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KARITANE

ABN 25 000 018 842

GENERAL PURPOSE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2019

KARITANE ABN 25 000 018 842

GENERAL PURPOSE FINANCIAL REPORT

FOR THE YEAR ENDED 30 JUNE 2019

CONTENTS

Directors’ Report ................................................................................................................................... 1 Auditor’s Independence Declaration ..................................................................................................... 4 Statement of Profit or Loss and Other Comprehensive Income ........................................................... 5 Statement of Financial Position............................................................................................................. 6 Statement of Changes In Equity ........................................................................................................... 7 Statement of Cash Flows ...................................................................................................................... 8 Notes to the Financial Statements ........................................................................................................ 9 Declaration of Chief Executive Officer ................................................................................................ 22 Responsible Persons’ Declaration ...................................................................................................... 23 Independent Auditor’s Report ............................................................................................................. 24


1

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019

Your directors present their report on the financial statements of Karitane (‘the Company’) for the year ended 30 June 2019. DIRECTORS The names of directors who held office at any time during, or since the end of the year are set out below together with the information on each director's experience, qualifications and special responsibilities:

Names of Directors Occupation/Qualifications Position/Special Responsibilities

Service as Director as at 30 June 2019

Robert Anthony Casamento

FCPA Chairman 12 Years

Garth Martin Ross B. Bus CPIM Chair of Nominations Committee Treasurer

20 Years

Susan Dinkha BA, Dip Law (SAB) Chair of Audit, Risk and Corporate Governance Committee

11 Years

Valsamma Eapen MBBS, DPM, MRCPsych, Diploma in Family Therapy, PhD, FRCPsych, FRANZCP

Director 8 Years

Sharyn Wilkins MBBS (USYD), RACGP Family Medicine Program, Family Planning Certificate, FAICD

Vice Chairman Director Chair of Clinical Governance

6 Years

Bernadette Keenan RN, Sterilising Technology Certificate, BHA (UNSW), MAICD

Director 3 Years

Lee Carpenter ACMA, Grad Cert Business Admin, CPA, MBA, MAICD, CGMA

Director 1 Year

Marion Skulley MBA, IMD Lausanne, Diploma in Psychology, AICD

Director Chair of Business Innovation & Development

1 Year

John Bonnici Electrical Supervisor, Licenses security consultant and electrical contractor

Director 13 Years and 4 Months

John Bonnici retired as a Director effective 25th October 2018. MEETINGS OF DIRECTORS During the financial year, 11 meetings of the directors were held and attended as follows:

Name Directors Meetings Special Meetings Eligible to

attend Attended Eligible to attend Attended

Robert Anthony Casamento 11 11 - - John Bonnici 4 1 - - Garth Martin Ross 11 10 - - Susan Dinkha 11 7 - - Valsamma Eapen 11 6 - - Sharyn Wilkins 11 10 - - Bernadette Keenan 11 9 - - Lee Carpenter 11 9 - - Marion Skulley 11 11 - -


DIRECTORS’ REPORT (CONTINUED)


2

COMPANY SECRETARY Ms Grainne O'Loughlin, CEO of Karitane, was appointed as the Company Secretary on 30th April 2014 and Karen Edwards, Director of Governance, was appointed as Company Secretary on the 31st of January 2019. Both continue in office at the date of this report. PRINCIPAL ACTIVITIES Karitane delivers high quality, comprehensive evidence-based parenting services for families, as well as the provision of education and training to healthcare professionals, non-government organisations and corporate partners. Our services cover parenting support, early intervention and prevention services to an increasing number of vulnerable families, antenatal support and education, services to alleviate parental depression and anxiety, managing toddler behaviour and delivering of community programs in addition to engaging in a strong research program. SHORT AND LONG TERM OBJECTIVES OF THE COMPANY The objectives are to focus on:

• Healthy and Vibrant Families • Accessible Health Care for All • High Quality Health Care Delivery • Responsible and Equitable Resource Management • An Energetic, Progressive and Innovative Organisation

STRATEGY FOR ACHIEVING THOSE OBJECTIVES The strategy for achieving these objectives has been to:

• Grow Our Programs & Services Deliver accessible & innovative programs and services that build parenting capacity and promote Karitane’s reputation as a national and international thought leader in early parenting practices.

