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Compass Housing Services Co LtdABN 84 002 862 213

Annual reportfor the year ended 30 June 2019

Compass Housing Services Co Ltd ABN 84 002 862 213

Annual report - 30 June 2019

ContentsPage

Directors' report 1Financial statements 9Independent auditor's report to the members 33

Directors' report

Your directors present their report on the consolidated entity consisting of Compass Housing Services Co Ltd andthe entities it controlled at the end of, or during, the year ended 30 June 2019. Throughout the report, theconsolidated entity is referred to as the group.

Directors

The following persons held office as directors of Compass Housing Services Co Ltd during the whole of thefinancial year and up to the date of this report, unless otherwise disclosed:

Paul JohnsonKwesi AddoGreg BudworthBarry MartinPaul HughesMichael PageJennifer RobertsSusan WilliamsCaroline McMillen (appointed January 2019)

Principal activities

During the year the principal continuing activities of the group consisted of providing social and affordablehousing in the areas of Broken Hill, Dubbo, Upper Hunter, Maitland, Central Coast, Newcastle, Taree, Cessnockand Lake Macquarie for New South Wales and in the areas of Logan and Greater Brisbane for Queensland andin South Auckland for New Zealand.

Compass Housing Services Co. Ltd received funding support from NSW Family and Community Servicesthrough grant subsidies for the Community Housing Leasing Program to lease properties from the private marketfor the provision of community housing.

Compass Housing Services Co Ltd and our wholly owned subsidiary Compass Housing Services Co(Queensland) Ltd received funding support from the Department of Housing and Public Works through grantsubsidies for the Community Rent Scheme Program.

Dividends

The company and its controlled entities (together the Group) is not for profit group and is prevented by itsconstitution from paying dividends.

Review of operations

The consolidated results from ordinary activities before tax for the year amounted to $7,277,000 (prior year:$16,898,000).

Significant changes in the state of affairs

On 7 September 2017, a controlled entity, Compass Housing Services Co (New Zealand) Limited, established a100% owned subsidiary, Compass Housing Services Co (Canterbury) Limited to pursue activities consistent withits business.

Compass Housing Services Co (Canterbury) Limited was closed and removed from the New Zealand Companiesregister on 12 October 2018.

Event since the end of the financial year

No matter or circumstance has arisen since 30 June 2019 that has significantly affected the company'soperations, results or state of affairs, or may do so in future years.

Environmental regulation

The group is not affected by any significant environmental regulation in respect of its operations.

Compass Housing Services Co Ltd30 June 2019

1

Directors' report

Information on directors

Paul Johnson

QualificationsCertified Practicing Accountant. Graduate member of the Australian Institute of Company Directors. Member ofthe Australian Computer Society.

ExperienceInvolved in the Community Housing Sector as a Director since 2008. Paul is a retired Chief Executive of afinancial institution with over 27 years' experience as a senior executive in the financial services and not-for-profitsectors in Australia.

Special responsibilitiesParent Board Member. Chair of Compass (NZ). Compass (Qld) Board Member. Chair of Internal ReviewCommittee. Chair of Australian Service Committee. Member of Governance & Remuneration Committee.Member of Audit Risk and Compliance Committee. Chair of Logan City Community Housing Co Ltd. Chair ofMyPlace Property Pty Ltd. Director of Home4Life Limited from 1 July 2018 to 27th November 2018.

Kwesi Addo

QualificationsFellow of the Australian Institute of Company Directors. Fellow of the Governance Institute of Australia. Bachelorof Laws. Master of Business Administration - International Business (Hons).Master of International Relations. Master of Construction Law.

ExperienceKwesi is an experienced non-executive director. He has nearly 15 years’ experience in the community housingsector and also has over 13 years of legal experience in corporate and commercial law across local governancematters and a range of commercial and corporate areas of law including major infrastructure projects, commercialand civil litigation, debt recovery and insolvency, privacy, tax and employment law.

Kwesi has served on the working groups and boards of other not for profit organisations and is the author of 3editions of a NSW legal text on community housing and 1 edition of a QLD legal text on community housing.

Special responsibilitiesChair of Parent Board. Chair of Compass (Qld). Chair of Nominations and Governance Committee. Member ofthe Appeals Committee. Compass (NZ) Board Member.

Greg Budworth

QualificationsMaster of Business Administration. Master of Business. Other tertiary qualifications in: Project Management,Business Management, Workplace Safety, Workplace Training. Graduate Member of the Australian Instituteof Company Directors. Member of the Australasian Housing Institute. Member of Managers and LeadersAustralia.

ExperienceGroup Managing Director of the Compass Group. He is a director of the Australasian Housing Institute and amember of various other related committees and panels. He has previous experience in CEO and seniormanagement roles in for profit human services organisations. He is currently the Vice President of the GeneralAssembly of Partners.

Special responsibilitiesCompass Group Managing Director. Executive Director of the Parent Board. Executive Director of Compass(Qld). Executive Director of Compass (NZ). Member of the Internal Review Committee. Logan City CommunityHousing Co Ltd Board Member. Member of the Australian Services Committee. Member of the InternationalExpansion Committee from 1 July 2018 to 25 February 2019. Director of Home4Life Limited from 1 July 2018 to30 June 2019.


2

Directors' report

Information on directors (continued)

Susan Williams

QualificationsMember of the Australian Institute of Company Directors (AICD). Fellow Certified Practicing Accountant. Fellowof the Governance Institute of Australia. Fellow of the Institute of Chartered Secretaries and Administrators.Master of Business Administration (International Business). Graduate Diploma of Applied Corporate Governance,Bachelor of Arts (Accounting). Registered Tax Agent.

ExperienceNon-Executive Director with over 10 years’ experience in both disability and community housing. Executivecareer including CFO and Company Secretary roles with ASX, NSX and NASDAQ listed companies, as well asprivate and not-for-profit organisations across a range of industries.

Special responsibilitiesDeputy Chair of the Parent Board. Deputy Chair Compass (Qld). Chair of Audit, Risk and ComplianceCommittee. Member of Australian Services Committee. Member of the Internal Review Committee. Member ofthe International Expansion Committee from July 2018 to February 2019.

Barry Martin

QualificationsFellow of the Australian Institute of Company Directors. Diploma of Business. Certificate IV in FrontlineManagement. Qualifications in workplace training and assessment. Qualifications in alcohol and other drugtraining. Certificate IV Personnel & Industrial Relations.

ExperienceBoard member 2011 - 2014, 2016 - present. Non-Executive Director with experience in business development,contract management, projects, business planning and relationship management and human resourceconsultant.

