federal levels. These meetings have been very positive and overall MPs are listening to us but in this changing climate, close connections at this local level are critical in the MPs clearly understanding the reasons behind the issues we raise. In the NSW Government’s 2014-15 Budget it was agreed to pass on the full the pensioner and senior card concession rebates in 2014-15 and absorb the loss resulting from "cost shifting" in the Federal Government's 2014-15 Budget where the Commonwealth announced a number of changes that impact significantly on NSW finances over the Budget and Forward Estimates period.

The State will make up the shortfall in 2014-15 resulting from the Commonwealth’s decision but this is only an interim decision by the NSW Government and for 2015-16 onwards this will be reassessed.

The NSW Government has strongly objected to this Federal Budget decision and has written to the Prime Minister calling on the Commonwealth to reinstate the $450 million funding reduction to NSW concessions over the next four years. A.I.R. was involved in discussions on this and in the drafting of this letter to the PM from the NSW Government. A.I.R. was a co-signatory of this letter.

In my discussions with the NSW Treasurer he stated that he intends to vigorously follow this up and to seek a long term resolution of this and other planned Commonwealth funding cuts announced in the 2014-15 Federal Budget. The NSW Government’s Whole of Government Ageing Strategy has been running for over 18 months and we are seeing targeted and innovative initiatives being rolled out. We do appreciate the opportunity we have had to continue working with the NSW Government and having input on this process. We are an important stakeholder in this initiative and the actions being rolled out resulting from this are, in my opinion, important for our members and their families. The AIA Alliance with A.I.R. gives all our members the opportunity to attend investment presentations at a professional level and be informed of changing situations and has being well received. Major changes to Aged Care were introduced on 1 July 2014 and we in the NSW Division are proud of the role A.I.R. has taken in the development of this aged care reform program. It is pleasing to report that the input A.I.R has made both direct to the Minister and the Department of Social Services and via our active membership of the National Aged Care Alliance (NACA) has been appreciated and held in high regard.

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QLD Division – Eddie Childs, Division President

Two years ago the current Executive was elected to continue on from the excellent base previously started on behalf of the members of A.I.R in Queensland. The biggest challenge was to ensure that we maintained the strength of the branches, maintained and indeed increased our membership numbers. The next challenge was to improve communication with our members. There were of course many other actions the Executive as well as the members of the DMC undertook to promote the Association and the needs of the members. This work will obviously continue. The figures would indicate moderate success in maintaining our numbers due no doubt to the excellent efforts of the Gold Coast Branch. However looking at the state of the Division from the renewals perspective we are immediately concerned. At the time of writing this report, we currently have a situation where some 50% of members are not shown as having renewed. Whilst it is early days yet, and it is noticed that some branches have not updated their members’ financial status, it is imperative that we work to ensure a maximum number of renewals and indeed work to grow that membership. Branch visits was an important and worthwhile function of the Executive this past period. Its purpose was many fold, not just to show a face to the members but to listen to them and where possible to offer assistance. In order to ensure branches in the Brisbane metropolitan area were visited a very successful forum was held with four branches attending; this provided a gateway for inter-branch activities which will benefit the area. Our communications were dramatically improved by the introduction of the Breaking News items compiled by John Cox and regularly communicated to Branches. This was intended to provide information on a range of issues that many Branches did not normally receive. Our submission to the State Treasurer did not result in any success but continues to be a reminder to politicians of issues we consider of importance. The State election due early next year will provide opportunities to present our case to both the Government and the Opposition. We have written to the Federal Treasurer as well as all Queensland based Federal Politicians regard the cost associated with insurance and the behaviour of insurance companies. Interestingly we have only received one reply. The Division has made several decisions over the past period that have not received the support of the Board. The introduction of an Honour Board has long been discussed but is not seen as needed by the Board; the introduction of Frig Magnets was not accepted (we have gone ahead and obtained them); lack of support for the use of the logo on our planned Facebook; the attempt to have a National

MAL and not proceed with the Queensland-based idea. We were successful in this endeavour. It is interesting to note that to date almost 50% of the QRB members have renewed their membership. The discussion over Queensland electricity pricing continues. It would appear that the prices will rise irrespective of any comment or discussion. The Cairns Branch has continued its discussions on our behalf with A.E.R, to date no change in the A.E.R attitude. It is disappointing to see a Branch such as Toowoomba closed due to a lack of members prepared to take leading roles in the running of the branch. At the time of writing Ipswich Branch are also in the process of closing. To continue functioning as a viable Association working for Retirees, we need have a strong Division Executive. At the Division AGM all positions were filled with the exception of the President. Members are currently working to obtain the services of a member to take this role. The Executive and the members of the DMC have worked extremely hard to ensure the success we have had this past period. Ken Mc Kay as our representative on the Board has been given some demanding tasks emanating from the DMC; we thank him for his efforts. Des Reppel and John Cox whose advice and support was vital in the operation of the Division. Of course Paul Southgate whose work as our Division Secretary was exemplary and way beyond the call of duty. To the incoming Executive I wish you success in your endeavours for the members.

