settlement services international limited and its controlled entities€¦ · settlement services...

Settlement Services International Limited and its controlled entities ABN: 38 031 375 761 Financial Statements For the year ended 30 June 2019

Settlement Services International Limited and its controlled entities 2 For the year ended 30 June 2019

Contents

Page

Corporate Information Statement 3

Auditor’s Independence Declaration 4

Consolidated Statement of Profit or Loss and Other Comprehensive Income 5

Consolidated Statement of Financial Position 6

Consolidated Statement of Changes in Funds 7

Consolidated Statement of Cash Flows 8

Notes to and forming part of the financial statements 9

Responsible Entities’ Declaration 30

Declaration by the Principal Officer 31

Independent Auditor’s Report 32

Settlement Services International Limited and its controlled entities 3 Financial Report for the year ended 30 June 2019

Corporate Information Statement Settlement Services International Limited is a company limited by guarantee, registered with the Australian Charities and Not-for-profits Commission.

Directors (Responsible Persons) The following persons were the Directors of Settlement Services International Limited and its controlled entities (“Settlement Services International” or “the Group”) at the date of this report:

Elisabeth Shaw (Chairperson) Lucy Taksa Antoinette Chow Elfa Moraitakis Yung Ngo Sophie Ray Deping Zheng

Chief Executive Officer

Violet Roumeliotis

Company Secretary

Peter Zographakis

Charity Street address and registered office

Level 2, 158, Liverpool Road, Ashfield

Auditor

Grant Thornton

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation.

www.grantthornton.com.au

Level 17, 383 Kent Street Sydney NSW 2000 Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.grantthornton.com.au

Auditor’s Independence Declaration To the Responsible Entities of Settlement Services International Limited

In accordance with the requirements of section 60-40 of the Australian Charities and Not-for-profits Commission Act 2012, as lead auditor for the audit of Settlement Services International Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been no contraventions of any applicable code of professional conduct in relation to the audit.

Grant Thornton Audit Pty Ltd Chartered Accountants

James Winter Partner – Audit & Assurance Sydney, 31 October 2019

emily.smith�

FreeText

4�


Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2019

Notes 2019 2018 $ $ Revenue 3(a)

112,303,104

85,457,845

Other Income 3(b)

3,459,869

7,333,145

Total Revenue and Other Income 115,762,973 92,790,990

Client support costs

38,066,905

32,445,079

Employee benefits 3(c)

57,243,754

43,470,820

Rent and utilities

5,448,251

6,212,837

IT expenses

1,898,021

1,935,162

Professional fees

2,042,610

2,871,663

Depreciation expense

2,312,729

2,934,494

Borrowing costs

101,191

-

Loss on disposal of property, plant and equipment

51,811

-

Cost of subsidiaries integration 16

1,778,081

-

Other expenses

5,166,007

2,476,345

Total Expenditure 114,109,360 92,346,400

Net surplus for the year 1,653,613 444,590 Other comprehensive income Revaluation of property, plant and equipment 391,023 - Other comprehensive income 391,023 -

Total comprehensive income for the year 2,044,636 444,590

This statement should be read in conjunction with the notes to the financial statements.


Consolidated Statement of Financial Position As at 30 June 2019

Notes 2019 2018 $ $ Assets Current Cash and cash equivalents 4 33,142,059 27,891,085 Receivables 5 9,127,474 4,758,266 Inventories 65,880 64,095 Other assets 6 896,442 1,008,508 Total Current Assets 43,231,855 33,721,954 Non-current Property, plant and equipment 7 7,242,513 3,636,160 Other assets 33,333 - Total Non-current Assets 7,275,846 3,636,160 Total Assets 50,507,701 37,358,114 Liabilities Current Payables 8 8,190,384 5,530,685 Borrowings 11 4,000,000 - Other liabilities 9 5,364,737 3,207,937 Provisions 10 5,884,533 4,458,693 Total Current Liabilities 23,439,654 13,197,315 Non-current Provisions 10 1,734,922 872,310 Total Non-current Liabilities 1,734,922 872,310 Total Liabilities 25,174,576 14,069,625 Net Assets 25,333,125 23,288,489

Funds

Accumulated funds 12(a) 13,242,102 11,588,489 Reserves 12(b) 12,091,023 11,700,000 Total Funds 25,333,125 23,288,489



Consolidated Statement of Changes in Funds For the year ended 30 June 2019

Funds Notes

Accumulated Funds

$

Operating Reserve

$

Revaluation Reserve

$ Total

$

Balance at 30 June 2017 22,843,899 - - 22,843,899 Surplus for the year 444,590 - - 444,590 Transfer to / (from) reserves (11,700,000) 11,700,000 - -

Balance at 30 June 2018 11,588,489 11,700,000 - 23,288,489

Surplus for the year 1,653,613 - - 1,653,613 Revaluation of property, plant and equipment

- - 391,023 391,022

Balance at 30 June 2019 2.18, 12 13,242,102 11,700,000 391,023 25,333,125 This statement should be read in conjunction with the notes to the financial statements.