Special responsibilitiesParent Board Member. Compass (Qld) Board Member. Member of the Governance & Remuneration Committee.Member of the Internal Review Committee. Member of the Australian Services Committee.

Paul Hughes

QualificationsBachelor of Commerce (Accounting Major). Fellow of the Australian Institute of Company Directors.

ExperienceOver 20 years’ experience as a non-executive director of unlisted public companies, not-for-profits andgovernment organisations. Paul's leadership roles span over 30 years, with 20 years in local government seniormanagement. As CEO of Newcastle Airport from 2005 - 2015, Paul led its evolution as a major regionaleconomic driver.

Special responsibilitiesParent Board Member. Compass (Qld) Board Member. Member of the Governance & Remuneration Committee.Member of the Audit, Risk and Compliance Committee. Member of the International Expansion Committee from 1July 2018 to 25 February 2019.


3

Directors' report

Information on directors (continued)

Michael Page

QualificationsGAICD, Australian Institute of Company Directors. Bachelor of Engineering (Civil).

ExperienceNon-executive director with over 8 years’ experience in community housing. Executive career for 35 years,including executive director, regional manager and project director roles with ASX listed companies in fundsmanagement, finance, development and construction. General manager, chief executive officer and boardmember of a variety of infrastructure, health and social infrastructure related PPPs and assets and not-for-profitorganisations.

Special responsibilitiesParent Board Member. Compass (Qld) Board Member. Member of the Audit, Risk and Compliance Committee.Member of the International Expansion Committee from 1 July 2018 to 25 February2019. Chairman of Home4LifeLimited from November 2019 to present.

Jennifer Roberts

QualificationsFellow of the Australian Institute of Company Directors. Bachelor of Economics (Honours First Class).Diploma of Education. Diploma of Urban and Regional Planning.

ExperienceSenior executive in state and local government for 20 years. 10 years as a private consultant in economic,strategy and property. Experience on private and public-sector Boards and advisory groups. Extensiveknowledge and skills in public sector strategy and policy development, project management, engagement andstakeholder relations. Strong experience in grant funding, economic impact assessment and project approvalpathways.

Special responsibilitiesParent Board Member. Compass (Qld) Board Member. Chair of the International Expansion Committee from 1July 2018 to 25 February2019. Member of the Governance & Remuneration Committee.

Professor Caroline McMillen (appointed January 2019)

QualificationsFellow of the Australian Academy of Health and Medical Sciences, Honorary Fellow of the Asian College ofKnowledge Management, Bragg Member of the Royal Institution Australia, Fellow of the Royal Society of NewSouth Wales, and MAICD. BA (Honours) and Doctor of Philosophy (University of Oxford), MB, B Chir (Universityof Cambridge) and Honorary Doctorate of Science, University of Adelaide.

Senior academic leadership positions prior to taking up the role as Vice-Chancellor at the University of Newcastleand subsequently as Chief Scientist for South Australia. Experience on Boards, international and nationaldisciplinary bodies, research policy and assessment panels and national and state industry and governmentleadership groups focused on R&D and innovation.

Special responsibilitiesParent Board member from January 2019. Compass QLD Board Member from January 2019. Member ofAustralian Services Committee from January 2019.


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Directors' report

Meetings of directors

The numbers of meetings of the Company's board of directors and of each board committee held during the year ended 30 June 2019, and the numbers of meetings attendedby each director were:

TotalMeetingsAttended

NominationsCommittee

RemunerationCommittee

InternalReview

Committee**ARC

Committee

CompassParentBoard

CompassNZ Board

CompassQLD Board

CompassQLD AGM

ASERCCommittee

Governance&

RemunerationCommittee

InternationalExpansionCommittee

A B A B A B A B A B A B A B A B A B A B A B A B

Paul Johnson 50 50 4 4 2 2 4 4 7 7 15 15 6 6 6 6 1 1 3 3 2 2 * *

Kwesi Addo 41 45 4 4 1 2 1 4 * * 15 15 6 6 6 6 1 1 3 3 2 2 2 2Greg Budworth 44 50 2 2 2 2 0 4 7 7 14 15 6 6 6 6 1 1 2 3 2 2 2 2Susan Williams 38 40 1 1 2 2 4 4 7 7 14 15 * * 5 6 * * 3 3 * * 2 2Barry Martin 35 35 4 4 2 2 4 4 * * 15 15 * * 6 6 1 1 1 1 2 2 * *Paul Hughes 28 32 * * 2 2 * * 4 4 12 15 * * 6 6 1 1 * * 1 2 2 2Michael Page 22 29 * * * * * * 4 7 11 14 * * 6 6 * * * * * * 1 2Jennifer Roberts 27 29 2 3 * * * * * * 15 15 * * 5 6 1 1 * * 2 2 2 2Caroline McMillen 8 11 * * * * * * * * 3 5 * * 2 3 * * 3 3 * * * *Anthony Quirk 6 6 * * * * * * * * * * 6 6 * * * * * * * * * *

A = Number of meetings attendedB = Number of meetings held during the time the director held office or was a member of the committee during the year* Not a member of the relevant committee** Note that Greg Budworth and Kwesi Addo are members of the internal review committee but only required to attend meetings if required to achieve quorum


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Directors' report

Remuneration report

The directors are pleased to present your Compass Housing Services Co Ltd's 2019 remuneration report whichsets out remuneration information for the company's non-executive directors.

Details of remuneration

The following tables show details of the remuneration received by the directors of the group.

Totalremuneration

for 2018 -19including

superannuation$'000

BoardKwesi Addo 93Susan Williams 61Paul Johnson 50Barry Martin 49Paul Hughes 51Michael Page 52Jennifer Roberts 51Caroline McMillen 24

Total 431

Insurance of officers

During the financial year, Compass Housing Services Co Ltd paid a premium of $27,560 (2018: $22,273) toinsure the directors of the company and its Australian-based controlled entities, and the general managers ofeach of the divisions of the company.

Proceedings on behalf of the company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bringproceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, forthe purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court undersection 237 of the Corporations Act 2001.

Auditor's independence declaration

A copy of the auditor’s independence declaration as required under section 60-40 of the Australian Charities andNot-for-Profit Commission (ACNC) Act 2012 is set out on page 8 and forms part of the Directors’ Report.

Rounding of amounts

The company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument2016/191, issued by the Australian Securities & Investments Commission, relating to the 'rounding off of amountsin the directors' report. Amounts in the directors' report have been rounded off in accordance with that instrumentto the nearest thousand dollars.


6

Directors' report

Auditor

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of directors.