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SA Division – John Yard, Division President

Presently S.A. has only three Branches namely Fleurieu Peninsula, Whyalla and Holdfast Bay. Like many others Fleurieu and Whyalla are having trouble forming committees - Fleurieu has not got a Secretary and Whyalla has not got a President. Whyalla has reduced its number of meetings, however their members are happy to stay in order to get their information, which they appreciate from the Board. The Holdfast Bay Branch is enjoying the pleasure of a full Committee with two additional members putting their hand up. All Branches have had some fall off in members, due mainly to death and ageing. We have had a few new members, however I have just been invited to be interviewed on community television which hopefully may create some interest. On the Division scene we are struggling as our Secretary since inception Stan Webster had to resign and we thank him for his contribution. We also lost our treasurer of five years, Sandra Higgins, who resigned to pursue other interests and we thank her too for a great contribution. At this stage we have got a new Treasurer but still on the hunt for a Secretary. Members of Branches and the Division were very busy talking to politicians during the last Federal and State elections. Holdfast Bay Branch and the Division are looking to participate in the new Westpac Banking system.

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TAS Division – Rob Cleary, Division President

A.I.R. Branches in Tasmania have suffered similar problems as in other states. Namely the difficulty in getting members to take office and places on their Management Committees. In June this resulted in the decision by Mersey Branch to merge with Northern Tasmania Branch. Whilst regrettable the decision to merge was taken so as to maximise the retention of membership in A.I.R. At a State level there was little demand for advocacy activities and efforts were mainly directed to encouraging Branch activities and recruitment efforts. The Tasmanian Division resolved to support in principle the Board’s proposal to establish an integrated company banking system. The Division also resolved to support a Members-at-Large (MAL) Branch being established within A.I.R. Secretariat. Given the age profile of the current membership, the future of the three remaining Branches in Tasmania will be determined by their ability to attract new members not only to the Branch but also to their Management Committees.

ooOOoo

VIC Division – Sandy Anderson, Division President

It has been an interesting year with a steep learning curve since my election as Victoria State Division President in November 2013 for the balance of Patsy Haywood’s term following her resignation from the role. I would like to thank Patsy for her work as Division President, her ongoing support and particularly for the excellent job she continues to do as Editor of A.I.R.’s In Touch publication.

Highlights of the VISD activities and my time as President include:

The 20th Birthday of Melbourne Eastern Branch on 7 February with excellent attendance, including a few inaugural members and five Parliamentarians.

Attendance on 7 March at a Businessman’s Breakfast at Royal Melbourne Golf Club with the State Treasurer, Hon Michael O'Brien as the guest speaker. This presented an opportunity to provide the VSD State Pre-Budget Submission to the Treasurer’s staffer and detail the Division’s position on the Victorian Patient Transport Assistance Scheme. As a result the following response was received on this issue:

A well-attended VSD Meeting on 19 March which included afternoon tea and a tour of the

Victorian Parliament House where it was evident that the Association is well known and well regarded.

Visits to VSD Branch Meetings during the year have included Swan Hill Branch on 14 March; Echuca Moama on 16 May. All these visits were characterised by well attended meetings and warm hospitality. I have also visited the Cairns Branch which was an excellent opportunity to see a Branch in another Division in operation.

Media attention on A.I.R. has included an interview with me in The Australian on 6 May in regard to the Federal Budget, interviews with the Financial Review and TV Channels 2 and 7. It is pleasing to note that good associations are being developed by the VSD with media outlets in the

State providing opportunities to promote the views of A.I.R. on issues of concern to self-funded retirees.

There have been some disappointments during the period including the closure of Melbourne North West Branch after 20 years of operation. Joan Heard and Elaine Muir are to be congratulated for their many years of sterling service to A.I.R at all levels of the organisation.

The closure of Peninsula Branch is also greatly regretted, however it is encouraging that many members have transferred to other Branches or become Members-at-Large. I congratulate the Branch on its achievements and contributions to A.I.R.

It is essential that steps be taken to keep Branches open, and I look forward to working with current Branches to assist where possible and would welcome assistance to open new Branches. A key issue needing to be addressed is the workload on Branch Office Bearers which frequently leads to closure of Branches with strong membership. A solution which could be explored may be the sharing of roles among members.

Any Branches who would find it helpful for me to visit, can contact me on 0411 570 888 or [email protected] and I will endeavour to attend.

