PROBUS SOUTH PACIFIC LIMITED ANNUAL REPORT 2013/14

ANNUAL REPORT 2013/14

ACTIVE RETIREESTM - Tomorrow’s vision for PROBUS

PROBUS SOUTH PACIFIC LIMITED

CONTENTS

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

(A company limited by guarantee)

Page No.

1 About Probus

1 About Probus South Pacific Limited

3 Probus South Pacific Limited Board

6 Chairman’s Report

8 Treasurer’s Report

10 General Manager’s Report

Annual Financial Report

12 Corporate information

13 Director’s Report

17 Auditor’s independence declaration

18 Statement of profit and loss and other comprehensive income

19 Statement of financial position

20 Statement of changes in funds

21 Statement of cash flows

22 Notes to the financial statements

42 Director’s declaration

43 Independent auditor’s report

1 PROBUS Annual Financial Report 2013/2014 |

ABOUT PROBUS

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

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

A BRIEF HISTORY

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

Probus has filled the need for today’s Active Retirees, so much so that the growth has been phenomenal. Probus is now a worldwide movement in over 23 countries. In the South Pacific region, there are over 2,000 Clubs and 160,000 Probus members.

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

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

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

The Secretariat is governed by a constitution which was developed in consultation with the Rotary Council of Governers. The Probus South Pacific Limited Board has 11 members, each PSP Director, excluding the 2 Rotary Representatives, are Probus members who act in a voluntary capacity dedicated to promoting the development of friendship, fellowship and the advancement of intellectual interests for Active RetireesTM.

2 | PROBUS Annual Financial Report 2013/2014

PROBUS VisionMission Statement

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

Vision Statement

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

Our Core Values

Friendship, Fellowship and FunSupportive Active RetireesAdaptable GrowthDiversity

Our Motto

ACTIVE RETIREESTM - Tomorrow’s vision for PROBUS


2013-2014 PROBUS SOUTH PACIFIC LIMITED BOARD

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

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

PETER CARROLL Peter Carroll was schooled in Sydney and completed degrees in Rural Science at the University of New England. He ran a large commercial piggery before returning to manage the poultry section and teach Intensive Animal Production at Hawkesbury Agricultural College in 1973. He developed an aquaculture course and facilities, and conducted research at the College during the 1970s. Peter also ran several schools on farming for the general public. In 1982, he joined the Asian Development Bank, headquartered in Manila, Philippines, where he became the bank’s senior livestock specialist. Peter has been an active member of Rotary, serving as Rotary District Probus Chairman and past president, and is a Paul Harris Fellow. Peter helped establish and is a Board member of the Katoomba and Upper Blue Mountains Bendigo Community Bank®.

DOUGLAS GEEKIE After a business career of in excess of 50 years, with Board, General Management, Corporate Finance and Governance responsibilities, Douglas retired to the Gold Coast, Queensland, to pursue his passion to serve the Community. He holds an Economics degree and is a Fellow Certified Public Accountant (FCPA). In his community he has assisted organisations such as the Salvation Army, Gold Coast City Council (chairman Finance Advisory Board), and migrants to Australia as an English tutor for 7 years through TAFE’s TESOL program. As a Rotarian since 1976, he has enjoyed Rotary in Victoria, South Australia, New South Wales and Queensland. In 2006/7 he served Rotary District 9640 as Governor and in the years 2007 to 2013 was Rotary District 9640 Probus Chairman. Internationally, he has served “The Rotary Foundation” as a Cadre since 2007. He is a member of the Nerang Rotary Club, In 2013 he joined the Probus South Pacific Board and was appointed Treasurer. His home Probus Club is The Probus club of Sanctuary Cove. Douglas is married to Suzanne, has two sons and two granddaughters.

