Annual Financial Report 30 June 2014 - · PDF fileOperating and financial review ... Avanade...

Annual Financial Report 30 June 2014

The Northcott Society (A company limited by guarantee) and its controlled entity ABN 87 302 064 152

ContentsDirectors’ report ........................................................................................................................................................................... 21. Directors ........................................................................................................................................................................................................... 22. Company secretary ....................................................................................................................................................................................... 33. Director’s meetings ...................................................................................................................................................................................... 44. Principal activities, objectives and strategies ................................................................................................................................... 45. Operatingandfinancialreview ............................................................................................................................................................... 66. Events subsequent to reporting date ................................................................................................................................................... 67. Likely developments .................................................................................................................................................................................... 68. Environmental regulation ......................................................................................................................................................................... 69. Indemnificationandinsuranceofofficers ......................................................................................................................................... 610. Members guarantee ..................................................................................................................................................................................... 711. Lead auditor’s independence declaration .......................................................................................................................................... 7

Statements of profit or loss and other comprehensive income .................................................................................... 8

Statements of changes in equity .............................................................................................................................................. 9

Statements of financial position ............................................................................................................................................10

Statements of cash flows ..........................................................................................................................................................11

Notes to the consolidated financial statements ................................................................................................................121. Reporting entity ...........................................................................................................................................................................................122. Changes in accounting policies .............................................................................................................................................................123. Significantaccountingpolicies ..............................................................................................................................................................124. Determinationoffairvalues ...................................................................................................................................................................195. Expenses .........................................................................................................................................................................................................206. Netfinancingincome .................................................................................................................................................................................207. Cash and cash equivalents .......................................................................................................................................................................208. Trade and other receivables ...................................................................................................................................................................219. Inventories .....................................................................................................................................................................................................2110. Otherfinancialassets ................................................................................................................................................................................2111. Other assets ...................................................................................................................................................................................................2112. Property, plant and equipment .............................................................................................................................................................2213. Intangible assets ..........................................................................................................................................................................................2314. Trade and other payables ........................................................................................................................................................................2315. Employeebenefits ......................................................................................................................................................................................2416. Other liabilities.............................................................................................................................................................................................2417. Capital and reserves ...................................................................................................................................................................................2418. Operating leases ..........................................................................................................................................................................................2519. Consolidated entities .................................................................................................................................................................................2520. Key management personnel disclosures ..........................................................................................................................................2621. Segment reporting ......................................................................................................................................................................................2622. Subsequent events ......................................................................................................................................................................................2623. Fundraisingappealsconductedduringthefinancialyear ........................................................................................................27

Declaration by Chief Executive Officer in respect of fundraising appeals ...............................................................28

Directors’ declaration ...............................................................................................................................................................29

Independent auditor’s report ................................................................................................................................................30

Lead auditor’s independence declaration ..........................................................................................................................32

The Northcott Society and its controlled entity Directors’ report For the year ended 30 June 2014 The directors present their report together with the financial report of The Northcott Society (“the Society”) and of the Group, being The Society and its controlled entity, for the year ended 30 June 2014 and the auditor’s report thereon.

1 Directors

The directors of the Society at any time during or since the end of the financial year are:

Name and qualifications Experience, special responsibilities and other directorships Mr. Michael Briggs B Comm, ACA, ACIS, MBA Chairman

Appointed 27 March 2003 Chairman, The Northcott Society Member, Finance and Properties Committee Member, Nomination Committee Business Advisor and Investor Chairman, Antec Engineering Pty Limited Director, SCECGS Redlands Limited Director Acrow Formwork and Scaffolding Pty Limited

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

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

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

Appointed 7 January 2013 Member, Finance and Properties Committee Global Lead, Development Effectiveness - The Fred Hollows Foundation Director, Three Rivers Consulting Director, South Eastern Sydney Medicare Local Fellow, Institute of Actuaries of Australia Member of the International Health Economics Association

Mr. Richard Blaiklock B Comm, MBA

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

Mr. Nick Cardno MA (Hons) CA MAICD

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

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

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

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The Northcott Society and its controlled entity Directors’ report (continued) For the year ended 30 June 2014

1 Directors (continued) Name and qualifications Experience, special responsibilities and other directorships Mr. Jeyan Jeevaratnam B Eng (Hons 1), MBA, M Eng Sc, MAICD

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

Mr. Andrew Mansour B Ec LLB (Hons)

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

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

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

Dr. Rob Silberstein LLB (Hons 1) MHL MMB BS MIP GDipLegPrac, FIPTA

Appointed 1 April 2009 Founding Principal, Silberstein & AssociatesChairman, Mobility 2000 (Australia) Limited