• Refine Systems & Structures Achieve a values aligned organizational culture with robust governance practices supported by contemporary systems and service delivery models.

• Strengthen Leadership Develop a leadership framework that sets international benchmarks in parenting support practices and builds the capacity of all our leaders to inspire, influence and develop individuals and teams.

• Expand Collaboration & Partnerships Expand relationships with strategic partners to promote organisational growth, pursue new opportunities and build community recognition.

• Ensure Financial Sustainability A sustainable approach to financial management supported by diversified funding streams, sound investment strategies and appropriate budgetary controls, that secures the financial future for Karitane’s programs and services.

• Facilitate Strategic Partnerships Collaborative relationships with strong strategic partners to position Karitane as a thought leader, program innovator and trusted provider of parenting services

4

AUDITOR’S INDEPENDENCE DECLARATION Auditor’s Independence Declaration We declare that, to the best of our knowledge and belief, there have been no contraventions of any applicable code of professional conduct in relation to the audit of the financial report of Karitane for the year ended 30 June 2019. Sydney, NSW A G Smith 27 September 2019 Director


The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

5

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019

Notes

2019 $

2018 $

Revenue from continuing operations 3 9,906,054 11,160,782 Other revenue and income 4 755,367 720,736 Total revenue and other income 10,661,421 11,881,518 Expenses Employee benefits expenses (7,446,719) (8,658,887) Depreciation and amortisation (487,303) (504,032) Occupancy expenses (580,113) (597,263) Fees written off 5 (111,025) (192,163) Provision for doubtful debts (3,664) 47,464 Printing and stationery expenses (102,160) (124,862) Telephone expenses (41,601) (66,717) Repairs and maintenance expenses (421,236) (269,780) VMO expenses (381,296) (373,703) Consultancy expenses (280,960) (301,786) Other expenses (739,037) (1,342,191) Total expenses (10,595,114) (12,383,920) Net surplus / (deficit) for the year before income tax expense 66,307 (502,402) Income tax expense 1(b) - - Net surplus / (deficit) for the year 66,307 (502,402) Other comprehensive income Revaluation of land and buildings 35,942 328,301

Total comprehensive income / (loss) for the year 102,249 (174,101)


The above statement of financial position should be read in conjunction with the accompanying notes. 6

STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2019

Notes

2019 $

2018 $

Current assets Cash and cash equivalents 6 992,719 1,928,117 Trade and other receivables 7 345,859 425,433 Financial assets 8 4,562,675 3,739,654 Other assets 9 97,718 102,535 Total current assets 5,998,971 6,195,739 Non-current assets Property, plant and equipment 10 13,062,887 13,631,116 Financial assets (non-current) 8 499,550 - Total non-current assets 13,562,437 13,631,116 Total assets 19,561,408 19,826,855 Current liabilities Trade and other payables 11 1,246,179 2,161,108 Employee entitlements 12 2,312,758 2,207,189 Deferred revenue 13 1,178,123 722,142 Total current liabilities 4,737,060 5,090,439 Non-current liabilities Employee entitlements 12 95,937 110,254 Total non-current liabilities 95,937 110,254 Total liabilities 4,832,997 5,200,693 Net assets 14,728,411 14,626,162 Funds Accumulated funds 9,111,352 9,045,045 Reserves 14 5,617,059 5,581,117 Total funds 14,728,411 14,626,162


The above statement of changes in equity should be read in conjunction with the accompanying notes. 7

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2019

Accumulated funds Reserves

Total Funds

$ $ $ Balance at 30 June 2017 9,547,447 5,252,816 14,800,263 Deficit for the year (502,402) - (502,402) Other comprehensive income for the year - 328,301 328,301 Balance at 30 June 2018 9,045,045 5,581,117 14,626,162 Surplus for the year 66,307 - 66,307 Other comprehensive income for the year - 35,942 35,942 Balance at 30 June 2019 9,111,352 5,617,059 14,728,411


The above statement of cash flows should be read in conjunction with the accompanying notes. 8