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


BRUCE CAMERON OAM Bruce is a Keilor East Rotarian of 29 years, being President in 1991/ 92 and Assistant District Governor in 1992/ 93. He served on numerous District committees receiving a PHF in 1993 with Sapphire in 2005 and the District Rotary Foundation Service Award in 1998 and 1999. He joined Keilor Probus Club in 2008 being elected President in 2012. After 45 years as an Executive in the Automotive Industry he moved into community life, being awarded OAM in 1996. He has held Director positions in eight organisations, was appointed Commissioner for the City in Moonee Valley in 1995 and Citizen of the Year in 2012, whilst running his own Management Consultancy business.

GARY WILLIAMS Gary is the District 9980 Governor. He is a member of the Rotary Club of Dunedin South. Gary’s career has encompassed Business Management, most recently with St John as the South Island Development and Relationship Manager. He is a Director or Trustee on a number of not for profit and commercial companies in NZ. Gary is married and has two daughters. His interests include Rotary, golf, wine and travel.

IAN SCOTT Ian is a member of the Rotary Club of Central Blue Mountains and has served in many Club and District positions, including faculty of the Rotary Leadership Institute. He is the District Governor 2014 - 2015 for D9685. Trained as a facilitator and mediator, he has facilitated at National and International levels for Rotary. Ian served in the Royal Australian Air Force full time for 37 years and in the Reserve since 2005. He has held command at all levels, including Commanding Officer of Number 37 squadron, Officer Commanding Number 84 Wing Commander of the Air Lift Group at RAAF Richmond. He retired with the rank of Air Commodore in 2005 from the position of Chief of Staff at Headquarters Air Command. Ian is involved with a number of ex-Service organisations.

ROGER GOLDSTONE Roger joined Otahuhu Rotary in 1997 and transferred to Papakura in 1980. He has served on various District Committees. Apart from being a Club Director several times, he has also served as Secretary for two years. Was president in 1998/99 and a recipient of a Paul Harris Sapphire Pin. He also served the clubs Educational Trust for 14 years. Initiated and organised a concert of Opera and light classical music for ten years raising over $300,000 for the club and its Education Trust. A retired school Principal, he worked part time as a consultant in the area of Performance Agreements and Principal Appraisals, also carried out investigations for the NZ School Trustees Assn. Other activities include representing the local community on Health PHO, Rugby Union Judiciary Committee for 20 years and choral singing. Roger has been married to Nannette for 56 years, has a son and a daughter and five grandchildren.

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


WILLIAM LAKE Bill was a retired Police Superintendent. Bill was a member of Probus Club of Victoria Park, Probus Club of Byford & Districts and as a Rotarian served as Rotary District 9470 Probus Chairman in 2007. Bill has served both Rotary and Probus as President, Secretary and held district committee positions. Bill was called to higher service this year and will be sadly missed.

JOHN LEWIS A charter member in 1975 of the Rotary Club of Fawkner in Victoria. John was president on two occasions and is a Paul Harris Fellow. John was appointed RDPC 2010-2014 and a board member 2012-2015. Qualified in Industrial Relations, John worked in Human Resources for over 30 years, and has lectured at a private business college in Principles of Management. John is a past chairman and currently a board member of a Disability Support Enterprise located in Broad Meadows and is a volunteer for the YMCA. Ceased Term of Office in April 2014.

DAVID ALLEN David is a member of the Probus Club of Taringa. David is a retired statistician, whose experience includes data collection and analysis and management of large scale national operations, consulting and training both in Australia and overseas. David has Bachelor of Economics Degree and Diploma of Public Administration. He was a staff member of the Australian Bureau of Statistics for many years, including as head of the Tasmanian and Queensland offices of the ABS. He has also worked as a consultant to the International Monetary Fund and other international organisations, working in Eastern Europe, Paris, South Pacific and South-East Asia. Ceased Term of Office in May 2013.