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

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

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

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

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

2 Company secretary

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

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3 Director’s meetings

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

Director Board Meetings Finance and Properties Committee Meetings

Nomination Committee Meetings

Attended Held* Attended Held* Attended Held* Mr R Blaiklock 6 7 1 1 2 2 Mr M Briggs 7 7 6 6 2 2 Dr C Janssen 7 7 6 6 - - Mr J Surian 5 7 5 6 - - Mr A Abrahams 7 7 1 1 2 2 Ms K Stubbs 6 7 5 6 1 2 Mr A Mansour 6 7 - - - - Dr R Silberstein 6 7 - - - - Ms K Armstrong 6 7 5 5 - - Mr N Cardno 7 7 6 6 - - Mr J Jeevaratnam 5 7 - - - - Ms D Richards 6 7 - - - -

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

4 Principal activities, objectives and strategies

The principal activities of the consolidated entity during the course of the financial year were the provision of individual and family support, respite, recreation and leisure programs, day programs, accommodation, employment, equipment and technology, specialist services and therapy services to people with disabilities in New South Wales.

There were no significant changes in the nature of the activities of the Group during the year.

The Society's long term objective:

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

In order to ensure the long term objectives are being met, the Society will:

• Be innovative in our service delivery, to ensure service provision best meets the needs of our clients. • Develop a recognised and respected brand to attract and retain clients and supporters. • Strive to become a provider of choice for both current and prospective clients. • Grow our services in areas of identified need, particularly regional NSW, the ACT and within indigenous

communities. • Develop and maintain a skilled workforce to meet the needs of clients as we expand. • Continue to focus on improving the quality and consistency of our services and measurement of client outcomes. • Develop mutual and long-term partnerships with our stakeholders, to ensure our clients have access to the best

level of service delivery. • Develop our knowledge and expertise in person centred planning, which involves identifying what is important

to our clients and acting upon it, as well as piloting some person centred services in new areas. • Develop a number of mechanisms to encourage research development, including a targeted and holistic

program, which translates research into practice. This ensures the services we offer our clients are indicative of best practice and are validated and measured.

• Develop a client consultation strategy, so that clients can be more meaningfully involved in planning services and evaluating what we do.

• Reshape services to ensure viability under the National Disability Insurance Scheme (NDIS).

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4 Principal activities, objectives and strategies (continued)

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

• Evaluate and improve existing services to drive and lift social inclusion • Explore and deliver new service opportunities • Explore and develop innovative services • Strengthen our regional footprint

2. Lead and influence the sector and public to change for the benefit of clients and the community

• Well positioned and connected Northcott • A credible research voice • Profile and presence in the sector

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

• A workforce enabled to deliver person centred approaches • Invest in our workforce and workplace to enhance delivery • A culture more aligned with our values

4. Build a sustainable organisation fit for the future

• A future focussed, external looking organisation• Broaden and grow our revenue base• Systems to sustain our capacity and growth• Improve the evaluation of organisational performance• Improved social responsibility effort

Company performance is constantly measured against the following KPI’s: • A range of financial indicators• Investment returns compared to benchmarks • Client activity performance including client numbers, client outputs and unit costs • Staffing measures including the number of staff, full time equivalents, recruitment and retention • Work Health and Safety measures including the number and type of incidents and lost time injuries • Fundraising performance and cost of fundraising ratio • Client Satisfaction measures including compliments and complaints • Government income to cover direct cost and contribute appropriately to overheads • The ratio of successful tenders over tenders applied for Northcott also undertakes regular surveys of Client and Staff satisfaction.

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5 Operating and financial review

Review and result of operations

The operations for the year ended 30 June 2014 resulted in a consolidated net surplus of $1,659,793 (2013: $3,243,194).

Income from government funding was greater than that achieved last year, primarily due to an expansion in Ageing, Disability and Home Care (ADHC) programs. Capital grants decreased due to a large capital grant being brought to account in 2013. Investment returns on managed funds generated a positive return. Expenditure on client programmes was significantly higher than last year mainly due to an increase in the expenses associated with setting up and running the new programs. Expenditure in all other areas was in accordance with expectations and includes some costs associated with transitioning to changing funding arrangements under the National Disability Insurance Scheme (NDIS). Significant changes in the state of affairs

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

6 Events subsequent to reporting date

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

7 Likely developments

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

8 Environmental regulation

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

9 Indemnification and insurance of officers

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

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

whatever their outcome; and • other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty or

improper use of information or position to gain a personal advantage.

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

10 Members Guarantee

The Northcott Society is incorporated in New South Wales as a company limited by guarantee. In the event of the Company being wound up, each member undertakes to contribute a maximum of $1 for payment of the Company’s liabilities. At 30 June 2014 there were 110 members and the amount of capital that could be called up in the event of the Company being wound up is $110.

11 Lead auditor’s independence declaration

The Lead auditor’s independence declaration is set out on page 32 and forms part of the directors’ report for financial year ended 30 June 2014.

