YOORALLAANNUAL FINANCIAL REPORT30 JUNE 2014ABN 14 005 304 432

FINANCIAL REPORT

Yooralla reported total comprehensive income of $0.5m in the year ended 30 June 2014. This included book value adjustments of $1.5m of unrealised gains on equity investment and a one off business combination gain of $3.5m on the acquisition of EDAR. The deficit recorded from operations was $4.4m

Revenue from operations is recorded at $103.6m, an increase of $5.5m on the previous year (2012/13). Increases in Government revenue for 13/14 continued the trend of previous years. The revenue increases afforded to Yooralla do not correspond with higher increases in costs.

The chart below shows another positive year of revenue growth in line with preceding years. It is through strategic mergers that Yooralla has achieved revenue growth above indexation.

Sources of income from Government bodies continue to provide Yooralla with the majority of our income stream. The support that we receive from Department of Human Services, Department of Education and Early Childhood Development and the Commonwealth Department of Social Services is imperative to providing quality services to our clients. The government derived income has amounted to $86.2m for the 2013/14 financial year.

Increases in operating expenditure continue to provide Yooralla with difficult trading conditions. Expenses in 13/14 increased above the rise in revenue. This directly resulted in the significant operating deficit of $4.4m. Labour costs continue to be the largest of Yooralla expense items. Management implemented a number of efficiency initiatives during the 13/14 year and have undertaken re-structures and other cost saving strategies across a number of Yooralla divisions. This will deliver a much improved result in 14/15.

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June 2010 June 2011 June 2012 June 2013 June 2014$0

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$40

$60

$80

$100

$120

Yooralla Revenue Trend

Revenue from Government Revenue from Other sourcesYear End

Millions

The Net Assets of Yooralla at the end of the 2013/14 financial year were $56.3m. This included $3.5m gain on net assets from the EDAR acquisition. Yooralla has embarked upon a program of asset improvement in line with the transition to NDIS. Yooralla has created a solid financial base which can now be utilised to make strategic investment in Information Technology and Property Assets. This development will leverage Yooralla to be well positioned to provide enhanced services to our customers as NDIS is implemented over the following years.

Yooralla continues to rely on the generosity of the public in the form of annual donations, bequests and trusts. On behalf of the clients of Yooralla, we therefore wish to thank all our financial supporters. It is only with these additional revenues that Yooralla is able to ensure the continuation of its services to people with a disability across Victoria and maintain the financial strength of the organisation.

Claire KeatingChairperson - Finance, Audit, Infrastructure & Risk Committee22 September 2014

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Employee benefits and staff agency expenseDiscretionary expenditure for carers & clientsMotor vehicle expenseIT, telecommunications & postage expenseFood supplies expensePrinting, stationery & photocopying expenseRent, insurance & utilities expenseRepairs, maintenance and minor equipment expenseRaw materials and consumables usedFundraising expensesDepreciation and amortisation expensesOther expenses

Yooralla - Expenditure Items

DIRECTORS’ REPORT

Your Directors submit their report for the year ended 30 June 2014.

DirectorsThe names and the details of the members of the Board during the financial year and until the date of this report are set out elsewhere in this report. The Board members were in office for the entire period unless otherwise stated.

Corporate InformationYooralla is a company limited by guarantee and the liability of members of Yooralla is limited to $50 each. The principal activity of Yooralla is to provide services for people with disabilities in the State of Victoria. Yooralla’s range of essential services includes therapy, accommodation, respite, equipment, employment, recreation and help in and out of the home.

ObjectivesYooralla’s objectives are guided by our vision, which is a world where people with disability are equal citizens.

Yooralla's new strategic plan, SMART Choices, reflects Yooralla’s need to continue driving service transformation, to maximise the value we add for people with disability in an NDIS environment.

Through SMART Choices, Yooralla will focus on providing relevant and quality services for children and adults with disability, their families and carers. Our services include a range of accommodation alternatives, respite, in-home support, therapy, attendant care, assistive technologies, employment, education, recreation, training and practical skills for daily living.

The Yooralla Promise, as an Australian human service provider, informed by its Victorian context and engaged with the people and the local communities it serves, Yooralla promises to advance:

Services Offer outstanding products and services that support people with disability, in all their diversity, to live the life they choose.

Markets Understand consumer needs and meet these through the development of appropriate partnerships, programs, leadership and management.

Access Easily connect with and use Yooralla services.Reputation

Demonstrate and build integrity through evidence based solutions and measurable results.

Talent Engaged, responsive staff who are educated, skilled, inspired and who demonstrate our Yooralla values.

These five important and interconnecting elements make up the Yooralla Promise.

Progress against our strategic plan is governed through the preparation and monitoring of annual business plans and tracking a number of key performance indicators. These performance indicators broadly monitor services meeting contemporary customer needs, productivity measures, increased customer numbers and service recognition, client satisfaction, research that leads to change in practice and service delivery, financial performance, and increased staff engagement.

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Review of Operations and ResultsYooralla's total comprehensive income for the year ended 30 June 2014 was $503,689 (2013: $6,561,560). Included in the comprehensive income for the year were unrealised gains on equity investment of $1.5m, other income from capital grants, bequests and a $3.5 million gain from the acquisition of EDAR. Typical operational activity for the year ended June 2014 resulted in Yooralla posting a deficit of $4.4 million.

Total revenues increased by $1.0 million. This increase is reflective of a $5.8 million increase in revenue from operating activities, a $3.5 million gain from the acquisition of EDAR, less the $8.1 million one-off gain from the sale of the Glenroy property recorded in 2012/13.

The increase in revenue from operating activities of $5.8 million is attributable to rate adjustments to recurring government grants by $3.7m and revenue from the EDAR services acquired on 1 July 2013 of $4.5 million.

Total operating expenses increased by $7.5 million. The increase is due to expenditure from EDAR services acquired on 1 July 2013 of $4.4 million, employee pay increase entitlements through award agreements of $1.8 million, the full year impact of leasing motor vehicles of $0.3m and non-capital investment in IT infrastructure, research, investigation and organisation restructure costs of $2.5 million.

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Principal ActivitiesThe company’s principal activities for the year were:

Residential and carer support for people with disabilities Community and Independence services Children’s school and early intervention services Recreation services Adult day program services Supported employment services Raising of funds for these activities through government grants, fee for service and

fundraising.

Significant events or changes in affairs after balance dateThe directors are not aware of any other matter or circumstance which will significantly or may significantly affect Yooralla's operations, the result of those operations or Yooralla's state of affairs.

Directors BenefitsNo non-executive director of Yooralla has received or became entitled to receive a benefit by reason of a contract made by Yooralla with a director, with a firm of which a director is a member, or with a company in which a director has a substantial financial interest, except as disclosed in Note 20.

Environmental regulationsThe Group’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of any State or Territory.

Indemnification and insurance of officers and auditorsDuring the financial year, insurance cover was provided in respect of directors’ and officers’ liability under the State Government’s insurance policy for State Government of Victoria funded Community Service Organisations. A premium was not incurred by Yooralla to give effect to this cover.

Yooralla has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of Yooralla or of any related body corporate against a liability incurred as such an officer or auditor.

Proceedings on behalf of the CompanyNo person has applied for leave of Court to bring proceedings on behalf of Yooralla or intervene in any proceedings to which Yooralla is a party for the purpose of taking responsibility on behalf of Yooralla for all or any part of those proceedings. Yooralla was not a party to any such proceedings during the year.