KEN BRAND Rotarian for 26 years; serving on district committees. Retired from the Police Force after serving 14 years; Ken has a Diploma in Education and Training, teaching in the areas of small business, business management and commercial law at TAFE. Ken joined the Hamilton Men’s Probus Club in 2002 and is a past president. He is a foundation member of the Hamilton Combined Probus club. Ceased Term of Office in May 2013.

DON WYLIE Don is a foundation member of the Combined Probus Club of Pukekohe. As a Rotarian Don has served on many committees and as Rotary District 9910 Probus Chairman. Starting work as a Stock Cadet with Dalgety and Co in the Hawkes Bay, Don later became a Stock Buyer in the Franklin area South of Auckland. In 1970 Don moved on to Real Estate forming his own company, and today specialises in Commercial and Retirement Villages. Don has served on local committees such as Auckland District Management Real Estate, Counties Rugby Union, Valley Primary School Board of Trustees and Methodist Wesley College Board of Governors. Ceased Term of Office in May 2013.


CHAIRMAN’S REPORT

My fellow Probus members,

With the presentation of the 2013 - 2014 Probus South Pacific Limited (PSPL) Annual Report I am delighted to present an overview of the past twelve months operations and activities of the Company under the directorship of the PSPL Board of Directors.

This past year has seen the sad passing of our dear colleague Director Bill Lake from Western Australia and the unfortunate resignation of Director John Lewis from Victoria due to health concerns. Both Directors are recognised for their dedication, commitment and service to Probus.

For most of us in retirement comes many changes; changes in our daily lives and changes in our circumstances. Probus has been the foundation for many retirees; providing opportunities to expand our interests, keep our minds and bodies active; involvement in club activities and various outings; but most of all enjoying life as an active retiree.

Probus is an organisation that is proud to be recognised as A Community Service Activity of Rotary clubs. The partnership we share with Rotary is a testament to the success and world wide recognition of Probus South Pacific Limited as a Centre of Excellence.

Probus’s aims and objects have never changed; our role is to promote the advancement of intellectual and cultural interests among men and women who have retired.

This year has been both challenging and rewarding.

The Probus Information Days kicked off the Probus year in April and provided separate workshop, training and networking days for newly elected officers across the twenty seven districts in Australia and New Zealand.

June saw the training weekend for our dedicated team of Rotary District Probus Chairman who are the ground troops for Probus in both forming new Probus clubs and assisting existing Probus clubs. These dedicated Rotarians and their committees are readily available to guide clubs on club administration and management and work closely with the Secretariat office and the PSPL Board of Directors.

The 2013 Probus Rendezvous was hosted in the twin cities of Albury Wodonga situated on either side of the great Murray River and the home of Australia’s world-famous Flying Fruit Fly Circus. A great time of fun and fellowship and country hospitality was enjoyed by the delegates that came from around Australia and from across the Tasman.

Probus South Pacific had the opportunity to showcase the True Spirit of Probus to the Rotary District Governor Elects as part of their training weekend held in Parramatta in July; the fun of the Probus presentation was well received and enjoyed after a long day of training sessions.

Another platform to present and identify Probus as Rotary’s greatest community service activity for seniors was the Probus Booth at the Rotary Institutes held in Canberra and Auckland. The Probus Brief provided Rotary leaders with an overview of the operations of the Probus organisation which highlighted the achievements over the year and recognised the partnership between Probus and Rotary.


Directors and Probus members have been very active in manning booths at senior and lifestyle expos to showcase Probus to the wider community and to encourage membership.

Within the Secretariat office, the task of providing every financial Probus club member with their personal Probus Membership Card has been a challenge in itself; but one we hope will be achieved as we continue to address and resolve the difficulties experienced to accommodate all requests from all Probus clubs across Australia and New Zealand. We thank all secretaries and membership officers for their patience and understanding.

Communication is a key component of any organisation; to have the ability to both receive and respond to all enquiries in an appropriate and timely manner; a challenge we have addressed with the level of staffing and the training of those staff members to ensure a high level of service is provided.