This report is made with a resolution of the directors:

__________________________ M. Briggs Director

Dated at Sydney this 11 September 2014

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The Northcott Society and its controlled entity Statements of profit or loss and other comprehensive income For the year ended 30 June 2014 In AUD Consolidated The Society

Note 2014 2013 2014 2013 Revenue from government funding 36,290,118 30,812,324 36,290,118 30,812,324 Revenue from capital grant income 426,910 3,087,363 426,910 3,087,363 Revenue from estates and bequests 340,785 796,194 340,785 796,194 Revenue from sale of goods 1,114,688 1,236,193 1,114,688 1,236,193 Revenue from fundraising and donations

- Monetary 1,904,944 1,481,738 1,879,132 1,461,388 - Non - monetary 147,973 411,307 147,973 411,307

Revenue from rental and accommodation 724,596 660,577 724,596 660,577 Revenue from royalties 159,078 83,185 159,078 83,185 Profit from sale of non-current assets 191,184 30,348 191,184 30,348 Other income 1,019,447 938,614 1,068,439 960,571 Total revenue 42,319,723 39,537,843 42,342,903 39,539,450 Cost of sales (723,202) (900,447) (723,202) (900,447) Client programme expenses (30,906,843) (27,781,643) (30,906,843) (27,781,643) Fundraising expenses (900,611) (915,716) (900,611) (915,716) Corporate support expenses (9,843,817) (8,444,781) (9,715,735) (8,412,457) (Deficit) / Surplus before financing income (54,750) 1,495,256 96,512 1,529,187 Financial income 6 1,714,543 1,747,938 1,505,375 1,540,957 Net financing income 1,714,543 1,747,938 1,505,375 1,540,957 Surplus for the period 1,659,793 3,243,194 1,601,887 3,070,144

Other comprehensive income Defined benefit plan actuarial profit / (losses) 23,106 (25,493) 23,106 (25,493) Total comprehensive income for the year 1,682,899 3,217,701 1,624,993 3,044,651 The statements of profit or loss and other comprehensive income are to be read in conjunction with the notes to the financial statements set out on pages 12 to 27.

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The Northcott Society and its controlled entity Statements of profit or loss and other comprehensive income For the year ended 30 June 2014 In AUD Consolidated The Society

Note 2014 2013 2014 2013 Revenue from government funding 36,290,118 30,812,324 36,290,118 30,812,324 Revenue from capital grant income 426,910 3,087,363 426,910 3,087,363 Revenue from estates and bequests 340,785 796,194 340,785 796,194 Revenue from sale of goods 1,114,688 1,236,193 1,114,688 1,236,193 Revenue from fundraising and donations

- Monetary 1,904,944 1,481,738 1,879,132 1,461,388 - Non - monetary 147,973 411,307 147,973 411,307

Revenue from rental and accommodation 724,596 660,577 724,596 660,577 Revenue from royalties 159,078 83,185 159,078 83,185 Profit from sale of non-current assets 191,184 30,348 191,184 30,348 Other income 1,019,447 938,614 1,068,439 960,571 Total revenue 42,319,723 39,537,843 42,342,903 39,539,450 Cost of sales (723,202) (900,447) (723,202) (900,447) Client programme expenses (30,906,843) (27,781,643) (30,906,843) (27,781,643) Fundraising expenses (900,611) (915,716) (900,611) (915,716) Corporate support expenses (9,843,817) (8,444,781) (9,715,735) (8,412,457) (Deficit) / Surplus before financing income (54,750) 1,495,256 96,512 1,529,187 Financial income 6 1,714,543 1,747,938 1,505,375 1,540,957 Net financing income 1,714,543 1,747,938 1,505,375 1,540,957 Surplus for the period 1,659,793 3,243,194 1,601,887 3,070,144

Other comprehensive income Defined benefit plan actuarial profit / (losses) 23,106 (25,493) 23,106 (25,493) Total comprehensive income for the year 1,682,899 3,217,701 1,624,993 3,044,651 The statements of profit or loss and other comprehensive income are to be read in conjunction with the notes to the financial statements set out on pages 12 to 27.

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The Northcott Society and its controlled entity Statements of changes in equity For the year ended 30 June 2014

Consolidated Reserves

Accumulated funds Total equity

In AUD Balance at 1 July 2012 26,076,222 4,147,433 30,223,655 Total comprehensive income for the period Surplus for the period - 3,243,194 3,243,194 Actuarial gains / (losses) on defined benefit superannuation plans - (25,493) (25,493) Transfer to accumulated funds (26,076,222) 26,076,222 - Balance at 30 June 2013 - 33,441,356 33,441,356

Balance at 1 July 2013 - 33,441,356 33,441,356 Total comprehensive income for the period Surplus for the period - 1,659,793 1,659,793 Actuarial gains / (losses) on defined benefit superannuation plans - 23,106 23,106 Balance at 30 June 2014 - 35,124,255 35,124,255

The Society In AUD Balance at 1 July 2012 26,076,222 1,873,103 27,949,325 Total comprehensive income for the period Surplus for the period - 3,070,144 3,070,144 Actuarial gains / (losses) on defined benefit superannuation plans - (25,493) (25,493) Transfer to accumulated funds (26,076,222) 26,076,222 - Balance at 30 June 2013 - 30,993,976 30,993,976

Balance at 1 July 2013 - 30,993,976 30,993,976 Total comprehensive income for the period Surplus for the period - 1,601,887 1,601,887 Actuarial gains / (losses) on defined benefit superannuation plans - 23,106 23,106 Balance at 30 June 2014 - 32,618,969 32,618,969

The statements of changes in equity are to be read in conjunction with the notes to the financial statements set out on pages 12 to 27.