Consolidated Statement of Cash Flows For the Year Ended 30 June 2019

Notes 2019 2018 $ $ Operating activities Receipts from government funding and other income 124,546,710 99,661,430 Interest received 527,411 512,214 Payments to clients, suppliers and employees (117,542,503) (98,481,993) Borrowing costs paid (101,191)

Net cash provided by operating activities 13 7,430,427 1,691,651

Investing activities Purchase of property, plant and equipment (2,179,453) (1,702,485)

Net cash provided by/(used in) investing activities (2,179,453) (1,702,485)

Net cash provided by/(used in) financing activities - - Net change in cash and cash equivalents 5,250,974 (10,834) Cash and cash equivalents, beginning of year 27,891,085 27,901,919 Cash and cash equivalents, end of year 4 33,142,059 27,891,085


Settlement Services International Limited and its controlled entities 9 Financial Report for the year ended 30 June 2019 Notes to the Financial Statements For the year ended 30 June 2019

1 Nature of Operations The principal activities of Settlement Services International Limited (“the Company”) were to provide a range of services in the areas of humanitarian settlement, accommodation, asylum seeker assistance, foster care and disability support in NSW.

Settlement Services International Limited is a not-for-profit company and Public Benevolent Institution, incorporated as company limited by guarantee under the Corporations Act 2001, registered under the Australian Charities and Not-for-profits Act 2012 and authorised to fundraise under the Charitable Fundraising Act 1991 (NSW).

Settlement Services International is domiciled in Australia and its registered office is Level 2, 158 Liverpool Road, Ashfield, NSW, 2131.

The consolidated financial statements for the year ended 30 June 2019 were approved and authorised for issue by the board of Responsible Entities on 31 October 2019.

2 Summary of Significant Accounting Policies

2.1 Basis of Preparation The consolidated financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards – Reduced Disclosure Requirements, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Australian Charities and Not for Profits Commission Act 2012 and Charitable Fundraising Act 1991. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated. The consolidated financial statements 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 following is a summary of the material accounting policies adopted by the Group in the preparation of the consolidated financial statements. 2.2 Basis of consolidation The consolidated financial statements incorporate the assets and liabilities of the subsidiaries of Settlement Services International as at 30 June 2019 and the results of the consolidated group since Settlement Services International became the sole member and controlling entity of Access Group International Limited on 4 December 2018. All controlled entities have a reporting date of 30 June. Settlement Services International and its controlled entities are referred to in these financial statements as the Group. The controlled entities are all entities over which the Company is the sole member or ultimate controlling entity. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.


Note 2 – Statement of Significant Accounting Policies (continued)

Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases. Inter-company transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Business combinations Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exceptions). All transaction costs incurred in relation to business combinations are recognised as expenses in profit or loss when incurred. 2.3 Revenue and Other Income

Government Funding Government funding which is contingent upon certain outcomes, including the expenditure of certain amounts, is considered reciprocal, recognised as revenue in accordance with AASB 118 Revenue only when those outcomes are achieved and only to the extent of the expenditure incurred. Funding received that has not achieved such outcomes is recognised as other payables. Funding which is not contingent upon certain outcomes is recognised as revenue over the periods to which it relates.

Government funding on some programs includes the reimbursement of out of pocket expenditure incurred. Such amounts are included in government grant revenue.

Donations Other sources of income which are not tied to specific outcomes (including donations) are recognised as revenue when the following conditions are met:

a) the Group obtains control of the contribution or the right to receive the contribution;

b) it is probable that the economic benefits comprising the contribution will flow to the Group; and

c) the amount of the contribution can be measured reliably.

Donated property and goods are accepted on the basis they will provide a future economic benefit. Revenue is brought to account when the property and goods are received and is recorded at fair value, which is represented by either wholesale value or independent valuation.



Rental income Rental revenue is recognised on an accruals basis when the entity’s right to receive payment is established under the lease.

Interest Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

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

2.4 Unexpected Grants The Group receives grant monies to fund projects for contracted periods of time. Where there is a contractual obligation to return unexpended amounts, the policy is to treat these grant monies as unexpended funds in the balance sheet. Where the unexpended funds can be spent in a subsequent financial period, it is recognised as future funding. Where required by the contract, unexpended grant monies are returned if they are not required to extinguish the service obligations under the contract.

