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National Affordable Housing Consortium Limited ABN 30 132 604 552
Financial Statements
For the Year Ended 30 June 2019
National Affordable Housing Consortium Limited ABN 30 132 604 552
Contents For the Year Ended 30 June 2019
Financial Statements Directors' Report
Auditors Independence Declaration under Section 307C of the Corporations Act 2001
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Responsible Persons' Declaration
Independent Audit Report
Page
8 9
10 11 12 13 39 40
National Affordable Housing Consortium Limited ABN 30 132 604 552
Directors' Report 30 June 2019
The Directors present their report, together with the financial statements of the Group, being the Company and its control led entities , for the financial year ended 30 June 2019.
1. General information
Directors
The names of the Directors in office at any time during, or since the end of, the year are : Names Position
Karen Smith-Pomeroy
Bradley Hosking
Jeff Dutton
Stephen Denaro
Michael Myers
Heather Watson
Prof William George Earl
Chairperson
Director
Director
Director
Managing Director
Director
Director
Appointed Chairperson 10 October 2019
Resigned 19 September 2019
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
Principal activities
NAHC is a not for profit charitable institution that facilitates the provision of affordable housing to people in need . It is one of Australia's largest providers under the Australian Government's National Rental Affordability Scheme [NRAS].
The principal activities are to:
• Create opportunities for further innovation and supply across the social and affordable housing system to meet community need,
• Facilitate shared equity home ownership to qualifying home purchasers using Buy Assist Australia,
• Facilitate the provision and compliance of affordable rental homes under NRAS,
• Provide or commission the provision of property management services for NRAS dwellings,
• Conduct research and act as an innovation hub to support the provision of social and affordable housing.
The Company is incorporated under the Corporations Act 2001 and is a company limited by guarantee. If the Company is wound up, the Constitution states that each member is required to contribute $10 each towards meeting any outstanding obligations of the entity.
No significant change in the nature of these activities occurred during the year.
National Affordable Housing Consortium Limited ABN 30 132 604 552
Directors' Report 30 June 2019
2. Operating results and review of operations for the year
Operating result
The consolidated profit of the Company for the financial year amounted to $ 3, 176,889 (2018 : $ 402,670). The profit for the parent company NAHC was $3,459,297 (2018: $1,267,627).
Dividends paid or recommended
No dividends are payable given the charitable nature of the company.
3. Other items
Events after the reporting date
In August 2019 the wholly owned subsidiary, Home and Equity Rental Services Ltd , purchased a medium sized property management portfolio in Melbourne, Victoria. While this does not have a material impact on the group's results, it clearly illustrates the intent to expand the property management business both in size and geographical reach.
In April 2019, NAHC and HERS commenced litigation against certain parties in the Supreme Court of Queensland. The substance of the dispute concerned property management rights over a number of National Rental Affordabil ity Scheme ("NRAS') properties for which NAHC is the NRAS approved participant. In July, the parties executed a Deed of Settlement. Legal fees associated with the dispute totalled approximately $200,000.
Except for the above, no other matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in future financial years.
Environmental issues
The Group's operations are not regulated by any significant environmental regulations under a law of the Commonwealth or of a state or territory of Austral ia.
Future developments
The NAHC Group, in pursuit of it's mission to provide affordable housing, has numerous initiatives in place to increase
the number of affordable rental properties
• the number of shared equity home ownership properties where deposit assistance is supplied to qualifying home purchasers.
Currently, while there is one initiative at the contract stage, it is expected that there will be a significant level of new business in place by 30th June 2020.
2
National Affordable Housing Consortium Limited ABN 30 132 604 552
Directors' Report 30 June 2019
Information on directors Karen Smith-Pomeroy
Qualifications
Experience
Bradley Hosking
Qualifications
Experience
Director and Chairperson
A. Dip (Accounting); Advanced Risk Management - Wharton College USA
Fellow Institute of Public Accountants (FIPA); Graduate Australian Institute of Company Directors (GAICD); Fellow Financial Services Institute of Australasia (FFIN); and Affiliate Governance Institute of Australia.
Director of NAHC since 2011 Karen has over 30 years' experience in the Financial Services sector within Australia. She has held a number of Non-Executive Director roles in past years, including in Government Owned Corporations and industry associations.
Karen has significant experience in risk and governance and extensive experience working with a wide range of companies across the energy, property and infrastructure sectors nationally.
Her current non-executive directorships include
Chairperson Buy Assist Australia Pty Ltd Queensland Treasury Corporation, Stanwell Corporation Limited, lnfocus Wealth Management Limited, Kina Securities Limited, lnfigen Energy Ltd.
Director
A. Dip (Accounting), A. Dip (Banking& Finance), FFin, FDIA, MAICD
Director of NAHC since 2009, Corporate Director Common Equity Housing Limited; Victoria's largest community housing association by assets. Brad brings a diverse range of experience and skills to NAHC through an extensive background in leadership, construction and development finance, property and risk management, business development, tertiary education and community housing, gathered through executive and senior roles within the Suncorp Group, ANZ Bank and Swinburne University of Technology over a 30 year period .
Bradley holds directorships for: Home Equity and Rental Services HERS Property
3
National Affordable Housing Consortium Limited ABN 30 132 604 552
Directors' Report 30 June 2019
Jeff Dutton
Qualifications
Experience
Director
Master of Business Administration (Executive) Graduate Certificate in Training (Action Learning) Bachelor of Business Post Graduate Studies - Project Management Econometrics Studies Diploma in Project Management; Certificate IV in Training and Assessment.
Further Studies: Enterprise Risk Management, Workplace Health and Safety, Company Directors Course. Certified Practicing Project Manager (AIPM) RegPM Assessor (CPPM) (AIPM) Certification - GPM-b (Green Project Management) Past Project Management Achievement Award Judge (AIPM) Past Project Management Achievement Award Judge (APFPM) Past Member of the Project Excellence Awards Judging Team (IPMA)
Professional Memberships: Australian Institute of Project Management Project Management Institute Australian & New Zealand Institute of Sustainable Management Chamber of Commerce and Industry Australia Philippines Inc
NAHC Founding Director since 2008
Jeff has over 30 years' experience as a consultant and has held senior management roles in private ,public and not for profit organisations. He has been associated with Community Housing for twenty years. He designed and delivered strategic planning processes in public, private, and, community organisations . A proponent of Green Project Management in Australia and Asia Pacific, he has designed and delivered accredited and unaccredited project management and sustainable project management training for several South Eastern Queensland Universities and Victoria. A Registered Project Manager (Reg PM) and an assessor for the Australian Institute of Project Management, he has implemented program and project management systems in a number of public and private sector organisations.
He has also been involved with the development and implementation of Group Insurance programs for Community Housing (QCHC) and NAHC. He has been involved with the development of Enterprise Risk Management and the development of Governance programs for Not for Profit organisations.
Jeff holds directorships for: National Affordable Housing Consortium Sustainable Living Infrastructure Consortium Home Equity and Rental Services HERS Property GPM Global - Asia Pacific Hub Community Life Learning Centre Decisions x Design
4
National Affordable Housing Consortium Limited ABN 30 132 604 552
Directors' Report 30 June 2019
Stephen Denaro
Qualifications
Experience
Heather Watson
Qualifications
Experience
Director
Bachelor of Business in Accountancy; Graduate Diploma in Applied Corporate Governance; Professional Memberships: Institute of Chartered Accountants in Australia & New Zealand; and Australian Institute of Company Directors
Director of NAHC since 201 O;
Stephen has extensive experience in mergers and acquisitions, business valuations, accountancy services, and income tax compliance gained from positions as Company Secretary and Chief Financial Officer of various public companies (including ASX listed), and with major chartered accountancy firms in Australia and the United Kingdom.