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The Northcott Society and its controlled entity

Statements of financial position As at 30 June 2014 In AUD Consolidated The Society

Note 2014 2013 2014 2013

Assets Cash and cash equivalents 7 8,903,343 6,870,372 8,610,038 5,144,196 Trade and other receivables 8 833,913 1,647,990 827,089 1,657,081 Inventories 9 293,934 322,801 293,934 322,801 Other financial assets 10 15,673,479 13,043,645 13,445,822 12,296,945 Other current assets 11 373,791 331,841 373,791 331,841 Total current assets

26,078,460 22,216,649 23,550,674 19,752,864

Employee benefits 15 231,285 227,644 231,285 227,644 Intangible assets 13 4,883,576 4,843,623 4,883,576 4,843,623 Property, plant and equipment 12 19,795,510 20,304,567 19,795,510 20,304,567 Total non-current assets

24,910,371 25,375,834 24,910,371 25,375,834

Total assets

50,988,831 47,592,483 48,461,045 45,128,698 Liabilities

Trade and other payables 14 3,083,650 2,450,671 3,061,150 2,434,266 Employee benefits 15 2,970,804 2,870,114 2,970,804 2,870,114 Other 16 9,567,863 8,588,758 9,567,863 8,588,758 Total current liabilities

15,622,317 13,909,543 15,599,817 13,893,138

Employee benefits 15 242,259 241,584 242,259 241,584 Total non-current liabilities

242,259 241,584 242,259 241,584

Total liabilities

15,864,576 14,151,127 15,842,076 14,134,722 Net assets

35,124,255 33,441,356 32,618,969 30,993,976

Accumulated funds

General accumulated funds 17 35,124,255 33,441,356 32,618,969 30,993,976

Total accumulated funds

35,124,255 33,441,356 32,618,969 30,993,976

The statements of financial position are to be read in conjunction with the notes to the financial statements set out on pages 12 to 27.

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The Northcott Society and its controlled entity Statements of cash flows For the year ended 30 June 2014 In AUD Consolidated The Society

Note 2014 2013 2014 2013

Cash flows from operating activities

Cash receipts from customers, donations and grants

46,739,783 42,728,405 46,778,878 42,265,990

Cash paid to suppliers and employees

(43,421,359) (38,828,016) (43,299,373) (38,787,755) Cash generated from/(used in) operations

3,318,425 3,900,389 3,479,505 3,478,235

Managed fund distribution received

1,030,763 1,300,518 994,103 1,300,518 Interest received

205,352 167,852 200,123 107,115

Net cash from operating activities

4,554,539 5,368,759 4,673,731 4,885,868

Cash flows from investing activities

Proceeds from sale of non-current assets

2,225,738 163,360 2,225,738 163,360

Proceeds from sale / (acquisition) of managed fund investments held for trading

(2,151,408) 3,951,611 (837,729) 3,447,260

Acquisition of property, plant and equipment and intangible assets

(2,595,898) (5,504,527) (2,595,898) (5,504,527)

Net cash from/(used in) investing activities (2,521,568) (1,389,556) (1,207,889) (1,893,907)

Net increase/(decrease) in cash and cash equivalents

2,032,971 3,979,203 3,465,842 2,991,961

Cash and cash equivalents at 1 July

6,870,372 2,891,169 5,144,196 2,152,235

Cash and cash equivalents at 30 June 7 8,903,343 6,870,372 8,610,038 5,144,196

The statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 12 to 27.

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The Northcott Society and its controlled entity Notes to the consolidated financial statements For the year ended 30 June 2014

1. Reporting entity

The Northcott Society (the ‘Society’ or ‘Company’) is a not-for-profit company limited by guarantee and domiciled in Australia. The consolidated financial report of the Society for the financial year ended 30 June 2014 comprises the Society and its controlled entity (together referred to as the ‘Group’).

2. Changes in Accounting Policies

The Company has adopted AASB119 Employee Benefits (2011) with a date of initial application of 1 July 2013.

As a result of AASB119 (2011), the Company has changed its accounting policy with respect to the definition of short-term employee benefits. The amended AASB119 (2011) defines the short-term benefits as benefits that are expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. It was previously defined as those due to be settled within 12 months after the end of the period in which employees render the related service. This change may result in benefits previously classified as short-term being treated as other long-term employee benefits and measured on a discounted basis.