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2019

Notes 2019

$ 2018

$ Cash flows from operating activities Receipts from patients 1,134,500 1,459,909 Interest received 74,328 31,654 Trust distributions received 71,140 79,185 Donations received 1,023,479 765,073 Proceeds from government subsidies and grants 8,650,631 9,190,990 Other receipts 1,089,810 1,352,573 Payments to suppliers & employees (11,712,039) (12,847,335) Net cash inflow from operating activities 17(a) 331,849 32,049 Cash flows from investing activities Purchase of property, plant & equipment (18,363) (211,758) Receipts from / (payments for) financial assets (1,322,572) 1,230,430 Proceeds from sale of property, plant & equipment 73,688 - Net cash (outflow) / inflow from investing activities (1,267,247) 1,018,672 Net (decrease) / increase in cash and cash equivalents (935,398) 1,050,721 Cash and cash equivalents at the beginning of the financial year 1,928,117 877,396 Cash and cash equivalents at the end of the financial year 6 992,719 1,928,117


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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial report for the year ended 30 June 2019 are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated. The financial report covers Karitane (“the Company”) as an individual entity. The financial report is presented in the Australian currency and rounded to the nearest dollar. Basis of preparation The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards - Reduced Disclosure Requirements, other authoritative pronouncements of the Australian Accounting Standards Board and the Australian Charities and Not-for-profits Commission Act 2012. In addition, Karitane's financial report has been prepared in accordance with the requirements of the Health Services Act 1997 and regulations, the New South Wales Health Department's Accounts and Audit Determination. Karitane is a not-for-profit entity for the purpose of preparing the financial statements.

The financial report, except for the cash flow information, has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets and financial assets for which the fair value basis of accounting has been applied. The financial report has been prepared on a going concern basis. As at year end the Company's current assets exceeded its current liabilities by $1,261,911 (2018: $1,105,300). Current liabilities include deferred income of $1,178,123 (2018: $722,142) and employee entitlements of $2,312,758 (2018: $2,207,189). The Company has no external debt and has significant property assets. On this basis the directors are satisfied that the Company is capable of accessing sufficient funds to meet its working capital requirements. The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. Comparative information has been reclassified where appropriate to enhance comparability with the current financial year. New, revised or amended Accounting Standards and Interpretations adopted The Company has applied all new, revised or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board that are mandatory for the current reporting period. The main new Accounting Standard and Interpretation that became effective during the current reporting period is as follows: AASB 9 Financial Instruments (“AASB 9”) The Company has adopted AASB 9 from 1 July 2018 which replaces AASB 139 Financial Instruments: Recognition and Measurement. The standard introduced new classification and measurement models for financial assets. The Company's financial instruments include cash and cash equivalents, trade and other receivables, other financial assets and trade and other payables. The Company does not apply hedge accounting. On initial application of AASB 9, the Company determined that, other than financial assets at fair value through profit or loss, its financial assets and liabilities continue to be measured at amortised cost and the Company has applied the simplified approach to measuring expected credit losses of its trade and other receivables. The adoption of AASB 9 has not had a significant effect on the Company's accounting policies relating to financial instruments or a material impact on the financial performance or position of the Company.


NOTES TO THE FINANCIAL STATEMENTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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New, revised or amended Accounting Standards and Interpretations adopted (continued) Comparatives were not required to be restated and no differences were required to be recognised to the opening balance of retained earnings at 1 July 2018 as a result of the adoption of AASB 9. Other amending Accounting Standards and interpretations Several other amending Accounting Standards and Interpretations apply for the first time for the reporting period commencing 1 July 2018. These other amending Accounting Standards and Interpretations did not result in any adjustments to the amounts recognised or disclosures in the financial report.

(a) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable. Patient fees Patient's fees are derived from chargeable inpatients and non-inpatients on the basis of rates specified by the NSW Health Department from time to time. Government subsidies Government subsidies are recognised as revenue when received. Interest Interest is recognised using the effective interest method. The effective interest method uses the effective interest rate that exactly discounts the estimated future cash receipts over the expected life of the financial asset.

Distributions from unit trusts Distributions from unit trusts are recognised when the right to receive a distribution has been established. Specific grants The Company's activities are supported by grants received from the federal, state and local governments. 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. Donations Donations collected, including cash, are recognised as revenue when the Company gains control, economic benefits are probable and the amount of the donation can be measured reliably. Investment revenue Investment revenue comprises of proceeds from the redemption of financial investments. The gain or loss on disposal is determined as the difference between the carrying amount of the asset at the time of the disposal and the net proceeds on disposal.