Directors’ MeetingsDuring the year, the number of Board and Committee Meetings held and attended by Directors were as follows:

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Board Meetings

Committee MeetingsDirectors Finance, Audit,

Infrastructure and Risk (formally Finance, Audit and Infrastructure)

Service Delivery & Quality (formally People, Quality and Policy

Investment Business Strategy & Performance

Governance & People (formally Nominations and Remuneration)

Number of meetings held

7 5 4 1 2 3

Number of meetings attended:Dr Peter Langkamp (1) 7 5 4 1 2 3Mr Sanjib Roy 6 5 3 1 2 3Mr Ian Silk 6 4 1 2Mr Phillip Slater (2) 4/5* 3/3* 1Ms Fiona Smith 7 2 2 3Ms Claire Keating 6 4 1/1*Mr Robert Walker (3) 7 4 2 3Ms Barbara Alexander AO

6 4 1

Mr Wayne Ramsey AM 5 3

(1) Resigned on 7 Aug 2014 (2) Resigned on 14 Feb 2014 (3) Resigned on 7 Aug 2014* Number of meetings the director was a member of the committee

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Auditors’ Independence and Non-Audit ServicesThe directors received a declaration from the auditor of Yooralla which is included with the Independent Audit Report on pages 47 to 49.

On behalf of the BoardSigned in accordance with a resolution of the Directors.

Wayne Ramsey AMChairperson22 September 2014

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CORPORATE GOVERNANCE

The Board of Directors of Yooralla is responsible for corporate governance of the organisation. The Board guides and monitors the business and affairs of Yooralla to ensure that it achieves its Objects, as set out in the Constitution, and acts on behalf of its members by whom it is elected and to whom it is accountable.

The Board sets the policies, strategic direction and annual budget of Yooralla. It decides what services and programs are to be provided and supported. The Chief Executive, appointed by and accountable to the Board, is responsible for the day to day operations and administration of Yooralla.

The Board aims to ensure it discharges its responsibilities in an appropriate manner and it has established Charters and Policies to guide its actions.

The Board ensures that the members are informed and the information is communicated through:

The annual report which is distributed to all members; The annual general meeting and such other meetings as may be called to obtain

approval for Board action as required by the Constitution.

Composition of the BoardThe composition of the Board is determined in accordance with Yooralla’s Constitution:

The Board must comprise between seven and ten directors. The members can vote at a general meeting to change the limits on the number of directors. However the limits cannot be lower than five nor greater than fifteen. The Board can still act even if it has fewer directors than its lower limit. However, if it has fewer than five directors it cannot do anything other than appoint more directors so that there are five in all.

A person can become a director by being elected by the members at an Annual General Meeting. At each Annual General Meeting, at least one third of the Board (those on the Board for the longest time since last elected) must resign and having done so, are eligible to be re-elected. These rotation requirements do not include the Chief Executive Officer.

At the first Board meeting after each Annual General Meeting, the Board must elect a Chairman and a Deputy Chairman.

The Board can appoint a member to fill a casual vacancy on the Board. He or she will hold office until the next Annual General Meeting and will be eligible for re-election at that meeting.

·At any meeting of Yooralla, the members present in person or by proxy, who are entitled to vote, may, by a majority vote, remove a director and appoint a replacement.

The Board meets in accordance with the Constitution and its directions and follows meeting guidelines set down to ensure all directors are made aware of, and have available all necessary information, to participate in an informed discussion of all agenda items.

Details of the members of the Board of Yooralla during the financial year are set out elsewhere in this Annual Report.

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Codes of ConductCodes of Conduct have been developed to establish the professional standards of behaviour required of directors, management and staff in the conduct of Yooralla’s affairs. In particular, the Staff Code seeks to provide guidance to staff to assist them to act with confidence and integrity in their interpersonal relationships with consumers, consumers’ family members, carers and advocates. The Codes are periodically reviewed and updated as required.

Risk Management FrameworkThe Board ensures that a risk assessment process is regularly undertaken and that control and monitoring processes are both in place and reviewed on a regular basis. The Board is supported in this responsibility through its sub-committees and by the development and formalisation and policies and procedures at the organisational and divisional levels.

Board CommitteesThe Board has established the following Committees to assist it in carrying out its responsibilities:

Finance, Audit, Infrastructure & Risk Committee (formerly Finance, Audit & Infrastructure)This Committee’s primary purpose is to advise the Board and the Chief Executive Officer (CEO), the Chief Financial Officer (CFO) and other members of the senior management team in matters relating to:a) Risk: assisting the Board and the CEO and CFO to discharge their responsibilities for

oversight and governance of risk within Yooralla;b) Audit: assisting the Board and the CEO and CFO to discharge their responsibilities for

the audit function (including internal audit and the annual external audit);c) Finance: including reviewing Yooralla’s annual budgets, financial reporting and record

keeping, cash flow and Annual Financial Report. The Committee will also advise the Board on the strengths and weaknesses of the Company’s financial position with regard to its strategic and business plans, and its legal obligations;

d) Infrastructure: including the Company’s property holdings and Property Strategy, Information, Communications and Technology (ICT) infrastructure and ICT Strategy and other significant asset management (e.g. fleet management).

The members of the Committee during the year were Ms Claire Keating (Chairperson), Dr Peter Langkamp (resigned 7 Aug 2014), Mr Ian Silk, Mr Phillip Slater (resigned 14 Feb 2014), Mr Robert Walker (appointed 19 Sep 2013, resigned 7 Aug 2014), Mr Wayne Ramsay (appointed 7 Aug 2014) and Mr Sanjib Roy.

Investment CommitteeThis Committee has responsibility and delegated authority to manage the Yooralla Long Term Investment Portfolio (YLTIP) including: a) oversight and control of the YLTIP;b) approval of the YLTIP investment strategy (Investment Strategy in accordance with the

investment guidelines (Investment Guidelines) set out below.The goals of the YLTIP set by the Board are:a) to grow the YLTIP in excess of the rate of inflation in the long term (5 plus years); andb) to generate a growing income stream each year to underpin research, innovation and

policy development.

The Finance, Audit, Infrastructure & Risk Committee, based on advice from management, will at least annually determine Yooralla’s working capital requirements and recommend to the Board the quantum of funds for additional investment in the YLTIP or the requirements for drawing down on the capital in the YLTIP to meet working capital requirements or for investment in property.

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The members of the investment committee during the year were Dr Peter Langkamp (Chairperson - appointed 13 Feb 2014 and resigned 7 Aug 2014), Mr Phillip Slater (resigned 14 February 2014), Mr Ian Silk, Ms Barbara Alexander (appointed 28 Nov 2013), Mr Richard Greenfield (co-opted member), Dr Steven Vaughan (co-opted member) and Mr Sanjib Roy.

Service Delivery & Quality Committee (formerly People, Quality & Policy)The Committee performs a monitoring and advisory role in relation to the senior management responsible for service and quality and reports to the Board in matters relating to the:a) quality of Yooralla’s services and practices;b) practice and behaviours of employees and the interrelationship with the quality of

services Yooralla delivers to clients; andc) effectiveness of the services provided by Yooralla.

The members of the Service Delivery & Quality and the former People, Quality & Policy Committee during the year were Mr Wayne Ramsay (Chairperson), Dr Peter Langkamp (resigned 7 Aug 2014), Ms Fiona Smith, Ms Barbara Alexander, Ms Claire Keating (appointed 23 May 2014) and Mr Sanjib Roy.

Business Strategy & Performance Committee This committee's role is to advise and make recommendations to the Board in matters relating to Yooralla’s:a) strategic planning;b) business performance;c) mission; andd) vision and values.

The Business Strategy & Performance Committee was established on 6 February 2014 and the members during the year were Dr Peter Langkamp (Chairperson, resigned 7 Aug 2014), Ms Fiona Smith, Mr Robert Walker (resigned 7 Aug 2014) and Mr Sanjib Roy. As a result of these resignations during the year, the membership of this committee is now under review.