The Company assessed its short-term employee benefits on adoption of the revised standard and noted it to have no impact to the Company's financial statements.

3. Significant accounting policies

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

Certain Comparative amounts have been reclassified to conform with current year’s presentation.

(a) Statement of compliance

The financial report is a tier 2 general purpose financial report which has been prepared in accordance with Australian Accounting Standards – Reduced Disclosure Requirements (AASBs) (including Australian Accounting Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Australian Charities and Not-For-Profits Commission Act 2012.

The Company has elected to adopt the Australian Accounting Standards – Reduced Disclosure Requirements (established by AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Standards arising from Reduced Disclosure Requirements).

The statements were approved by the board of directors on the 11 September 2014.

(b) Basis of Preparation

(i) Basis of measurement

The financial report is presented in Australian dollars.

The financial report is prepared on the historical cost basis except for financial instruments classified as held for trading which are stated at their fair value.

(ii) Estimates and judgements

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

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

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The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued) For the year ended 30 June 2014

3. Significant accounting policies (continued) (c) Basis of consolidation

(i) Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.

(ii) Transactions eliminated on consolidation Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.

(d) Financial Instruments

(i) Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below.

Cash and cash equivalents comprise cash balances and call deposits.

Where payment terms for disposed assets are deferred for more than twelve months, the receivable is discounted to its present value. The unwinding of the discount is recognised as interest income.

Financial assets at fair value through profit or loss An instrument is classified as at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Upon initial recognition, attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.

Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

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3. Significant accounting policies (continued)

(e) Property, plant and equipment

(i) Owned assets Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation (see below) and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Impairment of assets is discussed in Note 3(h). Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

(ii) Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Other leases are classified as operating leases. Lease payments are accounted for as described in accounting policy in Note 3(m).

(iii) Subsequent costs

The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.

(iv) Depreciation

With the exception of freehold land, depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated.

Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the entity will obtain ownership by the end of the lease term.

The estimated useful lives in the current and comparative periods are as follows:

• Buildings 40 years

• Leasehold improvements 3 years

• Plant and equipment 4 – 10 years

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

(f) Intangible assets (i) Internally generated Intangible Assets

The Company has developed a new website which it anticipates will drive additional revenue streams. Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding, is recognised in profit or loss as incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the company intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use, and capitalised borrowing costs.

Other development expenditure is recognised in profit or loss as incurred. Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.

14 14



(f) Intangible assets (continued) (i ) Internally generated Intangible Assets (continued)

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

Intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives, from the date that they are available for use.

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

(ii) Acquired Intangible Assets Intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

Intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives, from the date that they are available for use.

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

(g) Inventories

Inventories of raw material, parts, supplies and work in progress expended and assembled by Northcott are valued using the weighted average cost method and are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

Cost includes direct materials, direct labour and other direct costs necessary to bring inventories to their present location and condition.

(h) Impairment (i) Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in profit or loss.

15

15



(h) Impairment (continued) (ii) Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. As the Group is a not-for-profit organisation, value in use is determined as being the asset’s depreciated replacement cost.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(i) Employee benefits (i) Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as a personnel expense in profit or loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(ii) Defined benefit plans A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:

• service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); • net interest expense or income; and • remeasurement.

The Group presents the first two components of defined benefit costs in profit or loss in the line item ‘Client programme expenses’. Curtailment gains and losses are accounted for as past service costs. The retirement benefit obligation recognised in the consolidated statement of financial position represents the actual deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

16

16



(i) Employee benefits (continued) (iii) Other long term employee benefits

The Group’s net obligation in respect of long-term employee benefits other than defined benefit plans is the amount of future benefit that employees have earned in return for their service in the current and prior periods plus related on-costs.

(iv) Short term benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably.

Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Liabilities recognised in respect of long term employee benefits are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.

(v) Termination benefits

A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.

(j) Provisions

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

(k) Revenue

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) payable to the taxation authority.

(i) Sale of goods

Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the reporting date.

(ii) Goods sold and services rendered

The stage of completion is assessed by reference to estimates of work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, the costs incurred or to be incurred cannot be measured reliably, there is a risk of return of goods or there is continuing management involvement with the goods.

17

17



(k) Revenue (continued)

(iii) Rental and accommodation

Revenue from rental and accommodation is recognised in the income statement on a straight line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income.

(iv) Government funding Government funding comprises grants for ongoing funding and specific purposes. These are recognised as income in the income statement in the period to which the funding relates to the extent that expenditure has been incurred in accordance with the terms and conditions attaching to individual government grants.