The Probus website continues to develop and ensure an interactive session to all visitors to the site. Every Probus club has been issued with their generic email address and passwords to access the secured administration section of the Probus website that provides a great deal of information and resources.

The official flagship publications of the Probus organisation - Active Retirees - in both Australia and New Zealand continues to be an excellent communication and membership development tool as well as providing quality articles of interest and opportunities to win fabulous prizes. PSPL recognises the support from our sponsors and advertisers. I trust that PSPL can have the support of all Probus club members in ensuring the continued success of the magazines through your subscription levels.

One of our key goals is to communicate effectively with Probus club members and the Passport to Probus was an initiative which provided a concise summary of the many benefits and services available through Probus membership.

The Probus Travel Insurance continues to be recognised as an excellent member benefit and continues to be well supported.

With respect to our financial results, we have unfortunately ended the financial year with a trading loss of $293,827 which is reflective of the many challenges we have experienced over the past 12 months.

The Board has recognised the need to maintain a healthy financial position in all aspects of PSPL in order to grow the Probus movement.

Whilst more detailed information on our financial position is provided by Treasurer Douglas Geekie in this Annual Report, the PSPL Board can assure our Probus clubs and Probus club members that budgets and

strategic plans are in place that will continue to provide a sound financial structure going forward.

The PSPL Board is confident that the Company’s financial affairs are in order. The Company’s Annual Financial Report conform to the requirements of the Corporations Act 2001 and all relevant Australian Accounting Standards and The Company has received a ‘without qualification’ audit certificate from our Auditors.

PSPL engage the services of professional chartered accountants who attend to the Company’s auditing, accounting services and taxations matters in the preparation and review of our accounts; such financial statements are presented to the Members of PSPL for their review and adoption at the Company’s Annual General Meeting. As I come to the end of my term as Chairman I must say that the passion I share for Probus with my fellow Directors has been the mainstay that has been the driver for the task of leading the Probus Team to meet, address and overcome all the challenges that threaten the success and harmony within the Probus movement.

To the 2013 -2014 PSPL Directors I thank you for your support and the giving of your time to administer the Probus organisation always ensuring good governance and integrity.

To General Manager Pat Atkinson and The Secretariat staff I extend my sincere thanks and appreciation for your support and co-operation and recognise your exemplary work ethic and commitment to Probus.

I farewell our retiring Directors Margaret Robinson from Victoria, Director Murray Jensen and Director Gary Williams from New Zealand.

A warm welcome is extended to our new Directors Winston Marsh from Western Australia, Eric Penfold from New South Wales and Jennie Herring from New Zealand.

To incoming Chairman Peter Carroll I offer my support in my final year as Immediate Past Chairman and trust that I can continue to serve Probus with vigor and purpose.

I trust that Probus clubs and Probus club members will stand United in Friendship and that goodwill and harmony will prevail to ensure the future of Probus is secure and the integrity of Probus is upheld and respected.

Yours in Probus Service

Gary BlacklerChairman 2013-2014


TREASURER’S REPORT

Whilst the year 2013-14 has ensured member Clubs continue to receive good support and administrative services, the financial outcomes for the period were disappointing and reflected, for the most part, the recognition of past income tax liabilities and the imposition of external forces that involved the Company in expenses that were both costly and unavoidable.

The financial results for the year ended March 31, 2014 are detailed in the attached statements.

Key factors that have influenced the final results include:-1. Membership capitation fees charged to and collected from accredited Clubs were insufficient to recover the full costs of the services provided. The result was exacerbated by the impact of capitation fees not being increased since 2011.

2. Substantial legal costs to the order of $100,000 were incurred to defend and protect the Probus trademarks and challenges (instigated as a consequence of uninvited actions by others in the community not associated with Probus accredited membership) to PSPL’s governance and structure.