Governance & People Committee (formerly Nominations & Remuneration) This committee's role is to advise, support and make recommendations to the Board in matters relating to its composition and the effective discharge of its legal, ethical and functional responsibilities of oversight and corporate governance with particular reference to:a) the parameters of Board responsibility; b) Board composition and skillsets;c) human resources (including remuneration and people policies); andd) the Chief Executive Officer (CEO) performance, review and succession planning.

The members of the Governance & People and the former Nominations and Remuneration committee during the year were Mr Ian Silk (Chairperson), Dr Peter Langkamp (resigned 7 Aug 2014), Ms Fiona Smith, Mr Robert Walker (resigned 7 Aug 2014) and Mr Sanjib Roy. As a result of these resignations during the year, the membership of this committee is now under review.

Board’s CompensationA non-executive director may not be paid by Yooralla for his or her work as a director or for services to people with disabilities. He or she is only paid for his or her out of pocket expenses. Subject to section 241 of the Corporations Act, Yooralla must indemnify every director or other officer of Yooralla against all liabilities which he or she may take upon himself or herself as agent for Yooralla or for the benefit or intended benefit of Yooralla. However, Yooralla will not be required to provide an indemnity if the director or officer was acting outside the scope of his or her authority pursuant to the Corporations Act.

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STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2014

NOTES 2014$

2013$

Revenue from operating activities 2 97,580,973 91,739,678Investment income 2 2,321,237 2,466,732Fundraising income 2 3,804,079 3,767,257(Loss) / Profit on disposal of property, plant and equipment 2 (81,871) 8,226,295Gain on acquisition of business 2 3,474,572 -

Total operating revenue 107,098,990 106,199,962

Employee benefits and staff agency expense 3 80,047,815 74,782,868Discretionary expenditure for carers & clients 7,226,583 6,041,183Motor vehicle expense 1,974,233 1,646,456IT, telecommunications & postage expense 1,857,844 1,660,811Food supplies expense 1,329,832 1,310,735Printing, stationery & photocopying expense 542,206 629,521Rent, insurance & utilities expense 2,430,161 2,196,363Repairs, maintenance and minor equipmentexpense 3,061,013 3,299,083

Raw materials and consumables used 1,117,670 1,036,412Fundraising expenses 1,569,686 1,770,025Depreciation and amortisation expenses 3 2,114,965 2,177,422Other expenses 4,793,100 4,018,572Total operating expenses 108,065,108 100,569,451

(Deficit) / Surplus for the year (966,118) 5,630,511

Other Comprehensive IncomeItems that will not be reclassified subsequently to profit or loss:Unrealised gains on equity investments 1,469,807 1,035,689Realised (loss) / gains on equity investments - (104,640)

Total Comprehensive Income for the year 503,689 6,561,560

ANALYSIS OF COMPREHENSIVE INCOMEDeficit from operations (4,440,690) (2,474,309)Profit on disposal of the Glenroy property - 8,104,820Gain on acquisition of business 3,474,572 -Other comprehensive income 1,469,807 931,049

Total Comprehensive Income for the year 503,689 6,561,560

(The above Statement of Comprehensive Income is to be read in conjunction with the accompanying notes)

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STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2014

NOTES 2014$

2013$

CURRENT ASSETSCash and cash equivalents 16(b) 8,113,107 10,376,466Trade and other receivables 4 2,197,398 1,675,212Other financial assets 5 28,792,928 27,947,709Inventories 6 276,060 286,623Prepayments 525,404 403,880

39,904,897 40,689,890Assets classified as held for sale 7 150,000 -TOTAL CURRENT ASSETS 40,054,897 40,689,890

NON-CURRENT ASSETSProperty, plant & equipment 8 36,779,893 33,840,038Intangible assets 9 2,137,644 923,374TOTAL NON-CURRENT ASSETS 38,917,537 34,763,412

TOTAL ASSETS 78,972,434 75,453,302

CURRENT LIABILITIESTrade and other payables 10 11,141,368 9,421,941Employee benefits 11 9,949,152 8,839,177Provisions 12 199,038 -TOTAL CURRENT LIABILITIES 21,289,558 18,261,118

NON-CURRENT LIABILITIESEmployee benefits 11 1,346,110 1,359,107TOTAL NON-CURRENT LIABILITIES 1,346,110 1,359,107

TOTAL LIABILITIES 22,635,668 19,620,225

NET ASSETS 56,336,766 55,833,077

EQUITYRetained surpluses 13 53,711,451 54,741,983Special trust funds 14 1,601,815 1,537,401Changes in fair value of equity instruments 15 1,023,499 (446,307)

TOTAL EQUITY 56,336,766 55,833,077(The above Statement of Financial Position is to be read in conjunction with the accompanying notes)

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STATEMENT OF CASH FLOWS AS AT 30 JUNE 2014

NOTES 2014$

2013$

CASH FLOWS FROM OPERATING ACTIVITIESOperating government grants 85,361,733 81,749,001Receipts from customers/clients 10,872,410 12,422,055Fundraising 4,474,990 4,487,872Payments to suppliers and employees (102,534,95

) (96,301,598)Interest paid - -

Net cash from operating activities 16 (a) (1,825,823) 2,357,330

CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of property, plant & equipment (2,945,474) (3,118,019)Proceeds from sale of property, plant & equipment 81,971 14,483,235Acquisition of EDAR, net of cash acquired 174,798 -Purchase of equity investments (75,412) (6,500,000)Proceeds from sale of equity investments - 3,057,979Interest received 1,018,608 1,472,955Dividends received 607,974 716,073Decrease / (Increase) in long term bank deposits 700,000 (3,400,000)

Net cash from investing activities (437,536) 6,712,224

CASH FLOWS FROM FINANCING ACTIVITIESRepayment of borrowings - -Capital grants - -

Net cash from / (used) in financing activities - -

Net (decrease) / increase in cash and cash equivalents (2,263,359) 9,069,554

Cash and cash equivalents at beginning of the year 10,376,466 1,306,912

Cash and cash equivalents at the end of the year 16 (b) 8,113,107 10,376,466

(The above statement of cash flows is to be read in conjunction with the accompanying notes)

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STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2014

Special Trust Funds

$

Changes in Fair Value of Equity

Instruments

Retained Surpluses

$

Total$

Balance at 1 July 2013 1,537,401 (446,307) 54,741,983 55,833,077

Surplus / (Deficit) for the period 64,414 - (1,030,532) (966,118)Realised and unrealised gains on equity investments - 1,469,807 - 1,469,807

Transfers to retained surpluses - - - -

Total comprehensive income for the year 64,414 1,469,807 (1,030,532) 503,689

Balance at 30 June 2014 1,601,815 1,023,499 53,711,451 56,336,766

Balance at 1 July 2012 1,538,433 (1,481,996) 49,215,080 49,271,517

Surplus / (Deficit) for the period (1,032) - 5,631,543 5,630,511Realised and unrealised gains onequity investments - 931,049 - 931,049

Transfers to retained surpluses - 104,640 (104,640) -

Total comprehensive income for the year (1,032) 1,035,689 5,526,903 6,561,560

Balance at 30 June 2013 1,537,401 (446,307) 54,741,983 55,833,077

(The above statement of cash flows is to be read in conjunction with the accompanying notes)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of PreparationThe financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Australian Charities and Not-for-profits Commission Act 2012 and Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standard Board. The financial report has also been prepared on a historical cost basis, except for certain non-current assets and financial instruments that have been measured at revalue amount or fair value, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The accounting policies adopted are consistent with those of the previous year, unless otherwise noted. The financial report was authorised for issue by the Directors on 22 September 2014.