2.5 Operating Expenses Employee benefits expense include payments made to employed staff engaged to provide direct service delivery and staff engaged within human resources, finance, marketing, information and communications technology, and operational planning and development staff. Client support costs include direct service delivery expenses other than employee benefits. These include assessments, living expenses and program or activity expenses. 2.6 Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand and short-term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. 2.7 Receivables Receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for expected credit losses. Collectability of receivables is constantly reviewed and uncollectable debts are written-off. A provision for expected credit losses is established upon determining that a receivable amount is considered non-recoverable.



2.8 Financial Assets The Group classifies its financial assets into the following categories:

1. financial assets at fair value through profit or loss,

2. amortised cost, and

3. financial assets at fair value through other comprehensive income (previously available-for-sale financial assets).

The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date.

Financial assets and liabilities are initially measured at fair value plus transaction costs unless they are carried at fair value through profit or loss in which case the transaction costs are recognised in the income statement.

Purchases and sales of investments are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance date. The quoted market price used is the current bid price.

The categories of financial assets are:

a. Financial assets at fair value through profit or loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the Statement of Financial Position date.

After initial recognition they are measured at their fair values. Gains or losses on re-measurement are recognised in the income statement.

b. Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVPL or FVOCI): they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows, the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments as well as any long-term deposit that were previously classified as held-to-maturity under AASB 139.



c. Financial assets classified as fair value through other comprehensive income (FVOCI)

Investments in equity instruments that are not held for trading are eligible for an irrevocable election at inception to be measured at FVOCI. Under FVOCI, subsequent movements in fair value are recognised in other comprehensive income and are never reclassified to profit or loss. Dividend from these investments continue to be recorded as other income within the profit or loss unless the dividend clearly represents return of capital. This category was previously classified as ‘available-for-sale’.

The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the reporting date.

2.9 Impairment of financial assets At each balance date the Group assesses whether there is any objective evidence that a financial asset or group of financial assets is impaired. Any impairment losses are recognised in the Statement of Profit or Loss and Other Comprehensive Income. The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward-looking approach, a distinction is made between: financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’), and financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’). ‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date. ‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

2.10 Property, Plant and Equipment Leasehold improvements, plant and other equipment Leasehold improvements, plant and other equipment, including fittings and furniture, are initially recognised at acquisition cost, including any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the Group’s management.

Leasehold improvements, plant and other equipment are subsequently measured using the cost model, less subsequent depreciation and impairment losses.

Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of Leasehold improvements, plant and other equipment. The following useful lives are applied:

Fixed asset class Depreciation rate Plant and Equipment 3-5 years Leasehold improvements Lease period Buildings 40 years



At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any revisions are accounted for prospectively as a change in estimate.

When an asset is disposed, the gain or loss is calculated by comparing proceeds received with its carrying amount and is taken to profit or loss.

Land and buildings

Following initial recognition at cost, land and buildings are carried at a revalued amount that is the fair value at the date of the revaluation less any subsequent accumulated depreciation on buildings and any subsequent accumulated impairment losses.

Fair value is the amount of 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. Fair values are confirmed by independent valuations that are obtained with sufficient regularity to ensure that the carrying amounts do not differ materially from the assets’ fair values at the reporting date. Director valuations are used if an independent valuation does not take place during an annual reporting period.

Land and buildings are treated as a class of assets. When the carrying amount of this class of assets is increased as a result of a revaluation, the increase is credited directly to the revaluation reserve, except where it reverses a revaluation decrement previously recognised in the statement of profit or loss and comprehensive income, in which case it is credited to that statement.

When the carrying amount of land and buildings is decreased as a result of a revaluation, the decrease is recognised in the statement of profit or loss and other comprehensive income, except where a credit balance exists in the revaluation reserve, in which case it is debited to that reserve.

Make good provision At the end of the reporting period, a provision for the estimated cost for the make good of operating leases was recorded. The provision relates to the expected future cost and is based on management’s best estimate of the cost to restore the leased premises to their agreed original state at the expiration of the lease agreement.

2.11 Impairment testing of property, plant and equipment

The carrying values of property, plant and equipment are reviewed for impairment at each reporting date, with the recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of property, plant and equipment is the higher of fair value less costs of disposal and value in use. Depreciated replacement cost is used to determine value in use where the assets are not held principally for cash generating purpose and would be replaced if the organisation was deprived of it. Depreciated replacement cost is the current replacement cost of a time of plant and equipment less, where applicable, accumulated depreciation to date, calculated on the basis of such cost. Value in use for all other assets is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the statement of profit and loss and other comprehensive income.



