PROBUS SOUTH PACIFIC LIMITED ANNUAL REPORT PROBUS …

ANNUAL REPORT2012 - 2013

PROBUS - Tomorrow’s Visionfor AcTiVe ReTiReesTm

PROBUS SOUTH PACIFIC LIMITED'Perth House' Ground Level

Suite 1, 85 George Street, Parramatta NSW 2150 Australia

PO Box 1294 Parramatta NSW 2124 Australia

Australia Toll Free: 1800 630 488 New Zealand Toll Free: 0800 1477 6287

Tel: +61 2 9689 0200 | Fax: +61 2 9633 4779

Email: [email protected] | Website: www.probussouthpacific.org

PROBUS SOUTH PACIFIC LIMITED

CONTENTS

Probus South Pacific LimitedABN 38 726 423 979 / ACN 152 374 395

(A company limited by guarantee)

Page No.

About Probus 1

About Probus South Pacific Limited 1

Probus South Pacific Limited Board 3

Chairman’s Report 5

Treasurer’s Report 7

General Manager’s Report 8

Annual Financial Report

Corporate information 9

Director’s Report 10

Auditor’s declaration of independence 13

Statement of comprehensive income 14

Statement of financial position 15

Statement of changes in funds 16

Statement of cash flows 17

Notes to the financial statements 18

Director’s declaration 35

Independent auditor’s report 36

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1

ABOUT PROBUSProbus is Rotary’s most successful community service activity for seniors. Probus is the social club of choice, an association for active members of the community and for those no longer working full time to join together in clubs for a new lease of life in retirement.

Its basic purpose is to advance intellectual and cultural interests amongst adult persons, to provide regular opportunities to progress healthy minds and active bodies, through social interaction and activities, expand interests and enjoy the fellowship of new friends. A brief history

Probus originated in the UK in 1965, the first Probus clubs were formed in New Zealand in 1974, and in Australia in 1976. The first Probus Club in the Philippines was formed in 2007.

Probus has filled the need for today’s Active Retirees, so much so that the growth has been phenomenal. Probus is now a worldwide movement in over 23 countries. In the South Pacific region, there are over 2,186 Clubs and 172,000 Probus members.

The growth and strength of Probus in our region is a testament to the commitment from Rotary Districts, Rotary Clubs and the leadership and management of the Probus South Pacific Limited Board and the Secretariat.

ABOUT PROBUS SOUTH PACIFIC LIMITED

Probus South Pacific Limited is the organisation responsible for accrediting Probus Clubs and Probus Associations, for the administration and financial management of the Probus organisation and for determining Probus policies. Probus South Pacific Limited is responsible for protecting the integrity of the Probus organisation and are the owners of the Probus name and Probus emblem Trademarks in Australia, New Zealand and The Philippines.

Under the direction of the Probus South Pacific Limited Board, the Secretariat’s role is to act as the administration and service centre for Probus in Australia (including Norfolk Island), New Zealand, The Philippines, Papua New Guinea, Fiji, Cook Islands, New Caledonia, Tonga, American Samoa, Western Samoa, Timor Leste, Vanuatu, Kirubati Islands, Naura Island and the Solomon Islands.

The Secretariat is governed by a constitution which was developed in consultation with the Rotary Council of Governers. The Probus South Pacific Limited Board has 13 members, each PSP Director, excluding the 2 Rotary Representatives, are Probus members who act in a voluntary capacity dedicated to promoting the development of friendship, fellowship and the advancement of intellectual interests for Active RetireesTM.

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MISSION STATEMENTProbus South Pacific Limited is dedicated to promoting the development of friendship, fellowship and the advancement of intellectual interests for active retirees through Probus clubs in the South Pacific area.

VISION STATEMENTThe vision of Probus South Pacific Limited is to co-ordinate the growth, development and on-going support for Probus clubs, as the most widely recognised organisation for active retirees, in fostering the true spirit of Probus - friendship, fellowship and fun.

OUR CORE VALUESFriendship, Fellowship and FunSupportive Active RetireesAdaptable GrowthDiversity

OUR MOTTOACTIVE RETIREESTM - Tomorrow’s vision for PROBUS

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PROBUS SOUTH PACIFIC LIMITED BOARD | 2012-2013

MARGARET ROBINSONMargaret has been involved in property development and beef cattle production and is a retired Secondary Education teacher. Margaret is a foundation member and Past President of Ballarat East Ladies Probus club and a member of Ballarat Goldfields Probus club. Margaret has held positions of Vice President, President, Secretary, Program and Welfare coordinator at Probus Club level. Current Rotary District 9780 Probus Chairman and a member of the Rotary Club of Ballarat East.

KEN BRANDRotarian for 26 years; serving on district committees. Retired from the Police Force after serving 14 years; Ken has a Diploma in Education and Training, teaching in the areas of small business, business management and commercial law at TAFE. Ken joined the Hamilton Men’s Probus Club in 2002 and is a past president. He is a foundation member of the Hamilton Combined Probus club.

GARY BLACKLERGary served as a Police Officer for 3 years then on moving to Australia established his own business as a design and building contractor for over 35 years. Gary also served as a building disputes arbitrator and pre purchase inspector. Retired Rotarian of 15 years and also served a Rotary Probus District 9680 Chairman. Gary has strong sporting ties in all sports and represented New Zealand at International level as a rugby league test player in his early years.

VERONICA SEMMLERVeronica is a member and past president of the Rotary Club of Barossa District, Past Rotary District 9500 Chairman and foundation member of the two Combined Probus clubs in the Barossa. Veronica has been actively involved in sport as a player, umpire, coach and administrator over a period of 30 years. Veronica’s business background was in banking and as a finance officer in schools.

PETER CARROLLPeter Carroll was schooled in Sydney and completed degrees in Rural Science at the University of New England. He ran a large commercial piggery before returning to manage the poultry section and teach Intensive Animal Production at Hawkesbury Agricultural College in 1973. In 1982, he joined the Asian Development Bank, headquartered in Manila, Philippines, where he became the bank’s senior livestock specialist. Peter has been an active member of Rotary, serving as Rotary District Probus Chairman and past president, and is a Paul Harris Fellow. Peter helped establish and is a Board member of the Katoomba and Upper Blue Mountains Bendigo Community Bank®.

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DAVID ALLENDavid is a member of the Probus Club of Taringa. David is a retired statistician, whose experience includes data collection and analysis and management of large scale national operations, consulting and training both in Australia and overseas. David has Bachelor of Economics Degree and Diploma of Public Administration. He was a staff member of the Australian Bureau of Statistics for many years, including as head of the Tasmanian and Queensland offices of the ABS. He has also worked as a consultant to the International Monetary Fund and other international organisations, working in Eastern Europe, Paris, South Pacific and South-East Asia.

MURRAY JENSEN MNZMMurray is a retired Bank Chief Executive and has business experience in local government serving as Councillor and Deputy Mayor along with other community interests. Murray is a member of the Probus Club of Raumati and Probus Club of Waikanae Central. Murray was appointed a Justice of the Peace in 1973 and in 2002 he was awarded Member of New Zealand Order of Merit (MNZM). As a Rotarian Murray has served on many District Committees, appointed GSE team leader and a term as Assistant Governor. He is currently the Rotary District 9940 Probus Chairman.