The financial report is presented in Australian dollars.

Statement of complianceThe financial report complies with Australian Accounting Standards.

Critical accounting judgements and key sources of estimation uncertaintyIn the application of the company’s accounting policies, which are described below, the directors are required to make judgments, estimates and assumptions about carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

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 following accounting policies have been applied in the preparation of the financial report.

Business CombinationsThe acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary.

Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.

On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred and the amount of any non-controlling interest in

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the acquiree over the fair value of the group's share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the acquired subsidiary and the measurement of all amounts has been reviewed, the difference is recognised directly in the income statement as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, which is the rate that a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in the income statement.

Non Current Assets Held for SaleNon-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the dateof classification.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

Revenue RecognitionGovernment Grant IncomeRevenue is recognised in accordance with AASB 1004: Contributions . Revenue is recognised when the entity gains control over the revenue and there is no unconditional obligation to repay the revenue. Yooralla therefore recognises grant income even where the service is not delivered until the next financial period.

Sale of GoodsRevenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:

Yooralla has transferred to the buyer the significant risks and rewards of ownership of the goods;

Yooralla retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to

Yooralla; and the costs incurred or to be incurred in respect of the transaction can be measured

reliably.

FeesRevenue from a contract to provide services is recognised by reference to the stage of completion of the contract. Revenue from time and material contracts is recognised at the contractual rates as labour hours are delivered and direct expenses are incurred.

Dividend IncomeDividend income is recognised in the income statement when the entity’s right to receive is established.

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Fundraising IncomeRevenue generated from fund raising activities, including donations and bequests of corpus from deceased estates, are recognised in the income statement when received. Non-cash donations, such as shares in listed companies, are recognised when received and brought to account at the fair value on the date of receipt.

Donations are recognised in equity as Special Trust Funds where the corpus is to be maintained and the income generated used for a stated purpose. If a donation where the corpus and net income generated cease to be used for their stated purpose, then these amounts are repayable and therefore are recognised as liabilities.

Rental IncomeYooralla’s policy for recognition of revenue from operating leases is described under 'Leased Assets' below.

Cash and cash equivalentsCash and cash equivalents comprise cash balances and short-term call deposits with original maturities of three months or less. Cash and cash equivalents are stated at nominal value.

For the purposes of the Statement of Cash Flows, cash balances include cash on hand and at bank, and money market investments readily convertible to cash within two working days, net of outstanding bank overdrafts.

InventoriesInventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first-in-first-out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

Financial InstrumentsFinancial assets and financial liabilities are recognised when Yooralla becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

(a) Adoption of revised AASB 9 Accounting Standard: Financial Instruments

Yooralla has elected to early adopt Accounting Standard AASB 9 Financial Instruments from 1 July 2010. This new standard has been adopted because it includes requirements for the classification and measurement of financial assets which improve and simplify the approach when compared with the requirements of the previous Accounting Standard AASB 139 Financial Investments: Recognition and Measurement.

AASB 9 allows, and Yooralla has made, an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Yooralla considers this to result in a presentation that better presents performance and operations of the organisation.

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Investments in equity instruments, which were previously classified as available for sale financial assets, are from 1 July 2010 classified as equity instruments re-valued through other comprehensive income. They continue to be valued at fair value with changes in value being recognised in the Changes in Fair Value of Equity Investments reserve (previously Unrealised gains/(losses) on available for sale investments reserve). Consequently adoption of AASB 9 has no effect on the valuation of Yooralla’s net assets or total comprehensive income.

All gains and losses on equity investments thereon are presented in other comprehensive income as part of the Statement of Comprehensive Income. Under AASB 9, there is no recycling of the realised gains and losses to the net profit for the period as previously required under AASB 139. There is also no requirement to test Yooralla’s equity investments for impairment with the result that there is no transfer of unrealised impairment losses from the asset revaluation reserve to the net profit for the period.

The transition provisions of AASB 9 require the standard to be applied retrospectively but it cannot be applied to investments that were disposed of prior to the initial application date, which in Yooralla’s case is 1 July 2010. Therefore, investments that were sold prior to 1 July 2010 have been accounted for under the previous standard AASB 139 where realised gains and losses on sales are included in profit for the period. After 1 July 2010 all realised gains and losses on the sale of investments are includedin other comprehensive income.

(b) Financial Assets

Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ investments, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.

Held-to-maturity investments

Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates that the Yooralla has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment.

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Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of AFS debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

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(c) Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

Yooralla is a company limited by guarantee and therefore the liability of members of Yooralla is limited to $50 each. The liability continues for 12 months after a person stops being a member. Each member agrees to contribute up to that amount to Yooralla if it is wound up and the money is needed to pay the debts and liabilities of Yooralla or the cost of winding up. Under the Memorandum and the Articles of Association dividends are not able to be declared.

Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’.

Other financial liabilities

Other financial liabilities, including borrowings and trade and other payables, are initially measured at fair value, net of transaction costs.Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Derecognition of financial liabilities

Yooralla derecognises financial liabilities when, and only when, the Yooralla’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Property, Plant and EquipmentProperty, plant and equipment are carried in the accounts at acquisition cost less accumulated depreciation and any accumulated impairment losses.Land and Buildings are measured at cost less accumulated depreciation on buildings and less any impairment losses recognised after the date of revaluation.

Depreciation is provided on a straight-line basis on all property, plant and equipment, other than freehold land.

Major depreciation periods:2014 2013

· Freehold buildings 40 years 40 years· Leasehold improvements The lease term The lease term· Plant and equipment 2 to 10 years 2 to 10 years

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An item of property, plant & equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is disposed.

IntangiblesIntangible assets are acquired and initially measured at cost. Following initial recognition intangibles assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

Amortisation is provided on a straight-line basis over the estimated useful live. Estimated useful lives are deemed to be 4-5 years.

Impairment of non-financial assetsAssets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment losses are recognised in the income statement.

Recoverable amount is the higher of an asset’s (or cash-generating unit’s) fair value less costs to sell and value in use. The value in use is:(i) the present value of the estimated future cash flows relating to the asset using a pre-tax

discount rate specific to the asset or cash generating unit to which the asset belongs; or(ii) the depreciated replacement cost of the asset when the future economic benefits of an asset of a not-for-profit entity are not primarily dependent on the asset’s ability to generate net cash inflows and where the entity would, if deprived of the asset, replace its remaining future economic benefits.

Leased AssetsLeases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases.

The Company as lessor

Amounts due from lessees under finance leases are recognised as receivables at the amount of the Company’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company’s net investment outstanding in respect of the leases.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

The Company as lessee

Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

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Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the company’s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

ProvisionsProvisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Employee BenefitsA 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 organisation in respect of services provided by employees up to reporting date.

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

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.

When sufficient information is not available to use defined benefit accounting for the defined benefit plan, it is accounted for under AASB 119 paragraphs 44-46 as if it were a defined

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contribution plan. Refer to Note 11 for more detail.

TaxationYooralla is exempt from income tax by virtue of Section 23 of the Income Tax Assessment Act 1936.

Goods and Services Tax (GST)Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or

ii. for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the statement of cash flows on a net basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

Application of new and revised Accounting Standards

New and revised AASBs affecting amounts reported and/or disclosures in the financial statements periods)

In the current year, the Company has applied a number of new and revised AASBs issued by the Australian AccountingStandards Board (AASB).