I owe many thanks to all on the VSD Committee for your attendance (often with some distance to attend), your participation, your commitment to A.I.R. and genuine support to me personally which is very much appreciated. I could not have managed without the professional contribution and support of the Executive team; thanks also for your wonderful sense of humour which keeps us laughing together!

ooOOoo

WA Division – Charles O’Donnell, Division President

We certainly have had an eventful year. At the 2013/2014 AGM we were unable to fill all positions on our Divisional Committee and therefore we were stretched and sometimes unable to do what we wanted to do. However during the year we had Diane Blades and Faye Grey join us in the Executive and this gave us necessary support. Margaret Walsh became President of Perth Branch. Perth Branch had been operating for some years without a President and with shrinking numbers but kept open by Val Carter and the co-opted Acting President Larry Jones who was also Acting Treasurer and Membership Officer. With Margaret’s appointment, stabilisation is occurring at Perth, numbers are slowly growing and new people are being appointed to executive positions. The Division acknowledges the outstanding efforts of Val Carter and Larry Jones. Being short on Executive numbers, we decided to FOCUS on what we could do and that was to hold a Retirees/ Seniors Forum. This was a gamble but we planned well, had great support from the Board with National President Max Barton, Deputy President Dr Barry Ritchie plus senior Advocacy Director Robert Curley visit us and they plus three other great speakers made the Forum an outstanding success. We received a lot of media support. All our Branches assisted by involving ALL community newspapers and Don Keene spoke on the radio. This increased our public profile including that with Government. Our membership enquiries as a result of this has been very encouraging. The Planning Committee for the Forum included Maurine Crook, Margaret Walsh, Brian Cooper, and Darrell Govan with support from Diane Blades and Larry Jones with overview from Charles O’Donnell. Val Carter donated a weekend at her Mandurah resort as a Door prize. We thank Val for her generosity. The Forum also rekindled member interest and the Division now has a Full Committee with all positions on the Executive filled. Margaret Walsh has agreed to work with Robert Curley in the Aged Care and Health Advocacy portfolios. So we contributing more to A.I.R. So we can say that we are finishing the year in a very positive manner. With the storm clouds on the horizon we need a stronger A.I.R. We need the respect of all stakeholders. We are on the way to achieving this.

mailto:[email protected]

Association of Independent Retirees (A.I.R.) Limited ABN 35 102 164 385

Financial Statements For the Year Ended 30 June 2014


Contents

For the Year Ended 30 June 2014

Page

Financial Statements

Directors' Report 1

Auditors Independence Declaration under Section 307C of the Corporations Act 2001 7

Statement of Profit or Loss and Other Comprehensive Income 8

Statement of Financial Position 9

Statement of Changes in Equity 10

Statement of Cash Flows 11

Notes to the Financial Statements 12

Directors' Declaration 24

Independent Audit Report 25


Directors' Report

30 June 2014

1

Your directors present this report on the company for the financial year ended 30 June 2014.

Directors

The names of each person who has been a director during the year and to the date of this report are:

Names Position Appointed Resigned

Max Barton President November 2010

Barry Ritchie Deputy President January 2013

John Wenban Treasurer January 2007 November 2013

Elizabeth Grant Secretary December 2012 November 2013

Robert Curley NSW Division Representative November 2010

Ken McKay QLD Division Representative November 2012

John Yard SA Division Representative April 2011

Robert Cleary TAS Division Representative November 2012

Linda Martin VS Division Representative (formerly VIC Division Representative to June 2013) November 2010

Tom Rollo WA Division Representative December 2011 November 2013

Charles O'Donnell WA Division Representative November 2013

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Principal Activities

The principal activities of the Company during the financial year were:

Collating information and informing its members on all matters relevant to fully or partly self-funded retirees.

Providing a network that enables its members to meet and hear informed speakers on a range of topics such as maintaining income streams, health matters and aged care.

Providing a structure so that members can convey their concerns to the board.

Presenting submissions to Government at all levels on behalf of members, as well as responding at the invitation of Government.

Producing a monthly/quarterly newsletter which disseminates information and matters of interest to retirees.


Directors' Report

30 June 2014

Principal Activities continued

2

Attending Senate inquiries and similar Government consultations as representatives of fully and partly self-funded retirees.

Consulting with Members of Parliament and with public servants to make them aware of the needs of members.

Working proactively at local, state and national levels to recruit and retain fully and partly self-funded retirees as members.

No significant change in the nature of these activities occurred during the year.

Short and Long term Objectives and Strategy

The Company's short and long term objectives are to:

Work for the benefit and welfare of all fully and partly self-funded retirees.

Seek equitable economic, taxation and social environment outcomes that recognise and compensates for the special problems of fully or partly self-funded retirees.

Provide information on all matters pertaining to retirees.

Conduct research and prepare position papers to represent the views and concerns of member to all levels of Government.

Seek recognition as a body speaking for self-funded retirees at Local, State and Federal Government levels, by the community at large and by the media.

Foster membership of the company throughout Australia.

Cooperate with kindred organisations with objectives consistent with those of the Company.