Stephen hold directorships for: National Affordable Housing Consortium Sustainable Living Infrastructure Consortium AquaHydex Pty Ltd Admedus Limited .
Director
Bachelor of Laws Graduate Certificate in Business (Philanthropy and Non-profit Studies)
Member Australian Institute of Company Directors Member, Queensland Law Society
Director of NAHC since 2014 Principal Lawyer, Watson Advisory and Consulting Ply Ltd - an incorporated legal practice.
Heather has more than 30 years' experience in legal practice and for the last 12 years this has been with a specialist focus in Charity law, governance and regulatory compliance for the non-profit sector.
Heather's industry experience includes health and community services, infrastructure.affordable housing,philantropy and indigenous communities.
She is a non-executive director on a number of government and charitable entities including
Uniting in NSW ACT (Chair) Epic Good Foundation (Chair) Queensland Children's Hospital and Health Services Queensland Rail Uniting in Vic Tas Australian Regional and Remote Community Services Ltd (a subsidiary of UnitingCare Old) Community Services Reform Council (Chair) SEFA Partnerships Ltd
She is also a member of the Advisory Board to the Australian Charities and Not-for-Profits Commission.
5
National Affordable Housing Consortium Limited ABN 30 132 604 552
Directors' Report 30 June 2019
Jonathan Dale
Qualifications
Experience
Michael Myers
Qualifications
Experience
Company Secretary
B.A. (English); M.A. (Anthropology); Juris Doctor (University of California - Los Angeles)
Jonathan completed his graduate degree in law (Juris Doctor) at the University of California - Los Angeles in 2010 and was admitted to practice law in December 2010. While practicing law, Jonathan advised companies (not for profit and for profit) and government agencies in regard to commercial, governance and litigation matters .
Jonathan is the Company Secretary and Legal Affairs & Quality Assurance Manager. He has been working for NAHC since March 2013. In his roles, Jonathan advises and assists NAHC's Board, Management Team and staff in regard to governance, commercial, operational, QA and strategic issues. Jonathan also serves as Company Secretary for the other companies in the NAHC Group.
Managing Director
B.A.[hons] Government & Politics: Social Policy and Administration Member of Australian Institute of Company Directors Member of Australasian Housing Institute
Director of NAHC since November 2014
Sustainable Living Infrastructure Consortium Ltd Home Equity and Rental Services Ltd HERS Property Ltd Affordable Rentals Victoria Ltd
CEO and Company Secretary of NAHC between 1st January 2009 and 12 November 2014. Director and Company Secretary of National Affordable Housing Providers Ltd Member of the Bond University Property Advisory Committee 30 years in social and affordable housing in the UK and Australia; Executive Director of Qld Community Housing Coalition 1996-2008; Member of the ATO Charities Consultative Committee 2000-2009; Member of the QUT Humanities Advisory Board 2002-2007
Director of Brisbane Housing Company and Member of the Audit Committee 2003-2008 Director of the Community Housing Federation of Australia 1998-2010 and former Chairman; Director of the Qld Council of Social Services 1998-2007 and former Vice President; Director of the Australian Council of Social Services 2000-2005 and Housing Policy Adviser; Member of the Affordable Housing Summit Group 2005-2009. UK Executive Director CHAS Housing Advice Service 1985-1996, Legal Aid Franchise 1992-6, Single Homeless Accommodation Project 1991-5 and Kirklees Bond Bank 1992-6;
Mike has a number of non-executive director roles including Director of Buy Assist Australia Director and Company Secretary National Affordable Housing Providers.
6
National Affordable Housing Consortium Limited ABN 30 132 604 562
Directors' Report 30 June 2019
Meetings of directors
During the financial year, 9 meetings of Directors (including committees of Directors) were held. Attendances by each director during the year were as follows:
Karen SmithPomeroy
Bradley Hosking
Jeff Dutton
Stephen Denaro
Heather Watson
Michael Myers
Prof William George Earl
Directors' Meetings
Number eligible lo Number
attend attended
9 9
9 9
9 8
9 8
9 6
9 9
g 8
Audit & Risk Investment Committee Committee
Number Number eligible to Number eligible to Number
attend attended attend attended
4 4 -- 2 2
- - -4 4 4 3 2 2
-
- 2 2
Indemnification and insurance of officers and auditors
Governance Committee
Number eligible to Number
attend attended
--3 3
3 3
3 3
-
- -
NAHC has insurance cover for Directors via insurer AIG Australia Limited (AIG) .
The company has paid premiums to insure the directors against liabilities for costs and expenses incurred by them in defending and legal proceedings arising out of their conduct while acting in the capacity of Director of the company, other than conduct involving a wilful breach of duty in relation to the company.
Proceedings on behalf of company
In April 2019, NAHC and HERS commenced litigation against certain parties in the Supreme Court of Queensland. The substance of the dispute concerned property management rights over a number of National Rental Affordability Scheme ("NRAS') properties for which NAHC is the NRAS approved participant. In July . the parties executed a Deed of Settlement. Legal fees associated with the dispute totalled approximately $200.000.
Apart from the above , no person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking respons ibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the year.
Auditor's Independence declaration
The auditor's independence declaration in accordance with section 307C of the Corporations Act 2001 for the year ended 30 June 2019 has been received and can be found on page 8 of the financial report.
Signed in accordance with a resolution of the Board of Directors:
~~\ I
Karen Smith-Pomeroy Chairperson
Dated this 28th day of November 2019
7
Level 6, Brisbane Club Tower 241 Adelaide Street Brisbane Old 4000 Australia
GPO Box 565 Brisbane Old 4001 Australia
Phone: 61 (07) 3233 0600
Fax: 61 (07) 3233 0601
Email: [email protected]
Web: www.merrotts.com.au
Accounting
Audit & Assuran - Statutory - Internal - Government
Business - Services -Audit - Restructuring
Corporate Services
Estate Planning
Forensic Accounting
Litigation Support
Recruitment - Executive - Accounting
Superannuation -Administration - Planning
Taxation
errotts Chartered Accountants & Business Advisers
National Affordable Housing Consortium Limited ABN 30 132 604 662
Auditors Independence Declaration under Section 60-40 of the Australian Charities and Not-for-profits Commission Act 2012 to the Directors of N~tional Affordable Housing Consortium Limited and Controlled Entities
In accordance with the requirements of section 60-40 of the Australian Charities and Not-for-Profits Commission Act 2012, as lead auditor for the audit of National Affordability Housing Consortium Limited declare that, to the best of my knowledge and belief, during the year ended 30 June 2019, there have been:
(i) No contraventions of the auditor independence requirements of the Australian Charities and Not-for-Profits Commission Act 2012 in relation to the audit; and
(ii) No contraventions of any applicable code of professional conduct in relation to the audit.