Kwesi AddoDirector

Susan WilliamsDirector

Newcastle

21 October 2019


7

PricewaterhouseCoopers, ABN 52 780 433 757 Level 3, 45 Watt Street, PO Box 798, NEWCASTLE NSW 2300 T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Auditor’s Independence Declaration As lead auditor for the audit of Compass Housing Services Co Ltd for the year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Compass Housing Services Co Ltd and the entities it controlled during the period.

Caroline Mara Newcastle Partner PricewaterhouseCoopers

21 October 2019

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Compass Housing Services Co Ltd ABN 84 002 862 213

Annual report - 30 June 2019

Contents PageFinancial statements

Consolidated statement of comprehensive income 10Consolidated balance sheet 11Consolidated statement of changes in equity 12Consolidated statement of cash flows 13Notes to the consolidated financial statements 14

Directors' declaration 32Independent auditor's report to the members 33

These financial statements are the consolidated financial statements of the consolidated entity consisting ofCompass Housing Services Co Ltd and its subsidiaries. A list of subsidiaries is included in note 11. The financialstatements are presented in the Australian currency.

Compass Housing Services Co Ltd is a company limited by guarantee, incorporated and domiciled in Australia.

Its registered office is:Compass Housing Services Co LtdSuite 302, Level 3 12 Stewart AvenueNewcastle West NSW 2302PO Box 58 Wickham NSW 2293

Its principal place of business is:Compass Housing Services Co LtdSuite 302, Level 3 12 Stewart AvenueNewcastle West NSW 2302PO Box 58 Wickham NSW 2293

The financial statements were authorised for issue by the directors on 21 October 2019. The directors have thepower to amend and reissue the financial statements.


9

Consolidated statement of comprehensive incomefor the year ended 30 June 2019

Consolidated entity

Notes2019$'000

2018$'000

Revenue from continuing operations 1 59,691 57,231a

Other income 9,340 7,628Fair value adjustment to investment property 2(a) 9,240 13,675

Tenancy and property management expenses 2(b) (41,686) (38,105)Administration expenses 2(b) (25,994) (21,939)Finance expenses 2(b) (3,517) (1,592)Operating profit 7,074 16,898

Share of net profit of joint ventures accounted for using the equity method 203 -

Profit for the year 7,277 16,898

Total comprehensive income for the year 7,277 16,898

The above consolidated statement of comprehensive income should be read in conjunction with theaccompanying notes.


10

Consolidated balance sheetas at 30 June 2019

Consolidated entity

Notes2019$'000

2018$'000

ASSETSCurrent assetsCash and cash equivalents 3(a) 38,267 9,063Trade and other receivables 3(b) 9,603 10,072Financial assets at fair value through profit or loss 3(c) 5 11,744Other current assets 3(d) 1,547 1,329

Total current assets 49,422 32,208

Non-current assetsFinancial assets at fair value through profit or loss 3(c) 804 87Property, plant and equipment 4(a) 1,869 1,353Investment properties 4(b) 383,497 374,295Investments accounted for using the equity method 203 -Intangible assets 4(c) 1,083 600Other non-current assets 3(d) 3,767 2

Total non-current assets 391,223 376,337

Total assets 440,645 408,545

LIABILITIESCurrent liabilitiesTrade and other payables 3(e) 13,702 7,936Borrowings 3(g) - 2,422Provisions 4(d) 831 582Deferred income 3(f) 2,736 2,667

Total current liabilities 17,269 13,607

Non-current liabilitiesBorrowings 3(g) 64,519 43,360Provisions 4(d) 140 138

Total non-current liabilities 64,659 43,498

Total liabilities 81,928 57,105

Net assets 358,717 351,440

EQUITYOther reserves 5(a) 115,089 115,089Retained earnings 5(b) 243,628 236,351

Total equity 358,717 351,440

The above consolidated balance sheet should be read in conjunction with the accompanying notes.


11

Consolidated statement of changes in equityfor the year ended 30 June 2019

Assetrevaluation

reserve$'000

Vestedcapital assets

reserve$'000

Vestedsurplusreserve

$'000

Retainedearnings

$'000

Totalequity$'000

Balance at 1 July 2017 75 110,101 4,913 219,453 334,542

Total comprehensive incomefor the year

- - - 16,898 16,898

Balance at 30 June 2018 75 110,101 4,913 236,351 351,440

Balance at 1 July 2018 75 110,101 4,913 236,351 351,440

Total comprehensive incomefor the year

- - - 7,277 7,277

Balance at 30 June 2019 75 110,101 4,913 243,628 358,717

The above consolidated statement of changes in equity should be read in conjunction with the accompanyingnotes.


12

Consolidated entity

Notes2019$'000

2018$'000

55,329 52,088(59,676) (63,179)

388 350(3,517) (1,575)12,046 13,300

6 4,570 984

(4,170) (253)4(a) (1,099) (376)

(577) (392)5 153

(1) (6,162)11,739 -

5,897 (7,030)

60,323 5,180(41,586) (1,518)18,737 3,662

29,204 (2,384)9,063 11,447

Consolidated statement of cash flowsfor the year ended 30 June 2019

Cash flows from operating activitiesReceipts from customersPayments to suppliers and employeesInterest incomeInterest paid and finance costReceipt from grantsNet cash inflow from operating activities

Cash flows from investing activitiesPurchase of financial assetsPayments for property, plant and equipmentPayments for intangiblesProceeds from sale of property, plant and equipment Payments for investment propertiesProceeds from financial assetsNet cash inflow (outflow) from investing activities

Cash flows from financing activitiesProceeds from borrowingsRepayment of borrowingsNet cash inflow from financing activities

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 3(a) 38,267 9,063

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.


13

Contents of the notes to the consolidated financial statements

Page

1 Revenue 15

2 Other income and expense items 15

3 Financial assets and financial liabilities 16

4 Non-financial assets and liabilities 18

5 Equity 20

6 Cash flow information 21

7 Critical estimates, judgements and errors 21

8 Financial risk management 22

9 Commitments 23

10 Events occurring after the reporting period 23

11 Related party transactions 24

12 Parent entity financial information 25

13 Summary of significant accounting policies 26

14 Additional disclosures required by the Charitable Fundraising Act 1991 (NSW) and theCharitable Fundraising Regulations

30


14

1 Revenue

The company derives the following types of revenue:

Consolidated entity2019$'000

2018$'000

From continuing operationsTenant revenue 46,437 43,931Grant revenue 13,254 13,300

59,691 57,231

2 Other income and expense items

(a) Other income


2018$'000

Management income 3,574 2,696Other interest received 699 350Other revenue 5,067 4,582

9,340 7,628Fair value adjustment to investment property 9,240 13,675

18,580 21,303(b) Breakdown of expenses by nature

Consolidated entity

Tenancy and property management expenses2019$'000

2018$'000

Bad debts 686 1,316Depreciation and amortisation 710 600Insurance 1,601 1,840Property repairs and maintenance 9,898 9,642Rent - rental properties 20,279 16,474Utilities 7,121 6,538Other expenses 1,392 1,695

41,687 38,105

Consolidated entity

Administration expenses2019$'000

2018$'000

Employee benefits 16,660 13,735Motor vehicles 629 455Rent - office building 818 824Other expenses 7,887 6,926

25,994 21,940


2018$'000

Finance costsInterest and finance charges 3,517 1,592


15

3 Financial assets and financial liabilities

(a) Cash and cash equivalents


2018$'000

Current assetsCash at bank and in hand 38,267 9,063

The above cash balance includes a restricted amount attributable to tenant bonds of $0.51m (2018: $0.5m).