WILLIAM LAKEBill is a retired Police Superintendent. Bill is a member of Probus Club of Victoria Park, Probus Club of Byford & Districts and as a Rotarian served as Rotary District 9470 Probus Chairman in 2007. Bill has served both Rotary and Probus as President, Secretary and held district committee positions.

JOHN LEWISA charter member in 1975 of the Rotary Club of Fawkner in Victoria. John was president on two occasions and is a Paul Harris Fellow. John was appointed RDPC 2010-2013 and a board member 2012-2015. Qualified in Industrial Relations, John worked in Human Resources for over 30 years, and has lectured at a private business college in Principles of Management. John is a past chairman and currently a board member of a Disability Support Enterprise located in Broad Meadows and is a volunteer for the YMCA.

DON WYLIEDon is a foundation member of the Combined Probus Club of Pukekohe. As a Rotarian Don has served on many committees and as Rotary District 9910 Probus Chairman. Starting work as a Stock Cadet with Dalgety and Co in the Hawkes Bay, Don later became a Stock Buyer in the Franklin area South of Auckland. In 1970 Don moved on to Real Estate forming his own company, and today specialises in Commercial and Retirement Villages. Over the years Don has served on local committees such as Auckland District Management Real Estate, Counties Rugby Union, Valley Primary School Board of Trustees and Methodist Wesley College Board of Governors.

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CHAIRMAN’S REPORTMy fellow Probus members,

It is with great pleasure that I provide my twelve month report on the activities of the Probus organisation under the stewardship and governance of the Probus South Pacific Limited Board of Directors for 2012-2013.

The measure of success of an organisation is not just about the financial result, for Probus, it is also about ensuring that through Probus membership there are many opportunities to enjoy friendship, fellowship and fun in retirement but also to ensure we have a sustainable future for the organisation and to grow.

Whilst many members may have different reasons for joining Probus, the end result is the same, when we joined Probus we became part of something special.

Probus, like any other organisation, must evolve and adapt to the changing needs of our Probus membership and as we focus on driving the Probus vision, we need to embrace some change which does not mean that we are losing sight of our core values, it is entirely the opposite, it means strengthening and preserving the spirit of what Probus is.

The PSPL Board is made up of members of Probus clubs who share the Probus values, the PSPL Board has faced many challenges this year and will continue to face them as we work together to secure a Probus future for current and future active retirees.

There have been many success stories during the year including the culmination of our forward planning in purchasing an office suite in Perth House in the Parramatta CBD. An official opening was attended by 80 guests and friends of Probus. It was indeed an honour

to unveil a plaque recognising the Past Chairmen who have led the Probus movement since 1981.

The official opening co-incided with the annual Rotary District Probus Chairman Briefing Weekend which was well attended by 22 dedicated and committed Rotarians all working together to strengthen not only the relationship between our two organisations but to grow Probus.

The Probus Information Days once again proved a great success with information and workshop days being hosted over the twenty eight districts in Australia and New Zealand. A most successful avenue to enhance the communication between PSPL and Probus clubs and for sharing ideas between Probus members.

The Probus Travel Insurance has continued to be popular providing not only an income stream for the Probus organisation but an excellent service and a membership development tool to our Probus club members.

Once again the Annual Rendezvous, this year held in Palmerston North, New Zealand provided an opportunity for enjoying the hospitality of our host Rendezvous clubs and experiencing fun, friendship and fellowship with new and old friends.

On the invitation of Rotary International Director John Boag Probus South Pacific Limited showcased Probus by providing a unique glimpse of the type of fun, friendship and fellowship enjoyed through Probus membership to the District Governor Elects at their Training Weekend in Parramatta.

A joint delegation between Probus South Pacific Limited and representatives of the Rotary Council of Governors led to the acceptance and formal adoption of a revised Probus South Pacific Limited Constitution that provides for the following changes;

• Provides a presence by representatives of the Rotary Council of Governors.• Ensures due democratic process in the nomination and election of Probus members to PSPL.• Guarantees consultation with Probus clubs for future amendments to the Probus South Pacific Limited Constitution.

One of the special moments of this year was the transfer of the ownership of the Probus trademarks back to Probus South Pacific Limited. In an historic ceremony at RDU House these Trademarks were officially handed back to Probus South Pacific Limited for future care and administration.

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Probus South Pacific Limited was very pleased to be invited to have a Probus booth at the Rotary International Institutes held in Adelaide and Invercargill and to present our annual brief of Probus activities and operations. This opportunity further provided Probus with a stage to present and identify Probus as Rotary’s greatest community service activity for seniors in the region and to keep Probus in the forefront in the minds of all leaders within the community.

The PSPL 5 Year Constitutional Review was undertaken over four stages; the participation of Probus clubs was excellent. Following an external audit of the review results the Review Report was published and circulated to all accredited Probus clubs. Accompanying the report was a guide to the formal adoption of the enacted amendments along with the revised Standard Probus Club Constitution dated February 2013 and state/territory and New Zealand PSPL Model Incorporated Constitutions dated February 2013.

The Probus Membership Database was successfully established for all financial members of Probus clubs. As an adjunct to the Probus Membership Database the introduction of Probus Member Cards and a Probus Member Benefit Scheme was commenced in Australian and further investigations were commenced for New Zealand Probus members.

Throughout the year Probus has taken the opportunity to man booths to promote the Probus brand and to improve awareness of the Probus organisation at expos, lifestyle conferences and community events.

These days have proven to be very successful with many retirees indicating their interest to join Probus.

The launch of the new website in December 2012 has developed an awareness of Probus in the community evident by the number of people visiting the site and seeking more information on how to join Probus.

Our Active RetireesTM magazine in Australia continues to be an excellent source of communication and during the year a readers survey was undertaken; some 1700+ readers responded providing valuable comments and insight.

It is important to acknowledge our corporate sponsors and advertisers for their continued support of the Information days, Rendezvous and the Photographic and Literary Award competitions in the Probus magazines.

Sadly, the Active magazine in New Zealand will no longer be produced by Rotary Down Under Inc. as they no longer consider its production viable. PSPL are committed to ensuring that there is sound, reliable

communication medium between PSP and Probus members in New Zealand and are delighted to have engaged the previous production team to produce a new magazine under the masthead of Active RetireesTM New Zealand with the first issue being released in Spring 2013.

We say our sad farewells to our retiring Directors; Immediate Past Chairman Ken Brand, Directors David Allen and Don Wylie; your commitment to Probus has been both measured and enduring and I thank you for your enthusiastic support to develop and strengthen the Probus organisation.

We warmly welcome our new Directors; Douglas Geekie, Roger Goldstone, Bruce Cameron, Ian Scott and Gary Williams.

This year has been very demanding of my time but I can say I have thoroughly enjoyed the many challenges and the many achievements we have accomplished as a Board.

I am grateful to my fellow Directors, Treasurer Veronica Semmler, management and staff at The Secretariat office under the leadership of General Manager Pat Atkinson; your support and work ethics has been at the highest level; your professionalism and integrity always at the forefront.

I offer incoming Chairman Gary Blackler my continued support as he takes on the responsibility to lead and fulfil the organisations aims and objects and to continue to meet the needs of both the current and future retirees.