Merrotts Chartered Accountants
28th November 2019
Brisbane
Liability limited by a scheme approved under Professional Standards Legislation
8
National Affordable Housing Consortium Limited ABN 30 132 604 552
Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2019
Consolidated Parent
2019 2018 2019 2018
Note $ $ $ $ NRAS income 12,965,362 13,967,405 12,965,362 13,967,405
Consortium fees 2,752,072 2,778,766 2,752,072 2,778,766
Property management fee 2,498,792 2,201,718 2,048,382 2,043,649
Government grant income 2,053,460 152,525 2,053,460 152,525
Shared equity income 1, 100,086 95,940 1,034,074 74,728
Interest received 211,610 210,611 206,034 202,351
Other income 198,561 169,307 255,561 305,807
Share of equity-accounted joint ventures 244,075 244,075
Total Income 22,024,018 19,576,272 21,559,020 19,525,231 NRAS expenses 12,814,914 13,804,157 12,814,914 13,804, 157
Employee costs - salaried staff 3,359,704 3,219,240 2,966,323 3,043,099
Consultancy fees 589,335 526,723 380,179 166,340
Depreciation and amortisation expense 84,034 104,961 65,096 67,433
Directors remuneration 203, 151 215,500 176,455 173,500
Legal fees 325,398 122,069 321,343 116,118
Rent 215,961 202,939 215,961 202,939
Shared Equity expenses 116,278 20,231 417,953 47,650
Other operating expenses 1,138,354 957,782 741,499 636,368
Total Expenses 18,847!129 19,173,602 181099!723 18,257,604
Profit before income tax 3,176,889 402,670 3,459,297 1,267,627 Income tax expense 2(b).
Profit for the year 3,176,889 402,670 3,4591297 1,267,627
Other comprehensive income for the year, net of tax
Total comprehensive income attributable to members 3,176,889 402,670 3,459,297 1,267,627
The accompanying notes form part of these financial statements. 9
National Affordable Housing Consortium Limited ABN 30 132 604 552
Statement of Financial Position 30 June 2019
Consolidated Parent
2019 2018 2019 2018
Note $ $ $ $
ASSETS CURRENT ASSETS
Cash and cash equivalents 4 9,141,762 7,917,318 8,332,541 7,673,637
Trade and other receivables 5 1,111,344 504,963 2,061,391 797,482
Other financial assets 7.(b). 769,509 5,202,845 769,509 5,202,845
Other assets 9 247,999 245,424 247,844 244 , 133
TOTAL CURRENT ASSETS 111270,614 13,870,550 1114111285 13,918,097 NON-CURRENT ASSETS
Investments in subsidiaries 22 1,250,000 1,250,000
Investment in joint ventures 23 244,075 244,075
Assets held for sale 6 12,937 716,755 12,937 716,755
Other financial assets 7.(a). 137,500 137,500 137,500 137,500
Property, plant and equipment 10 5,149,275 719,541 5,143,734 695,061
Intangible assets 8
TOTAL NON-CURRENT ASSETS 51543,787 1,5731796 6,7881246 2,799,316 TOTAL ASSETS 16,8141401 15,444,346 1811991531 16,717,413
LIABILITIES CURRENT LIABILITIES
Trade and other payables 11 645,243 433, 193 511,485 391,407
Employee benefits 13 405,338 379,595 356,546 374,343
Income in advance 12 2,842,621 4,861,249 2,794,015 4,847,475
TOTAL CURRENT LIABILITIES 318931202 5,674,037 316621046 51613,225
NON-CURRENT LIABILITIES
Employee benefits 13 59,000 85,000 59,000 85,000
TOTAL NON-CURRENT LIABILITIES 591000 85,000 591000 85,000
TOTAL LIABILITIES 319521202 5,759 ,037 317211046 51698,225
NET ASSETS 1218621199 91685,309 1414781485 11,019,188
EQUITY Retained earnings 12,862,199 9,685,309 14,478,485 11 ,019,188
TOTAL EQUITY 1218621199 9,685,309 1414781485 11 ,019,188
The accompanying notes form part of these financial statements. 10
National Affordable Housing Consortium Limited ABN 30 132 604 552
Statement of Changes in Equity For the Year Ended 30 June 2019
2019
Balance at 1 July 2018
Profit attributable to members of the parent entity
Balance at 30 June 2019
2018
Balance at 1 July 2017
Profit attributable to members of the parent entity
Balance at 30 June 2018
2019
Balance at 1 July 2018
Profit attributable to members of the parent entity
Balance at 30 June 2019
2018
Balance at 1 July 2017
Profit attributable to members of the parent entity
Balance at 30 June 2018
Parent
Retained Earnings Total
$ $
11,019,188 11,019,188
3,459,297 3,459,297
14,478,485 14,478,485
Parent
Retained Earnings Total
$ $
9,751,561 9,751,561
1,267,627 1,267,627
11,01 9,188 11 ,019,188
Consolidated
Retained Earnings Total
$ $
9,685,309 9,685,309
3, 176,889 3, 176,889
12,862,198 12,862,198
Consolidated
Retained Earnings Total
$ $
9,282,639 9,282,639
402,670 402,670
9,685,309 9,685 ,309
The accompanying notes form part of these financial statements. 11
National Affordable Housing Consortium Limited ABN 30 132 604 552
Statement of Cash Flows For the Year Ended 30 June 2019
Consolidated Parent
2019 2018 2019 2018
Note $ $ $ $
CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers 18,939,911 23,881,936 17,788,129 24, 100,076 Payments to suppliers and employees (18,550,639) (19,094,472) (17,958,820) (18,207,679) Interest received 211,611 210,611 206,034 202,351
Net cash provided by operating activities 27 600,883 4,998,075 35,343 6,094,748
CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (4,513,593) (608,989) (4,513,593) (597,324) Payments for shares in subsidiaries (350,000) Proceeds from disposal of assets held for sale 703,818 1,029,144 703,818 1,029,144
Net cash provided by/(used in) investing activities (3,809,775) 420, 155 (3,809, 775) 81,820
CASH FLOWS FROM FINANCING ACTIVITIES: Net cash used by financing activities
Net increase/(decrease) in cash and cash equivalents held (3,208,892) 5,418,230 (3, 77 4,432) 6, 176,568 Cash and cash equivalents at beginning of year 13,120,163 7,701,933 12,876,482 6,699,914
Cash and cash equivalents at end of 4 financial year 91911 ,271 13,120,163 9,102,050 12,876,482
The accompanying notes form part of these financial statements. 12
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
The financial report covers Nationa l Affordable Housing Consortium Limited and its control led entities ('the Group'). National Affordable Housing Consortium Limited is a not-for-profit Company, reg istered and domiciled in Australia.
Each of the entities within the Group prepare their financial statements based on the currency of the primary economic environment in which the entity operates (functional currency). The consolidated financial statements are presented in Australian dollars wh ich is the parent entity's funct ional and presentation currency.
The financial report was authorised for issue by the Directors on 28 November 2019.
Comparatives are consistent with prior years, unless otherwise stated.
1. Basis of Preparation
The financial statements are general purpose financial statements that have been prepared in accordance with the Austral ian Accounting Standards and the Australian Charities and Not-for-profits Commission Act 2012.
2. Summary of Significant Accounting Policies
(a). Joint arrangements
AASB 11 Joint Arrangements defines a joint arrangement as an arrangement of which two or more parties have joint control and class ifies these arrangements as either joint ventures or joint operations . Nationa l Affordable Housing Consortium Limited has determined that it has an interest in a joint venture operation .
Joint ventures :
Joint ventures are those joint arrangements which provide the venturer with right to the net assets of the arrangements . Interests in joint ventures are accounted for using the equity method in accordance with AASB 128 Associates and Joint Ventures. Under this method, the investment is initially recognised as cost and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss and other comprehensive income of the investee after the date of acquisition .
If the venturer's share of losses of a joint venture equals or exceeds its interest in the joint venture, the venturer discontinues recognising its share of further losses.
The venturer's share in the joint venture's gains or losses arising from transactions between a venturer and its joint venture are eliminated.
Adjustments are made to the joint venture's accounting policies where they are different from those of the venturer for the purpose of the consolidated financial statements.
(b). Income Tax
The Company is exempt from income tax under Division 50 of the Income Tax Assessment Act 1997. The controlled entities in the Group are exempt from income tax, with the exception of Buy Assist Australia Pty Ltd .