AASB 2012-2 ‘Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities’

The Company has applied the amendments to AASB 7 ‘Disclosures – Offsetting Financial Assets and Financial Liabilities’ for the first time in the current year. The amendments to AASB 7 require entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement.

The amendments have been applied retrospectively. As the Company does not have any offsetting arrangements in place, the application of the amendments does not have any material impact on the financial statements

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AASB CF 2013-1 ‘Amendments to the Australian Conceptual Framework’ and AASB 2013-9‘Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments’ (Part A Conceptual Framework

This amendment has incorporated IASB’s Chapters 1 and 3 Conceptual Framework for Financial Reporting as an Appendix to the Australian Framework for the Preparation and Presentation of Financial Statements. The amendment also included not-for-profit specific paragraphs to help clarify the concepts from the perspective of not-for- profit entities in the private and public sectors.

As a result the Australian Conceptual Framework now supersedes the objective and the qualitative characteristics of financial statements, as well as the guidance previously available in Statement of Accounting Concepts SAC 2 ‘Objective of General Purpose Financial Reporting’. The adoption of this amending standard does not have any material impact on the financial statements.

New and revised Standards on consolidation, joint arrangements, associates and disclosures

In August 2011, a package of five standards on consolidation, joint arrangements, associates and disclosures was issued comprising AASB 10 ‘Consolidated Financial Statements’, AASB 11 ‘Joint Arrangements’, AASB 12 ‘Disclosure of Interests in Other Entities’, AASB 127 (as revised in 2011) ‘Separate Financial Statements’ and AASB 128 (as revised in 2011) ‘Investments in Associates and Joint Ventures’. Subsequent to the issue of these standards, amendments to AASB 10, AASB 11 and AASB 12 were issued to clarify certain transitional guidance on the first-time application of the standards.

In the current year, the Company has applied for the first time AASB 10, AASB 11, AASB 12 and AASB 128 (as revised in 2011) together with the amendments to AASB 10, AASB 11 and AASB 12 regarding the transitional guidance. AASB 127 (as revised in 2011) is not applicable to the Company as it deals only with separate financial statements. The impact of the application of these standards is set out below.

AASB 10 ‘Consolidated Financial Statements’, AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards’, and AASB 2012-11 ‘Amendments to Australian Accounting Standards - Reduced Disclosure Requirements and

AASB 10 replaces the parts of AASB 127 ‘Consolidated and Separate Financial Statements’ that deal with consolidated financial statements and Interpretation 112 ‘Consolidation – Special Purpose Entities’. AASB10 changes the definition of control such that an investor controls an investee when a) it has power over an investee, b) it is exposed, or has rights, to variable returns from its involvement with the investee, and c) has the ability to use its power to affect its returns. All three of these criteria must be met for an investor to have control over an investee. Previously, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Additional guidance has been included in AASB 10 to explain when an investor has

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Other Amendments’ control over an investee. Some guidance included in AASB 10 that deals with whether or not an investor that owns less than 50 per cent of the voting rights in an investee has control over the investee is relevant to the Company.

The directors of the Company made an assessment as the date of the initial application of AASB 10 (i.e. 1 July 2013) and no new controls are identified. The adoption of this standard does not have any material impact on the Company's financial statements

AASB 12 ‘Disclosure of Interests in Other Entities’, AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards’, and AASB 2012-7 ‘Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements’

AASB 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the application of AASB 12 does not have any impact on the financial statements as there were no joint arrangements identified.

AASB 13 ‘Fair Value Measurement’, AASB 2011-8 ‘Amendments to Australian Accounting Standards arising from AASB 13’, and AASB 2012-1 ‘Amendments to Australian Accounting Standards Fair Value Measurement – Reduced Disclosure Requirements’

The Company has applied AASB 13 for the first time in the current year. AASB 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of AASB 13 is broad; the fair value measurement requirements of AASB 13 apply to both financial instrument items and non-financial instrument items for which other AASBs require or permit fair value measurements and disclosures about fair value measurements, except for leasing transactions that are within the scope of AASB 117 ‘Leases’, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).

AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under AASB 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, AASB 13 includes extensive disclosure requirements.

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AASB 13 requires prospective application from 1 July 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the initial application of the Standard. In accordance with these transitional provisions, the Company has not made any new disclosures required by AASB 13 for the 2013 comparative period. Other than the additional disclosures, the application of AASB 13 does not have any material impact on the amounts recognised in the financial statements.

AASB 2012-10 ‘Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments’

This standard amends AASB 10 and various Australian Accounting Standards to revise the transition guidance on the initial application of those Standards. This standard also clarifies the circumstances in which adjustments to an entity’s previous accounting for its involvement with other entities are required and the timing of such adjustments. The adoption of this amending standard does not have any material impact on the financial statements.

AASB 119 ‘Employee Benefits’ (2011), AASB 2011-10 ‘Amendments to Australian Accounting Standards arising from AASB 119 (2011)’ and AASB 2011-11 ‘Amendments to AASB 119 (September 2011) arising from Reduced Disclosure Requirements’

In the current year, the Company has applied AASB 119 (as revised in 2011) ‘Employee Benefits’ and the related consequential amendments for the first time. AASB 119 (as revised in 2011) changes the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in the fair value of plan assets when they occur, and hence eliminate the ‘corridor approach’ permitted under the previous version of AASB 119 and accelerate the recognition of past service costs. In addition, AASB 119 (as revised in 2011) introduces certain changes in the presentation of the defined benefit cost including more extensive disclosures.

The application of the standard has resulted in the discounting of the long term employee benefits in the current financial year. There has been no material change due to the adoption of this standard in the retrospective periods in relation to this amendment.

The adoption of this standard does not have any material impact on the defined benefit plan of the group (Refer to note 11 for details).

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Standards and Interpretations affecting the reported results or financial position

There are no new and revised Standards and Interpretations adopted in these financial statements affecting the reporting results or financial position.

Standards and Interpretations in issue not yet adoptedAt the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective.

Standard / Interpretation Effective for annual reporting periods beginning on or after

Expected to be initially applied in the financial year ending

AASB 9 ‘Financial Instruments’, and the relevant amending standards1

1 January 2017 30 June 2018

AASB 1031 ‘Materiality’ (2013) 1 January 2014 30 June 2015

AASB 2012-3 ‘Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities’

1 January 2014 30 June 2015

AASB 2013-3 ‘Amendments to AASB 135 – Recoverable Amount Disclosures for Non- Financial Assets’

1 January 2014 30 June 2015

AASB 2013-4 ‘Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting’

1 January 2014 30 June 2015

AASB 2013-5 ‘Amendments to Australian AccountingStandards – Investment Entities’

1 January 2014 30 June 2015

AASB 2013-9 ‘Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments’

1 January 2014 30 June 2015

INT 21 ‘Levies’ 1 January 2014 30 June 2015

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At the date of authorisation of the financial statements, the following IASB Standards and IFRIC Interpretations were also in issue but not yet effective, although Australian equivalent Standards and Interpretations have not yet been issued.