Key Performance Measures

The Company's Strategic Plan 2011-2014 identifies five key action areas to be addressed by the Board:

Membership

Policy Development and Advocacy Process

Governance

A.I.R.’s Identity and Member Services


Directors' Report

30 June 2014

Key Performance Measures continued

3

The Company measures performance within these key action areas through the identification of key outcomes and the articulation of specific areas of work focus which are monitored against key performance indicators (strategic objectives):

To increase membership and to meet the needs of A.I.R.’s members.

To develop a policy framework and process for effective advocacy of issues of concern to self-funded retirees which can be communicated and replicated through the organisation.

To build and maintain a transparent, robust and efficiently governed organisation which ensures a sustainable financial structure.

That A.I.R. is recognised by all levels of Government, stakeholders and the wider community who influence outcomes as the peak body representing self-funded retirees.

To ensure that members, Government, stakeholders and the wider community are well informed of issues of concern to self-funded retirees.

Members guarantee

Association of Independent Retirees (A.I.R.) Limited is a company limited by guarantee. If the company is wound up, the constitution states that each member is required to contribute a maximum of $2 each towards meeting any outstanding obligations of the company. At 30 June 2014, the total amount that members of the company are liable to contribute if the company is wound up is $ 14,376 (2013: $ 16,800).

Information on Directors

Max Barton Appointed National President in November 2012. Elected as National Deputy President in November 2011. Served as Queensland Division Representative 2010/2011. A civil engineer who held senior government and corporate positions until retirement. During his working life and in retirement he has maintained a strong and active involvement in the broader community.

Barry Ritchie PhD, FTS, FIEAust Appointed Deputy President January 2013 and Honorary Life Member November 2012. Chairman National Retirement Incomes Research Group since 2005, President of the Gold Coast Branch 2004. A Mechanical Engineer, Business Manager, and Academic awarded a Centenary Medal for work in mining and energy research while serving in the coal industry. Led the Australian Management College Mt Eliza in the 1990s, sometime Professor of Management Southern Cross University.


Directors' Report

30 June 2014

Information on Directors continued

4

John Wenban Appointed Treasurer November 2012 following 2 years as National President. Previously served as National Treasurer 2007/2010 and Queensland Division Representative 2005/2006.Formerly a Supply Officer with long service in the Royal Navy and Royal Australian Navy.

Elizabeth Grant AM Appointed to the board as the National Secretary in January 2013. Pharmacist in Retail and Hospital Pharmacy until 1990, then became Director of an information service company. Elizabeth has a background in Politics and Community Services and an ongoing involvement with the National Health and Medical Research Council as a member of the Council and a number of principal and special interest committees since 1981. She was awarded an AM for services to health and the Australian Community in 1987 and an Honorary Doctorate of Laws from Monash University in May 2005.

Robert Curley Appointed to the Board as the New South Wales Division Representative in November 2012. Served as New South Wales Director since November 2010. A former a mechanical engineer with 20 years’ experience in both global and local senior management roles until retirement.

Ken McKay Appointed to the Board as the Queensland Division Representative in November 2012. Retired in 2004 after a successful career in Sales Management with Australia Post. A.I.R. National Coordinator of the Baby Boomers Special Interest Group.

John Yard Appointed to the Board from November 2009 to November 2010 and again from April 2011. After commencing his working life in farming, John moved into a career in life insurance followed by roles in financial planning. John continues a very active involvement in a wide range of community activities in South Australia.

Robert Cleary Appointed to the Board as the Tasmania Division Representative in November 2012. Joined A.I.R.'s Northern Tasmania branch in 1998 after retiring from working in the motor industry, higher education, the ice cream and frozen food industry in sales, marketing, distribution, financial administration and property management.


Directors' Report

30 June 2014

Information on Directors continued

5

Linda Martin Appointed to the Board as Victoria Division Representative in November 2010. Appointed to the Board as Victorian State Division Representative in July 2013. A retired teacher and school principal with the Victorian Education Department holding a BA and M Ed. Admin. Currently Chairman of the Albury Wodonga Eisteddfod and convenor of the Albury-Wodonga Regional Group of the Australian Shareholders’ Association.

Tom Rollo Appointed to the Board as the Western Australia Division Representative in December 2011. Prior to retirement was involved with engineering construction management within Australia and at overseas locations. Currently a branch secretary, a tax help volunteer and a member of the current Western Australia State Government Seniors Ministerial Council.

Charles O’Donnell Appointed to the Board as the Western Australian Division Representative in November 2013. Charles commenced employment in W.A. and moved to all mainland States working in Industrial Marketing. In 1983 returned to Perth as W.A. Manager of a manufacturing plant. In 1994 he was transferred to North China for a two-year tour as General Manager of an Australian/Chinese venture. The speciality areas of ISO 9000 and TQM Quality Systems as well as J.I.T. and Lean Manufacturing were introduced at that time. He returned to Australia in 1996 and retired in 2000.