2.12 Trade and Other Payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

2.13 Provisions Provisions are recognised when the Group 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 an estimate of the consideration required to settle the present obligation at reporting 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. During the current financial year a provision for the estimated cost for the make good of operating leases was recorded. The provision relates to the expected future cost and is based on management’s best estimate of the cost to restore the leased premises to their agreed original state at the expiration of the lease agreement. 2.14 Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to entities in the Group, are classified as finance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the 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 their estimated useful lives where it is likely that the Group will obtain ownership of the asset or over the term of the lease. Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. The lease is not recognised in the statement of financial position.

2.15 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 payables 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 are included in the statement of cash flows 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 taxation authority is classified as operating cash flows. 2.16 Income Tax No provision for income tax has been raised as the Company and the controlled entities are exempt from income tax under Div. 50 of the Income Tax Assessment Act 1997.



2.17 Employee Benefits Short-term Employee Benefits Liabilities for wages and salaries, including non-monetary benefits are recognised in other liabilities and annual leave, long service leave and accumulating sick leave expected to be settled within twelve months of the end of the reporting period are recognised in current provision in respect of employees' services rendered up to the end of the reporting period. These balances are measured at amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when leave is taken and measured at the actual rates paid or payable. Long-term Employee Benefits Long service leave not expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service are included in non-current provisions. They are measured at the present value of the expected future payments to be made to employees. The expected future payments incorporate anticipated future wage and salary levels, experience of employee departures and periods of service, and are discounted at rates determined by reference to market yields at the end of the reporting period on high quality corporate bonds that have maturity dates that approximate the timing of the estimated future cash outflows. Any re-measurements arising from experience adjustments and changes in assumptions are recognised in profit or loss in the periods in which the changes occur.

The Group presents employee benefit obligations as current liabilities in the Statement of Financial Position if the Group does not have an unconditional right to defer settlement for at least twelve (12) months after the reporting period, irrespective of when the actual settlement is expected to take place. Superannuation Contributions are made by the Group to an employee's superannuation fund and are charged as expenses when incurred.

2.18 Reserves Operating Reserve This reserve consists of funds the Board have set aside with the intention that they be used for strategic purposes. The general purpose of the Operating Reserve, is to help to ensure the long term financial stability and sustainability of the Group and position it to respond to significant economic conditions and changes affecting the Group’s financial position and the ability of the Group to continuously carry out its mission.

Revaluation Reserve This reserve is used to record movements in the fair value of freehold land and buildings.



2.19 Comparative Amounts Comparatives are consistent with prior years, unless otherwise stated. 2.20 Critical Accounting Estimates and Judgments The directors evaluate estimates and judgments 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 Group. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The effect of the change relating to the current period is recognised as income or expense in the current period. The effect, if any, on future periods is recognised as income or expense in those future periods.

Key Estimates – impairment The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Fair value less costs to sell or current replacement cost calculations performed in assessing recoverable amounts incorporate a number of key estimates.

Key Judgments – make good provision During the current financial year a provision for the estimated cost for the make good of operating leases was recorded. The provision relates to the expected future cost and is based on management’s best estimate of the cost to restore the leased premises to their agreed original state at the expiration of the lease agreement. Key Judgments – useful lives of depreciable assets Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of certain software and IT equipment.

Key Judgments – long service leave The liability for long service leave is recognised and measured at the present value of the estimated cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.


3 Items within profit and loss

3 (a) Revenue 2019 2018 $ $ Government funding 111,775,693 84,945,631 Government funding - client recovery 1,044,776 1,677,655 Direct client costs (1,044,776) (1,677,655) Interest income 527,411 512,214 112,303,104 85,457,845 3 (b) Other Income 2019 2018 $ $ Rental income 1,392,404 4,098,823 Donations income 205,790 1,184,322 Sale of goods 427,494 471,371 Other 1,434,181 1,578,629 3,459,869 7,333,145 Total revenue and other income 115,762,973 92,790,990 3 (c) Employee benefits expense 2019 2018 $ $ Wages & salaries 44,631,117 34,429,568 Workers compensation insurance 1,318,851 421,162 Superannuation 4,415,510 3,390,904 Employee benefit provisions 5,161,828 3,558,356 Other staff related costs 1,716,448 1,670,830 Employee benefits expense 57,243,754 43,470,820

4 Cash and cash equivalents 2019 2018 $ $ Cash on hand 31,479 29,395 Cash at bank 17,110,580 11,861,690 Short term deposits 16,000,000 16,000,000 Cash and cash equivalents 33,142,059 27,891,085