(b) Trade and other receivables


2018$'000

Trade debtors 8,211 7,430Tenant debtors 1,207 1,215Ex tenant arrears 83 86Provision for doubtful debt (5,236) (4,712)Other receivables 5,338 6,053

9,603 10,072

(c) Financial assets at fair value through profit or loss

Consolidated entity2019 2018

Current$'000

Non-current

$'000Total$'000

Current$'000

Non-current

$'000Total$'000

Other financial assetsTerm deposits* 5 - 5 11,744 - 11,744Bank guarantees - 804 804 - 87 87

5 804 809 11,744 87 11,831

(d) Other assets


Current$'000

Non-current

$'000Total$'000

Current$'000

Non-current

$'000Total$'000

Other financial assetsPrepayments 1,547 - 1,547 1,329 - 1,329Security deposits paid - 1 1 - 2 2Loan to joint venture - 3,312 3,312 - - -Deferred borrowing cost - 454 454 - - -

1,547 3,767 5,314 1,329 2 1,331


16

Financial assets and financial liabilities

(e) Trade and other payables


2018$'000

Trade payables 5,933 5,139Accrued wages 1,288 748Accrued expenses 4,276 684Annual leave payable 1,172 937Other payables 1,033 428

13,702 7,936

Trade payables are unsecured and are usually paid within 30 days of recognition.

The carrying amounts of trade and other payables are considered to be the same as their fair values, due to theirshort-term nature.

(f) Deferred income

2019$'000

2018$'000

Deferred revenue: Grants 852 2,405Deferred revenue: Sinking fund 1,884 262

2,736 2,667

(g) Borrowings


Current$'000

Non-current

$'000Total$'000

Current$'000

Non-current

$'000Total$'000

SecuredNational Housing Finance andInvestment Corporation loan - 60,323 60,323 - - -Bank loan - - - 2,422 39,165 41,587Loan - Department of Housingand Public Works Brisbane - 4,196 4,196 - 4,195 4,195

Total secured borrowings - 64,519 64,519 2,422 43,360 45,782


17

4 Non-financial assets and liabilities

(a) Property, plant and equipment

Consolidated entityFreehold land

$'000

Plant andequipment

$'000

Furniture,fittings andequipment

$'000

Machineryand vehicles

$'000

Leaseholdimprovements

$'000Total$'000

At 30 June 2018Cost 550 535 1,952 191 860 4,088Accumulated depreciation - (328) (1,627) (168) (612) (2,735)

Net book amount 550 207 325 23 248 1,353

Year ended 30 June 2019Opening net book amount 550 207 325 23 248 1,353Additions - 42 643 - 230 915Depreciation charge - (28) (248) (7) (104) (387)Transfers - (12) - - - (12)

Closing net book amount 550 209 720 16 374 1,869

At 30 June 2019Cost 550 564 2,571 170 1,078 4,933Accumulated depreciation - (356) (1,847) (157) (704) (3,064)

Net book amount 550 208 724 13 374 1,869


18

Non-financial assets and liabilities

(a) Property, plant and equipment (continued)

Revaluation, depreciation methods and useful lives

Property, plant and equipment is recognised at historical cost less depreciation.

Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts, net of theirresidual values, over their estimated useful lives or, in the case of leasehold improvements and certain leasedplant and equipment, the shorter lease term as follows:

• Buildings 25 - 40 years• Machinery 10 - 15 years• Vehicles 3 - 5 years• Furniture, fittings and equipment 3 - 8 years• Leased plant and equipment 10 - 15 years

See note 13(h) for the other accounting policies relevant to property, plant and equipment.

(b) Investment properties


2018$'000

At fair valueOpening balance at 1 July 374,295 351,980Additions - 6,169FV gain/(loss) on investment properties 9,240 13,675FV gain/(loss) on investment properties - Department of Housing - 2,471Other adjustments (38) -

Closing balance 383,497 374,295

(c) Intangible assets


2018$'000

SoftwareCost 2,644 1,914Accumulated amortisation (1,561) (1,314)

Total 1,083 600

(d) Provisions


NotesCurrent

$'000

Non-current

$'000Total$'000

Current$'000

Non-current

$'000Total$'000

Employee benefits 785 117 902 536 115 651Make good provision 46 23 69 46 23 69

831 140 971 582 138 720


19

Non-financial assets and liabilities

(d) Provisions (continued)

Information about individual provisions and significant estimates

Employee benefits

The provision for employee benefits relates to the group’s liability for long service leave.

Make good provision

Compass Housing Services Co Ltd is required to restore the leased premises of its offices to their originalcondition at the end of the respective lease terms. A provision has been recognised for the present value of theestimated expenditure required to remove any leasehold improvements.

5 Equity

(a) Other reserves

The following table shows a breakdown of the balance sheet line item ‘other reserves’ and the movements inthese reserves during the year. A description of the nature and purpose of each reserve is provided below thetable.


2018$'000

Revaluation surplus - property, plant and equipment 75 75Vested capital assets reserve 110,101 110,101Vested surplus reserve 4,913 4,913

115,089 115,089

Nature and purpose of other reserves

Revaluation surplus - property, plant and equipment

The property, plant and equipment revaluation surplus is used to record increments and decrements on therevaluation of non-current assets. In the event of a sale of an asset, any balance in the reserve in relation to theasset is transferred to retained earnings, see accounting policy note 14(h) for details.

Vested capital assets reserve

This reserve records the fair value of properties received with a vested interest by a third party.

Vested surplus reserve

The vested surplus reserve records the fair value movements of properties with vested title after coming underthe Company's control.