Directors' Report

30 June 2014

6

Meetings of directors

During the financial year, 9 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows:

Directors' Meetings

Number

eligible to attend

Number attended

Max Barton 9 9

Barry Ritchie 9 7

John Wenban 5 5

Elizabeth Grant 5 5

Robert Curley 9 8

Ken McKay 9 8

John Yard 9 7

Robert Cleary 9 8

Linda Martin 9 8

Tom Rollo 3 1

Patsy Haywood 1 1

(Alternate VSD director)

Charles O'Donnell 5 5

Significant Changes in State of Affairs

No significant changes in the Company's state of affairs occurred during the financial year.

Events Subsequent to the End of the Reporting Period

No matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in future financial years.

Operating Result

The surplus of the Company amounted to $ 5,311 (2013 surplus: $10,042).

Auditor's Independence Declaration

The lead auditors independence declaration for the year ended 30 June 2014 has been received and can be found on page 7 of the financial report.

Signed in accordance with a resolution of the Board of Directors:

Directors:

Dated 7 October 2014


Auditors Independence Declaration under Section 307C of the Corporations Act 2001 to the Directors of Association of Independent Retirees (A.I.R.) Limited

7

I declare that, to the best of my knowledge and belief, during the year ended 30 June 2014 there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

Hardwickes Chartered Accountants

Robert Johnson FCA Dated 7 October 2014 6 Phipps Close, Deakin ACT 2600


Statement of Profit or Loss and Other Comprehensive Income


8

A.I.R. Limited Board of A.I.R.

Note 2014

$

2013

$ 2014

$

2013

$

Revenue 2

420,565 469,494

186,947 204,584

Conference, AGM, meetings & functions (131,691) (181,953)

(14,817) (64,426)

Other expenses

(105,397) (97,757)

(4,180) (20)

Commerce Management contract (53,525) (50,781)

(53,525) (50,781)

Board expenses

(26,550) (25,174)

(26,550) (25,174)

Travel & accommodation (22,842) (35,307)

- -

Magazine & newsletter production

(17,522) (22,459)

(17,522) (22,459)

Advertising (16,426) (11,617)

- -

Auditing or reviewing the financial statements 3

(16,000) (17,500)

(16,000) (17,500)

Projects (9,697) (4,310)

(9,697) (4,310)

Insurance

(6,411) (4,130)

(6,411) (4,130)

Health and aged care advocacy (4,925) -

(4,925) -

Commerce Management additional

(3,768) (4,380)

(3,768) (4,380)

National Members at Large (500) -

(500) -

Standing committee costs

- (4,084)

- (4,084)

Surplus/(deficit) for the year

5,311 10,042

29,052 7,320

Other comprehensive income for the year

- -

- -

Total comprehensive income for the year

5,311 10,042

29,052 7,320

Total comprehensive income attributable to members

5,311 10,042

29,052 7,320


Statement of Financial Position

30 June 2014

9


Note

2014

$

2013

$ 2014

$

2013

$

ASSETS

CURRENT ASSETS

Cash and cash equivalents 4

362,299 349,496

86,475 36,780

Trade and other receivables 5 2,965 15,813

2,324 1,657

Other financial assets 7

280,780 286,050

143,819 156,159

Other assets 6 2,869 3,118

2,869 3,118

TOTAL CURRENT ASSETS

648,913 654,477

235,487 197,714

NON-CURRENT ASSETS

TOTAL ASSETS

648,913 654,477

235,487 197,714

LIABILITIES

CURRENT LIABILITIES

Trade payables 8 56,824 46,930

32,580 23,859

Other financial liabilities 9 81,749 102,518

- -

TOTAL CURRENT LIABILITIES

138,573 149,448

32,580 23,859

NON-CURRENT LIABILITIES

TOTAL LIABILITIES

138,573 149,448

32,580 23,859

NET ASSETS

510,340 505,029

202,907 173,855

EQUITY

Members equity

510,340 505,029

202,907 173,855

TOTAL EQUITY

510,340 505,029

202,907 173,855


Statement of Changes in Equity


10

2014

Board of A.I.R.

Retained Earnings

$

Total

$

Balance at 1 July 2013

173,855 173,855

Surplus/(deficit) attributable to members

29,052 29,052

Balance at 30 June 2014

202,907 202,907

2013

Board of A.I.R.