Standard / Interpretation Effective for annual reporting periods beginning on or after

Expected to be initially applied in the financial year ending

Narrow-scope amendments to IAS 19 Employee Benefits entitled Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)

1 July 2014 30 June 2015

Annual Improvements to IFRSs 2010-2012 Cycle

1 July 2014 30 June 2015

Annual Improvements to IFRSs 2011-2013 Cycle

1 July 2014 30 June 2015

IFRS 14 Regulatory Deferral Accounts 1 January 2016 30 June 2017

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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

NOTE 2 REVENUE 2014 2013$ $

Revenue from operating activitiesRecurrent government grants - State 83,862,795 76,540,846

- Commonwealth 2,243,334 2,835,897Capital grants - State government 123,647 63,371

- Private capital grants 3,314 13,600Sale of goods - Business Services 2,753,744 2,914,675

- Equip. - -Bequests - Capital bequests 671,331 695,544

- Special trust funds - 25,071

Fee income 7,922,808 8,650,675Total revenue from operating activities 97,580,973 91,739,678

Investment incomeInterest on short-term deposits 1,084,608 1,342,988Rental income - Glenroy School - 140,111

- Office space 548,136 393,904Income from equity investments 688,493 589,730Total revenue from investment income 2,321,237 2,466,732

Fundraising income 3,804,079 3,767,257

Other income(Loss) / Profit on disposal of property, plant and equipment (81,871) 8,226,295Gain on acquisition of EDAR 3,474,572 -

3,392,701 8,226,295

Total revenue 107,098,990 106,199,962

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NOTE 3 EXPENSES 2014 2013$ $

Employee benefits and staff agency expenseSalaries and wages expense 61,205,705 55,250,833Superannuation expense 5,500,951 4,945,316Workers compensation expense 2,494,704 2,735,349Annual and long service leave expense 6,538,236 5,359,186Employee training expense 857,865 706,331Staff agency expense 3,450,354 5,785,853

80,047,815 74,782,868

Depreciation and amortisation expenseBuildings 750,806 777,405Leasehold improvement 311,935 196,118Plant and equipment 744,477 730,053Motor vehicles 55,999 338,605Computer software 251,748 135,242

2,114,965 2,177,422

Operating lease expense 2,138,046 1,425,972Provision for doubtful debts and bad debts 93,326 63,565

Auditors remuneration (i) - audit fee 55,450 42,100- other services 39,153

(i) The auditor of Yooralla is Deloitte Touche Tohmatsu

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NOTE 4 RECEIVABLES (CURRENT) 2014 2013$ $

Trade receivables (i) 868,507 979,096Less allowance for impairment loss (36,319) (6,080)

832,188 973,016Accrued interest on term deposits 268,348 191,956Accrued franking credits income 189,915 142,183Other accrued income 795,491 284,773Other receivables 111,456 83,283

2,197,398 1,675,212(i) Trade receivables are non-interest bearing and generally on 30-60 day terms.

A provision for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired. An impairment loss of $36,319 has been recognised by Yooralla at reporting date.

As at reporting date the ageing analysis of trade receivables is as follows:

Total 0-30 days 31-60 days 61-90 days +91 days +31 days

30 June 2014 868,506 417,595 215,444 91,490 107,659 36,319

30 June 2013 979,096 552,846 178,161 63,653 178,356 6,080* PDNI - Past due not impaired* CI - Considered impaired

NOTE 5 FINANCIAL ASSETS (CURRENT) 2014 2013$ $

Term deposits - at fair value 16,700,000 17,400,000Equity instruments at fair value through Other Comprehensive IncomeEquity investments - at fair value 12,092,928 10,547,709

28,792,928 27,947,709

Equity Investments are classified as not held for trading and are units in managed trust funds that have no fixed maturity date. Their fair value has been determined indirectly by reference to published price quotations in an active market.Equity investments during the year included dividends reinvested of $75,412.

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NOTE 6 INVENTORIES (CURRENT) 2014 2013$ $

Raw materials 183,158 210,438Finished goods 92,902 76,185

276,060 286,623

NOTE 7 ASSETS CLASSIFIED AS HELD FOR SALE 2014 2013$ $

Land 150,000 -150,000 -

The property situation at 8 Irwin Road, Benallla was classified as held for sale at 30 June 2014. No impairment loss was recognised on reclassification of the land as held for sale at 30 June 2014. The sale concluded on 14 July 2014 with net proceeds of $174,957. There were no cumulative income or expenses recognised in other comprehensive income relating to the sale in the current year.

NOTE 8 PROPERTY, PLANT & EQUIPMENT 2014 2013$ $

Carrying amounts of:Land 14,069,627 10,974,627Buildings 19,238,439 19,855,610Leasehold improvements 1,312,513 1,040,259Plant and equipment 2,084,784 1,894,481Motor vehicles 74,529 75,061

36,779,893 33,840,038

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Freehold land Buildings

Leasehold improvements

Plant and equipment

Motor vehicles Total

$ $ $ $ $ $CostBalance at 1 July 2012 11,014,627 26,843,053 1,955,656 7,464,146 6,734,228 54,011,710Additions - 817,663 830,320 707,460 247,880 2,603,323Disposals - - (62,647) (302,829) (6,702,023) (7,067,499)Acquisitions through business combinations - - - - - -Reclassified as held for sale - - - - - -

Balance at 30 June 2013 11,014,627 27,660,716 2,723,329 7,868,777 280,085 49,547,535

Additions - 196,796 420,555 862,106 - 1,479,457Disposals (90,000) (69,327) - (844,379) (45,214) (1,048,919)Acquisitions through business combinations 3,330,000 - 163,635 88,357 55,467 3,637,459Reclassified as held for sale (175,000) - - - - (175,000)

Balance at 30 June 2014 14,079,627 27,788,186 3,307,519 7,974,860 290,338 53,440,531

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Freehold land Buildings

Leasehold improvements

Plant and equipment

Motor vehicles Total

$ $ $ $ $ $Accumulated depreciation and impairmentBalance at 30 June 2012 40,000 7,038,452 1,515,220 5,513,448 3,109,093 17,216,213Eliminated on disposals of assets - (10,750) (28,268) (269,205) (3,242,674) (3,550,897)Eliminated on reclassification as held for sale - - - - - -Impairment losses recognised in profit or loss - - - - - -Depreciation expense - 777,405 196,118 730,053 338,605 2,042,180

Balance at 30 June 2013 40,000 7,805,106 1,683,070 5,974,296 205,024 15,707,497

Eliminated on disposals of assets (5,000) (6,166) - (828,697) (45,214) (885,077)Eliminated on reclassification as held for sale (25,000) - - - - (25,000)Impairment losses recognised in profit or loss - - - - - -Depreciation expense - 750,806 311,935 744,477 55,999 1,863,217

Balance at 30 June 2014 10,000 8,549,746 1,995,006 5,890,077 215,809 16,660,637

Based on independent valuations done in the year ended 30 June 2012 ($45,130,000) and independent valuation as a result of the acquisition of EDAR as at 1 July 2013 ($3,330,000), the Directors are satisfied that the valuation has not materially changed during the year and exceeds the book value at 30 June 2014.

Impairment losses recognised in respect of property, plant and equipment in the year amounted to $nil (2013: $nil). The impairments reflect our estimates of fair value which were based on appraisals with market based assumptions.

The impairment losses have been included in the line item 'other expenses' in the statement of comprehensive income.

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NOTE 9 INTANGIBLE ASSETS 2014 2013$ $

Computer software at cost 2,283,325 1,071,449Accumulated amortisation (399,823) (148,075)Written down value 1,883,502 923,374

Work in progress - at cost 254,142 -

Total intangible assets - at cost 2,537,467 1,071,449Total accumulated amortisation (399,823) (148,075)Total written down value 2,137,644 923,374

Opening Balance

at 01/07/13 Additions

Transfer In / (Out) Disposals

Amortisation Expense Closing

Balanceat 30/06/14

Software 923,374 402,954 808,924 - (251,748) 1,883,502Work in progress - 1,063,065 (808,924) - - 254,141

Total 923,374 1,466,019 - - (251,748) 2,137,643

Opening Balance

at 01/07/12 Additions

Transfer In / (Out) Disposals

Amortisation Expense Closing

Balanceat 30/06/13

Software 159,682 145,269 753,353 313 (135,242) 923,374Work in progress 485,040 268,313 (753,353) - - -

Total 644,722 413,582 - 313 (135,242) 923,374

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NOTE 10 PAYABLES (CURRENT) 2014 2013$ $

Trade payables (i) 1,935,539 1,700,974Other payables 2,551,787 1,421,209Goods & services tax payable 580,016 482,473Salaries and wages accrual 2,678,218 1,593,246Superannuation payable 492,801 450,181Prepaid operating revenue 2,706,065 3,577,422Jean Chambers Foundation 196,943 196,436

11,141,368 9,421,941

(i) Trade payables are non-interest bearing and generally on 7 to 30 day terms.