3. The recognition and payment of Income Tax on earnings since 2010. In the annual statutory accounts for 2011-2012 attention was drawn to possible taxation liability and a note was made to the accounts indicating that a contingent liability may exist. At that time, the external advice received by the Company was that the principle of “mutuality” applied to the determination of the Company’s tax liability. Despite discussions with the ATO commencing in 2008/9 and a resolution not being proffered, in 2012 the Company requested a private binding tax ruling from the ATO with respect to the Company’s Taxation status. As a matter of financial prudence, a taxation provision of $230,000 was made in the 2012-13 statutory accounts. In late 2013, the Company was advised by the ATO that income tax was payable and that taxation returns from the financial years ended 2010 to 2013 were to be lodged immediately. The final determination of the tax liability payable by the Company for the years 2009-10 to 2012-13 showed that the provision made in the 2012-13 accounts of $230,000 was inadequate and an additional provision of $127,807 was necessary. Accordingly, this was reflected in the 2013-14 accounts as a charge that further increased the loss.

4. The notes to the accounts draw attention to the reduction in cash reserves in the short term following the funding of the loss and specifically the payment of income tax for the past years. Overall, whilst the Company’s Net Assets value as at the commencement of the financial year has been reduced by the value of the net loss, there still remains a net asset value of $683,924. It is, however, imperative that the loss of these financial reserves is restored as soon as practicable.

5. The State Government charges for the registration of Club Constitutions that was underwritten by the Company and later reimbursed to Clubs was provided for in the 2012-13 statutory accounts for a total amount of $70,000. The actual costs of the reimbursements are forecast to exceed the $70,000 provision principally as a result of increased State charges and hence a further charge against revenues for the 2013-14 year of $30,791 was necessary.


As a consequence of these financial outcomes Directors have implemented a number of measures to correct and improve the financial performance of the Company. Such measures include:-• An increase in capitation fees with effect from the 2014-15 year to ensure that a “User Pays Principle” is achieved for services provided to Clubs.

• Commencement of a program that ensures a complete and progressive review of all services being provided to Clubs as to the relevance and cost effectiveness of delivery so that the overall efficiency and relevance is optimised. This includes an update of existing information and monitoring systems and greater use of web technology for the distribution and sharing of information and educational materials.

• Addressing growth and retention of membership through the formation of more Probus clubs, addressing the large waiting lists and assisting Clubs with strategies for membership development to ensure their future. Since the close of the 2014 financial year, there has been a significant reduction in New Zealand club membership and the number of Clubs, exacerbating the urgency of this action.

The support and commitment of the Financial Controller and the Secretariat team over the past twelve months has been greatly appreciated. Their collective efforts and dedication which has been demonstrated by many hours of work well beyond any normal call of duty has been noted and recognised.

Sadly, the financial story, for these past two years, has been disappointing by any measure, but the determination of both the Board and the Secretariat team to regain the losses and taxes of the recent past and to restore reserves is indeed strong. The recovery period will take time but we will come through the current challenges as a stronger and better organisation.

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GENERAL MANAGER’S REPORT

This Annual Report provides an opportunity to present the financial position of Probus South Pacific Limited (PSPL) - The Company and to recognise the people who support and work to achieve the vision of Probus.

This vision is to ensure retention and growth of membership in Probus clubs that will see Probus recognised as the Social Club of Choice for today’s retirees and for our future retirees.

With direction provided by the Board, PSPL operates under good governance with a coordinated, strategic approach to map out a sound and sustainable future for the Probus organisation.

Our structure is well established and beyond reproach. Our partnership with Rotary is resilient and secure.

Many would describe the past twelve months as rather a challenging one for PSPL - there have been constitutional changes at club level, misunderstanding and misrepresentation of PSPL’s role, structure and governance and a testing time financially. The Administration and Service centre (The Secretariat) supports all accredited Probus Clubs and Probus Associations thereby fulfilling PSPL’s mission to provide excellence in customer service along with a range of services.