(c). Leases
Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses on a straight-line basis over the life of the lease term .
13
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
{d). Revenue and other income
Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the Group and specific criteria relating to the type of revenue as noted below, has been satisfied.
Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates.
Interest revenue
Interest is recognised using the effective interest method.
Rendering of services
Revenue in relation to rendering of services is recognised depending on whether the outcome of the services can be estimated reliably. If the outcome can be estimated reliably then the stage of completion of the services is used to determine the appropriate level of revenue to be recognised in the period.
(e) . Goods and services tax (GST)
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).
Receivables and payable are stated inclusive of GST.
Cash flows in the statement of cash flows are included on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
(f). Property, plant and equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment.
Land and buildings
Land and buildings are measured using the cost model.
Shared Equity Investments
Equitable interests in property are measured using the cost model. NAHC has an equitable interest (ranging between 25% and 30%) in properties purchased under the Buy Assist scheme. These interests are classified as joint operations where NAHC does not have joint control over the asset. Under this arrangement, NAHC will recognise its share of the building and the interest will be accounted for under AASB 116 Property, Plant and Equipment.
Depreciation
Property, plant and equipment, excluding freehold land, is depreciated on a straight-line basis over the assets useful life to the Group, commencing when the asset is ready for use.
14
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
Leased assets and leasehold improvements are amortised over the shorter of either the unexpired period of the lease or their estimated useful life.
At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any revisions are accounted for prospectively as a change in estimate.
(g). Financial Instruments
Financial instruments are recognised when the Group becomes a party to the contractual provisions to the instrument. For financial assets, this is the date that the Group commits itself to either the purchase or sale of the asset (ie the trade date accounting is adopted)
Financial instruments (except for trade receivables) are initially measured at fair value through profit or loss, in which case transaction costs are expensed to profit or loss immediately. where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted .
Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant financing component or if the practical expedient as specified in AASB 15.63.
Financial liabilities
Financial instruments are subsequently measured at:
• amortised cost; or
• fair value through profit or loss
A financial liability is measured at fair value through profit or loss if the financial liability is :
• A contingent consideration of an acquirer in a business combination to which AASB 3 Business Combinations applies;
• Held for trading; or
• initially designated as at fair value through profit or loss
All other financial liabilities are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of the financial asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through the expected life of the instrument to the net carrying amount at initial recognition .
A financial liability is held for trading if it is:
• it is incurred for the purpose of repurchasing or repaying the near term;
• part of the portfolio where there is an actual pattern of short-term profit taking; or
15
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
• a derivative financial instrument (except for a derivative that is a financial guarantee contract or a derivative that is in an effective hedging relationship).
Any gains or losses arising on changes in fair value are recognised in profit or loss to the extent that they are not a part of a designated hedging relationship .
The change in fair value of the financial liability attributable to changes in the issuer's credit risk is taken to other comprehensive income and is not subsequently reclassified to profit or loss. Instead, it is transferred to retained earnings upon derecognition of the financial liability. If taking the change in credit risk in other comprehensive income enlarges or creates an accounting mismatch , then these gains or losses should be taken to profit or loss rather than other comprehensive income.
A financial liability cannot be reclassified .
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of the debt instrument.
Financial guarantee contracts are initially measured at fair values (if not designated as at fair value through profit or loss and do not arise from a transfer of a financial asset) and subsequently measured the higher of:
• the amount of loss allowance determined in accordance with AASB 9.3.25.3; and
• the amount initially recognised less the accumulative amount of income recognised in accordance with the revenue recognition policies.
Financial Assets
Financial assets are subsequently measured at:
• amortised cost;
• fair value through other comprehensive income; or;
• fair value through profit or loss.
Measurement is on the basis of two primary criteria:
• the contractual cash flow characteristics of the financial asset; and
• the business model for managing financial assets .
A financial asset that meets the following conditions is subsequently measured at amortised cost:
• the financial asset is managed solely to collect contractual cash flows; and
• the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates.
16
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
The investment in Community 21 Limited is reported at cost less any impairment charges, as its fair value cannot currently be reliably estimated.
A financial asset that meets the following conditions is subsequently measured at fair value through other comprehensive income:
• The contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates; and
• The business model for managing the financial assets comprises both contractual cash flows collection and the selling of the financial asset.
By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value through other comprehensive income are subsequently measured at fair value through profit or loss.
The Group designates a financial instrument as measured at fair value through profit or loss if:
• it eliminates or significantly reduces a measurement or recognition inconsistency (often referred to as an accounting mismatch) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases;
• It is in accordance with the documented risk management or investment strategy, and information about the groupings was documented appropriately, so that the performance of the financial liability that was part of a group of financial assets or financial liabilities can be managed on a fair value basis; and
• it is a hybrid contract that contains an embedded derivative that significantly modifies the cash flows otherwise required by the contract.
The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option on initial classification and is irrevocable until the financial asset is derecognised .
Equity instruments
At initial recognition, as long as the equity instrument is not held for trading and not a contingent consideration recognised by an acquirer in a business combination to which AASB 3 applies , the Group made an irrecoverable election to measure any subsequent changes in fair value of the equity instruments in other comprehensive income, while the dividend revenue received on underlying equity instruments investment will still be recognised in profit or loss.
Regular way purchases and sales of financial assets are recognised and derecognised at settlement date in accordance with the Group's accounting policy.
Derecognition
Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement of financial position .
17
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
Derecognition of financial liabilities
A liability is derecognised when it is extinguished (ie when the obligation in the contract is discharged, cancelled or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of the financial liability, is treated as an extinguishment of the existing liability and recognition of a new financial liability.
The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash asset transferred or liabilities assumed, is recognised in profit or loss.
Derecognition of financial assets
A financial asset is derecognised when the holder's contractual rights to its cash flow expires, or the asset is transferred in such a way that all the risks and rewards of ownership are substantially transferred.
All of the following criteria need to be satisfied for derecognition of financial asset:
• the right to receive cash flows from the asset has expired or has been transferred;
• all risk and rewards of ownership of the asset have been substantially transferred; and
• the Group no longer controls the asset (ie the Group has no practical ability to make a unilateral decision to sell the asset to a third party).
On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.
On derecognition of a debt instrument classified under fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is reclassified to profit or loss.
On derecognition of an investment in equity which was elected to be classified under fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings.
Impairment
The group recognises a loss allowance for expected credit losses on :
• financial assets that are measured at amortised cost or fair value through other comprehensive income;
• lease receivables;
• contract assets (eg amounts due from customers under construction contracts);
• loan commitments that are not measured at fair value through profit or loss, and
• financial guarantee contracts that are not measured at fair value through profit or loss .
18
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
Loss allowance is not recognised for:
• financial assets measured at fair value through profit or loss; or
• equity instruments measured at fair value through other comprehensive income.
Expected credit losses are the probability weighted estimate of credit losses over the expected life of the financial instrument. A credit loss is the difference betweeen all contractual cash flows that are due and all cash flows that are expected to be received, all discounted at the original effective interest rate of the financial instrument.
The Group uses the following approaches to impairment, as applicable under AASB 9: Financial Instruments
• the general approach;
• the simplified approach;
• the purchased or originated credit impaired approach; and
• low credit risk operational simplification
General approach
Under the general approach, at each reporting period, the Group assess whether the financial instruments are credit-impaired, and if:
• the credit risk of the financial instrument has increased significantly since initial recognition, the Group measures the loss allowance of the financial instruments at an amount equal to the lifetime expected credit losses; or
• there is no significant increase in credit risk since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.
(h). Impairment of non-financial assets
At the end of each reporting period the Group determines whether there is an evidence of an impairment indicator for non-financial assets.