Where funding in a period exceeds related expenditure, unspent amounts are either:

• Deferred and recognised as unearned income in the Statement of Financial Position if they are repayable to related government bodies under the terms and conditions of the funding;

• Deferred and recognised as unearned income in the Statement of Financial Position if amounts are not repayable but related expenditure has not yet been incurred in accordance with the terms and conditions of the funding; or

• Recognised as income if the amounts are not repayable and no obligation exists to incur expenditure in accordance with specified terms and conditions.

Amounts deferred are presented within “Current liabilities – Other”.

Grants received on the condition that specified services are delivered, or conditions are fulfilled, are considered reciprocal. Such grants are initially recognised as a liability and revenue is recognised as services are performed or conditions fulfilled. Revenue from non-reciprocal grants is recognised when the company obtains control of the funds.

(v) Disposal of non-current assets

The net gain on disposal of non-current assets is recognised as revenue at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed.

The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal (including incidental costs).

(vi) Donations

Donations are recognised as they are received or, where special terms and conditions are attached to these, in accordance with those terms and conditions.

(vii) Contribution of assets

Contribution of assets and contributions to assist in the acquisition of assets, being non-reciprocal transfers, are recognised as revenue at the fair value of the asset received when the Group gains control of the contribution.

(viii) Estates and bequests

Estates and bequests received are recognised as income by the Group in accordance with the terms and conditions of the bequests. Where no specific terms and conditions exist, these are recognised as income as follows:

• Cash distributions from estates at the time of receipt; and • Shares, real property and other securities at the estimated market value when the risks and benefits pass to

the Society.

(ix) Managed fund income distributions

Managed fund income distributions are recognised in the period in which they are receivable.

18 18



(l) Finance income and expense

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

Finance expenses changes in the fair value of financial assets at fair value through profit or loss, and impairment losses recognised on financial assets.

(m) Expenses (i) Operating lease payments

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

(n) Income tax

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

(o) Segment reporting

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

(p) Goods and services tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

4. Determination of fair values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(i) Investment in equity securities

The fair value of financial instruments classified as held for trading is their quoted bid price at the reporting date.

19 19


5. Expenses

In AUD Consolidated The Society 2014 2013 2014 2013

Depreciation 1,820,448 1,925,910 1,820,448 1,925,910 Impairment loss (reversal) on trade receivables - 4,485 - 4,485 Operating lease rental expense 694,613 666,587 694,613 666,587 Personnel expenses Wages and salaries 23,719,429 21,380,241 23,719,429 21,380,241 Increase / (Decrease) in asset for defined benefit superannuation plans

19,465 (36,295) 19,465 (36,295)

Contributions to defined contribution superannuation plans

2,083,021 1,860,321 2,083,021 1,860,321

Increase in liability for annual leave 94,268 182,294 94,268 182,294 Increase in liability for long service leave 5,490 187,003 5,490 187,003 25,921,673 23,573,564 25,921,673 23,573,564

6. Net financing income

In AUD Interest income – other parties 205,352 167,852 200,123 107,115 Managed fund income distribution 1,030,763 1,300,518 994,103 1,300,518 Gain from managed fund investments 478,428 279,568 311,149 133,324 Financial income 1,714,543 1,747,938 1,505,375 1,540,957 Net financing income 1,714,543 1,747,938 1,505,375 1,540,957

7. Cash and cash equivalents

In AUD Current Cash on hand 18,770 17,970 18,770 17,970 Cash at bank 8,884,573 6,852,402 8,591,268 5,126,226 Cash and cash equivalents in the statements of cash flows

8,903,343 6,870,372 8,610,038 5,144,196

20 20


8. Trade and other receivables

In AUD Consolidated The Society Current 2014 2013 2014 2013

Trade receivables 499,660 657,446 502,613 667,254 Less: Impairment losses (13,981) (13,981) (13,981) (13,981) 485,679 643,465 488,632 653,273 Other receivables 348,234 1,004,525 338,457 1,003,808 833,913 1,647,990 827,089 1,657,081 9. Inventories

In AUD Raw materials, supplies and parts – at cost 184,889 189,979 184,889 189,979 Less: Provision for inventory obsolescence (16,730) (17,239) (16,730) (17,239) Work in progress 125,775 150,061 125,775 150,061 293,934 322,801 293,934 322,801

10. Other financial assets

In AUD Current Financial assets designated at fair value through profit or loss 15,673,479 13,043,645 13,445,822 12,296,945 The financial assets designated at fair value through profit or loss are equity securities that otherwise would have been classified as available for sale. 11. Other assets

In AUD Current Prepayments 373,791 331,841 373,791 331,841

21 21

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22

22

The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued) For the year ended 30 June 2014 13. Intangible assets

In AUD Consolidated The Society

Building Projects

Internally Generated

Intangible Assets

Total

Building Projects

Internally Generated

Intangible Assets

Total

Cost Balance at 1 July 2012 1,825,260 - 1,825,260 1,825,260 - 1,825,260 Acquisitions 3,090,981 - 3,090,981 3,090,981 - 3,090,981 Balance at 30 June 2013 4,916,241 - 4,916,241 4,916,241 - 4,916,241 Balance at 1 July 2013 4,916,241 - 4,916,241 4,916,241 - 4,916,241 Acquisitions 67,107 132,283 199,390 67,107 132,283 199,390 Balance at 30 June 2014 4,983,348 132,283 5,115,631 4,983,348 132,283 5,115,631