5 Receivables 2019 2018 $ $ Funding debtors and accrued income 8,813,740 4,753,464 Other receivables 313,734 4,802 Receivables 9,127,474 4,758,266

6 Other assets

2019 2018 $ $ Prepayments 638,466 544,891 Deposits 257,976 463,617 Other assets 896,442 1,008,508

7 Property, plant and equipment

2019 2018 $ $

Leasehold improvements (at cost) 5,318,143 4,500,884 Less: Accumulated depreciation (4,432,712) (3,762,500) 885,431 738,384 Plant and equipment (at cost) 10,197,851 8,577,878 Less: Accumulated depreciation (8,231,638) (5,745,371) 1,966,213 2,832,507 Make good asset (at cost) 886,332 454,448 Less: Accumulated depreciation (424,480) (389,179) 461,852 65,269 Work in Progress 310,228 - Land and Buildings (at directors’ valuation) 3,625,000 - Less: Accumulated depreciation (6,211) - 3,618,789 - Total property, plant and equipment 7,242,513 3,636,160 The Land and buildings are mortgaged against the borrowings disclosed in Note 11. The directors’ valuations were based upon independent valuations received from CBRE, dated 15 May 2019.


8 Payables

2019 2018 $ $

Trade payables 2,868,455 1,671,816 Other creditors and accruals 5,321,929 3,858,869 Payables 8,190,384 5,530,685

9 Other liabilities

2019 2018 $ $

Unexpended grants and government funding 5,364,737 3,207,937

10 Provisions

2019 2018 $ $

Current Leave provision 3,900,211 2,810,723 Make good provision 799,363 454,448 Other provisions 1,184,959 1,193,522 Total current provisions 5,884,533 4,458,693 Non-current Leave provision 1,734,922 872,310 Total non-current provisions 1,734,922 872,310 11 Borrowings

2019 2018 $ $

Bank Loan - secured 4,000,000 - Total borrowings 4,000,000 -

The Access Group International borrowing from Westpac is secured by: Mortgages provided by Access Community Services Limited for properties located at 92 Wembley Road,

Logan Central and 2 Carmody Street, Logan Central. Debt and Interest Guarantee and Indemnity and General Security over all existing and future assets and

undertakings provided by Access Community Services Limited and Access Community Enterprises Limited; General Security over all existing and future assets and undertakings provided by Access Group

International Limited; and General Security over all existing and future assets and undertakings provided by Settlement Services

International Limited.

Refer to Note 21 regarding refinancing of this loan subsequent to year end.


12 Funds 2019 2018 $ $

(a) Accumulated funds Accumulated funds at the beginning of the year 11,588,489 22,843,899 Transfer to reserves - (11,700,000) Net surplus 1,653,613 444,590 Accumulated funds 13,242,102 11,588,489

(b) Reserves

Reserves at the beginning of the year 11,700,000 - Transfer from accumulated funds to Reserve (refer Note 2.18) - 11,700,000 Revaluation of property, plant and equipment 391,023 - Reserves 12,091,023 11,700,000

13 Cash Flow Information Reconciliation of Result for the Year to Cash flows from Operating Activities

2019 2018 $ $

Cash flows from operating activities Net surplus for the year 1,653,613 444,590 Non-cash flows in operating surplus/(deficit): Depreciation and amortisation 2,312,729 2,934,494 Cost of subsidiaries integration 1,778,081 -

Movements in assets and liabilities

Change in receivables (4,369,208) 2,057,946

Change in inventories (1,785) 4,163

Change in other assets 112,065 (107,227)

Change in payables 2,659,699 745,074

Change in other liabilities 2,156,800 (5,748,589)

Change in provisions 2,288,452 1,361,200

Increase/(decrease) in receivables / payables on acquisition (1,160,019) -

Net cash from operating activities 7,430,427 1,691,651


14 Related party transactions The Group’s related parties include its key management personnel and related entities as described below.

14.1 Transactions with key management personnel Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity is considered key management personnel. Key management personnel are the Company’s Board members and senior executives of the Group. Key Management Personnel remuneration includes the following: 2019 2018 $ $ Total Key Management Personnel compensation 2,029,121 1,217,943

14.2 Board Fees The following persons were directors of Settlement Services International during the year: Elisabeth Shaw, Lucy Taksa, Antoinette Chow, Elfa Moraitakis, Yung Ngo, Sophie Ray, Deping Zheng, Claudia Perry-Beltrame (appointed: 1 August 2018, resigned: 15 February 2019). Remuneration or benefits received by members of governing body

The type and amount of remuneration or benefit received (or receivable) by members of the governing body (the Board) of Settlement Services International (other than reimbursement of reasonable out-of-pocket expenses) is listed below:

Name Position Board Fees 2019

Board Fees 2018

Elisabeth Shaw Director 38,325 38,325 Lucy Taksa Director 19,162 19,162 Luigi Bacchiella Former Director - 6,970 Antoinette Chow Director 19,162 19,162 Elfa Moraitakis Director 19,162 19,162 Yung Ngo Director 19,162 19,162 Sophie Ray Director 19,162 12,234 Deping Zheng Director 19,162 12,234 Clement Meru Former Director - 1,474 Claudia Perry-Beltrame Former Director 10,171 - Total 163,468 147,885


14.3 Settlement Services Program Subcontractor Fees Paid to Migrant Resource Centres Some directors of the Group are also directors of Migrant Resource Centres (MRCs). Settlement Services International (SSI) is the lead organisation in a consortium that delivers the Australian Government Settlement Services Program. SSI subcontracts to MRCs to deliver settlement grant activities under this program.

Member Migrant Resource Centres Related Director 2019 $

2018 $

Advance Diversity Services Antoinette Chow 784,117 788,180 Auburn Diversity Services Deping Zheng 1,175,980 1,275,725 Community Migrant Resource Centre None 1,799,996 1,810,061 CORE Community Services None 1,899,236 1,983,782 Illawarra Multicultural Services Inc. None 616,151 606,079 Liverpool Migrant Resource Centre None 1,388,634 1,488,178 Macarthur Diversity Service Inc. Claudia Perry-Beltrame 376,289 353,415 Metro Assist None 1,799,897 1,895,847 Northern Settlement Services None 935,598 993,059 Sydney Multicultural Community Services None 357,494 331,068 SydWest Multicultural Services Inc. Elfa Moraitakis 1,119,426 1,278,802 Total 12,252,818 12,804,196

14.4 Facilitation Fees Paid to Member Migrant Resource Centres Some directors of the Group are also directors of member Migrant Resource Centres (MRCs). Settlement Services International pays facilitation fees to MRCs for use of premises to deliver client services.


2018 $

Advance Diversity Services Antoinette Chow 40,896 37,395 Auburn Diversity Services Deping Zheng 93,528 55,928 Community Migrant Resource Centre None 18,728 35,334 Core Community Services None 238,150 230,741 Illawarra Multicultural Services None 31,000 51,137 Liverpool Migrant Resource Centre None 196,245 240,771 Macarthur Diversity Service Claudia Perry-Beltrame - - Metro Assist None 39,020 65,863 Northern Settlement Services None 109,087 36,455 Sydney Multicultural Community Services None - 36,239 SydWest Multicultural Services Elfa Moraitakis 164,380 192,615 Total 931,034 982,478


14.5 Amounts Received from Member Migrant Resource Centres

The amounts received relate to membership fees and / or tickets purchased for fundraising events during the year.


2018 $

Advance Diversity Services Antoinette Chow 100 100 Auburn Diversity Services Deping Zheng 100 190 Community Migrant Resource Centre None 100 100 Core Community Services None 100 2,373 Illawarra Multicultural Services None 5,258 100 Liverpool Migrant Resource Centre None 100 100 Macarthur Diversity Service Claudia Perry-Beltrame 100 100 Metro Assist None 8,209 3,495 Northern Settlement Services None 340 100 Sydney Multicultural Community Services None 100 100 SydWest Multicultural Services Elfa Moraitakis 2,373 100 Total 16,880 6,858

14.6 Other Transactions in relation to Member Migrant Resource Centres

Some directors of the Group are also directors of Migrant Resource Centres (MRCs). This includes all other payments by SSI to MRC's, including any other sub-contracting to MRCs to deliver programs.


2018 $

Advance Diversity Services Antoinette Chow 217,729 20,011 Auburn Diversity Services Deping Zheng 77,911 8,448 Community Migrant Resource Centre None 22,253 9,988 Core Community Services None 690,766 17,035 Illawarra Multicultural Services None - - Liverpool Migrant Resource Centre None 283,070 34,508 Macarthur Diversity Service Claudia Perry-Beltrame 175,897 11,908 Metro Assist None 593,726 302,771 Northern Settlement Services None 10,650 12,770 Sydney Multicultural Community Services None 33,849 39,875 SydWest Multicultural Services Elfa Moraitakis 134,354 40,474 Total 2,240,205 497,788


14.7 Other Related Party Transactions The following other transactions occurred with related parties:

Organisation Related Party 2019 $

2018 $

Amounts paid to: The Ethics Centre Elisabeth Shaw 7,500 7,500 Relationships Australia Elisabeth Shaw 4,390 2,470 Settlement Council of Australia Gail Kerr 1,136 - Migration Council of Australia Gail Kerr 511 - Amounts received from: Relationships Australia Elisabeth Shaw 52,164 10,871