As I conclude my term as Chairman I reflect on what lies ahead for the future of Probus; I can confidently say that Probus is in a sound position to continue to provide avenues that will offer fulfilment to the lives of senior members of the community and for Probus to be seen as the best social club for those entering retirement.

MARGARET ROBINSON CHAIRMAN

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TREASURER’S REPORTOn behalf of the Directors of the Board of Probus South Pacific Limited (‘PSPL’), I am pleased to present this Annual Financial Report for the year ended 31 March 2013.

The financial statements contained within this Annual Financial Report are fully compliant with the requirements of PSPL as a company limited by guarantee and I am happy to report that PSPL has once again received an unqualified external audit opinion for the financial year ended 31 March 2013.

PSPL’s financial result before tax for the 2012-13 year was a loss of $17,394. During the year, the PSPL Board of Directors and Management established a provision for tax of $230,000. This recognition of an income tax liability has resulted a net deficit after income tax expense of $247,394. In addition to the establishment of this provision, there are a number of other non recurring or one off expenses that occurred during the year that contributed to this deficit, such as the establishment of a provision of $70,000 for the reimbursement of the registration cost of Australian Probus Club constitutions as well as the completion of the refurbishment of the office suite of $89,933.

It is also noted in the Annual Financial Report notes 2c(i) and 7 that an Independent Valuation of the Parramatta Office Suite resulted in an increased value of the suite of $95,729 (valuation as at Feb 1, 2013 was $1,200,000). When the revaluation is recognised in the result, comprehensive income for the year was in deficit by $151,665.

Since 2009, PSPL have been working with the ATO with respect to PSPL’s tax position. Although PSPL have traditionally lodged income tax returns on the basis that it is a mutual entity for tax purposes, PSPL believed that clarity was required given the uniqueness of the PSPL organisation.

Whilst PSPL does not strictly fit into the ATO definition of a mutual organisation, it does have a mutual income stream and for this reason PSPL have been in negotiation with the ATO for some time as how best to categorise PSPL with respect to tax.

PSPL has recently lodged a Private Binding Ruling application with the ATO in respect of mutuality. If the application for a Private Binding Ruling application does not result in the ATO accepting that the mutuality principle applies to PSPL, tax will be payable and a provision for tax has been in the internal management accounts of PSPL for quite some time.

The notes within the Annual Financial Report provide further explanation on the tax status and how provision for taxation was determined. It is important to note that whilst the PSPL Board believe that PSPL is at least in part mutual, it was prudent to establish a provision in the event that PSPL is ruled as an assessable entity.

A provision of $70,000 was also established during the year and provides for reimbursement to Australian incorporated clubs for the registration of their constitutions as part of the 5 Year Constitutional Review.

Since the introduction of cover for private travel in December 2010, Probus Travel insurance has proven to be a significant income stream for PSPL. The policy was renewed during the year as an adjustable policy which protects both PSPL and the insurer, this new structure will allow PSPL to continue to provide this member benefit at a reduced level of income for PSPL. It was always intended for the Probus Travel Insurance to be a member benefit to Probus members rather than an income stream.

Whilst PSPL has made a deficit for the year ended 31 March 2013, this deficit contains ‘one off’ non operational expenses which are not expected in the future.

Operational expenses have increased in line with the services being provided to more than 172,000 members in the South Pacific region and whilst PSPL income has also increased, this increase relates primarily to travel insurance income.

As stated earlier, PSPL will not be able to rely on the abnormally high levels of income provided from travel insurance and must continue to focus on growing the level of Probus membership to ensure positive results going forward.

Yours in Probus

VERONICA SEMMLERTREASURER

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GENERAL MANAGER’S REPORTProbus is about fun, fellowship and friendship in retirement. At Probus South Pacific, my team of dedicated staff and I are committed to providing support and services to Probus Clubs, Probus Members and Probus Associations that will ensure effective communication and good governance.

In order to assist the clubs and to promote the organisation as a whole, the Probus South Pacific office provides administration and advocacy services. These services are provided to 2,186 Probus clubs, comprising 172,000 members in Australia, New Zealand and The Philippines. Established in 1981, this office has a wealth of experience, established structure and resources necessary to assist Probus Clubs in every aspect of their development and the changes that inevitably occur.

The key to success for the Probus organisation at club and secretariat level remains its people. I would like to acknowledge the dedication of our small team here at PSP, who have delivered outstanding service, when you consider that over the past twelve months they have responded to over 39,000 telephone calls, posted out more than 30,000 items by mail, assisted over 11,000 Probus members with Probus Travel Insurance, distributed over 330,000 Active Retirees magazines and responded to over 70,000 emails.

Whilst the day to day operations of a Probus club, in the main, relate to making arrangements for social events and ensuring Probus members are making the most out of their retirement years, there is an essential and important element that must be attended to in order for the club to function legally and effectively, whilst at the same time protecting the club and it’s members. This is the less glamorous business part of club administration and management, undertaken by fellow Probus members. I have had the pleasure of meeting many of these dedicated people and would like to extend appreciation for their commitment to serving others in this way.

I also acknowledge the role of Rotary, in establishing Probus so many years ago and continuing to support the formation of clubs. Past and present Rotary Governors have been instrumental in establishing the good name enjoyed by Probus throughout our respective countries and communities. The appointment by Rotary Governors of Probus District Chairman is an important aspect of the structure which provides assistance to clubs at local level.

Moving to the Annual Financial Report, the financial result before tax for the 2012-13 year was a loss of $17,394. The reasons behind this deficit are detailed

within the Treasurer’s Report and Annual Financial Report. Despite this deficit, Probus South Pacific continues to be in a sound position, both financially and administratively and I do hope that the reader will review this Annual Report in its entirety.

In closing, I extend my appreciation and sincere thanks to our volunteer board of Directors, all Probians’ who have applied themselves earnestly to the task of promoting and steering the organisation, achieving balance and focus under sometimes difficult circumstances not to mention the changes in demographics and technology that seem to occur more frequently each year.

I wish you all a year of fun, friendship, fellowship and good health!

Best regards,

PATRICIA ATKINSONGENERAL MANAGER

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Probus South Pacific Limited (A company limited by guarantee)

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CORPORATE INFORMATION

Directors Margaret Robinson (Chair)

Ken Brand (Immediate Past Chair)

Gary Blackler (Vice Chair)

Veronica Semmler (Treasurer)

David Allen

Peter Carroll

Murray Jensen MNZM

William Lake

John Lewis

Don Wylie

General Manager & Company Secretary Patricia Atkinson

Registered office and principal place of business

Perth House Ground Floor, Suite 1 85 George St Parramatta NSW 2150

Auditors CABEL Partners

Lawyers Emil Ford

Patent and Trademark Attorneys Wallington Dummer

ANNUAL FINANCIAL REPORT

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DIRECTORS’ REPORT The directors present this report to the members of Probus South Pacific Limited (“the Company”) for the year ended 31 March 2013. Directors The names of each person who has been a director during the year and to the date of this report are: Board Date appointed Date of cessation A B