Where this indicator exists and regardless for goodwill, indefinite life intangible assets and intangible assets not yet available for use, the recoverable amount of the asset is estimated.
Where assets do not operate independently of other assets, the recoverable amount of the relevant cashgenerating unit (CGU) is estimated. The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit. Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit or loss.
Reversal indicators are considered in subsequent periods for all assets which have suffered an impairment loss, except for goodwill.
19
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
(i). Intangible Assets
Intangible assets are intially recognised at cost upon acquisition . The Group has property management portfolios which do not meet the recognition requirements of Accounting Standards and therefore have not been recognised in these financial statements. The Directors estimate a fair value of $6. 7m for the portfolios.
Amortisation
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
U). Cash and cash equivalents
Cash and cash equivalents comprises cash on hand, demand deposits and short-term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
(k). Employee benefits
Provision is made for the Group's liability for employee benefits arising from services rendered by employees to the end of the reporting period . Employee benefits that are expected to be wholly settled within one year have been measured at the amounts expected to be paid when the liability is settled.
Employee benefits expected to be settled more than one year after the end of the reporting period have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Cashflows are discounted using market yields on high quality corporate bond rates incorporating bonds rated AM or AA by credit agencies, with terms to maturity that match the expected timing of cashflows. Changes in the measurement of the liability are recognised in profit or loss.
(I). Provisions
Provisions are recognised when the Group has a legat 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.
(m). Adoption of new and revised accounting standards
The Group has adopted all standards which became effective for the first time at 30 June 2019, the adoption of these standards has not caused any material adjustments to the reported financial position, performance or cash flow of the Group.
The Group elected to early adopt MSB 15 Revenue from Contracts with Customers and AASB 1058 Income of not-for-Profit Entities from the year beginning 1 July 2017 and as a result, government grants have been received in advance and the revenue will be recognised over time as the grant conditions are performed.
(n). New Accounting Standards and Interpretations
The MSB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods. The Group has decided not to early adopt these Standards. The following table summarises those future requirements, and their impact on the Group where the standard is relevant:
20
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
Standard Name
AASB 16 Leases
Effective date for entity
1 July 2019
Requirements
Revisions to accounting for operating leases on balance sheet by lessees of property and high value equipment. However, exemptions for short-term leases and leases of low value assets will reduce the impact.
Impact
The entity will be required to recognise a right-of-use asset and lease liability for its operating leases of the office premises . The standard is not expected to have a material impact.
3. Critical Accounting Estimates and Judgments
4.
The directors make estimates and judgements during the preparation of these financial statements regarding assumptions about current and future events affecting transactions and balances .
These estimates and judgements are based on the best information available at the time of preparing the financial statements, however as additional information is known then the actual results may differ from the estimates.
The significant estimates and judgements made have been described below.
Key estimates - receivables
The receivables at reporting date have been reviewed to determine whether there is any objective evidence that any of the receivables are impaired. An impairment provision is included for any receivable where the entire balance is not considered collectible based on the expected lifetime credit losses approach.
Key estimates - provisions
As described in the accounting policies, provisions are measured at management's best estimate of the expenditure required to settle the obligation at the end of the reporting period. These estimates are made taking into account a range of possible outcomes and will vary as further information is obtained.
Key estimates - impairment of property, plant and equipment (including shared equity interests)
The Group assesses impairment at the end of each reporting period by evaluating conditions specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.
Cash and Cash Equivalents Consolidated Parent
2019 2018 2019 2018
$ $ $ $ Cash at bank and in hand 9,141,762 7,917,318 8,332,541 7,673 ,637 Fixed interest securities 769,509 5,202,845 769,509 5,202,845
91911 1271 13,120,163 911021050 12,876,482
21
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
5. Trade and Other Receivables
Trade receivables
Provision for impairment
Related party receivables
Interest receivable
Other receivables
Total current trade and other receivables
(a). Impairment of receivables
(a) .
Consolidated
2019 2018
$ $
304,273 24,375
(1,609) (1,609)
3021664 22,766 183,796
15,403 26 ,913
609,481 455,284
11111 1344 504,963
Reconciliation of changes in the provision for impairment of receivables is as follows:
Balance at beginning of the year
Additional impairment loss recognised
Balance at end of the year
(1,609)
(1,609)
(1,609)
(1 ,609)
Parent
2019 2018
$ $
244,569 18,875 (1,609) (1 ,609)
2421960 17,266 1,282,950 345,927
15,403 26,913
520,078 407,376
210611391 797.482
(1,609) (1,609)
(11609) (1 ,609)
The carrying value of trade receivables is considered a reasonable approximation of fair value due to the short-term nature of the balances.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable in the financial statements.
6. Assets and liabilities held for sale
Non-current assets held for sale Property, plant and equipment 12,937 716,755 12,937 716,755
22
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
7. Other financial assets
Consolidated
2019
$
2018
$
(a). Financial assets at fair value through profit or loss
Shares in other corporations 137,500 137,500
137,500 137,500
2019
$
Parent
137,500
137,500
2018
$
137,500
137,500
The company subscribed to the investment with the shares issued on 10 April 2015. The directors have assessed the carrying value of the shares in Community 21 Limited and have determined that the investment is appropriately valued as at 30 June 2019.
(b). Held-to-maturity investments
CURRENT Fixed interest securities
8. Intangible Assets
Intellectual property ('Shared Equity Home Ownership') Cost
Accumulated amortisation and impairment
Net carrying value
Other intangible assets Cost
Accumulated amortisation and impairment
Total Intangibles
769,509
769,509
25,000
(25,000)
54,275
(54,275)
5,202,845 769,509 5,202,845
5,202,845 769,509 5,202,845
25,000 25,000 25,000
(25,000) (25,000) (25,000)
54,275
(54,275)
Intangible assets are initially recognised at cost upon acquisition. The Group has property management portfolios which do not meet the recognition requirements of Accounting Standards and therefore have not been recognised in these financial statements . The Directors estimate a fair value of $6.7m for the portfolios.