You will no doubt appreciate that over the past decade PSPL have minimised increases in Probus club member capitation fees (with no increases at all in some years) but sadly this has resulted in, over the longer term, our inability to recover both recurrent and increased service costs.

Unfortunately, all of this and much more comes against the background of a slightly reduced total Probus membership (both club numbers and club members) and increased communication costs. Similarly for Australian Probus club members the annual magazine subscription was raised due to increases in the cost of paper and postage.

PSPL’s financial position remains stable but it is important to recognise the need to rebuild our reserves to ensure a sustainable healthy financial future.

There were three major factors that impacted and resulted in our 2014 financial year’s operating loss;

(1) Capitation fees charged to Probus club members did not cover the costs required to provide services to Probus clubs and Probus club members;(2) Under provision for our tax liability in previous years; and(3) Higher than anticipated legal costs.

At the same time we are talking about opportunities to invest in our future and our ability to adapt, evolve and grow, and in so doing, help strengthen Probus.

Amid these conditions PSPL enjoyed a good year overall, and fortunately there are many positive things to celebrate.

Over the last three years, the Active RetireesTM Australia magazine has improved significantly and has been recognised on the international stage.


Active RetireesTM Australia magazine was honoured to receive two prestigious publishing awards for the Valentine’s Day special issue, featuring Probus members Stan and Cherry Fields: a Bronze in the US Pearl Awards for Best Cover and, closer to home, the Audience Choice Award for Best Cover at the Publishers Australia Awards.

The launch of the flagship publication Active RetireesTM New Zealand magazine and the introduction of a new National Photographic Competition to engage Probus club members has been well received.

PSPL produced a new edition of the Probus Club Handbook which is a useful guide for club officers.

PSPL introduced the Passport to Probus; a handy guide to the many benefits offered through Probus club membership and an important key strategy to create an effective communication direct to Probus club members.

The booklet can also be utilized as a membership development tool for encouraging and showcasing what is offered through Probus club membership to your potential club members.

There are many ways to achieve and maximize effective communication technologies and PSPL is working to utilize many arms of today’s mediums; radio, television, website, Facebook, district newsletters, e-newsletters, Probus publications and promotional material, local newspapers and competitor publications. Sharing correct information is an important asset to any organisation.

Probus Travel Insurance which is seen as a membership benefit has assisted more than 11,500 Probus club members and guests over the past twelve months when travelling domestically and internationally offering a competitive price structure with ‘Probus designed’ cover and benefits.

The development of PSPL MODEL Incorporated Constitutions for each state/territory and New Zealand - a collaborative effort - which was only possible through the goodwill of our Probus club members sharing their knowledge and experience.

PSPL has been grateful for the opportunity arranged through Mahlab Media to showcase Probus on

Australian national television with the participation of Probus club members eager to support the brand awareness of Probus.

The development of a community service Probus commercial through the generosity of two Probus club members will hopefully achieve brand awareness of Probus and a platform to welcome potential Probus club members across the community when viewed on community and national television across Australia and New Zealand.

PSPL has continued to engage with our Probus clubs at many levels. Whether it’s at club visits by attending PSPL Directors or Rotary District Probus Chairman (RDPC); Probus Information Days or focus groups; community and lifestyle retirement expos and networking events; PSPL continues to communicate and share information.

There is still considerable work to be done, of course, and one of the aims of our internal Strategic Plan is to see our membership grow - and grow substantially - in the coming years I believe if we stand united and work together we will see these rewards.

It is important that each Probus club member embraces and holds true to the motto of ‘fun, friendship and fellowship’ which is the foundation of Probus.

The aims, objects and philosophy of Probus have not changed and in fact it is part of the reason why Probus has retained its respect, integrity and reputation as A Community Service Activity of Rotary clubs within the community for forty years in the South Pacific region.