M Robinson 13 May 2010 ‐ 4 4

K Brand 20 May 2009 ‐ 4 4

G Blackler 19 May 2011 ‐ 4 4

V Semmler 20 May 2009 17 May 2012 4 4

D Allen 13 May 2010 ‐ 4 4

P Carroll 31 May 2012 ‐ 4 4

M Jensen MNZM 19 May 2011 ‐ 4 4

W Lake 19 May 2011 ‐ 3 4

J Lewis 17 May 2012 ‐ 4 4

D Wylie 13 May 2010 ‐ 1 4

J Burford 21 May 2008 17 May 2012 1 1

A Ducray 20 May 2009 17 May 2012 1 1

G McLennan OAM 20 May 2009 17 May 2012 1 1 *Veronica Semmler completed her 3 year term on 17 May 2012 and was re‐elected to the Board for another 3 year term on 17 May 2012. A – Number of meetings attended B – Number of meetings held during the time the director held office during the year Director’s Information Please refer to page 3 of this Annual Report for Directors qualifications and experience. Directors’ Information Name Qualifications and experience M Robinson Margaret has been involved in property development and beef cattle production and is a

retired Secondary Education teacher. Margaret is a foundation member and Past President of Ballarat East Ladies Probus club and a member of Ballarat Goldfields Probus club. Margaret has held positions of Vice President, President, Secretary, Program and Welfare coordinator at Probus Club level. Current Rotary District 9780 Probus Chairman and a member of the Rotary Club of Ballarat East.

K Brand Rotarian for 26 years; serving on district committees. Retired from the Police Force after serving 14 years; Ken has a Diploma in Education and Training, teaching in the areas of small business, business management and commercial law at TAFE. Ken joined the Hamilton Men’s Probus Club in 2002 and is a past president. He is a foundation member of the Hamilton Combined Probus club.

G Blackler Gary served as a Police Officer for 3 years then on moving to Australia established his own business as a design and building contractor for over 35 years. Gary also served as a building

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Short‐ and long‐term objectives and strategy The Company’s short and long term objectives are to drive the vision of Probus. Probus provides an avenue for senior members of the community; and for those no longer working full time, to join together in clubs for a new lease of life. Its basic purpose is to advance intellectual and cultural interest amongst adult persons; to provide regular opportunities to progress healthy minds and active bodies, through social interaction and activities, expand interests and to enjoy the fellowship of new friends.

The Company’s strategy for achieving these objectives includes the development and implementation of an internal 5 year Strategic Plan.

Principal activities The Company’s principal activities during the year were: - To promote the advancement of intellectual and cultural interests among men and women who have retired from their former activities;

- To help members of the community by providing mental stimulation, and the means to advance intellectual, social and cultural activities and to facilitate an exchange of ideas amongst adult persons who are no longer working full time or who have retired or semi‐retired from their former vocation;

- To promote the formation of Probus Clubs by Rotary Clubs as a community service to retired persons and to seniors in the community;

- To encourage existing Probus Clubs in the advancement of their objectives; - To act as the Administration and Service Centre for Probus within Australia, New Zealand, Papua New Guinea, Cook Islands, New Caledonia, Norfolk Island, Tonga, American Samoa, Western Samoa, Timor Leste, the Philippines, Fiji, Vanuatu, Kiribati, Nauru, and the Solomon Islands (“the South Pacific”); and

- To be the authority for determining policy matters relating to Probus within the South Pacific in accordance with the Constitution.

These activities have assisted the Company in achieving its objectives by enabling it to: ‐ Meet the current and future needs of the members of Probus clubs and ‐ To provide members of Probus clubs and their guests, access to Probus Travel Insurance (previously known as PSPL Optional Travel Insurance).

Performance measures The Company measures performance through the establishment and monitoring of benchmarks that include financial benchmarks as well as feedback through Probus club member focus groups.

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Members’ guarantee In accordance with the Company’s constitution, each member of the Company may be liable to contribute an amount not exceeding $10.00 in the event that the Company is wound up. The total amount members of the Company would contribute is $130.00. Probus clubs and members of Probus clubs are not members of the Company and therefore have no liability. Auditors’ independence The Auditor’s Independence Declaration appears on page 13 and forms part of the Directors’ report for the year ended 31 March 2013. Signed in accordance with a resolution of the directors made pursuant to s.298(2) of the Corporations Act 2001. On behalf of the directors: Margaret Robinson Veronica Semmler

Chairman Treasurer

Parramatta, 30 May 2013 Parramatta, 30 May 2013

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AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

To the Directors of PROBUS SOUTH PACIFIC LIMITED I declare that, to the best of my knowledge and belief, during the year ended 31 March 2013 there has been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in

relation to the audit; and (ii) no contraventions of any applicable code of professional conduct in relation to the audit. CABEL Partners Chartered Accountants

Phillip Browne Registered Company Auditor [email protected]

North Sydney Dated this 30th day of May 2013

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Financial statements for the year ended 31 March 2013 STATEMENT OF COMPREHENSIVE INCOME

Note 2013 $

2012$

Revenue and other income

Revenue 2(h), 3(a) 3,808,624 3,245,497

Revenue and other income 3(a) 3,808,624 3,245,497

Expenditure

Cost of national publication 570,477 564,915

Depreciation and amortisation expenses 2(c)(ii), 2(i)(ii) 44,601 10,819

Employee benefits expense 500,068 386,651 Refurbishment of office suite, relocation and occupancy costs 130,246 184,237

Marketing and promotion 189,700 253,029

Insurance premiums 1,298,079 464,903

Postage, print and stationery 411,793 331,748

Management and administration 402,949 237,173

Finance costs 30,516 21,254

Auditors’ remuneration 88,843 71,005

Bad and doubtful debts 386 3,949

Computer services 42,351 27,344

Foreign currency translation losses 66,387 35,039

Rent 24,413 54,883

Other expenses 25,209 31,295

Expenditure 3(b) 3,826,018 2,678,244

Net (deficit) / surplus before income tax expense (17,394) 567,253

Income tax expense 2(b) (230,000) ‐

Net (deficit) / surplus after income tax expense (247,394) 567,253

Other comprehensive income

Revaluation of office suite 7 95,729 ‐

Other comprehensive income for the year 95,729 ‐

Total comprehensive income for the year (151,665) 567,253

The statement of comprehensive income is to be read in conjunction with the attached notes

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Financial statements for the year ended 31 March 2013 STATEMENT OF FINANCIAL POSITION

Note 2013 $

2012$

Assets

Current assets

Cash and cash equivalents 4 448,333 530,713

Trade debtors and other receivables 5 47,544 30,555

Other assets 6 849,418 396,023

Total current assets 1,345,295 957,291

Non‐current assets

Office suite 7 1,195,000 1,125,548

Property, plant and equipment 8 67,292 59,215

Intangible asset 9 44,449 ‐

Total non‐current assets 1,306,741 1,184,763

Total assets 2,652,036 2,142,054

Liabilities

Current liabilities

Trade creditors and other payables 10 494,810 213,567

Current tax liabilities 11 230,000 ‐

Premium funding facility 12 310,580 ‐

Provisions 13 142,839 48,909

Total current liabilities 1,178,229 262,476

Non‐current liabilities

Provisions 13 68,249 47,355

Commercial bill 14 300,000 575,000

Total non‐current liabilities 368,249 622,355

Total liabilities 1,546,478 884,831

Net assets 1,105,558 1,257,223

Funds

Accumulated funds 1,009,829 1,257,223

Asset revaluation reserve 95,729 ‐

Total funds 1,105,558 1,257,223

The statement of financial position is to be read in conjunction with the attached notes