(b) Retained earnings

Movements in retained earnings were as follows:

2019$'000

2018$'000

Balance 1 July 236,351 219,453Net profit for the year 7,074 16,898

Balance 30 June 243,425 236,351


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6 Cash flow information

Reconciliation of profit after income tax to net cash inflow from operating activities


2018$'000

Profit for the year 7,277 16,898Share of net profit of joint ventures accounted for using the equity method (203) -Depreciation and amortisation 710 600Fair value adjustment to investment property (9,240) (13,675)Change in operating assets and liabilities:

(Increase) decrease in accounts receivable 470 (3,840)(Increase) in other assets (530) (148)(Decrease) increase in trade and other payables 5,766 (517)Increase (decrease) in other liabilities 69 1,588Increase in other provisions 251 78

Net cash inflow from operating activities 4,570 984

7 Critical estimates, judgements and errors

The preparation of financial statements requires the use of accounting estimates. Management also needs toexercise judgement in applying the group’s accounting policies.

Critical accounting estimates and assumptions

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, bydefinition, seldom equal the related actual results. The estimates and assumptions that have a significant risk ofcausing a material adjustment to the carrying amounts of assets and liabilities within the next financial year arediscussed below.

Estimated fair values of investment properties

Investment properties are held to earn rental income up to 75% of market value (as defined by CommunityHousing policy) and for capital appreciation. Compass Housing Services Co Limited require both these incomestreams to continue to service the Community Housing market and they are not, in the judgement of thedirectors, incidental to the purposes of the group or the service delivery obligations of the group.

The group engaged external, independent and qualified valuers to determine the fair value of the groupsinvestment properties. This is conducted on a periodic, but at least triennial basis with one third of the portfolio,valued at least every three years. As at 30 June 2019, the fair values of the investment properties have beendetermined by JLL.

At the end of each reporting period, the directors update their assessment of the fair value of each property,taking into account the most recent independent valuations. The directors determine a property's value within arange of reasonable fair value estimates.

The best evidence of fair value is the current prices in an active market for similar properties. Where suchinformation is not available, the directors consider information from a variety of sources including:

• current prices in an active market for properties of different nature or recent prices of similar properties in lessactive markets, adjusted to reflect those differences.• discounted cash flow projections based on reliable estimates of future cash flows.• capitalised income projections based upon a properties estimated net market income, and a capitalisation ratederived from an analysis of market evidence.

The fair value of investment properties has been derived using the Capitalisation of Income Approach andHypothetical Development Approach.


21

8 Financial risk management

(a) Market risk

(i) Foreign exchange risk

The group is exposed to foreign currency exchange risk following establishment of Compass Housing ServicesCo (New Zealand) Ltd.

The Compass Housing Services Co (New Zealand) Ltd balance sheet is translated at the 30 June 2019 spot rate.The statement of comprehensive income is translated at the average exchange rate for the period.

Amounts recognised in profit or loss and other comprehensive incomeDuring the year, the following foreign exchange related amounts were recognised in profit or loss and othercomprehensive income:

$'000

Net unrealised exchange gain 5

(ii) Cash flow and fair value interest rate risk

The group has managed its interest rate risk by securing 10 year interest only finance from the NHFIC.

(iii) Price risk

Amounts recognised in profit or loss and other comprehensive incomeThe amounts recognised in profit or loss and other comprehensive income in relation to the various investmentsheld by the group are:

2019 2018$'000 $'000

Investment properties 9,240 13,675

(b) Credit risk

Impaired trade receivables

Individual receivables which are known to be uncollectible are written off by reducing the carrying amountdirectly. The other receivables are assessed collectively to determine whether there is objective evidence that animpairment has been incurred but not yet been identified. For these receivables the estimated credit losses arerecognised in a separate provision for impairment. Refer accounting policy for provision for doubtful debts basedon AASB 9 expected credit loss model in note 13(f).

Provision for doubtful debts is recognised on the following basis;

Trade Debtors - A provision of 10% of trade debtors is recognised on the basis of historical recoupment of thesereceivables.

Tenant Debtors - A provision of 4% of tenant rent and tenant non rent incidentals receivable is is recognisedbased on industry average for balances outstanding less than 12 months. Balances over 12 months are fullyprovided with the exception of those on payment plans who are deemed to be fully collectable.

Ex-Tenant Debtors - A provision of 85% of ex-tenant rent and non rent incidentals receivable is recognised on thebasis of historical recoupment of these receivables. Balances over 12 months are fully provided with theexception of those on payment plans who are deemed to be fully collectable.

Receivables for which an impairment provision was recognised are written off against the provision when there isno expectation of recovering additional cash. Impairment losses are recognised in profit or loss within otherexpenses. Movements in the provision for impairment of trade receivables that are assessed for impairmentcollectively are as follows:


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Financial risk management

(b) Credit risk (continued)

Impaired trade receivables (continued)

Movements in the provision for impairment of trade receivables that are assessed for impairment collectively areas follows:

Consolidated entity

Current assets2019$'000

2018$'000

As at 1 July 4,712 3,012Provision for impairment recognised during the year 587 1,738Receivables written off during the year as uncollectable (63) (38)

As at 30 June 5,236 4,712

(c) Liquidity risk

Financing arrangements

The group had access to the following undrawn borrowing facilities at the end of the reporting period:


2018$'000

Total facility - NHFIC 184,280 -- Expiring beyond one year (bank loans) (60,323) -

Undrawn borrowing facilities 123,957 -

Total facility - Bank loan 45,002- Expiring within one year (bank overdraft and bill facility) - (2,422)- Expiring beyond one year (bank loans) - (39,165)

Undrawn borrowing facilities - Bank loan 3,415Z

Total undrawn borrowing facilities 123,957 3,415

9 Commitments

Non-cancellable operating leases


2018$'000

Commitments for minimum lease payments in relation to non-cancellableoperating leases are payable as follows:Within one year 3,808 1,124Later than one year but not later than five years 10,263 1,094Later than five years 7,215 -

21,286 2,218

10 Events occurring after the reporting period

No matter or circumstance has occurred subsequent to year end that has significantly affected, or maysignificantly affect, the operations of the group, the results of those operations or the state of affairs of the groupor economic entity in subsequent financial years.


23

Due to a change in the scope of the project being financed, it is expected, after the signing date of these accounts, that the amount of the finance facility will be amended from $184,280k to $114,163k.