(b) Income tax The Company is exempt from Income Tax under sub division 50-5 of the Income Tax Assessment Act 1997. Effective 1 April, 2009 the ATO has endorsed Karitane as a tax exempt charity with a Health Promotion Charity Status. Karitane is also a registered charity under the Australian Charities and Not- for-profits Commission Act 2012.





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(c) Cash and cash equivalents

For the purposes of the statement of cash flows, cash includes: (i) cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts; and (ii) short-term highly liquid investments with original maturities of three months or less.

(d) Trade and other receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The Company has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Patients’ fees are billed to insurers for insured patients on discharge and are carried at the amount billed. An allowance for expected credit losses is recognised when collection of the fee is doubtful. The amount of the impairment loss is recognised in net surplus / (deficit) within other expenses. When a receivable for which an impairment allowance had been recognised becomes uncollectable in a subsequent period, it is written off against the allowance amount. Subsequent recoveries of amounts previously written off are credited against other expenses in net surplus / (deficit).

(e) Financial assets

Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written off. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost are classified as financial assets at fair value through profit or loss. Fair value movements are recognised in profit or loss.

(f) Property, plant and equipment

Each class of property, plant and equipment is carried at fair value or at cost less, where applicable, accumulated depreciation and impairment losses. Under NSW Health Department guidelines, Health Service assets with a value over $5,000 are capitalised. Consequently assets with a cost or book value of less than $5,000 are expensed as incurred.





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(f) Property, plant and equipment (continued)

Land and buildings Land and buildings are measured at fair value, based on periodic, but at least triennial, valuations by external valuers, less subsequent accumulated depreciation for buildings. Any accumulated depreciation at revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Increases in the carrying amount arising on revaluation of land and buildings are credited to the property revaluation reserve included within equity unless it reverses a revaluation decrease on the same class of asset previously recognised in surplus or deficit. A revaluation deficit is recognised in the statement of comprehensive income unless it directly offsets a previous revaluation surplus on the same class of asset in the asset revaluation reserve. On disposal, any revaluation reserve relating to sold assets is transferred to retained earnings. Plant and equipment All plant and equipment is stated at historical cost, including costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, less accumulated depreciation and any impairment losses.

Depreciation Depreciation is provided on all property, plant & equipment, including buildings and property improvements but excluding freehold land. Depreciation is calculated on a straight line basis over the estimated useful life of the asset commencing from the time the asset is first held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of fixed assets Depreciation rate

Buildings 2.5%

Building Improvements 10% - 20%

Plant & Equipment 10% - 40%

The residual values and useful lives of assets are reviewed at the end of each statement of financial position date.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the surplus or deficit. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(g) Impairment of non-financial assets

At each statement of financial position date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. The assessment will include considering both external 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 of disposal 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 surplus or deficit. 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.





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(h) Trade and other payables Trade payables and other payables are carried at amortised cost, due to their short-term nature they are not discounted. They represent liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when Company becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and usually paid within 30 days of recognition.

(i) Provisions Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at statement of financial position date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

(j) Employee entitlements

Wages, salaries and annual leave Liabilities for wages and salaries are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in employee benefits in respect of employees’ services up to the reporting date and is measured at the amount expected to be paid when the liability is settled and is reported inclusive of associated on-costs.

Long service leave The liability for long service leave for employees with greater than 10 years’ service at the reporting date is recognised and measured in accordance with annual leave provision at (i) above. The liability for long service leave for employees with more than 5 years’ service but less than 10 years’ service at the reporting date is recognised in non-current employee benefits but is measured on remuneration rates current as at the balance sheet date for all employees with 5 or more years of service.

The directors believe that this method provides an estimate of the liability that is not materially different from the estimate that would be obtained by using the present value basis of measurement.

(k) Deferred revenue The Company receives grant monies and donations to fund projects either for contracted periods of time or for specific projects irrespective of the period of time required to complete those projects. It is the policy of the Company to treat grant monies and donations as deferred revenue in the statement of financial position where the Company is contractually obliged to provide the services in a subsequent financial period to when the grant or donation is received or in the case of specific project grants or donations where the project has not been completed.

(l) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except; • where the GST incurred on purchase of goods and services are not recoverable from the taxation

authority in which case the GST is recognised as part of the cost of acquisition of an asset or as part of the expense item as applicable; and

• receivables and payables are stated with the amount of GST included. The net amount of GST receivable from, or payable to, the taxation authority is included as part of the receivables or payables in the statement of financial position.