Retained Earnings

$

Total

$


166,535 166,535


7,320 7,320


173,855 173,855

2014

A.I.R. Limited

Retained Earnings

$

Total

$


505,029 505,029


5,311 5,311


510,340 510,340

2013

A.I.R. Limited

Retained Earnings

$

Total

$


494,987 494,987


10,042 10,042


505,029 505,029


Statement of Cash Flows


11


Note

2014

$

2013

$ 2014

$

2013

$

CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from activities 408,699 471,083

187,536 200,099

Payments to suppliers

(415,136) (489,462)

(158,951) (231,631)

Interest received 13,971 11,909

8,770 5,754

Net cash provided by (used in) operating activities 10

7,534 (6,470)

37,355 (25,778)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of investments

5,269 12,805

12,340 (6,159)

Net cash used by investing activities

5,269 12,805

12,340 (6,159)

Net increase (decrease) in cash and cash equivalents held

12,803 6,335

49,695 (31,937)

Cash and cash equivalents at beginning of year 349,496 343,161

36,780 68,717

Cash and cash equivalents at end of financial year 4

362,299 349,496

86,475 36,780


Notes to the Financial Statements


12

The financial report include the financial statements and notes of Association of Independent Retirees (A.I.R.) Limited (the Company), incorporated and domiciled in Australia. Association of Independent Retirees (A.I.R.) Limited is a not-for-profit Company limited by guarantee.

The financial statements were authorised for issue on the 7th of October 2014 by the directors of the company.

1 Summary of Significant Accounting Policies

(a) Basis of Preparation

The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated.

The financial statements, except for cash flow information, have been prepared on an accruals basis and are based on historical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The amounts presented have been rounded to the nearest dollar.

(b) Income Tax

No provision for income tax has been raised as the Company is exempt from income tax under Div 50 of the Income Tax Assessment Act 1997.

(c) Financial Instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the instrument. For financial assets, this is the equivalent to the date that the Company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transactions costs, except where the instrument is classified 'at fair value through profit or loss' in which case transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest rate method, or cost. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.




1 Summary of Significant Accounting Policies continued

(c) Financial Instruments continued

13

Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.

(i) Financial assets at fair value through profit or loss

Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

(ii) Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company's intention to hold these investments to maturity. They are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.

(iv) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

They are subsequently measured at fair value with any remeasurements other than impairment losses and foreign exchange gains and losses recognised in other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss.






14

Available-for-sale financial assets are included in non-current assets, except for those which are expected to be sold within 12 months after the end of the reporting period. All other available-for-sale financial assets are classified as current assets.

(v) Financial liabilities

Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Fees payable on the establishment of loan facilities are recognised as transaction costs of the loan.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Gains or losses are recognised in profit or loss through the amortisation process and when the financial liability is derecognised.

Impairment

At the end of each reporting period, the Company assesses whether there is objective evidence that a financial asset has been impaired. A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events (a "loss event") having occurred, which has an impact on the estimated future cash flows of the financial asset(s).

In the case of financial assets carried at amortised cost, loss events may include, indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments, indications that they will enter bankruptcy or other financial reorganisation and changes in arrears or economic conditions that correlate with defaults.

For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced directly if no impairment amount was previously recognised in the allowance account.

When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the Company recognises the impairment for such financial assets by taking into account the original terms as if the terms have not been renegotiated so that the loss events that have occurred are duly considered.






15

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

(d) Impairment of Assets

At the end of each reporting period, the Company assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information and internal sources of information. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard. Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard.

Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

(e) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.

(f) Revenue and Other Income

Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the entity and specific criteria relating to the type of revenue as noted below, has been satisfied.

Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates.

Donations and bequests are recognised as revenue when received.

Interest is recognised using the effective interest method.

All revenue is stated net of the amount of goods and services tax (GST).





16

(g) Trade and other payables

Trade and other payables represent the liability outstanding at the end of the reporting period which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.

(h) Goods and Services Tax (GST)

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 Australian Taxation Office (ATO).

Receivables and payable are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the statement of financial position.

Cash flows in the statement of cash flows are included on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the ATO is presented as operating cash flows included in receipts from customers or payments to suppliers.

(i) Comparative Figures

When required by the Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

When the Company has retrospectively applied an accounting policy, made a retrospective restatement of reclassified items in its financial statements, an additional statement of financial position as at the beginning of the earliest comparative period will be disclosed.

(j) Critical Accounting Estimates and Judgments

The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company.

The directors have not made any significant accounting estimates or judgements which are likely to affect the future results of the Company.

(k) New Accounting Standards and Interpretations

The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods. The Company has decided against early adoption of these standards. The following table summarises those future requirements, and their impact on the Company:





(k) New Accounting Standards and Interpretations continued

17

Standard Name

Effective date for

entity Requirements Impact

AASB 9 Financial Instruments and amending standards AASB 2010-7 / AASB 2012-6

30 June 2016 Changes to the classification and measurement requirements for financial assets and financial liabilities. New rules relating to derecognition of financial instruments.

The impact of AASB 9 has not yet been determined as the entire standard has not been released.