11 Related party transactions

(a) Subsidiaries

Name of the entity TypeOwnershipinterest 2019

Ownershipinterest 2018

Compass Housing Services Co (Queensland) Ltd.Fully ownedsubsidiary 100% 100%

Compass Housing Services Co (New Zealand) Ltd.Fully ownedsubsidiary 100% 100%

Compass Housing Services Co (Canterbury) LtdFully ownedsubsidiary - 100%

My Place Property Pty LtdFully ownedsubsidiary 100% 100%

Compass SAHF A Pty LtdFully ownedsubsidiary 100% -

Compass SAHF B Pty LtdFully ownedsubsidiary 100% -

Compass SAHF C Pty LtdFully ownedsubsidiary 100% -

(b) Key management personnel compensation

Consolidated entity2019

$2018

$

Short-term employee benefits 2,179,099 1,348,783Short-term non-cash benefits 495,810 405,260

2,674,909 1,754,043

(c) Transactions with other related parties

The following transactions occurred with related parties:

Consolidated entityYear ended2019

$2018

$

Sale and purchases of goods and servicesPurchase of management services from parent - Compass Housing Services Co(QLD) Limited 798,963 1,193,877Purchase of management services from parent - Compass Housing Services Co(NZ) Limited 84,414 1,362,071Consulting services,specifically administration assistance in regards H4L,performed by Matash Developments Pty Ltd of which Michael Page is currently adirector 25,000 -

(d) Outstanding balances arising from sales/purchases of goods and services

The following balances are outstanding at the end of the reporting period in relation to transactions with relatedparties:

2019$

2018$

Current payables (purchases of goods and services)Receivable from LCCH Ltd 131,222 131,222Receivable from Compass Housing Services Co. (New Zealand) Ltd 1,251,185 1,362,071Receivable from Compass Housing Services Co. (Queensland) Ltd 265,992 1,478,937Loan to Home4Life Limited (including accrued interest) 3,311,688 -


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Related party transactions

(e) Joint ventures

Name of the entity TypeLogan City Community Housing Limited Joint VentureHome4Life Limited Joint Venture

Home4Life Limited

During the year Compass entered into a joint venture with BlueCHP Limited, through the company Home4LifeLimited. The purpose of the joint venture is to deliver the Hunter Residences Program under the Project DeliveryDeed with The Minister for Disability Services, for and on behalf of the State of New South Wales, acting throughThe Department of Communities and Justice. Compass and Blue CHP are the two members Home4 Life, with a50% share each. Compass and Blue CHP have loaned Home4Life $3,000,000 with remaining finance for thejoint venture coming from LIFT Home4Life Trust as financier.

(f) Terms and conditions

Management services were provided to related entities during the year based on terms that would be available tothird parties and charged to those entities provided the charge does not send the entity into a loss or increasedloss position, in which case the parent does not recover these charges. Consulting services were provided byrelated entities during the year based on normal commercial terms and conditions and at market rates. All othertransactions were made on normal commercial terms and conditions and at market rates, except that there areno fixed terms for the repayment of balances with related parties. Outstanding balances to key managementpersonnel are unsecured and are repayable in cash.

12 Parent entity financial information

Summary financial information

The individual financial statements for the parent entity show the following aggregate amounts:

2019$'000

2018$'000

Balance sheet

ASSETSCurrent assets 46,642 24,209Non-current assets 385,703 371,435

Total assets 432,345 395,644

LIABILITIESCurrent liabilities 16,256 5,705Non-current liabilities 58,823 39,276

Total liabilities 75,079 44,981

Net assets 357,266 350,663(1,071,798) (1,051,989)

EQUITYReserves 114,861 115,115Accumulated surplus 234,717 219,392Profit for the year 7,688 16,156

Total equity 357,266 350,663


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Parent entity financial information

Summary financial information (continued)

Profit or loss for the year 7,688 16,156

Total comprehensive income for the year 7,688 16,156

13 Summary of significant accounting policies

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian AccountingStandards and interpretations issued by the Australian Accounting Standards Board and the Australian Charitiesand Not-for-Profit Commission (ACNC) Act 2012. Compass Housing Services Co Ltd is a not-for-profit entity forthe purpose of preparing the financial statements.

Where relevant, amounts in the prior year may have been reclassified to enhance consistency and comparabilitywith the current year.

(i) Historical cost convention

These financial statements have been prepared under the historical cost basis, except for the following:

• available-for-sale financial assets, financial assets and liabilities certain classes of property, plant andequipment and investment property - measured at fair value

• assets held for sale - measured at fair value less cost of disposal.

(ii) New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June2019 reporting periods and have not been early adopted by the Company. The Company’s assessment of theimpact of these new standards and interpretations is set out below.

Standard/Interpretation AASB 15 Revenue from contracts with customersXXXNature of Change The AASB has issued a new standard for the recognition of revenue.

This will replace AASB 118 which covers revenue arising from the sale of goodsand the rendering of services and AASB 111 which covers construction contracts.The standard permits either a full retrospective or a modified retrospectiveapproach for the adoption

XXXImpact and date of adoption The Company has taken advantage of the 1 year extension available to not-for-

profit entities which means it is mandatory for financial years commencing on orafter 1 January 2019 and will therefore be applicable for the company from 1 July2019.The financial impact of the new accounting standard is being determined bymanagement.

Standard/Interpretation AASB 16 LeasesXXXNature of Change AASB 16 was issued in February 2016. It will result in almost all leases being

recognised on the balance sheet, as the distinction between operating andfinance leases is removed. Under the new standard, an asset (the right to use theleased item) and a financial liability to pay rentals are recognised. The onlyexceptions are short term and low-value leases.The accounting for lessors will not significantly change.

XXXImpact and date of adoption Mandatory for financial years commencing on or after 1 January 2019 and will

therefore be applicable for the company from 1 July 2019.The financial impact of the new accounting standard has been assessed bymanagement and will result capitalization of Right of use assets and lease liabilityon the balance sheet amounting to $13,435,082, and an impact of ($255,807) onthe income statement in FY 2020. The impact on the income statement isexpected to even out over the lease term but leads to a higher interest expense atthe start of the lease.


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Summary of significant accounting policies

(a) Basis of preparation (continued)

(ii) New standards and interpretations not yet adopted (continued)

(iii) Compliance with Australian Accounting Standards - Reduced Disclosure Requirements

The consolidated financial statements of the Compass Housing Services Co Ltd group comply with AustralianAccounting Standards - Reduced Disclosure Requirements as issued by the Australian Accounting StandardsBoard (AASB).

(iv) Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requiresmanagement to exercise its judgement in the process of applying the group's accounting policies. The areasinvolving a higher degree of judgement or complexity, or areas where assumptions and estimates are significantto the financial statements, are disclosed in note 7.

(b) Principles of consolidation

Subsidiaries

Subsidiaries are all entities over which the group has control. The group controls an entity when the group isexposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect thosereturns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date onwhich control is transferred to the group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the group.