Amortisation Balance at 1 July 2012 5,794 - 5,794 5,794 - 5,794 Amortisation for the year 66,824 - 66,824 66,824 - 66,824 Balance at 30 June 2013 72,618 - 72,618 72,618 - 72,618 Balance at 1 July 2013 72,618 - 72,618 72,618 - 72,618 Amortisation for the year 124,465 34,972 159,437 124,465 34,972 159,437 Balance at 30 June 2014 197,083 34,972 232,055 197,083 34,972 232,055

Carrying amounts At 1 July 2012 1,819,466 - 1,819,466 1,819,466 - 1,819,466 At 30 June 2013 4,843,623 - 4,843,623 4,843,623 - 4,843,623 At 1 July 2013 4,843,623 - 4,843,623 4,843,623 - 4,843,623 At 30 June 2014 4,786,265 97,311 4,883,576 4,786,265 97,311 4,883,576 The company has completed two building projects, one at Wagga Wagga and another at Mount Hutton in previous years, with minor additions for these building projects during the year. The building projects are to be utilised for disability housing. The company was awarded grants from the NSW government in the total amount of $4,493,900 to enable construction. Under the agreement, the company has a right to continued use of the properties for their intended purpose until such time as the company believes it is unable to continue to provide those services. The terms of the agreement establish that at such time, when either the property is sold or no longer used for its intended purpose, the government has a caveat that provides a 100% equitable interest. Accordingly the government has the right to take title of the land and the proceeds associated with the sale at this time. The total amount of $4,493,900 has been recognised as capital grants income in previous years and the cost of the project has been recognised as an intangible asset in previous years ($4,916,241), with minor additions of $67,107 during the year. 14. Trade and other payables

In AUD Consolidated The Society

Current 2014 2013 2014 2013

Trade payables 1,572,009 1,135,645 1,572,009 1,135,645 Other Payables 1,511,641 1,315,026 1,489,141 1,298,621 3,083,650 2,450,671 3,061,150 2,434,266

23 23

The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued) For the year ended 30 June 2014 15. Employee benefits

In AUD Consolidated The Society Current 2014 2013 2014 2013 Other wages 86,374 84,767 86,374 84,767 Liability for long service leave 1,015,752 1,010,937 1,015,752 1,010,937 Liability for annual leave 1,868,677 1,774,410 1,868,677 1,774,410 Total liability for employee benefits 2,970,804 2,870,114 2,970,804 2,870,114 Non-current Liability for long-service leave 242,259 241,584 242,259 241,584 Total liability for employee benefits 242,259 241,584 242,259 241,584 Recognised asset for defined benefit obligations (231,285) (227,644) (231,285) (227,644) 16. Other liabilities

In AUD Current Unearned income – government grants 9,020,123 8,176,793 9,020,123 8,176,793 Unearned income – other sources 547,740 411,965 547,740 411,965 9,567,863 8,588,758 9,567,863 8,588,758

17. Capital and reserves

Reconciliation of movement in capital and reserves

In AUD Consolidated

General Accumulated

funds

Total equity

Balance at 1 July 2013 33,441,356 33,441,356 Total recognised income and expense 1,682,899 1,682,899 Balance at 30 June 2014 35,124,255 35,124,255 The Society

General Accumulated

funds

Total equity

Balance at 1 July 2013 30,993,976 30,993,976 Total recognised income and expense 1,624,993 1,624,993 Balance at 30 June 2014 32,618,969 32,618,969

24 24

The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued) For the year ended 30 June 2014 18. Operating leases

Leases as lessee Non-cancellable operating lease rentals are payable as follows: Consolidated The Society In AUD 2014 2013 2014 2013 Less than one year 634,830 479,935 634,830 479,935 Between one and five years 652,172 465,679 652,172 465,679 1,287,002 945,614 1,287,002 945,614 The Group leases property under non-cancellable operating leases expiring from one to five years. Leases generally provide the Group with a right of renewal at which time all terms are renegotiated. During the financial year ended 30 June 2014, $694,613 was recognised as an expense in the income statement in respect of operating leases (2013: $666,587). Leases as lessor The Group leases out part of its property under an operating lease. The future minimum lease payments under non-cancellable leases are as follows: In AUD Less than one year 233,236 276,994 233,236 276,994 Between one and five years - 279,477 - 279,477 More than five years - - - - 233,236 556,471 233,236 556,471 During the financial year ended 30 June 2014, $258,381 was recognised as rental income in the income statement (2013: $280,974). 19. Consolidated entities