2 Revenue and Other Income


2014

$

2013

$ 2014

$

2013

$

- Membership and affiliation

232,185 222,180

167,997 136,635

- Functions and conference 76,633 141,157

- 53,942

- Other revenue

41,627 43,101

504 597

- Sponsorship 38,848 34,382

- -

- Interest

13,971 11,909

8,770 5,754

- Project marketing 9,000 -

9,000 -

- Donations

7,625 9,109

- -

- Commissions 676 457

676 457

- Club Lifestyle

- 7,199

- 7,199

Total revenue

420,565 469,494

186,947 204,584

3 Remuneration of Auditors


2014

$

2013

$ 2014

$

2013

$

Remuneration of the auditor of the company for:

- Auditing or reviewing the financial statements 16,000 17,500

16,000 17,500




18

4 Cash and Cash Equivalents


2014

$

2013

$ 2014

$

2013

$

Cash on hand

2,140 2,757

- -

Cash at bank

360,159 346,739

86,475 36,780

362,299 349,496

86,475 36,780

5 Trade and other receivables


2014

$

2013

$ 2014

$

2013

$

CURRENT

Trade receivables 2,965 15,813

2,324 1,657

Total current trade and other receivables

2,965 15,813

2,324 1,657

Credit risk

The Company has no significant concentration of credit risk with respect to any single counterparty or group of counterparties other than those receivables specifically provided for and mentioned within Note 5. The main source of credit risk to the Company is considered to relate to the class of assets described as 'trade and other receivables'.

6 Other Assets


2014

$

2013

$ 2014

$

2013

$

CURRENT

Prepayments 2,869 3,118

2,869 3,118

2,869 3,118

2,869 3,118

7 Financial Assets


2014

$

2013

$ 2014

$

2013

$

Term deposits 280,780 286,050

143,819 156,159

Total financial assets

280,780 286,050

143,819 156,159




19

8 Trade and Other Payables


2014

$

2013

$ 2014

$

2013

$

CURRENT

Unsecured liabilities

Trade payables 35,683 24,247

11,439 1,176

Sundry payables and accrued expenses 21,141 22,683

21,141 22,683

56,824 46,930

32,580 23,859

(a) Financial liabilities at amortised cost classified as trade and other payables


Note 2014

$

2013

$ 2014

$

2013

$

Trade and other payables

- Total current

56,824 46,930

32,580 23,859

Financial liabilities classed as trade and other payables

12

56,824 46,930

32,580 23,859

9 Other Liabilities


2014

$

2013

$ 2014

$

2013

$

CURRENT

Subscriptions in advance 81,749 102,518

- -

81,749 102,518

- -

10 Cash Flow Information

Reconciliation of net income to net cash provided by operating activities:


2014

$

2013

$ 2014

$

2013

$

Net surplus/(deficit)

5,311 10,042

29,052 7,320

Changes in assets and liabilities:

- (increase)/decrease in trade and other receivables

12,848 (7,721)

(667) 1,379

- (increase)/decrease in prepayments 249 9,182

249 9,182




19

- increase/(decrease) in income in advance

(20,769) 3,105

- (18,224)

- increase/(decrease) in trade and other payables 9,895 (21,078)

8,721 (25,435)

Net cash provided by operating activities

7,534 (6,470)

37,355 (25,778)




20

11 Related Party Transactions

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

The only other transactions with related parties are payments in reimbursement of expenses for travel and accommodation related to attendances of meetings as well as reimbursement of sundry telephone, internet, stationery and postage expenses as deemed appropriate for reimbursement as costs of operations.

12 Financial Risk Management

The Company's financial instruments consist mainly of deposits with banks, short-term investments, and accounts receivable and payable.

The totals for each category of financial instruments, measured in accordance with AASB 139: Financial Instruments: Recognition and Measurement as detailed in the accounting policies to these financial statements, are as follows:


2014

$

2013

$ 2014

$

2013

$

Financial Assets

Cash and cash equivalents 4

362,299 349,496

86,475 36,780

Term deposits 7 280,780 286,050

143,819 156,159

Trade and other receivables 5

2,965 15,813

2,324 1,657

Total financial assets

646,044 651,359

232,618 194,596

Financial Liabilities

Financial liabilities at amortised cost

Trade and other payables 8

56,824 46,930

32,580 23,859

Total financial liabilities

56,824 46,930

32,580 23,859

Specific financial risk exposures and management

The main risks the Company is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk.

There have been no substantive changes in the types of risk the company is exposed to, how these risks arise, or the Board's objectives, policies and processes for managing or measuring the risks from the previous period.

(a) Credit risk

Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Company.




12 Financial Risk Management continued

(a) Credit risk continued

21

It is the Company’s policy that all customers who wish to trade on credit terms undergo a credit assessment process which takes into account the customer’s financial position, past experience and other factors. Credit limits are then set based on ratings in accordance with the limits set by the Board of Directors, these limits are reviewed on a regular basis.