9. Other Assets
CURRENT Prepayments
Deposits
37,525
210,474
247,999
21,609
223,815
245,424
37,370
210,474
247,844
20,318
223,815
244, 133
23
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
Consolidated Parent
2019 2018 2019 2018
$ $ $ $
10. Property, plant and equipment
Land & Buildings - shared equity investments At cost 4,915,484 570,050 4,915,484 570,050
Total land & buildings - shared equity investments 4,915!484 570,050 4,915,484 570,050
PLANT AND EQUIPMENT
Motor vehicles At cost 131,662 79,415 131,662 79,415
Accumulated depreciation (38,580) (54,462) (38,580) (54,462)
Total motor vehicles 931082 24,953 93,082 24,953
Office equipment At cost 97,146 88,889 95,033 86,775
Accumulated depreciation (59,672) (49,936) (58,478) (49,542)
Total office equipment 37,474 38,953 36 555 37,233
Computer equipment At cost 180,408 159,023 178,207 156,822
Accumulated depreciation (146,193) (122,503) (144,248) (121,368)
Total computer equipment 34,215 36 ,520 33,959 35,454
Computer software At cost 117,225 117,225 75,389 75,389
Accumulated depreciation (112,859) (94,679) (75,389) (74,537)
Total computer software 4 366 22,546 852
Leasehold Improvements At cost 104,048 43,763 104,048 43,763
Accumulated amortisation (39,394) (17,244) (39,394) (17,244)
Total leasehold improvements 64,654 26,519 641654 26,519
Total plant and equipment 233,791 149,491 228,250 125,011
Total property, plant and equipment 51149,275 719 ,541 5,143,734 695 ,061
24
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
(a). Movements in carrying amounts of property, plant and equipment
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year:
Motor Office Computer Computer Buildings Vehicles Equipment Equipment Software Improvements Total
Parent $ $ $ $ $ $ $
Year ended 30 June 2019 Balance at the beginning of year 570,050 24,953 37,233 35,454 852 26,519 695,061
Additions 4,345,434 85, 114 8,258 21 ,385 60,284 4,520,475
Disposals
Disposals - written down value (6,707) (6,707)
Depreciation expense (10,278) (8,936) (22,880) (~52) (22,149) (65,095)
Balance at the end of the year 4,915,484 93,082 36,555 33,959 64,654 5,143,734
Motor Office Computer Computer Buildings Vehicles Equipment Equipment Software Improvements Total
Parent $ $ $ $ $ $ $
Yearended30June2018 Balance at the beginning of year 33,271 37,976 39,940 18,712 35,271 165,170
Additions 570,050 8,494 18,780 597,324
Disposals
Depreciation expense (8,317) (9,237) (23,266) (17,860) (8,753) (67,433)
Balance at the end of the year 570 050 24 954 37 233 35,454 852 26 518 695 061
Motor Office Computer Computer Buildings Vehicles Equipment Equipment Software Improvements Total
Consolidated $ $ $ $ $ $ $
Year ended 30 June 2019 Balance at the beginning of year 570,050 24,953 38,953 36,520 22,546 26,519 719,541
Additions 4,345,434 85,114 8,258 21,385 60,284 4,520,475
Disposals
Disposals - written down value (6,707) (6,707)
Depreciation expense (10,278) (9,737) (23,690) (18,180) (22, 149) (84,034)
Balance at the end of the year 4,915,484 93,082 37,474 34,215 4,366 64,654 5,149,275
25
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
Buildings
Consolidated $
Year ended 30 June 2018 Balance at the beginning of year
Additions 570,050
Depreciation expense
Balance at the end of the year 570 050
11. Trade and Other Payables
Current
Trade payables
GST payable
Sundry payables and accrued expenses
PAYG Witholding payable
Superannuation payable
Motor Vehicles
$
33,271
(8,318)
24,953
Office Computer Computer Equipment Equipment Software Improvements
$ $ $ $
39,076 39,940 48,758 35,271
9,507 20,982 8,450
(9,630) (24,402) (34,662) (8,752)
38,953 36 520 22 546 26 519
Consolidated Parent
2019 2018 2019
$ $ $
510,711 308,871 393,140
58, 161 50,971 46,673
2,100
44,734 49,212 44,734
29,537 24, 139 26,938
645,243 433,193 511 ,485
Total
$
196,316
608,989
(85,764)
719 541
2018
$
251,421
68,472
49,212
22,302
391,407
Trade and other payables are unsecured, non-interest bearing and are normally settled within 30 days. The carrying value of trade and other payables is considered a reasonable approximation of fair value due to the short-term nature of the balances .
12. Income in advance Government grants received in advance 2,794,015 4,847,475 2,794,015 4,847,475
Shared equity income in advance 48,606 13,774
2,842,621 4,861 ,249 2,794,015 4,847,475
13. Employee Benefits
Current liabilities Annual leave provision 262,534 265,056 229,742 259,804
Staff bonus provision 85,804 114,539 85,804 '114,539
405,338 379,595 3561546 374,343
Non-current liabilities Long service leave 59,000 85,000 59,000 85,000
591000 85,000 59,000 85,000
26
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
14. NRAS Income
NRAS income received
NRAS amounts paid to owners
Consolidated
2019
$
12,965,362
(12,814,914)
150,448
2018
$
13,967,405
(13,804,157)
163,248
2019
$
Parent
12,965,362
(12,814,914)
150,448
2018
$
13,967,405
(13,804,157)
163,248
The Group is party to 1,4 78 (2018: 1, 102) agreements each with an initial term of ten years and an average remaining term of five years.
15. NRAS Incentives
(a). State Government NRAS Incentives
Opening incentives payable
Incentives received
Incentives paid
Closing incentives payable
7,926
9,385,106
(9,383,653)
9 379
10,643
9,593,702
(9,596,419)
7 926
7,926
9,385,106
(9,383,653)
9 379
10,643
9,593,702
(9 ,596,419)
7 926
The State Government Incentives must, by law, flow through to the owners of the NRAS dwellings by following the NRAS Derived Rent. As such NAHC - even as the Approved Participant - does not have an entitlement to the State NRAS payment as it does not receive the NRAS Derived Rent, which is the owners. Accordingly NAHC do not include the State Government Incentive payments in the Group's consolidated statement of profit or loss and other comprehensive income.
The Federal Government refundable tax offset applies only to NRAS dwellings and the offset must follow the NRAS Derived Rent, which is to the owner. The offset is not a 'right' or 'property' and is not tradeable, it is an entitlement to a tax concessions. Accordingly, NAHC do not include the tax offsets in the Group's consolidated statement of profit and loss and other comprehensive income.
16. Property Administration Bank Accounts
The entity administers a number of bank accounts pertaining to the properties which are managed by external partners and the properties which are managed by internal property managers . Although not subject to the statutory requirements of the Agents Financial Administration Regulation 2014, the entity effectively administers these accounts as trust accounts. The balance held in these accounts is shown below. Account Name
Anglicare Housing Limited
Fraser Coast Housing
Church of Christ (Care)
Mangrove Housing
HERS (VIC)
Whitsundays
QAHC PMC
Connect
HERS
Regional Housing Limited
165,711
2,194
311,127
173,040
86,325
940
972,301
111,777
436,752
13,205
42,852
28,963
32, 106
27,698
1,017
10,147
832
165,711
2,194
311,127
173,040
86,325
940
972,301
111,777
436,752
13,205
42,852
28,963
32, 106
27,698
1,017
10,147
832
27
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
17. AFR disclosure note
(a) . Statement of ~rofi t or loss and other com~rehensive income Non- Non-
Registered registered Registered registered Charities Charities Elimination Consolidation Charities Charities
2019 2019 2019 2019 2018 2018
$ $ $ $ $ $
Revenue Consortium fees 2,752,072 2,752,072 2,778,766
Interest received 211,208 402 211,610 204,146 6,465
Property management fees 2,894,792 (396,000) 2,498,792 2,513,718
Other income 270,561 (72,000) 198,561 313,307
Share of Joint Venture 244,075 244,075
Shared equity income 1,034,074 483,965 (417,953) 1, 100,086 60,953 82,637
Government grants 2,053,460 2,053,460 152,525
Lease income 12,965,362 12,965,362 13,967,405
Total Income 22,425,604 484,367 (885,953) 22,024,018 19,990,820 89,102 Employee costs 3,077,085 282,619 3,359,704 3,145,278 73,962
Depreciation, amortisation 65,096 18,938 84,034 67,433 37,528
Rent 215,961 215,961 202,939
Consultancy fees 430,390 158,945 589,335 189,840 336,883
Legal fees 199, 189 126,209 325,398 116, 167 5,901
Directors remuneration 176,455 26,696 203, 151 173,500 42,000
Lease expenses 12,814,914 12,814,914 13,804, 157
Shared equity expenses 417,953 116,278 (417,953) 116,278 47,650 20,231
Other operating expenses 1,739,144 132,790 (468,000) 1, 138,354 1,015,946 397,836
Total expenses 1911 36! 187) (8621475) 8851953 (1 81847,1 29) 181762,910) j9141341)
Net ProfiU(loss) 312891417 (3781108) 311761889 1,2271910 (825,239)
Elimination Consolidation
2018 2018
$ $
2,778,766
210,611
(312,000) 2,201,718
(144,000) 169,307
(47,650) 95,940
152,525
13,967,405
(503,650) 19,576,272
3,219,240
104,961
202,939
526,723
122,069
215,500
13,804, 157
(47,650) 20,231
(456,000) 957,782
5031650 (19,1731602)
4021670
28
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
(b). Statement of financial ~osition
Non· Registered registered Charities Charities
2019 2019
$ $
Total current assets 11,462, 198 41, 138
Total non current assets 6,788,246 5,541
Total assets 18,250,444 46,679 Total current liabilities (3,816,373) (309,551)
Total non current liabilities (59,000)
Total liabilities (3,8751373) (3091551)
Net assets 1413751071 (2621872)
Share capital . 1,250,000
Retained earnings 43,375,071) 1,512,872
Total equity 43,375,071 (262,872)
18. Financial Risk Management
Non-Registered registered
Elimination Consolidation Charities Charities
2019 2019 2018 2018
$ $ $ $
(232,722) 11,270,614 14,066,424 150,053
(1,250,000) 5,543,787 2,799,317 24,479
(1,482, 722) 16,814,401 16,865, 741 174,532
(232,722) (3,893,202) (5,960,668) (59,296)
(59,000) (85,000)
(2321722) (3!9521202) !6,0451668) (591296)
(1,715,444) 121862,199 10,820,073 115,236
(1,250,000) • (1,250,000)
12,862, 199 10,820,073 (1,134,764)
(1,250,000) (12,862, 199) 10,820,073) (115,236)
The Group is exposed to a variety of financial risks through its use of financial instruments.