Ownership interest 2014 2013 Parent entity The Northcott Society

Subsidiary Spinecare Foundation 100% 100%

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The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued) For the year ended 30 June 2014 20. Key management personnel disclosures

Transactions with key management personnel In addition to their salaries, the Group also contributes to post-employment defined contribution funds on behalf of key management personnel. Key management personnel compensation The key management personnel compensation includes the following expenses: Consolidated The Society

In AUD 2014 2013 2014 2013 Total key management personnel compensation 1,460,740 1,220,474 1,460,740 1,220,474 Other related party transactions From time to time directors of Northcott, or their director related entities, may purchase from or supply goods and services to Northcott. These dealings are on the same terms and conditions as those entered into by other Northcott employees, customers and suppliers. During the year there were no transactions with directors of Northcott or their director related entities.

21. Segment reporting

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

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

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The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued) For the year ended 30 June 2014 23. Fundraising appeals conducted during the financial year

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

Consolidated The Society 2014 2013 2014 2013

(i) Results of fundraising appeals In AUD Gross proceeds from fundraising 2,052,916 1,893,045 2,027,105 1,872,695 Less: Direct costs of fundraising appeals (900,611) (915,716) (900,611) (915,716) Net surplus obtained from fundraising appeals 1,152,305 977,329 1,126,494 956,979

(ii) Application of net surplus obtained from fundraising appeals

In AUD Distributions (expenditure on direct services) 30,906,843 27,781,643 30,906,843 27,781,643 Recurrent administration expenses 9,843,817 8,444,781 9,715,735 8,412,457 40,750,660 36,226,424 40,622,578 36,194,100

(iii) Application of net surplus obtained from fundraising appeals

The shortfall between the net surplus available from fundraising appeals and total expenditure was provided from the following sources:

In AUD Government grants 36,717,028 33,899,687 36,717,028 33,899,687 Financial income 1,714,543 1,747,938 1,505,375 1,540,957 Gain from sale of goods 391,487 335,746 391,487 335,746 Other income 2,435,089 2,508,916 2,484,081 2,530,873 Transfer from/(to) general accumulated funds (1,659,793) (3,243,193) (1,601,887) (3,070,143) 39,598,354 35,249,095 39,496,084 35,237,121

Consolidated The Society 2014 2013 2014 2013

$ % $ % $ % $ % (iv) Comparisons of certain monetary

figures and percentages Total cost of fundraising / 900,611 44 915,716 48 900,611 44 915,716 49 Gross income from fundraising 2,052,916 1,893,045 2,027,105 1,872,695 Net surplus from fundraising / 1,152,305 56 977,329 52 1,126,494 56 956,979 51 Gross income from fundraising 2,052,916 1,893,045 2,027,105 1,872,695 Total cost of services / 30,906,843 73 27,781,643 73 30,906,843 73 27,781,643 73 Total expenditure 42,374,472 38,042,587 42,246,390 38,010,263 Total cost of services / 30,906,843 73 27,781,643 70 30,906,843 73 27,781,643 70

Total income received from operating activities 42,128,539 39,507,494 42,151,719

39,509,101

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The Northcott Society and its controlled entity Declaration by Chief Executive Officer in respect of fundraising appeals I, Kerry Stubbs, Chief Executive Officer of The Northcott Society, declare that in my opinion: a) The financial report gives a true and fair view of all income and expenditure of the Group with respect to fundraising appeal

activities for the financial year ended 30 June 2014; b) The Statement of Financial Position gives a true and fair view of the state of affairs of the Group with respect to fundraising

appeal activities as at 30 June 2014; c) The provisions of the Charitable Fundraising (NSW) Act 1991 and Regulations under the Act and the conditions attached to

the authority have been complied with during the year ended 30 June 2014; and d) The internal controls exercised by the Group are appropriate and effective in accounting for all income received and applied

by the Group from any of its fundraising appeals. Dated at Sydney this 11 September 2014. Signed in accordance with a resolution of the directors:

_______________________ Kerry Stubbs Chief Executive Officer

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The Northcott Society and its controlled entity Directors’ declaration In the opinion of the directors of The Northcott Society (“the Society”): a) the group is not publicly accountable; b) the financial statements and notes set out on pages 8 to 27 are in accordance with the Australian Charities and Not-For-

Profits Commission Act 2012, including:

(i) giving a true and fair view of the financial position of the Society and the Group as at 30 June 2014 and of their performance, as represented by the results of their operations and their cash flows for the financial year ended on that date; and

(ii) complying with the Australian Accounting Standards – Reduced Disclosure Requirements and the Australian

Charities and Not-For-Profits Commission Act 2012; and c) there are reasonable grounds to believe that the Society will be able to pay its debts as and when they fall due. Dated at Sydney this 11 September 2014. Signed in accordance with a resolution of the directors:

_______________________ M Briggs Director

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1800 818 286www.northcott.com.au

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