Intercompany transactions, balances and unrealised gains on transactions between group companies areeliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment ofthe asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensureconsistency with the policies adopted by the group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidatedincome statement, statement of comprehensive income, statement of changes in equity and balance sheetrespectively.

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of CompassHousing Services Co Ltd ('Company' or 'parent entity') as at 30 June 2019 and the results of all subsidiaries forthe year then ended. Compass Housing Services Co Ltd and its subsidiaries together are referred to in thisfinancial report as the group or the consolidated entity.

(c) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenueare net of returns, trade allowances, rebates and amounts collected on behalf of third parties.

The group recognises revenue when the amount of revenue can be reliably measured, it is probable that futureeconomic benefits will flow to the entity and specific criteria have been met for each of the group's activities asdescribed below. The group bases its estimates on historical results, taking into consideration the type ofcustomer, the type of transaction and the specifics of each arrangement.

(i) Tenant income

Revenue from services is recognised in the accounting period in which the services are rendered. For fixed pricecontracts, revenue is recognised based on the actual service provided to the end of the reporting period as aproportion of the total services to be provided (percentage of completion method).

(ii) Grant income

Grant revenue is recognised in the statement of comprehensive income when the entity obtains control of thegrant, it is probable that the economic benefits gained from the grant will flow to the entity and the amount of thegrant can be measured reliably.

When grant revenue is received whereby the entity incurs an obligation to deliver economic benefits directly backto the contributor, this is considered a reciprocal transaction and the grant revenue is recognised in the statementof financial position as a liability until the service has been delivered to the contributor, otherwise the grant isrecognised as income on receipt.


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(c) Revenue recognition (continued)

(iii) Interest income

Interest income is recognised using the effective interest method. When a receivable is impaired, the groupreduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at theoriginal effective interest rate of the instrument, and continues unwinding the discount as interest income. Interestincome on impaired loans is recognised using the original effective interest rate.

(iv) Unearned rental income

The unearned rental income shown in the accounts will brought into account in the subsequent year as itrepresents tenants rent received in advance.

(v) Donations and other income

Donations and bequests are recognised as income when received.

(d) Impairment of assets

Other assets are tested for impairment whenever events or changes in circumstances indicate that the carryingamount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carryingamount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less coststo sell and value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels forwhich there are separately identifiable cash inflows which are largely independent of the cash inflows from otherassets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered animpairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(e) Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash onhand, deposits held at call with financial institutions, other short-term, highly liquid investments with originalmaturities of three months or less that are readily convertible to known amounts of cash and which are subject toan insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings incurrent liabilities in the balance sheet.

(f) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using theeffective interest method, less provision for impairment. See note 8(b) for further information about the group’saccounting for trade receivables.

AASB 9 - Financial Instruments, being applicable, was adopted without restating comparative information. TheCompany’s Trade receivables are subject to AASB 9’s new expected credit loss model.

Management believe that the provision as at 30 June 2018 would materially represent the ECL calculation as at 1July 2018, due to the large provision associated with ex-tenant debtors.

The Company was required to revise its impairment methodology under AASB 9, however the impact of thechange in impairment methodology was expected to be immaterial. While cash and cash equivalents are alsosubject to the impairment requirements of AASB 9, the identified impairment loss was also expected to beimmaterial.

The Company applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetimeexpected loss allowance for all trade and other receivables. To measure the expected credit losses, the trade andother receivables are assessed based on credit risk characteristics, the days past due and the historical lossrates which adjusted to reflect current and forward looking information.

The amount of the provision is the difference between the asset’s carrying amount and the present value ofestimated future cash flows, discounted at the original effective interest rate.

(g) Investments and other financial assets

Classification

The group classifies its financial assets in the following categories:

• financial assets at fair value through profit or loss,


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(g) Investments and other financial assets (continued)

Classification (continued)

• loans and receivables, and

• held-to-maturity investments

The classification depends on the purpose for which the investments were acquired. Management determines theclassification of its investments at initial recognition and, in the case of assets classified as held-to-maturity,re-evaluates this designation at the end of each reporting year. See note 3 for details about each type of financialasset.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset isclassified in this category if acquired principally for the purpose of selling in the short term. Assets in this categoryare classified as current assets if they are expected to be settled within 12 months; otherwise they are classifiedas non-current.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They are included in current assets, except for those with maturities greater than 12months after the reporting period which are classified as non-current assets. Loans and receivables are includedin trade and other receivables and receivables in the balance sheet.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixedmaturities that the group's management has the positive intention and ability to hold to maturity. If the group wereto sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be taintedand reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, exceptfor those with maturities less than 12 months from the end of the reporting period, which are classified as currentassets.

(h) Property, plant and equipment

The group's accounting policy for land and buildings is explained in note 4(a). All other property, plant andequipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directlyattributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate,only when it is probable that future economic benefits associated with the item will flow to the group and the costof the item can be measured reliably. The carrying amount of any component accounted for as a separate assetis derecognised when replaced. All other repairs and maintenance are charged to profit or loss during thereporting year in which they are incurred.

Increases in the carrying amounts arising on revaluation of land and buildings are recognised, net of tax, in othercomprehensive income and accumulated in reserves in shareholder's equity. To the extent that the increasereverses a decrease previously recognised in profit or loss, the increase is first recognised in profit or loss.Decreases that reverse previous increases of the same asset are first recognised in other comprehensive incometo the extent of the remaining surplus attributable to the asset; all other decreases are charged to profit or loss.Each year, the difference between depreciation based on the revalued carrying amount of the asset charged toprofit or loss and depreciation based on the asset's original cost is reclassified from the property, plant andequipment revaluation surplus to retained earnings.

(i) Investment properties

The group’s accounting policy for investment properties is disclosed in note 7.

(j) Intangible assets

IT development and software

Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that willcontribute to future period financial benefits through revenue generation and/or cost reduction are capitalised tosoftware and systems. Costs capitalised include external direct costs of materials and service, employee costsand an appropriate portion of relevant overheads.


29


(k) Trade and other payables

These amounts represent liabilities for goods and services provided to the group prior to the end of financial yearwhich are unpaid. The amounts are unsecured and are usually paid within 14 days of recognition. Trade andother payables are presented as current liabilities unless payment is not due within 12 months from the reportingdate. They are recognised initially at their fair value and subsequently measured at amortised cost using theeffective interest method.

(l) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequentlymeasured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemptionamount is recognised in profit or loss over the period of the borrowings using the effective interest method. Feespaid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it isprobable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw downoccurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, thefee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which itrelates.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement ofthe liability for at least 12 months after the reporting period.

(m) Borrowing costs

Borrowing costs are expensed in the period in which they are incurred.