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Financial statements for the year ended 31 March 2013

STATEMENT OF CHANGES IN FUNDS

Accumulated funds

$

Asset revaluation

reserve $

Total funds$

Balance at 1 April 2011 689,970 ‐ 689,970

Net surplus 567,253 ‐ 567,253

Other comprehensive income 7 ‐ ‐ ‐

Total comprehensive income for the year 567,253 ‐ 567,253

Balance at 31 March 2012 1,257,223 ‐ 1,257,223

Balance at 1 April 2012 1,257,223 ‐ 1,257,223

Net deficit (247,394) ‐ (247,394)

Other comprehensive income 7 ‐ 95,729 95,729

Total comprehensive income for the year (247,394) 95,729 (151,665)

Balance at 31 March 2013 1,009,829 95,729 1,105,558

The statement of changes in funds is to be read in conjunction with the attached notes

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STATEMENT OF CASH FLOWS

Note 2013 $

2012$

Cash flows from operating activities

Cash receipts from customers 4,114,642 3,177,090

Interest income 36,718 66,830

Payments to suppliers, employees and others (4,198,470) (2,721,472)

GST paid ‐ (7,483)

Net cash flows (used in) / from operating activities 16 (47,110) 514,965

Cash flows from investing activities

Purchase of property, plant and equipment (28,456) (48,231) Proceeds from disposal of property, plant and equipment 3,988 ‐

Purchase of office suite ‐ (1,125,548)

Purchase of trademarks (46,382) ‐

Net cash flows used in investing activities (70,850) (1,173,779)

Cash flows from financing activities

Proceeds from commercial bill borrowing ‐ 675,000

Repayment of commercial bill borrowing (275,000) 100,000

Proceeds from premium fund facility 1,213,680 ‐

Repayment of premium fund facility (903,100) ‐

Net cash flows from financing activities 35,580 575,000

Net decrease in cash and cash equivalents (82,380) (83,814)

Cash and cash equivalents at beginning of year 530,713 614,527

Cash and cash equivalents at end of year 2(f), 4 448,333 530,713

The statement of cash flows is to be read in conjunction with the attached notes

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NOTES TO THE FINANCIAL STATEMENTS 1) Corporate information The financial statements of Probus South Pacific Limited (“the Company”) for the year ended 31 March 2013 were authorised for issue in accordance with a resolution of the directors on 30 May 2013. The principal activities of the Company are described in the Directors’ report. 2) Summary of accounting policies a) Basis of preparation These general purpose financial statements have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board and Urgent Issues Group interpretations. The entity is a not‐for‐profit entity for financial reporting purposes under Australian Accounting Standards. The 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.

b) Income tax The income tax status of the Company is unclear and has been the source of communication with the Australian Taxation Office (“ATO”) since 2009. During the financial year, some matters were clarified however, the position remains unclear and a request for a private binding ruling has been lodged with the ATO since balance date in order to clarify the tax status of the Company. Tax consulting and audit advice has suggested that status as a taxable entity should be assumed and if applicable a provision for income tax expense should be raised. Whereas any liability to income tax expense was thought to be contingent in 2012 it has been decided to recognise a provision this financial year due to clarification of some matters and uncertainty surrounding the outcome of the private binding ruling. No ATO assessment liability to income tax has been issued to the Company.

A summary of the history of the Company as regards to its income tax status is as follows. From incorporation in 1976 to 2009, the Company self‐assessed as a mutual organisation. In 2009, the Company received tax consulting advice that the legal structure prima facie raised questions about eligibility for the income tax mutuality principle to apply. The question was left in abeyance as endorsement as a charity firstly, and then ruling as a community service organisation were canvassed with the ATO. During this time, transparent voluntary communication has occurred with the ATO who have granted extensions for lodgement of tax returns until such time as this matter is resolved.

If the mutuality principle continues to apply, the Company is likely to have income tax losses brought forward each year since 2009. In this event no provision for income tax expense is required and it will be written back.

The matter of eligibility to apply the mutuality principle is not free from doubt or debate. Whilst the legal structure does not immediately lend itself to mutuality it is well enough established that the mutuality principle may also apply to contributions made where the persons who associate for a common purpose and contribute to a common fund have incorporated to effectuate their common purpose, provided the Company can properly be treated as an entity for their convenience.

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Financial statements for the year ended 31 March 2013 NOTES TO THE FINANCIAL STATEMENTS (continued) Nor is the type of income which might be mutual free from doubt or debate. The mutuality principle does not exclude all profits and gains of the mutual entity from being classified as income under ordinary concepts and therefore assessable. An association which engages in business activities with outsiders, in addition to the transactions it has with its members, may invoke the mutuality principle to the extent that it is possible to sever from the business activities the fund which consists of receipts from mutual dealings.

The nature and substance of a transaction – that is, whether it is for a commercial purpose – will determine whether the income derived from it is mutual or non‐mutual income.

The change in incorporation from state incorporated association to a Commonwealth company limited by guarantee has not had any effect on the income tax status of the Company.

There are other matters which could arise depending on the outcome of the tax status decision. An example is application to the ATO for substituted accounting period, which is expected to be approved but is not certain. Any effect on the income tax position arising from such an uncertainty is likely to be a timing difference between one financial year and the next.

The Company’s private binding ruling application to the ATO is for treatment of certain income as mutual. If successful the consequence is that the Company will have income tax losses carried forward and $Nil income tax expense provision. Alternatively, if the company is treated as a taxable entity the tax payable outcome will depend on the date of commencement of that status. If 1 July 2009 is taken as the commencement date the income tax payable is likely to be $120,000. If 1 July 2010 is taken as the commencement date the income tax payable is likely to be $230,000. This tax liability is recognised in the financial statements. In a less likely situation where the Company is treated as having always been a taxable not‐for‐profit entity the potential tax payable is estimated to be $400,000. The additional amount over the amount recognised this year is considered a contingent liability at Note 19.

c) Property, plant and equipment and office suite Depreciation is calculated on straight line basis, so as to write off the net cost of each fixed asset over its expected useful life to its estimated residual value. The gain or loss on disposal of all fixed assets is determined as the difference between the carrying amount of the asset at the time of disposal and the proceeds of disposal, and is included in operating (deficit) / surplus profit before income tax in the year of disposal. The carrying amount of the property, plant and equipment is reviewed annually by the Board, to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets' employment and subsequent disposal. The expected net cash flows have not been discounted to present values in determining recoverable amounts. The office suite is measured at fair value at date of revaluation less accumulated depreciation. i. Revaluation of office suite Following initial recognition at cost, the office suite will be carried at a revalued amount which is the fair value at the date of the revaluation less any subsequent depreciation on the office suite. Fair value is determined by reference to a market based appraisal, which is the amount for which the asset could be exchanged in an arm’s length transaction as at the valuation date. Fair values are confirmed by independent