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(l) Goods and Services Tax (GST) (continued)

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(m) Leases

Leases, where substantially all the risks and benefits incidental to the ownership of the asset (but not the legal ownership) are transferred to the Company, are classified as finance leases. Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to their fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risk and benefits remain with the lessor, are recognised as expenses on a straight-line basis over the lease term.

(n) Functional and Presentation Currency

The financial statements are presented in Australian dollars which is the Company's functional and presentation currency.

2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The Directors evaluate estimates and judgements incorporated into the financial report 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. Significant accounting estimated and assumptions The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:

Valuation of land and buildings Land and buildings are measured at fair value, based on periodic, but at least triennial, valuations by external valuers, less subsequent accumulated depreciation for buildings (Note 1(f)). If the estimates of the valuation across all fixed assets held at fair value were to change by plus or minus 1%, this would result in an increase or decrease in the property, plant and equipment balance and deficit before income tax of $127,700.

Grants received The Company has received a number of government grants during the year. Once the Company has been notified of the successful outcome of a grant application, the terms and conditions of each grant are reviewed to determine whether the funds relate to a reciprocal grant (i.e. payment for services rendered) in which case it is accounted for under AASB 118 Revenue or a non-reciprocal grant in which case it is accounted for under AASB 1004 Contributions. Employee entitlements Annual leave and long service leave accounts payable after 12 months from the reporting date are based on future wage and salary levels, experience of employee departures and periods of service. The amount of these accruals would change should any of these factors change in the next 12 months.




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2019

$ 2018

$ 3. REVENUE

(a) Operating revenue

Government subsidies 5,809,337 5,352,234 Government grants 1,640,345 2,932,493 Patient fees 1,054,926 1,466,380 Conference, training and course registration fees 46,845 77,294

8,551,453 9,828,401

(b) Other revenue

Donations 1,023,499 772,140 Other revenue 331,102 560,241

1,354,601 1,332,381

Total revenue 9,906,054 11,160,782

4. OTHER REVENUE AND INCOME

Superannuation – liability accepted by South Western Sydney Local Health District 609,899 609,897 Interest received – other persons 53,020 31,654 Distributions from unit trust 71,140 78,621 Fair value movement in financial assets 21,308 - Gain on sale of property, plant & equipment - 564

755,367 720,736

5. SPECIFIC EXPENSES

The results include the following specific expenses: Patient fees written off 111,025 192,163 Bank and finance charges (included within ‘Other expenses’ in the Statement of profit or loss and other comprehensive income) 10,276 7,283

6. CASH AND CASH EQUIVALENTS

Cash on hand 2,600 2,900 Cash at bank 476,185 411,283 Term deposits (less than 90 days maturity) 513,934 1,513,934

992,719 1,928,117




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2019

$ 2018

$

7. TRADE AND OTHER RECEIVABLES Current Trade and receivables 278,137 414,787 Less: allowance for expected credit losses - -

278,137 414,787 Other receivables 67,722 10,646

345,859 425,433

8. FINANCIAL ASSETS Current Term deposits 1,078,743 78,743 Unlisted trusts – at fair value through profit and loss NSW Treasury Corp – Hour Glass Investment Facilities 3,483,932 3,660,911

4,562,675 3,739,654

Non-current Shares – at fair value through profit and loss 499,550 -

499,550 -

9. OTHER ASSETS Current Prepayments 97,718 102,535

Note

10. PROPERTY, PLANT AND EQUIPMENT Land and buildings Freehold land - at fair value 4,450,000 4,590,000 Buildings – at fair value 8,320,003 8,557,090 Total land and buildings 10(a),(b) 12,770,003 13,147,090

Plant and equipment Plant and equipment – at cost 1,450,683 1,681,291 Less: accumulated depreciation (1,157,799) (1,197,265) Total plant and equipment 292,884 484,026 Total property, plant and equipment 13,062,887 13,631,116




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10. PROPERTY, PLANT AND EQUIPMENT (continued)

Movements in carrying amounts Moments in carrying amounts for each class of property, plant and equipment between the beginning and at the end of the current financial year. For the year ended 30 June 2019