Elimination Consolidation
2018 2018
$ $
(345,927) 13,870,550
(1,250,000) 1,573,796
(1,595,927) 15,444,346
345,927 (5,674,037)
(85,000)
3451927 (5,759,037)
(1,250,000) 9,685,309
1,250,000
9,685,309
1,250,000 (9,685,309)
The Group's overall risk management plan seeks to minimise potential adverse effects due to the unpredictability of financial markets.
The most significant financial risks to which the Group is exposed to are described below:
Specific risks
• Liquidity risk
• Credit risk
• Market risk • currency risk, interest rate risk and price risk
Financial instruments used
The principal categories of financial instrument used by the Group are:
• Trade receivables
• Cash at bank
29
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
• Trade and other payables
Liquidity risk
Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities as and when they fall due. The Group mainta ins cash and marketable securities to meet its liquidity requirements for up to 30-day periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets.
The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash-outflows due in day-to-day business.
Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection . Long-term liquidity needs for a 180-day and a 360-day period are identified monthly.
At the reporting date, these reports indicate that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances and will not need to draw down any of the financing facilities .
Financial guarantee liabilities are treated as payable on demand since the Group has no control over the timing of any potential settlement of the liabil ities.
The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management's expectations that banking facilities will be rolled forward. The amounts disclosed in the table are the undiscounted contracted cash flows and therefore the balances in the table may not equal the balances in the statement of financial position due to the effect of discounting.
Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractua l obligations resulting in a financial loss to the Group.
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposure to wholesale and retail customers, including outstanding receivables and committed transactions.
The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The utilisation of credit limits by customers is regularly monitored by line management. Customers who subsequently fail to meet their credit terms are required to make purchases on a prepayment basis until creditworthiness can be re-established.
Trade receivables consist of a large number of customers , spread across diverse industries and geographical areas . Ongoing credit evaluation is performed on the financial condition of accounts receivable .
30
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
Credit Risk
The Board of Management receives monthly reports summarising the turnover, trade receivables balance and aging profile of each of the key customers individually and the Group's other customers analysed by industry sector as well as a list of customers currently transacting on a prepayment basis or who have balances in excess of their credit limits.
Management considers that all the financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due.
The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.
The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties .
The following table details the Group's trade and other receivables exposure to credit risk (prior to collateral and other credit enhancements) with ageing analysis and impairment provided for thereon . Amounts are considered as 'past due' when the debt has not been settled, within the terms and conditions agreed between the Group and the customer or counter party to the transaction . Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there is objective evidence indicating that the debt may not be fully repaid to the Group.
The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be of high credit quality.
Past due but not impaired
{days overdue)
Within Past due initial
Gross and trade amount impaired < 30 31-60 61-90 > 90 terms
$ $ $ $ $ $ $
Consolidated
2019 Trade receivables 304,273 1,609 121,649 139 13,898 124,441 42,537
Other receivables 808,681 - 808,681
Total 1,112,954 1,609 121,649 139 13,898 124,441 851,218
2018 Trade receivables 24,375 1,609 422 4,846 6,454 11,044
Other receivables 482, 197 - 482,197
Total 506 572 1,609 422 4 846 6,454 493,241
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National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
Parent
2019 Trade receivables
Past due Gross and
amount impaired < 30
$ $ $
Past due but not impaired
(days overdue}
31-60 61-90
$ $
> 90
$
244,569 1,609 121,649 139 13,898 107,274
Within initial trade terms
$
Other receivables 1,816,823 • 1 ,816,823
Total 2,061,392 1,609 121,649 139 13,898 107,274 1 ,816,823
2018 Trade receivables 18,875 1,609 422 2,656 455 13,733
Other receivables 780,216 780,216
Total 799 091 1 609 422 2,656 455 793,949
Neither the Group nor parent entity holds any financial assets with terms that have been renegotiated, but which would otherwise be past due or impaired.
(a). Interest rate risk
{i) Interest rate risk
The Group is exposed to interest rate risk as funds are borrowed at floating and fixed rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.
The Group's policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At the reporting date, the Group is exposed to changes in market interest rates through its bank borrowings, which are subject to variable interest rates.
Consolidated Parent
2019 2018 2019 2018
$ $ $ $ Held-to-maturity financial assets 769,509 5,202,845 769,509 5,202,845
Financial assets at fair value through profit or loss 137,500 137,500 137,500 137,500
9071009 5,340 ,345 9071009 5,340 ,345
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National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
Objectives, policies and processes
The Board of Management has overall responsibility for the establishment of the Group's financial risk management framework. This includes the development of policies covering specific areas such as foreign exchange risk , interest rate risk, credit risk and the use of derivatives. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.
The day-to-day risk management is carried out by the Group's finance function under policies and objectives which have been approved by the Board. The Chief Financial Officer has been delegated the authority for designing and implementing processes wh ich fo llow the objectives and policies. This includes monitoring the levels of exposure to interest ra te and foreign exchange rate risk and assessment of market forecasts for interest rate and foreign exchange movements. The Board of Management receives monthly reports which provide details of the effectiveness of the processes and policies in place.
19. Members' Guarantee
The Company is incorporated under the Corporations Act 2001 and is a Company limited by guarantee. If the Company is wound up, the constitution states that each member is required to contribute a maximum of $ 10 each towards meeting any outstandings and obligations of the Company. At 30 June 2019 the number of members was 2 (2018: 2).
20. Key Management Personnel Disclosures
21 .
Key management personnel remuneration included within employee expenses for the year is shown below:
Remuneration and benefits
Post-employment benefits
Consolidated
2019 2018
$ $ 537,699
29,660
567,359
538,838
29,162
568,000
The above remuneration includes remuneration and benefits of $104,070 (2018: $103,580) paid to Professor William George Earl in his capacity as Chief Executive Officer of Sustainable Living Infrastructure Consortium Ltd .