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Financial statements for the year ended 31 March 2013 valuations which will be obtained on a regular cycle to ensure that the carrying amounts do not differ materially from the assets’ fair value at Statement of financial position date. The office suite is treated as a separate asset class. When the carrying amount of this asset class is increased as a result of a revaluation, the increase is credited to the revaluation reserve, except where it reverses a decrement previously recognised in the Statement of comprehensive income, in which case it is credited to that statement. When the carrying amount of the office suite is decreased as a result of a revaluation, the decrease is recognised in the Statement of comprehensive income, except where a credit balance exists in the revaluation reserve, in which case it is debited to that reserve. ii. Depreciation Depreciation on property, plant and equipment and office suite is calculated on a straight line basis over their estimated useful lives to the Company commencing from the time the asset is held ready for use. The estimated useful life of the office furniture and equipment varies between 5 and 7 years and office suite is 40 years. The depreciation rates used for each class of depreciable asset are:

Class of Fixed Asset Depreciation Rate

Office suite 2.50%

Office furniture and equipment 20.00% The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the Statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to accumulated funds. d) Employee benefits i. Wages and salaries, annual leave and sick leave Liabilities for wages and salaries, including non‐monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non‐accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. ii. Long service leave The liability for long service leave is recognised in the provision for employee entitlements as a non‐current liability and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. iii. Retirement benefit obligation The Company contributes to accumulation superannuation plans. Contributions are recognised in the Statement of comprehensive income when they are paid or payable.

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Financial statements for the year ended 31 March 2013 NOTES TO THE FINANCIAL STATEMENTS (continued) e) Provisions Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period. In addition to the provision for employee entitlements as per note 2(d)(i) and (ii), the Directors of the Company approved a liability in the provision for the reimbursement to Australian Probus clubs for the re‐registering of their clubs’ constitution which is expected to be settled within 12 months of the reporting date. f) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks and other short‐term highly liquid investments with original maturities of three months or less. These deposits earn interest at market rates. Bank overdrafts are shown within borrowings in current liabilities on the Statement of financial position. During the period and as at the reporting date, the Company does not have a bank overdraft. g) Functional and presentation currency The financial statements are presented in Australian dollars, which is also the functional currency of the Company. i. Foreign currency transactions and balances Foreign currency transactions are translated into the functional currency, using the exchange rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in the Statement of comprehensive income. Non‐monetary items are not retranslated at year‐end and measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non‐monetary items measured at fair value which are reported at the exchange rate at the date when fair value was determined. ii. Foreign operations In the Company’s financial statements, all assets, liabilities and transactions of the Company with a functional currency other than the AUD are translated into AUD at reporting date. h) Revenue and other income Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, duties and taxes paid. Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset. i) Intangible asset i. Trademarks During the year, the Company registered additional trademarks in Australia and New Zealand. The trademarks are capitalised on the basis of the costs incurred to register the trademarks.

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Financial statements for the year ended 31 March 2013 ii. Subsequent measurement and amortisation Trademarks are accounted for using the cost model whereby capitalised costs are amortised on a straight‐line basis over the estimated useful life. The useful life applied is 10 years. Amortisation has been included within depreciation and amortisation expenses. Subsequent expenditure on trademarks are expensed as incurred. The amortisation method and useful life are reviewed at each reporting date. j) Goods and Services Tax (‘GST’) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables in the Statement of financial position are shown inclusive of GST. Cash flows are presented in the Statement of cash flow on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. k) Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. l) Critical accounting estimates and assumptions The Directors evaluate estimates and judgments incorporated in financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events that may impact the financial position of Company and are based on current trends and economic data, obtained both externally and within the Company. m) Debtors and prepayments These are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debtors. The recoverability of these assets is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off. A provision for doubtful debtors is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of debtors. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the Statement of comprehensive income. n) Trade creditors and accruals These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid at year end. These amounts are unsecured and are usually paid within 30 days of recognition. o) Contributions from Probus clubs For the year ended 31 March 2013 each Probus Club is required to pay to the Company contributions as set out below: i. Each Probus Club domiciled in Australia to contribute AUD $4.00 (2012 – AUD $4.00) per member towards

the cost of the insurance cover that is applicable to all members of those Probus Clubs.

ii. Each Probus Club domiciled in Australia to contribute AUD $3.00 (2012 ‐ AUD $3.00) per member towards the cost of administration of the Company.

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Financial statements for the year ended 31 March 2013 NOTES TO THE FINANCIAL STATEMENTS (continued) iii. Each Probus Club domiciled in New Zealand to contribute NZD $0.20 (2012 – NZD $0.20) per member

towards the cost of the insurance cover that is applicable to all members of those clubs.

iv. Each Probus Club domiciled in New Zealand to contribute NZD $3.00 (2012 – NZD $3.00) per member towards the cost of administration of the Company.

p) Geographical information The Company operates in Australia, New Zealand and other countries within the South Pacific. The Company provides all management and administration services from Australia. q) New accounting standards for application in future periods The Australian Accounting Standards Board (‘AASB’) has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods. The Company has decided to adopt the new standards when they become mandatory.

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2013 $

2012$

3) Revenue, other income and expenses a) Revenue Sale of publications 357,032 352,572

Advertising revenue 516,765 513,812

Royalties and gratuities 22,940 21,989

Subsidies and sponsorships 22,808 6,140

Travel insurance income 1,827,958 1,268,862

Capitation fees (incl. administration and insurance) 1,024,403 1,015,292

Interest received 36,718 66,830

Total revenue 3,808,624 3,245,497

b) Expenditure Cost of goods sold – Australian national publication 570,477 564,915

Depreciation and amortisation expenses 44,601 10,819

Employee benefits expenses 500,068 386,651

Refurbishment of office suite, relocation and occupancy costs 130,246 184,237

Marketing and promotion 189,700 253,029

Insurance premiums 1,298,079 464,903

Postage, printing and stationery 411,793 331,748

Management and administration 402,949 237,173

Finance costs 30,516 21,254

Auditors‘ remuneration

- Audit and compilation of financial report 10,104 13,000

- Taxation compliance services 78,739 58,005

Bad and doubtful debts 386 3,949

Computer services 42,351 27,344

Foreign currency translation losses 66,387 35,039

Rent 24,413 54,883

Other expenses 25,209 31,295

Total expenditure 3,826,018 2,678,244

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Financial statements for the year ended 31 March 2013 Notes to the financial statements (continued)

2013 $

2012$

4) Cash and cash equivalents Cash on hand 311 311

Cash at bank ‐ Australia 425,511 404,518

Cash at bank – New Zealand 13,059 ‐

Cash at bank ‐ Philippines 9,452 7,256

Short term bank deposits – New Zealand ‐ 118,628

448,333 530,713

5) Trade debtors and other receivables Trade debtors 42,536 29,180

Other debtors 5,008 1,375

47,544 30,555

6) Other assets Prepayments 849,418 396,023

7) Office suite Independent valuation

As at 1 April 1,125,548 ‐

Additions ‐ 1,125,548

Revaluation increment 95,729 ‐

As at 31 March 1,221,277 1,125,548

Accumulated depreciation

As at 1 April ‐ ‐

Depreciation for the year (26,277) ‐

As at 31 March (26,277) ‐

Net carrying amount as at 31 March 1,195,000 1,125,548

The Company engaged an independent and accredited Real Estate Valuer & Consultant, to determine the fair value of its office suite. The effective date of the revaluation was 1 February 2013. The fair value is $1,200,000 and has been determined directly by reference to market‐based evidence, which is the amount for which office suite could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date. Based on the information provided by the independent and accredited Real Estate Valuer & Consultant in the current financial year, the Directors have determined to adjust the value of the office suite as per the valuation less any applicable depreciation.