Jean Chambers FoundationBalance at beginning of the financial year 196,436 195,550Additional contributions - -Interest earned 7,366 9,789Capital expenditure - -Operating expenditure (6,859) (8,903)Balance at end of the financial year 196,943 196,436

NOTE 11 EMPLOYEE BENEFITS 2014 2013$ $

Provision for employee benefits (current) 9,949,152 8,839,177Provision for employee benefits (non-current) 1,346,110 1,359,107

11,295,262 10,198,284

Employee BenefitsThe aggregated employee benefits recognised and included in the financial statements are as follows:Annual Leave - current 5,078,655 4,322,108Long Service Leave - current 4,870,497 4,517,069Long Service Leave - non-current 1,346,110 1,359,107Salaries and wages accrual (i) 2,678,218 1,593,246Superannuation payable (i) 492,801 450,181Total Employee Benefits 14,466,281 12,241,710

(i) The salaries and wages accrual and superannuation payable are included in Note 10 Payables (Current).

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Superannuation Commitments

The superannuation plans provide both accumulated and defined benefits, the latter based on years of service and final average salary. Eligible employees can contribute to the plans at various percentages of their wages and salaries and Yooralla also contributes to these plans. Contributions by Yooralla into the accumulation fund of up to 9.25% and into defined benefits fund of up to 15.25% of employees' wages and salaries are legally enforceable in Australia.

Five of Yooralla's employees (30 June 2013: 9 employees) will receive defined benefit post-employment benefits from First State Super. First State Super is a defined benefit multi-employer plan. Sufficient information is not available to account for First State Super as a defined benefit plan as each employer is exposed to actuarial risks associated with current and former employees of other entities. As a result there is no consistent and reliable basis for allocating the obligation, assets and costs to individual entities. Therefore Yooralla has adopted defined contribution accounting for these employees.

We have not been notified by First State Super, as at reporting date, of any notional deficit of net assets attributable to Yooralla employees in the Defined Benefit Scheme as at 30 June 2014 (30 June 2013: $9,772 surplus).Past investment performance is not a reliable indicator of future performance. Even though the First State Super Fund has recently attained a satisfactory funding status with the assistance of strong investment returns, on the advice of the Fund's actuary, the contribution rates will remain unchanged for the current financial year.

NOTE 12 PROVISIONS 2014 2013$ $

Provision for termination benefits (i) 199,038 -

(i) The provision for termination benefits represents employee entitlement to redundancy pay according to Yooralla's redundancy policy and equivalent years of service. At year end, Yooralla had entered into redundancy arrangements with fifteen employees as a result of divisional restructures.

NOTE 13 RETAINED SURPLUSES 2014 2013$ $

Balance at beginning of financial year 54,741,983 49,215,080Surplus before other comprehensive income (966,118) 5,630,511(Deficit) / surplus attributable to special trust funds (64,414) 1,032Other comprehensive loss - (104,640)Balance at end of financial year 53,711,451 54,741,983

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NOTE 14 SPECIAL TRUST FUND 2014 2013$ $

Hilltops Trust FundBalance at beginning of the financial year 211,989 208,668Additional contributions - -Income 7,950 9,912Capital Expenditure - -Operating Expenditure (238) (6,590)Balance at end of the financial year 219,701 211,989

Katherine Bourke Trust FundBalance at beginning of the financial year 1,106,101 1,118,093Additional contributions - -Income 72,200 51,138Capital Expenditure - (13,910)Operating Expenditure (17,490) (49,221)Balance at end of the financial year 1,160,811 1,106,101

Hemmingway Trust FundBalance at beginning of the financial year 192,625 186,196Additional contributions - -Income 7,223 8,844Capital Expenditure -Operating Expenditure (6,232) (2,415)Balance at end of the financial year 193,616 192,625

Hampton Trust FundBalance at beginning of the financial year 26,686 25,476Additional contributions - -Income 1,001 1,210Capital Expenditure -Operating ExpenditureBalance at end of the financial year 27,687 26,686

Total Special Trust Funds 1,601,815 1,537,401

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NOTE 15 CHANGES IN FAIR VALUE OF EQUITY INSTRUMENTS 2014 2013

$ $

Balance at beginning of financial year (446,307) (1,481,996)Unrealised gain on equity investments 1,469,807 1,035,689Realised loss on equity investments - (104,640)Transfers to accumulated funds - 104,640Balance at end of financial year 1,023,500 (446,307)

NOTE 16 CASH AND CASH EQUIVALENTS 2014 2013$ $

(a) Reconciliation of Surplus to the net cash flows from operating activities

Loss / Surplus for the year (966,118) 5,630,511Adjust for non-operating and non-cash items: Depreciation of property, plant and equipment 1,863,217 2,042,180 Amortisation of Intangibles 251,748 135,242 Impairment expense - - Bad and doubtful debts - - Loss / Gain on disposal of property, plant and equipment 81,871 (8,226,295) Interest received (1,091,975) (1,342,988) Dividends received (688,493) (589,730) Capital grants - - Gain on acquisition of business (3,474,164) -

Change in assets and liabilities: Trade and other receivables (353,105) 322,690 Inventories 10,563 (1,579) Prepayments (106,732) 339,456 Trade and other payables 1,545,207 3,511,053 Provision for employee benefits 1,102,158 536,789

Net cash flow from operating activities (1,825,823) 2,357,330(b) Reconciliation of cash and cash equivalentsCash and cash equivalents comprise: - Cash on hand 18,500 17,350 - Cash at bank 644,607 59,116 - Short term deposits 7,450,000 10,300,000Closing cash and cash equivalents balance 8,113,107 10,376,466

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NOTE 17 BUSINESS COMBINATIONS

a) Amalgamation with EDAROn 1 July 2013, Yooralla amalgamated with EDAR under a Charity Merger Deed. EDAR is a not for profit organisation which provides mainly day programs and adult life skill training programs from four locations, concentrated in the eastern metropolitan region. Details of the acquisition are as follows:

2014 $

Cash and cash equivalents (i) 93,727Trade and other receivables (ii) 15,604Other financial assets 81,070Prepayments 14,791Property, plant & equipment (iii) 3,637,459Trade and other payables (187,787)Employee benefits (iv) (180,292)

3,474,572Gain on Acquisition (3,474,572)

-

Consideration:Cost of acquisition (v) -

Notes:(i) Cash recognised as fair value.(ii) Receivable are valued at fair value less irrecoverable balances.(iii) Land and buildings revalued to fair value as at 30 June 2013 by an independent valuation. Other plant and equipment items have been recognised at written down value after reviewing and vouching for existence and condition. Useful lives have been reviewed and updated where appropriate in line with Yooralla accounting policy.(iv) Provision for employee leave has been re-calculated based on Yooralla accounting policy and any differences adjusted on opening balances.