Freehold land

$ Buildings

$

Plant & equipment

$ Total

$ Carrying amount at 1 July 2018 4,590,000 8,557,090 484,026 13,631,116 Additions - - 18,363 18,363 Disposals - (91,728) (43,503) (135,231) Movement as a result of revaluations (140,000) 175,942 - 35,942 Depreciation expense - (321,301) (166,002) (487,303) Carrying amount at 30 June 2019 4,450,000 8,320,003 292,884 13,062,887

(a) Title and ownership of land and buildings

Karitane Residential Unit (Lot 916, DP855880) - Cnr Horsley Drive & Mitchell Street, Carramar. This property is the subject of a Relocation Agreement between the Minister for Health, the Health Administration Corporation (Corporation), Karitane and the South Western Sydney Area Health Service. The parties entered into the Agreement on 15 January 1998. Pursuant to the Relocation Agreement the Corporation will be given the first right of refusal to purchase the site if Karitane at any time decided to sell the facility site. Karitane has sole title to the land at the 126 Horsley Drive Carramar and is to share proportionally an equity interest in the buildings with the Corporation. There is a caveat on the property in favour of the Corporation. Karitane has sole title to the land at 124 The Horsley Drive Carramar and is to share proportionally an equity interest in the building with The Minister for Family & Community Services until 30 June 2018. From 1 July 2018 there is no equitable claim by the Minister or further obligations under the Deed on 124 The Horsley Drive Carramar.

(b) Valuation of land and buildings The valuation basis of land and buildings is fair value which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The value of freehold land and buildings makes use of the independent valuations performed during the current year by Corporeal Property Valuers as at 30 June 2019. The Directors have considered the independent valuations and regard them as being an appropriate reflection of fair values as at 30 June 2019. As Karitane is not subject to income tax, no capital gains tax is payable should any of the properties be sold. Any revaluation increment is credited to the property revaluation reserve (see Note 14).




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2019 $

2018 $

11. TRADE AND OTHER PAYABLES

Current Trade payables 292,692 232,826 Other payables 953,487 1,928,282

1,246,179 2,161,108

12. EMPLOYEE ENTITLEMENTS

Current Annual leave 669,056 638,983 Long service leave 1,643,702 1,568,206

2,312,758 2,207,189 Non-current Long service leave 95,937 110,254

13. DEFERRED REVENUE Current Deferred revenue 1,178,123 722,142

14. RESERVES

Property revaluation reserve Balance at 1 July 5,581,117 5,252,816

Revaluation – increment 10(b) 35,942 328,301

Reversal to accumulated funds - -

Balance at 30 June 2019 5,617,059 5,581,117

(a) Nature and purpose of reserves

(i) Property revaluation reserve

The property revaluation reserve is used to record increments and decrements on the revaluation of land and buildings, as described in Note 1(f).




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15. KEY MANAGEMENT PERSONNEL COMPENSATION Key Management Personnel (KMP) are those having authority for planning, directing and controlling the Company's activities including the Directors and CEO (and all persons who were CEO or acting CEO during the year ended 30 June 2019). The Directors act in an honorary capacity, receiving no remuneration (see Note 20 for any other related party transactions). The compensation provided to the KMP is as follows:

2019 $

2018 $

Total KMP compensation 291,662 287,104

16. AUDITOR’S REMUNERATION Remuneration of auditor: Audit of financial statements and acquittal reports 34,240 34,900

Preparation of financial statements 2,300 2,200

36,540 37,100

17. CASH FLOW INFORMATION

(a) Reconciliation of surplus / (deficit) for the year to cash flows from operating activities Surplus / (deficit) for the year 66,307 (502,402) Non-cash flows in surplus / (deficit):

Depreciation & amortisation 487,303 504,032 Gain on sale of plant & equipment 61,545 -

Changes in operating assets & liabilities:

Decrease / (increase) in trade receivables 79,574 (6,471) Decrease / (increase) in other assets 4,817 (27,376)

(Decrease) / increase in trade payables (914,931) 149,610 Increase in deferred income 455,981 77,790

Increase / (decrease) in employee entitlements 91,253 (163,134)

Cash flows from operating activities 331,849 32,049

(b) Credit standby arrangements The Company has no credit standby arrangements and loan facilities.




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18. CAPITAL COMMITMENTS There are no capital commitments outstanding at year end.