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19


2013 $

2012$

8) Property, plant and equipment

Cost value

As at 1 April 77,870 50,532

Additions 28,456 48,231

Disposal of asset (3,988) (20,893)

As at 31 March 102,338 77,870

Accumulated depreciation

As at 1 April (18,655) (25,224)

Depreciation for the year (16,844) (10,819)

Disposal of asset 453 17,388

As at 31 March (35,046) (18,655)

Net carrying amount as at 31 March 67,292 59,215

9) Intangible asset Trademarks

Cost value


Additions 46,382 ‐

As at 31 March 46,382 ‐

Accumulated amortisation


Amortisation for the year (1,933) ‐

As at 31 March (1,933) ‐

Net carrying amount as at 31 March 44,449 ‐

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2013 $

2012$

10) Trade creditors and other payables Sundry creditors 464,810 183,567

Money Cover Insurance Fund 30,000 30,000

494,810 213,567

The Probus Travel insurance policy (‘previously known as PSP Optional Travel insurance policy) was renewed on 30 November 2012 for the period 1 December 2012 to 30 November 2013. The Insurer of the Probus Travel insurance policy has issued the Company an adjustable insurance policy rather than fixed rate insurance policy as per the previous year. At the end of the insurance policy period, the premium paid in advance is adjusted based on the number of policies accessed by members and guests of Probus clubs. As per the term and conditions of the adjustable insurance policy, a premium of $1,236,680 was paid in advance to the Insurer for the period 1 December 2012 to 30 November 2013 based on the number members and guests of Probus clubs that accessed the Insurance policy in the previous reporting period, claims experience and management’s assumptions. Based on the number of members and guests of Probus clubs that had accessed the Probus Travel Insurance policy as at reporting date, a sundry creditor of $389,765 has been recognised as additional premium that may be payable in excess of the premium that has been paid in advance.

Note 2013 $

2012$

11) Current tax liabilities Current tax liabilities 2(b) 230,000 ‐

12) Premium funding facility

Premium funding facility 310,580 ‐

The Company has in place a short‐term secured premium funding facility (‘facility’) for $1,213,680. The facility is secured by the assignment of all monies paid and payable under the Probus Travel Insurance policy. The purpose of the facility is to fund the payment to the Insurer for the renewal of the Probus Travel Insurance adjustable insurance policy from 1 December 2012, as described in Note 10. The facility is to be repaid by 30 April 2013. The interest rate of the facility is a fixed interest rate of 0.96% p.a. and subject to the terms and conditions of the facility agreement. During the year, the Company made capital and interest repayments of $903,100 (2012 ‐ $Nil). On 30 April 2013, the Company repaid all capital and interest repayments in accordance with the terms and conditions of the facility agreement.

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Note 2013 $

2012$

13) Provisions a) Current Provision for annual leave 72,839 48,909

Provision for Probus Clubs Constitution expenses 2(e) 70,000 ‐

142,839 48,909

b) Non‐current Provision for long service leave 68,249 47,355

14) Commercial bill

Commercial bill 300,000 575,000

The Company has in place a secured commercial bill facility (‘facility) for $675,000 with a financial institution, secured by a first registered real property mortgage over the office suite located at Ground Floor, Suite 1, Perth House, 85 George St Parramatta. The facility was used to partly finance the purchase of the office suite. The period of the facility is five years ending on 12 December 2016. The interest rate of the facility is a variable rate which is reset every 90 days subject to the terms of the facility agreement. During the year, the Company made capital repayments of $275,000 (2012 ‐ $100,000). 15) Financial instruments Financial risk management – objectives and policies The Company’s main financial instruments are cash, term deposits, premium funding facility and a commercial bill. The main purpose for these financial instruments is to provide finance for the Company’s projects and operations. The Company has other financial instruments, such as trade debtors and creditors, which arise from its activities. The Company manages the risks by ongoing identification and monitoring. The Company’s activities expose it to a variety of financial risks: market risk, credit risk, interest rate risk and liquidity risk. All financial assets and liabilities are carried at the amounts that approximate fair values. a. Market risk Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Company's functional currency. b. Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to discharge its obligation. The Company is exposed to two sources of credit risk: amounts receivable in respect to capitation and subscription fees from Probus Clubs and advertising fees from customers advertising in the Company’s magazine, and counterparty risk in respect of funds deposited with a number of financial institutions.

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Financial statements for the year ended 31 March 2013 NOTES TO THE FINANCIAL STATEMENTS (continued) The Company has no significant concentrations of credit risk. The Company has policies in place to ensure that sales of products and services are made to customers subject to appropriate credit history and a contractual agreement, which includes payment terms. Any amounts not received by the payment date are followed up in accordance with Company’s credit management policy. There are no significant financial assets that are impaired. Funds deposited with financial institutions are in accordance with the Company’s investment policy. The current maximum exposure at reporting date is equal to the fair value of the financial instruments disclosed on the Statement of financial position. c. Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments. The Company is exposed to interest rate fluctuations on its cash, term deposits and commercial bill. The Company monitors interest rates for cash and term deposits to maximise interest income. The Company monitors the interest rates on the commercial bill to minimise interest expense. d. Liquidity risk Liquidity risk is the risk that the Company will not be able to discharge its financial liabilities as they fall due. The Company manages liquidity risk by monitoring forecast cash flows and maintaining sufficient cash and cash equivalents to meet normal operating activities. The Company’s exposure to financial liabilities includes a secured commercial bill facility maturing 12 December 2016 and a secured premium funding facility maturing on 30 April 2013. The Company reviews its requirement for the commercial bill every 90 days and if the Company has excess liquidity it will repay part or the entire commercial bill prior to maturity. The secured premium funding facility is to be repaid on 30 April 2013. Trade and other payables are typically settled within 30 days. The tables below reflect the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity, as well as management's expectations of the settlement period for all other financial instruments. As such the amounts may not reconcile to the Statement of financial position.

2013 $

2012$

Financial liability and financial asset maturity analysis – within 1 year

Financial liabilities due for payment

Premium funding facility 310,580 ‐

Trade and other payables 105,045 213,567

Total contractual outflows 415,625 213,567

Total expected outflows 415,625 213,567

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23


2013 $

2012$

Financial assets ‐ cash flows realisable

Cash and cash equivalents 448,333 530,173

Trade debtors and receivables 47,544 30,555

Total anticipated inflows 495,877 560,728

Net inflow on financial instruments 80,252 347,161

Financial liability and financial asset maturity analysis – within 1 to 5 years

Financial liabilities due for payment

Commercial bill 300,000 575,000

Total contractual outflows 300,000 575,000

Total expected outflows 300,000 575,000

Net outflow on financial instruments (300,000) (575,000)

e. Fair values Fair value estimation – the fair values of financial assets and financial liabilities are as per carrying amounts as presented in the Statement of financial position. Fair value is an amount at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

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2013 $

2012$

16) Cash flow information a) Reconciliation of cash and cash equivalents Cash at the end of financial year as shown in the Statement of cash flows is reconciled to the related items in the statement of financial position as follows:

Cash on hand 311 311

Cash at bank 448,022 411,774

Short term bank deposits ‐ 118,628

448,333 530,713

b) Reconciliation of net (deficit) / surplus for the year after income tax with net cash flows from operations

Net (deficit) / surplus after income tax for the year (247,394) 567,253

Non‐cash flows in surplus:

Depreciation and amortisation 44,601 10,819

Bad debts 386 3,949

Loss on disposal of property, plant and equipment ‐ 3,505

Changes in assets & liabilities:

(Increase) in debtors (17,375) (13,009)

(Increase) in prepayments (453,395) (218,295)

Increase in creditors 281,243 131,709

Increase in income tax payable 230,000 ‐

Increase in other provisions 114,824 29,034

Net cash flows (used in) / from operating activities (47,110) 514,965

17) Related parties and related party transactions From time to time, Directors and employees of the Company are covered by the company’s travel insurance policy when attending and conducting company business activities. Directors of the Company or director related entities may purchase Probus Travel Insurance (previously known as PSP Optional Travel Insurance) for private travel at normal commercial rates.