(v) Based on Charity Merger Deed Clause 3.1.

b) Analysis of net outflow of cash and cash equivalents in respect of the acquisition of EDAR

2014 $

Cash and bank balances acquired 93,727Other financial assets acquired - term deposit 81,070Net inflow of cash and cash equivalents in respect of the acquisition of EDAR 174,797

c) Impact of the amalgamation on the results of YoorallaIncluded in the deficit for the year is a $19,499 deficit attributable to the business activity of EDAR. Revenue for the year includes $4.458 million in respect of EDAR.

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NOTE 18 EXPENDITURE AND CAPITAL COMMITMENTS 2014 2013$ $

a) Lease expenditure commitments: Operating leases (non-cancellable) - not later than one year 2,039,560 1,422,640 - later than one year and not later than five years 3,677,721 2,538,587 - greater than five years 143,533 404,690

5,860,814 4,365,916

b) Capital commitmentsAs at 30 June 2014, Yooralla has a capital commitments totalling $867,000 for the development of a community hub in Fawkner, which had been contracted for as at that date but not recognised as liability.

NOTE 19 FINANCING ARRANGEMENTS 2014 2013$ $

Yooralla has access to the following financing facilities with Westpac BankOverdraft facility 1,000,000 1,000,000Bank guarantee 270,000 120,000

1,270,000 1,120,000

Facilities utilised at reporting dateOverdraft facility - -Bank guarantee 264,992 105,461

264,992 105,461

Facilities not utilised at reporting dateOverdraft facility 1,000,000 1,000,000Bank guarantee 5,058 14,539

1,005,058 1,014,539

These facilities are secured by registered mortgage over property situated at 244-248 Flinders Street, Melbourne.

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NOTE 20 RELATED PARTY DISCLOSURESThe Board of Yooralla during the financial year comprised:Dr Peter Langkamp (Yooralla Chairperson, resigned 7 August 2014)Mr Sanjib RoyMr Ian SilkMr Phillip Slater (resigned 14 February 2014)Ms Fiona SmithMs Claire KeatingMr Robert Walker (resigned 7 August 2014)Ms Barbara AlexanderMr Wayne RamseyNo remuneration or superannuation benefit has been received or is due and receivable by Directors of Yooralla, except for Mr Sanjib Roy, who received remuneration in his capacity as the Chief Executive Officer of Yooralla.Rob Walker performed legal services for Yooralla on behalf of Baker & McKenzie. Legal fees of $10,083 was charged on an arms’ length basis and subsequently paid.

Compensation for Key Management Personnel 2014 2013$ $

Short-term Benefits 1,595,775 1,242,518Other Long-term Benefits 76,434 56,874Post Employment Benefits 124,281 108,522

1,796,490 1,407,914

Key management personnel are: CEO and five Executives reporting directly to him. (7 General Managers in FY2013). The composition of the key management personnel group changed in January 2014, whereby General Managers now report directly to the COO.

NOTE 21 SEGMENT INFORMATIONYooralla operates in Victoria within the community sector providing services to persons with disabilities.

NOTE 22 FAIR VALUE & INTEREST RATE RISKYooralla’s financial instruments comprise of receivables, financial assets available for sale (bank bills and equity investments), cash and deposits at call. Yooralla does not enter into or trade financial instruments for speculative purposes.

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Risk Exposures and Responses

(a) Interest rate riskYooralla’s exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised, at the reporting date are as follows:

Financial Instruments

Floating interest Rate

Fixed interest rate maturing 1 year or less

Non-interest Bearing

Total amount as per statement of financial position

Weighted average effective interest rate

2014 2013 2014 2013 2014 2013 2014 2013 2014 2013$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 % %

1. Financial AssetsCash and bank 645 59 19 663 76 N/A N/ATrade receivable 832 832 973 N/A N/AShort term deposits 24,150 27,700 24,150 27,700Equity investments 12,093 10,548 12,093 10,548 N/A N/AListed shares N/A N/A

Total financial assets 645 59 24,150 27,700 12,944 11,538 37,738 39,297N/A – not applicable for non-interest bearing financial instruments.

(b) Sensitivity analysisThe following sensitivity analysis is based on the interest rate risk exposure in existence over the year ended 30 June 2014. If interest rates had moved as illustrated below, with all other variables held constant, the Yooralla operating surplus and equity would have been affected as follows:

Surplus / (Deficit)Higher / (Lower)2014 2013

$ $+1% (100 basis points) 287,964 336,533-1% (100 basis points) (287,964) (336,533)

The sensitivity in 2014 is similar to 2013 given average balances and returns.

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(c) Credit RiskCredit risk arises from the financial assets of Yooralla, which comprise cash and cash equivalents, trade and other receivables and available for sale financial assets. Yooralla’s exposure to credit risk arises from potential default of the counter party on its contractual obligations resulting in financial loss.Trade receivables consist of arrangements with state and federal governments, Dualware commercial customers, clients, financial intermediary and TAC. Receivables are monitored and followed up on an ongoing basis to reduce the potential for bad debts. Our current trade terms are 30 -60 days (refer to Note 4 for details of the ageing of trade receivables as at 30 June 2014).The credit risk on liquid funds is limited because the counter parties are reputable banks with high credit ratings. Equity securities are spreads amongst highly reputable fund managers and stocks to minimise the risk of default.

(d) Price RiskThe accounting standard defines this as the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market price. At balance date Yooralla has 33% (2013: 28%) of its investment portfolio in managed fund units which are exposed to price risk. By nature, these investments can never be risk free as the market price of these securities can fluctuate. To limit this risk Yooralla diversifies its portfolio in accordance with limits set by the Investment Committee and ultimately the Board. The units purchased are for equity investments that are publicly traded on the ASX. The investment philosophy set by the Board regards these investments as medium to long term.

(e) Liquidity RiskThe accounting standard defines this as the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The ultimate responsibility for this rests with the Board. Management manages the liquidity risk by maintaining adequate cash reserves and by continuously monitoring forecast and actual cash flows while matching the maturity profiles of financial assets and liabilities. Given the current surplus cash assets, liquidity risk is minimal.

(f) Fair valuesThe Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements represents their net fair values for both 30 June 2014 and 30 June 2013.The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels:

Level 1 Level 2 Level 3 Total$ $ $ $

2014Equity Instruments- equity investments 12,092,928 12,092,928

12,092,928 12,092,928

2013Equity Instruments- equity investments 10,547,709 10,547,709

10,547,709 10,547,709

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NOTE 23 ECONOMIC DEPENDENCYYooralla receives a significant proportion (2014: 79%, 2013: 75%) of its operating revenue from the Victorian State Government and the Federal Government, and is therefore dependent on that income to sustain operations.

NOTE 24 SUBSEQUENT EVENTS AFTER BALANCE SHEET DATEOn 14 July 2014, Yooralla completed the property sale settlement for the land at Irwin Road, Benalla. The net sale proceeds was $174,957 and the net book value was $150,000.Other than the above, there has not been any other events arisen subsequent to the reporting date which would impact the reported results for the period or related disclosures.

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DIRECTORS’ DECLARATION

In accordance with a resolution of the Directors of Yooralla made pursuant to s60-15 of the AustralianCharities and Not-for-profits Commission Regulation 2013, I state that:

In the opinion of the Directors:

(a) the financial statements and notes of Yooralla are in accordance with the Australian Charities andNot-for-profits Commission Act 2012, including:

(i) giving a true and fair view of Yooralla's financial position as at 30 June 2014 and of its performance for the year ended on that date; and(i) complying with Accounting Standareds and Australian Charities and Not-for-profits CommissionRegulation 2013; and

(b) there are reasonable grounds to believe that Yooralla will be able to pay its debts as and when they become due and payable.

On behalf of the Board:

Wayne Ramsey AM Chairman22 September 2014

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