PSPL recognises the importance of ‘connecting’ and realises that one of the major values of belonging to a Probus club is the safe and friendly environment and the sociability and connection with other retirees; indeed, you could say that this is one of the major reasons for being part of Probus.

With our dedicated staff continuing to work hard and our new internal Strategic Plan now in place, we look forward to a prosperous future in 2014 and beyond.

Thank you for your continuing support of The Secretariat; our staff members look forward to working with you all in the 2014 - 2015 Probus year.

Yours in Probus Service,

Pat AtkinsonGeneral Manager


Directors Gary Blackler (Chair)

Margaret Robinson (Immediate Past Chair)

Peter Carroll (Vice Chair)

Douglas Geekie (Treasurer)

Bruce Cameron OAM

Roger Goldstone

Murray Jensen MNZM

Ian Scott

Veronica Semmler

Gary Williams

General Manager & Company Secretary Patricia Atkinson

Registered office and principal place of business

Perth House Ground Floor, Suite 185 George StParramatta NSW 2150

Auditors CABEL Partners

Lawyers Emil Ford

Patent and Trademark Attorneys Wallington Dummer

CORPORATE INFORMATION


DIRECTOR’S REPORT

The directors present this report to the members of Probus South Pacific Limited (“the Company”) for the year ended 31 March 2014.

DirectorsThe names of each person who has been a director during the year and to the date of this report are:

*Deceased

A – Number of meetings attended B – Number of meetings held during the time the director held office during the year

Board

Date appointed Date of cessation A B

Gary Blackler 19 May 2011 - 4 4

Bruce Cameron 30 May 2013 - 3 4

Peter Carroll 31 May 2012 - 4 4

Douglas Geekie 30 May 2013 - 4 4

Roger Goldstone 30 May 2013 - 4 4

Murray Jensen MNZM 19 May 2011 - 4 4

Margaret Robinson 13 May 2010 - 4 4

Ian Scott 30 May 2013 - 4 4

Veronica Semmler 17 May 2012 - 3 4

Gary Williams 30 May 2013 - 4 4

David Allen 13 May 2010 30 May 2013 1 1

Ken Brand 20 May 2009 30 May 2013 1 1

William Lake 19 May 2011 17 November 2013* 2 4

John Lewis 17 May 2012 1 April 2014 3 4

Don Wylie 13 May 2010 30 May 2013 1 1


Probus South Pacific Limited (A company limited by guarantee)

Short- and long-term objectives and strategy The Company’s short and long term objectives are to drive the vision of Probus. Probus provides an avenue for senior members of the community; and for those no longer working full time, to join together in clubs for a new lease of life. Its basic purpose is to advance intellectual and cultural interest amongst adult persons; to provide regular opportunities to progress healthy minds and active bodies, through social interaction and activities, expand interests and to enjoy the fellowship of new friends. The Company’s strategy for achieving these objectives includes the development and implementation of an internal 5 year Strategic Plan.

Principal activities The Company’s principal activities during the year were to: - Promote the advancement of intellectual and cultural interests among men and women who have retired

from their former activities; - Help members of the community by providing mental stimulation, and the means to advance intellectual,

social and cultural activities and to facilitate an exchange of ideas amongst adult persons who are no longer working full time or who have retired or semi-retired from their former vocation;

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

- Encourage existing Probus Clubs in the advancement of their objectives; - Act as the Administration and Service Centre for Probus within Australia, New Zealand, Papua New Guinea,

Cook Islands, New Caledonia, Norfolk Island, Tonga, American Samoa, Western Samoa, Timor Leste, the Philippines, Fiji, Vanuatu, Kiribati, Nauru, and the Solomon Islands (“the South Pacific”); and