(b) Liquidity risk

Liquidity risk arises from the possibility that the Company might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Company manages this risk through the following mechanisms:

preparing forward-looking cash flow analysis in relation to its operational, investing and financial activities which are monitored on a monthly basis;

monitoring undrawn credit facilities;

obtaining funding from a variety of sources;

maintaining a reputable credit profile;

managing credit risk related to financial assets;

only investing surplus cash with major financial institutions; and

comparing the maturity profile of financial liabilities with the realisation profile of financial assets.

Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days.

The available funds to the Company are discussed in note 12.

The table below reflect an undiscounted contractual maturity analysis for non-derivative financial liabilities. Bank overdrafts have been deducted in the analysis as management does not consider that there is any material risk that the bank will terminate such facilities. The bank does however maintain the right to terminate the facilities without notice and therefore the balances of overdrafts outstanding at year-end could become repayable within 12 months. Financial guarantee liabilities are treated as payable on demand since the Company has no control over the timing of any potential settlement of the liability. The Company does not hold any derivative financial liabilities directly.





22

Financial liability maturity analysis

A.I.R. Limited Within 1 Year Total

2014

$

2013

$

2014

$

2013

$

Financial liabilities due for payment

Trade and other payables 56,824 46,930 56,824 46,930

Total expected outflows 56,824 46,930 56,824 46,930

Board of A.I.R. Within 1 Year Total

2014

$

2013

$

2014

$

2013

$

Financial liabilities due for payment

Trade and other payables 32,580 23,859 32,580 23,859

Total expected outflows 32,580 23,859 32,580 23,859

The timing of expected outflows is not expected to be materially different from contracted cashflows.

Financial Asset maturity analysis

A.I.R. Limited Within 1 Year Total

2014

$

2013

$

2014

$

2013

$

Financial assets - cash flows realisable

Cash and cash equivalents 362,299 349,496 362,299 349,496

Term deposits 280,780 286,050 280,780 286,050

Trade and other receivables 2,965 15,813 2,965 15,813

Total anticipated inflow 646,044 651,359 646,044 651,359

Board of A.I.R. Within 1 Year Total

2014

$

2013

$

2014

$

2013

$

Financial assets - cash flows realisable

Cash and cash equivalents 86,475 36,780 86,475 36,780

Term Deposits 143,819 156,159 143,819 156,159

Trade and other receivables 2,324 1,657 2,324 1,657

Total anticipated outflows 232,618 194,596 232,618 194,596





23

(c) Market risk

i. Interest rate risk

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The financial instruments that expose the Company to interest rate risk are limited to cash and cash equivalents.

13 Members' Guarantee

The Company is incorporated under the Corporations Act 2001 and is a Company limited by guarantee. If the Company is wound up, the constitution states that each member is required to contribute a maximum of $ 2 each towards meeting any outstandings and obligations of the Company. At 30 June 2014 the number of members was 7,188 (2013: 8,400).

14 Company Details

The registered office of the company is:

Association of Independent Retirees (A.I.R.) Limited

Commerce Management

Suite 26 The Atrium, Swinger Hill Shopping Centre

Mawson ACT 2607


Directors' Declaration

24

The directors of the entity declare that: 1. The financial statements and notes, as set out on pages 8 to 23, are in accordance with the Corporations

Act 2001 and:

(a) comply with Australian Accounting Standards; and

(b) give a true and fair view of the financial position as at 30 June 2014 and of the performance for the year ended on that date of the entity.

2. In the directors' opinion, there are reasonable grounds to believe that the entity will be able to pay its debts

as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Directors:

Dated 7 October 2014


Independent Audit Report to the members of Association of Independent Retirees (A.I.R.) Limited

25

Report on the Financial Report We have audited the accompanying financial report of Association of Independent Retirees (A.I.R.) Limited, which comprises the statement of financial position as at 30 June 2013 the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration. Directors' Responsibility for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Association of Independent Retirees (A.I.R.) Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

Basis for Qualified Opinion - Limitation of Scope As is common for organisations of this type, it is not practicable to operate and effective system of control over membership revenues and other fund raising activities conducted at the divisional and branch levels until their initial banking and entry in the accounting records. Accordingly, our audit in relation to these revenues was limited to the amounts banked. The Geelong-Werribee branch did not submit data for audit and inclusion into the 2014 financial statements.

Based on the net equity position of the branch at 30 June 2014 the effect of the omission of their performance and position at year end is not considered to have materially affected the performance and position of the company overall.

Qualified Opinion

In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the financial report of Association of Independent Retirees (A.I.R.) Limited is in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of the company’s financial position as at 30 June 2014 and of its performance for the year ended on that date; and

(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.

Hardwickes Chartered Accountants

Robert Johnson FCA Dated 7 October 2014

6 Phipps Close, Deakin ACT

annual report to members for the year 1 july 2013 30 june 2014 · 2019. 2. 6. · president’s...

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