Other related transactions: Payments of employee benefits for employees within the consolidated entity, and other benefits paid to persons who are family members of related parties of $163,819. 15 Commitments The Group’s future minimum operating lease payments are as follows:

Minimum Lease Payments Due Within 1 year 1 to 5 years After 5 years Total $ $ $ $

30 June 2019 3,264,059 6,965,322 - 10,229,381

Lease expense during the year amounted to $3,297,375 representing the minimum lease payments. The property and motor vehicle lease commitments are non-cancellable operating leases with lease terms of between one and five years. Increases in lease commitments may occur in line with CPI or market rent reviews in accordance with the agreements. The Group had no other commitments at the end of the reporting period.

16 Interests in Subsidiaries Information about Principal Subsidiaries

On 4 December 2018, Settlement Services International Limited became the sole member and controlling entity of Access Group International Limited and its subsidiaries, as listed below. The deficit in net assets of the Access entities on the date that these entities became part of the Settlement Services International Limited consolidated group was $1,778,081. This amount has been recognised in the Statement of Profit or Loss and Other Comprehensive Income in the current year.

The subsidiaries listed below are wholly controlled by Settlement Services International Limited.


Membership held within the Group

Name of Subsidiary Membership

Access Group International Limited Sole member: Settlement Services International Limited

Access Community Services Limited Sole member: Access Group International Limited

Access Community Enterprises Limited Sole member: Access Group International Limited

Multicultural Centre for Mental Health and WellBeing Limited Sole member: Access Community Services Limited

Brisbane Multicultural Arts Centre Limited Sole member: Access Community Services Limited

Each of the above entities are companies limited by guarantee, are charitable entities with constitutions, which each include clauses prohibiting distributions of income and property to members. 17 Parent Entity Financial Information Summary of Financial Information The individual Statement of Financial Position for the parent entity show the following aggregate amounts: 2019 2018 $ $ Assets Current Assets 39,616,438 33,721,954 Non-current Assets 3,502,885 3,636,160 Total Assets 43,119,323 37,358,114 Liabilities Current Liabilities 15,469,863 13,197,315 Non-current Liabilities 1,421,062 872,310 Total Liabilities 16,890,925 14,069,625 Net Assets 26,228,398 23,288,489

Funds

Accumulated funds 14,528,398 11,588,489 Reserves 11,700,000 11,700,000 Total Funds 26,228,398 23,288,489 Surplus for the year 2,939,908 444,590 Total comprehensive surplus for the year 2,939,908 444,590


18 Contingencies The Group has rental guarantees totalling $743,629 (2018: $676,633) at year-end for all leased premises in favour of the landlords. The controlling entity, Settlement Services International Limited, has provided a letter of support to Access Group International and its subsidiaries (which are each subsidiaries of this entity), as listed below, indicating its intention to provide financial support, as and when required, to enable each of the subsidiary entities to continue as going concerns, and meet their financial commitments, as and when they fall due. The financial support includes providing immediate loan funds to each and any of those entities as required, to enable them to each meet their going concern obligations.

A letter of financial support has also been provided by Access Community Services Limited to Access Group International Limited (both of which are subsidiaries of this entity).

The net financial position of each of the subsidiaries to which the letter of financial support has been provided is listed below. Refer also to Note 11 regarding the guarantees and securities provided by the controlling entity and other subsidiaries in support of borrowings of Access Group International Limited of $4,000,000.

Name of Subsidiary Net financial position

as at 30 June 2019 $

Access Group International Limited (4,104,387)

Access Community Services Limited 3,199,494

Access Community Enterprises Limited (160,582)

Multicultural Centre for Mental Health and WellBeing Limited 10,925

Brisbane Multicultural Arts Centre Limited 159,277


19 Charitable Fundraising Act 1991 Disclosures

2019

$ 2018

$

Gross aggregate income received from fundraising: Donations and gifts – monetary 109,790 138,522 Donations and gifts - non-monetary - 245,800 Corporate donations 96,000 800,000 Donations income (as per Note 3 (b)) 205,790 1,184,322 Event income 123,506 79,223 Sundry income - -

Total fundraising income 329,296 1,263,545 Direct expenditure associated with fundraising appeals 306,135 346,005

Application of funds for charitable purposes - refugee educational scholarships, Ignite small business start-ups and community engagement projects 23,161 127,733