Auditors' Remuneration Consolidated Parent
2019 2018 2019 2018
$ $ $ $ Remuneration of the auditor of the parent entity, Merrotts Chartered Accountants, for:
- auditing or reviewing the financial statements 21,600 21,500 21,600 21,500 - other services 3,600 2,800 3,600 2,800
Total 25,200 24 ,300 25,200 24,300
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National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
22. Interests in Subsidiaries
(a). Composition of the Group Principal place of business I Country of Incorporation
Percentage Owned(%)*
Percentage Owned(%)*
Subsidiaries: Home Equity and Rental Services Ltd
Sustainable Living Infrastructure Consortium Ltd
Buy Assist Australia Pty Ltd
Australia
Australia
Australia
2019
100
100
100
2018
*The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries .
23. Interests in Joint Arrangements
(a). Material joint ventures
The following information is provided for joint ventures and is the amount per the Joint Venture financial statements. The Group has an interest in a joint venture entity, Affordable Rentals Victoria Ltd (ARV Ltd) with Common Equity Housing Limited .
2019
Name of Joint Venture
Summarised statement of financial position Cash and cash equivalents
Other current assets
Non-current assets
Current financial liabilities (excluding trade and other payables and provisions)
Other current liabilities
Net assets
Summarised statement of profit or loss and other comprehensive income
Revenue Housing Scheme revenue
General Expenses
Income tax expense I (income)
Profit I (loss) from continuing operations
Total comprehensive income
ARV Ltd
63,160
947,989
7,074,000
(6,858, 107)
(738,892)
488, 150
682,444
(192,080)
488,150
488,150
100 100 100
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National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
(b). Aggregate information for joint ventures
The Group accounts for a 50 per cent interest in the joint venture entity. The table below summarises the Group's share of the net assets of the joint venture entity.
Carrying amount of investments in joint ventures
Share of those joint ventures:
Profit or loss from continuing operations
Other comprehensive income
Total comprehensive income
24. Contingencies
2019 2018
$ $ 244,075
244,075
244 075
In the opinion of the Directors, the Company did not have any contingencies at 30 June 2019 (30 June 201 B:None).
25. Related Parties
(a). The Group's main related parties are as follows:
Key management personnel - refer to Note 20 ..
Joint arrangements - refer to Note 23 ..
Subsidiaries - refer to Note 22.
(b). Transactions with related parties
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.
26. Fair Value Measurement
The Group measures the following assets and liabilities at fair value on a recurring basis:
• Financial assets
Unlisted Shares
35
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
Fair value hierarchy
AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a level in the fair value hierarchy as follows: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can
access at the measurement date.
Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 Unobservable inputs for the asset or liability.
The table below shows the assigned level for each asset and liability held at fair value by the Group:
Consolidated
30 June 2019
Financial assets Unlisted Shares
Consolidated
30 June 2018
Financial assets Unlisted Shares
Parent
30 June 2019
Unlisted Shares
Parent
30 June 2018
Unlisted Shares
Level 3 measurements
Level 1
$
Level 1
$
Level 1
$
Level 1
$
Level2
$
Level2
$
Level2
$
Level2
$
Level 3
$
137,500
Level 3
$
137,500
Level3
$ 137,500
Level 3
$ 137,500
Total
$
137,500
Total
$
137,500
Total
$ 137,500
Total
$
137,500
A reconciliation of the movements in recurring fair value measurements allocated to Level 3 of the hierarchy is provided below: Balance at beginning of year 137,500 137,500 137 ,500 137,500
Total gains or losses for the year Recognised in profit or loss - other income I other expenses - unrealised
Balance at end of year 137,500 137,500 137,500 137,500
The Board assess fair value of the Investment by comparing to the net tangible asset position of the investment entity.
36
National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
27. Cash Flow Information
(a). Reconciliation of result for the year to cashflows from operating activities
Reconciliation of net income to net cash provided by operating activities:
Consolidated
2019 2018
$ $ Profit for the year 3,176,889 402,670
Cash flows excluded from profit attributable to operating activities
Non-cash flows in profit:
- amortisation 19, 196
- depreciation 84,034 85,764
- net loss on disposal of property, plant and equipment 1,153
- (gain)/loss on disposal of held for sale assets (1,329) (8,724)
Share of net profits of equity accounted joint ventures (244,075)
Changes in assets and liabilities:
- (increase)/decrease in trade and other receivables (606,381) (336,789)
- (increase)/decrease in prepayments (2,574) (181,932)
- increase/(decrease) in income in advance (2,018,628) 4,861,249
- increase/(decrease) in trade and other payables 211,513 92,646
- increase/(decrease) in employee benefits 281 63,995
Cashflows from operations 6001883 4 ,998 ,075
Parent
2019 2018
$ $ 3,459,297 1,267,627
65,096 67,433
1,153
(1,329) (8,724)
(244,075)
(1,263,909) (61,555)
(3,711) (180,969)
(2,053,460) 4,847,475
120,078 104,718
(43,797) 58,743
351343 6,094,748
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National Affordable Housing Consortium Limited ABN 30 132 604 552
Notes to the Financial Statements For the Year Ended 30 June 2019
28. Events after the end of the Reporting Period
The financial report was authorised for issue on 28 November 2019 by the Board of Directors.
In April 2019, NAHC and HERS commenced litigation against certain parties in the Supreme Court of Queensland. The substance of the dispute concerned property management rights over a number of National Rental Affo rdability Scheme ("NRAS') properties for which NAHC is the NRAS approved participant. In July 2019, the parties executed a Deed of Settlement. Legal fees associated with the dispute totalled approximately $200,000.
Except for the above, no other matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in future financial years.
29. Company Details
The registered office and principal place of business of the company is:
National Affordable Housing Consortium Limited
Suite 1 D, level 1, K1 - Kings Row Office Park
40-52 McDougall Street MIL TON OLD 4064
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National Affordable Housing Consortium Limited ABN 30 132 804 662
Responsible Persons' Declaration
The responsible persons declare that in the responsible persons' opinion:
• there are reasonable grounds to believe that the registered entity is able to pay all of its debts, as and when they become due and payable; and
the financial statements and notes satisfy the requirements of the Australian Charities and Not-for-profits Commission Act 2012.
Signed on behalf of all Responsible Persons in accordance with subsection 60.15(2) of the Australian Charities and Not-forprofits Commission Regulation 2013.
~~\ I
Responsible person ... .... .. ............................................... ......... .. ...... .. ........ ... ............... ... .... ..... ............ ..... ............ .. Karen Smith-Pomeroy
Dated this 28th day of November 2019
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Level 6, Brisbane Club Tower 241 Adelaide Street Brisbane Qld 4000 Australia
GPO Box 565 Brisbane Qld 4001 Australia
Phone: 61 (07) 3233 0600
Fax: 61 (07) 3233 0601
Email: [email protected]
Web: www.merrotts.com. au
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errotts Chartered Accountants & Business Advisers
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF NATIONAL AFFORDABLE HOUSING CONSORTIUM LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of National Affordable Housing Consortium Limited (the Company) and its controlled entities (the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with Division 60 of the Australian Charities and Not-for-profits Commission Act 2012, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2019 and of its
financial performance and cashflows for the year then ended; and
(b) complying with Australian Accounting Standards and Division 60 of the Australian Charities
and Not-for-profits Commission Regulation 2013.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Australian Charities and Not-for-profits Commission Act 2012 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 11Q Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We have given to the directors of the Company a written Auditors Independence Declaration required by the Australian Charities and Not-for-profits Commission Act 2012, a copy of which is attached to the Directors' Report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion .
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Australian Charities and Not-for-profits Commission Act 2012 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
40
Liability limited by a scheme approved under Professional Standards Legislation
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors files/ar1 .pdf . This description forms part of our Auditor's Report.
Merrotts Chartered Accountants
Partner
Brisbane, 28th November 2019
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