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Financial statements for the year ended 31 March 2013 Apart from the details disclosed in this note, no director has entered into a material contract with the Company since the end of the previous financial year and there were no material contracts involving Directors’ interests existing at year end. Directors’ compensation The following people were Directors of the Company during the financial year and to the date of this report: M Robinson P Carroll D Wylie

K Brand M Jensen MNZM J Burford resigned 17 May 2012

G Blacker W Lake A Ducray resigned 17 May 2012

V Semmler J Lewis G McLennan OAM resigned 17 May 2012

D Allen In accordance with the Company’s Constitution, the Directors are entitled to be reimbursed for travelling and other expenses incurred in attending Directors’ meetings and other meetings in connection with the Company’s business. During the year, travel and other expenses totalling $75,149 (2012 ‐ $76,600) was incurred by the Directors in fulfilling their role. Remuneration paid to the Directors during the year $Nil (2012: $Nil). Key management personnel compensation The positions held within the Company having authority and responsibility for planning, directing and controlling the Company’s activities, directly or indirectly (not including directors), are

General Manager Financial Controller Executive Assistant / Office Manager

The compensation paid, payable or provided to key management personnel noted as above is as follows;

Note 2013 $

2012$

Short‐term employee benefits 337,077 281,778

Post‐employment benefits 34,242 32,028

Long‐term employee benefits 62,044 43,050

433,363 356,856

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Financial statements for the year ended 31 March 2013 NOTES TO THE FINANCIAL STATEMENTS (continued)

18) Additional company information a) Company details As at reporting date, the registered office and principal place of business of the Company is Ground Floor, Suite 1, Perth House, 85 George St Parramatta. b) Structure In 1981, Governors of Rotary Districts in Australia and New Zealand established The Probus Centre – South Pacific Inc. as a community service activity and encouraged Rotary Clubs to sponsor the establishment of Probus Clubs throughout the region. In August 2011, Probus Centre – South Pacific Inc. became a company limited by guarantee. The Company is a company limited by guarantee registered under the Corporations Act and registered with Australian Securities and Investment Commission (‘ASIC’). The Constitution of the Company lists the objects of the Company, its legal powers, composition of the Board, conduct of elections and general meetings, membership and other information on the management and administration of the Company.

DISTRICT GOVERNORSAustralia and New Zealand

PROBUS SOUTH PACIFIC LIMITEDMembers of The Company Nine Probus Members elected from the area of selection and the original two remaining Members of the Probus Information Centre.

Company’s Board of DirectorsNine Probus Members elected from the area of selection; the Immediate Past Chairman, one Rotary District Governor Elect and one Rotary District Governor Nominee appointed annually by the Rotary Council of Governors.

THE SECRETARIATAdministration and Service Centre

KEY:

Rotary Probus


PROBUS ASSOCIATIONSAccredited to

Probus South Pacific Limited

To assist Probus clubs within a Rotary district with exchange of ideas and

information, assist on social activities and to protect the integrity of Probus against the unauthorised use of the Probus Name and Probus Emblem

trademarks.

PROBUS SOCIAL INTEREST GROUPS

Unaccredited groups formed by clubs in proximity to one

another coming together in friendship and fellowship for meetings, social

activities and picnics.

ROTARY DISTRICT PROBUS CHAIRMENPromote new Probus clubs and liaise with

district governor. Maintain informal contact with Probus clubs, if required.

ROTARY CLUBSSponsor new Probus clubs

PROBUS CLUBSAccredited to Probus South Pacific Limited

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Financial statements for the year ended 31 March 2013 19) Contingent liability Apart from the following there are no other known contingent liabilities as at 31 March 2013. As explained in Note 2(b), the Company’s income tax status is unclear. To this extent there is a contingent liability for additional income tax. Whilst the Company believes this is an unlikely risk a contingent liability exists for up to $170,000. 20) Events after the reporting period Other than as disclosed in note 11, at the date of this Report, there are no other matters or circumstances which have arisen since 31 March 2013 which have significantly affected or may significantly affect: (i) The operations of the Company; or (ii) The results of those operations; or (iii) The state of affairs of the Company; in financial years subsequent to 31 March 2013.

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DIRECTORS’ DECLARATION The directors declare that in our opinion:

a) The attached financial statements and notes thereto comply with accounting standards b) The attached financial statements and notes thereto give a true and fair view of the financial

position and performance of the company c) The attached financial statements and notes thereto are in accordance with the Corporations Act

2001 and the Corporations Regulations 2001 d) There are reasonable grounds to believe the company will be able to pay its debts as and when they

become due and payable. Signed in accordance with a resolution of the directors made pursuant to s. 295(5) of the Corporations Act 2001. On behalf of the directors

Margaret Robinson Veronica Semmler

Chairman Treasurer

Parramatta, 30 May 2013 Parramatta, 30 May 2013

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF


Report on the Financial Report We have audited the accompanying financial report of Probus South Pacific Limited (the company), which comprises the statement of financial position as at 31 March 2013 and the statement of comprehensive income, statement of changes in funds and statement of cash flows for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the directors’ declaration. The Responsibility of the Directors for the Financial Statements The Directors of the company are responsible for the preparation of a financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risk of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors of Probus South Pacific Limited on 30th May 2013, would be in the same terms if provided to the directors as at the date of this auditor’s report. Auditor’s Opinion In our opinion, the financial statements present fairly, in all material respects the financial position of Probus South Pacific Limited as of 31 March 2013, and its financial performance for the year then ended in accordance with Corporations Act 2001, and the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

CABEL Partners Chartered Accountants

Phillip Browne Registered Company Auditor [email protected]

North Sydney Dated this 30th day of May 2013

ANNUAL REPORT2012 - 2013

PROBUS - Tomorrow’s Visionfor AcTiVe ReTiReesTm

PROBUS SOUTH PACIFIC LIMITED'Perth House' Ground Level

Suite 1, 85 George Street, Parramatta NSW 2150 Australia

PO Box 1294 Parramatta NSW 2124 Australia

Australia Toll Free: 1800 630 488 New Zealand Toll Free: 0800 1477 6287

Tel: +61 2 9689 0200 | Fax: +61 2 9633 4779

Email: [email protected] | Website: www.probussouthpacific.org


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