Total fundraising expenditure 329,296 473,738

Net surplus from fundraising appeals - 789,807

Unspent funds from fundraising appeals 518,205 789,807 Any donations received where the use of those funds is restricted under the conditions of the contribution to specific purposes are applied for those specific purposes. Costs of fundraising include all direct fundraising costs in accordance with the Act. The costs also include costs for processing unsolicited donations and the planning and development of future fundraising activities. Any surplus arising from fundraising appeals is applied to the charitable purposes of the Company. The unspent corporate donations intended for specific purposes have been recognised in Note 3(b) as contributions to current year, in accordance with AASB1004 and no separate provisions are recognised for these amounts intended to be spent in future periods. 20 Economic dependency Federal and State government departments provide funding to the Group which enables it to provide its services. It is anticipated that significant funding will continue to be received to enable the Group to continue to provide services.


21 Events Occurring After the Reporting Date

On 19 September 2019, the $4,000,000 borrowing of the controlled entity, Access Group International Limited, from Westpac Banking Corporation (“Westpac”) was refinanced and repaid from a new borrowing undertaken by Access Community Services Limited of $4,000,000 from Commonwealth Bank Australia (“CBA”). The new borrowings are secured by mortgage against the properties at 92 Wembley Road, Logan Central and 2 Carmody Street, Logan Central, both of which are held by the controlled entity, Access Community Services Limited. The borrowings from CBA are also secured by an account security set-off against a cash deposit of Settlement Services International Limited, and general security interests over all current and future assets of the following group entities: Multicultural Centre for Mental Health and Wellbeing Limited, Brisbane Multicultural Arts Centre Limited and Access Group International Limited.

As a result of the refinancing of the $4,000,000 loan from Westpac to CBA referred to above, an intercompany loan has been established between Access Community Services Limited and Access Group International Limited of $4,000,000. The ability of Access Group International Limited (which was in a net deficiency position of $4,104,387 as at year end) to meet any debt repayment to Access Community Services Limited, is dependent on financial support from Settlement Services International Limited, as referred to in Note 18. As a further result of this refinancing, on 31 October 2019 this entity provided a letter of financial support to Access Group International Limited and its subsidiaries as referred to in Note 18.

Nil other matters.

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation.

www.grantthornton.com.au

Level 17, 383 Kent Street Sydney NSW 2000 Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 445 E [email protected] W www.grantthornton.com.au

Independent Auditor’s Report To the Members of Settlement Services International Limited

Report on the audit of the financial report

Opinion

We have audited the financial report of Settlement Services International (the “Registered Entity”) and its subsidiaries (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2019, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in funds and consolidated 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 Entities’ declaration.

In our opinion:

1. the financial report of Settlement Services International Limited has been prepared in accordance with the requirements of the Australian Charities and Not-for-profits Commission Act 2012 (“ACNC Act”), including:

a. giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial performance for the year then ended; and

b. complying with Australian Accounting Standards and Division 60 of the Australian Charities and Not-for-profits Commission Regulation 2013;

2. the financial statements of Settlement Services International Limited for the year ended 30 June 2019 show a true and fair view of the financial result of fundraising appeals for the year to which they relate;

3. the financial statements and associated records of Settlement Services International Limited have been properly kept during the year ended 30 June 2019 in accordance with the requirements of the Charitable Fundraising Act 1991 and the Charitable Fundraising Regulation 2015;

4. money received as a result of fundraising appeals conducted by Settlement Services International Limited during the year ended 30 June 2019 has been properly accounted for and applied in accordance with the requirements of the Charitable Fundraising Act 1991 and the Charitable Fundraising Regulation 2015; and

5. there are reasonable grounds to believe that Settlement Services International Limited will be able to pay its debts as and when they become due and payable.

emily.smith�

FreeText

32�

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 Registered Entity in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of the Responsible Entities for the financial report

The Responsible Entities of the Registered Entity are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards, the ACNC Act and the Charitable Fundraising Act 1991, and for such internal control as the Responsible Entities 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 Responsible Entities are responsible for assessing the Registered Entity’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 Responsible Entities either intend to liquidate the Registered Entity or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Registered Entity’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 the 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 Registered Entity’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Responsible Entities.

Conclude on the appropriateness of the Responsible Entities’ 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 Registered Entity’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 Registered Entity to cease to continue as a going concern.

emily.smith�

FreeText

33�

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.

Obtain sufficient appropriate evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision, and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance 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.

Grant Thornton Audit Pty Ltd Chartered Accountants

James Winter

Partner – Audit & Assurance

Sydney, 31 October 2019

emily.smith�

FreeText

34�

settlement services international limited and its controlled entities€¦ · settlement services...

Documents