19. COMMITMENTS FOR OPERATING LEASE EXPENDITURE

Karitane leases one property under non-cancellable operating leases. This lease has varying terms and renewal rights which were negotiated at the beginning of the lease. Commitments of leases contracted at the reporting date but not recognised as liabilities, payable:

2019 $

2018 $

Within one year 123,750 148,995

20. RELATED PARTY TRANSACTIONS

John Bonnici's (Director – retired 25th October 2018) firm, Bonn Electronics, provided electronic surveillance contractor services to the Company and was paid $4,825 (2018: $28,282) for their services for the year. Susan Dinkha’s (Director) firm, Emmaus Legal, provided legal services to the Company and was paid $2,332 (2018: $1,080) for their services for the year.

21. EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE

There were, at the date of this report, no matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial year.

22. ECONOMIC DEPENDENCY The NSW Department of Health provides funding to Karitane, which enables it to operate the hospital and various programmes. It is anticipated that adequate funding will be provided to enable Karitane to pay its debts as and when they fall due.

23. COMPANY DETAILS The registered office and principal place of business of the Company is:

Corner of The Horsley Drive and Mitchell Street, Carramar NSW 2163

Karitane is a Company limited by guarantee, incorporated and domiciled in Australia.

24. CONTINGENCIES

Guarantees: As at 30 June 2019, the Company has not provided any guarantee with the exception that the Company will (as referred to in Note 10) be required to repay the equity contribution received from the Health Administration Corporation based on the market price as determined by the Valuer-General at the time Karitane disposes of the property at Horsley Drive.




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2019 $

2018 $

25. INFORMATION AND DECLARATIONS TO BE FURNISHED UNDER THE CHARITABLE

FUNDRAISING ACT 1991 General revenue from fundraising Donations 1,023,499 755,988 Karitane Golf Day - 16,152

1,023,499 772,140 Total cost of fundraising Donations 3,835 7,408 Karitane Golf Day - 11,411 3,835 18,819 Net surplus from fundraising 1,019,664 753,321 This surplus is used to meet the short and long term objectives of the company.

2019 2018 $ % $ %

Total cost of fundraising 3,835 0 18,819 2 Gross revenue from fundraising 1,023,499 772,140

Net surplus from fundraising 1,019,664 99 753,321 98

Gross revenue from fundraising 1,023,499 772,140

At the year-end, donations included in deferred revenue total $948,930 (2018: $566,623).

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Independent Auditor’s Report to the Members of Karitane INDEPENDENT AUDITOR’S REPORT

Opinion We have audited the financial report of Karitane (“the company”) which comprises the statement of financial position as at 30 June 2019, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the responsible persons’ declaration, for the company. In our opinion: (a) the accompanying financial report of the company is in accordance with Division 60 of the Australian

Charities and Not-for-profits Commission Act 2012, including:

(i) giving a true and fair view of the company’s financial position as at 30 June 2019 and of its financial performance and cash flows for the year then ended; and

(ii) complying with Australian Accounting Standards – Reduced Disclosure Requirements and Division 60 of the Australian Charities and Not-for-profits Commission Regulation 2013.

(b) the financial report gives a true and fair view of the financial result fundraising appeals for the financial

year;

(c) any money received as a result of fundraising appeals conducted during the year ended 30 June 2019 has been properly accounted for and applied in accordance with the Charitable Fundraising Act 1991 and regulations thereto;

(d) the financial statements and associated records ave been properly kept during the financial year n

accordance with the provisions of the Charitable Fundraising Act 1991 and the regulations thereto; and

(e) at the date of this statement there are reasonable grounds to believe that Karitane will be able to pay

its debts as and when they are due. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the company in accordance with the auditor independence requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by Division 60 of the Australian Charities and Not-for-profits Commission Act 2012, which has been given to those charged with governance, would be in the same terms if given as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors are responsible for the preparation of the financial report that gives a true and fair view in accordance with the Australian Accounting Standards – Reduced Disclosure Requirements and the Australian Charities and Not-for-profits Commission Act 2012 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. The directors are responsible for overseeing the company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or

error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.

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• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. HLB Mann Judd Assurance (NSW) Pty Ltd A G Smith Chartered Accountants Director Sydney, NSW 30 September 2019

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