(n) Provisions

Provisions for legal claims and make good obligations are recognised when the group has a present legal orconstructive obligation as a result of past events, it is probable that an outflow of resources will be required tosettle the obligation and the amount has been reliably estimated. Provisions are not recognised for futureoperating losses.

Provisions are measured at the present value of management's best estimate of the expenditure required tosettle the present obligation at the end of the reporting period. The discount rate used to determine the presentvalue is a pre-tax rate that reflects current market assessments of the time value of money and the risks specificto the liability. The increase in the provision due to the passage of time is recognised as interest expense.

(o) Rounding of amounts

The company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument2016/191, issued by the Australian Securities & Investments Commission, relating to the 'rounding off of amountsin the directors' report. Amounts in the directors' report have been rounded off in accordance with that instrumentto the nearest thousand dollars.

14 Additional disclosures required by the Charitable Fundraising Act 1991 (NSW) andthe Charitable Fundraising Regulations 2015 (NSW)

(a) Fundraising appeals

Fundraising appeals during the year consisted of donations.

(b) Details of aggregate gross income and total expenses of fundraising appeals


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Additional disclosures required by the Charitable Fundraising Act 1991 (NSW) andthe Charitable Fundraising Regulations

(b) Details of aggregate gross income and total expenses of fundraising appeals (continued)

Consolidated entityYear ended

30 June2019$'000

30 June2018$'000

Gross proceeds from fundraising appeals:Donations 10 10Grants received 78 -Gross proceeds from fundraising 88 10

Fundraising costs (2) -

Net surplus obtained from fundraising appeals 86 10

(c) Statement showing how funds received were applied to Charitable Purpose

Net surplus from fundraising appeals86 10

This is applied to the charitable purposes in the following manner:

Expenditure on direct services:Grants for grow a star participants 9 13

Net surplus/(deficit) after grants 77 (3)

The surplus from fundraising appeals has been retained in cash at bank.

(d) Comparisons by monetary figures and percentages

2019 $ %Total cost of fundraising/gross income from fundraising 1,892/87,628 2.16%Net surplus from fundraising/gross income from fundraising 85,736/87,628 97.84%Total cost of direct services/total expenditure 8,862/10,754 82.41%Total cost of direct services/total income received 8,862/87,628 10.11%

2018 $ %Total cost of fundraising/gross income from fundraising 194/10,197 1.90%Net surplus from fundraising/gross income from fundraising 10,003/10,197 98.10%Total cost of direct services/total expenditure 13,462/13,656 98.58%Total cost of direct services/total income received 13,462/10,197 132.02%


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Directors' declaration

In the directors' opinion:

(a) the financial statements and notes set out on pages 9 to 31 are in accordance with the AustralianCharities and Not-for-Profit Commission (ACNC) Act 2012, including:

(i) complying with Accounting Standards, the Australian Charities and Not-for-Profit Commission(ACNC) Act 2012 and other mandatory professional reporting requirements, and

(ii) giving a true and fair view of the consolidated entity's financial position as at 30 June 2019 and ofits performance for the financial year ended on that date, and

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when theybecome due and payable.

This declaration is made in accordance with a resolution of directors.

Kwesi AddoDirector

Susan WilliamsDirector

Newcastle21 October 2019

In my opinion:

(a) the consolidated statement of comprehensive income and notes set out on pages 9 to 31 give a true andfair view of all income and expenditure of Compass Housing Services Co Ltd with respect to fundraisingappeals;

(b) the consolidated balance sheet gives a true and fair view of the state of affairs with respect to fundraisingappeals;

(c) the provision of the Charitable Fundraising Act 1991, the Charitable Fundraising Regulation 2015 underthe Act and the conditions attached to the authority have been complied with for the year ended 30 June2019; and

(d) the internal controls excercised by Compass Housing Services Co Ltd are appropriate and effective inaccounting for all income received and applied by the organisation from any of its fundraising appeals.

Kwesi AddoDirector

Newcastle21 October 2019


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PricewaterhouseCoopers, ABN 52 780 433 757 Level 3, 45 Watt Street, PO Box 798, NEWCASTLE NSW 2300 T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Independent auditor’s report To the members of Compass Housing Services Co Ltd

Our opinion In our opinion:

The accompanying financial report of Compass Housing Services Co Ltd (the Company) and its controlled entities (together the Group) is in accordance with Division 60 of the Australian Charities and Not-for-profits Commission (ACNC) Act 2012, including:

(a) giving a true and fair view of the Group's financial position as at 30 June 2019 and of itsfinancial performance for the year then ended

(b) complying with Australian Accounting Standards - Reduced Disclosure Requirements andDivision 60 of the Australian Charities and Not-for-profits Commission Regulation 2013.

What we have audited The Group financial report comprises:

• the consolidated balance sheet as at 30 June 2019• the consolidated statement of comprehensive income for the year then ended• the consolidated statement of changes in equity for the year then ended• the consolidated statement of cash flows for the year then ended• the notes to the consolidated financial statements, which include a summary of significant

accounting policies• the directors’ declaration.

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

Independence We are independent of the Group in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (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.

Other information The directors are responsible for the other information. The other information comprises the information included in the Annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon.

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Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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 - Reduced Disclosure Requirements and the Australian Charities and Not-for-profits Commission (ACNC) 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.

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 the 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_responsibilities/ar3.pdf. This description forms part of our auditor's report.

Report on the requirements of the NSW Charitable Fundraising Act 1991 and NSW Charitable Fundraising Regulations 2015 We have audited the financial report as required by Section 24(2) of the NSW Charitable Fundraising Act 1991. The directors of the group are responsible for the preparation and presentation of the financial report in accordance with the Charitable Fundraising Act 1991 (NSW) and the NSW Charitable Fundraising Regulations 2015. Our responsibility is to express an opinion on the financial report based on our audit.

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http://www.auasb.gov.au/auditors_responsibilities/ar3.pdf

Auditors’ opinion In our opinion, in all material respects:

a. The financial report of Compass Housing Services Co Limited and its controlled entities isprepared and associated records have been properly kept, during the financial year ended 30 June2019, in accordance with:

i. sections 20(1), 22(1-2) and 24(1-3) of the NSW Charitable Fundraising Act 1991; and

ii. sections 10(6) and 11 of the NSW Charitable Fundraising Regulations 2015; and

b. money received as a result of fundraising appeals activities conducted by the company duringthe year ended 30 June 2019 has been properly accounted for and applied in accordance with theabove mentioned Acts and Regulations.

PricewaterhouseCoopers

Caroline Mara Newcastle Partner 21 October 2019

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