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

These activities have assisted the Company in achieving its objectives by enabling it to: - Meet the current and future needs of the members of Probus clubs and - Provide members of Probus clubs and their guests access to Probus Travel Insurance. Review of operations and financial outcomes The Company has incurred a net loss after tax of $421,634 for the year ended 31 March 2014 and, as of that date, current liabilities exceed current assets by $402,490. These results give rise to some uncertainty which may cast significant doubt over the Company’s ability to continue as a going concern. Whilst the current asset position may cause some concern, the overall financial position is positive with total assets of $3,023,429 exceeding total liabilities by $683,924. It is important to recognise that the Directors maintained the level of annual capitation fees since 2011, a period of three years without any increase. During this period there has been a reduction in capitation fee income paid by Probus club members for the 2013-2014 year which is related to a decrease in membership levels across both Australia and New Zealand. Directors have taken the decision to increase capitation fees for 2014-2015 based on a user pays system to meet all associated costs of providing insurance, benefits, administration and advocacy services to all accredited Probus clubs and their Probus club members.




Whilst it is noted that the increase in annual capitation fees per member for Australia equates to 43% and 72% in New Zealand it is important to emphasise on the value that Probus club members receive rather than focus on the percentage increases with the understanding that this is the first increase since 2011. The Directors believe that these actions will address the under recovery experiences of the past three years and benefit the 2015 results accordingly.

For the year ended 31 March 2014, the Company’s total revenue increased by $853,167 from $3,808,624 (2013) to $4,661,791 (2014) and expenses before income tax by $1,129,600 from $3,826,018 (2013) to $4,955,618 (2014) in comparison to the prior year. This revenue growth is mainly attributable to increase in travel insurance income paid by Probus club members for the 2013-2014 financial year whilst the expense increase is related to overheads such as legal fees and insurance premiums. Whilst it is recognised that the ability of the Company to continue as a going concern is dependent upon its ability to repay a premium funding facility, (note 13) which is due by 30 November 2014, it is envisaged that the repayment through the income generated from the Probus Travel Insurance will be achieved. To further support this view it is to be noted that the income generated through the access to Probus Travel Insurance remains steady and consistent with forecasts and past experience providing confidence to the achievement of this goal. In relation to the purchase of the office suite to house the secretariat office the Company operates on a commercial bill that rolls over every 90 days which allow the Company to regulate the level of principal payments against the facility. It is important to recognise that the Company has provided the bank (the lenders) with security in excess of the value of the agreed bill facility. The Directors are satisfied and comfortable that adequate strategies and controls have been put in place to reverse this loss trend and that the Company will have positive cash flows through to 31 March 2015. For these reasons, inter alia, the annual financial report has been prepared on a ‘going concern’ basis. Should the Company be unable to continue as a going concern it may be required to realise its assets and discharge its liabilities other than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amounts of liabilities that might result should the company be unable to continue as a going concern and meet its debts as and when they fall due. The income tax status of the Company has been the source of communication with the Australian Taxation Office (“ATO”) since 2009. During the 2014 financial year, a private binding ruling was issued by the ATO confirming that the Company is a non-mutual fully taxable entity. An application was made to the ATO for a substituted accounting period of 1 April to 31 March for the Company and this was successful. The transition year was the 2010 year and the tax return for that year was prepared for the period 1 July 2009 to 31 March 2010. Income tax returns were prepared and lodged for the 2010, 2011, 2012 and 2013 tax years and a tax liability of $311,849 arose and was paid in respect of those years. The provision for income tax created in the prior year was fully utilised against this liability. The Company had tax losses carried forward from years prior to and including the year ended 30 June 2009.



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

To the Directors of PROBUS SOUTH PACIFIC LIMITED I declare that, to the best of my knowledge and belief, during the year ended 31 March 2014 there has been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001

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

Alan Grevler Registered Company Auditor [email protected]

North Sydney Dated this 21st day of May 2014





Financial statements for the year ended 31 March 2014 Statement of profit or loss and other comprehensive income

Notes 2014 $

2013 $

Revenue and other income

Revenue 2(h), 3(a) 4,661,791 3,808,624

Revenue and other income 3(a) 4,661,791 3,808,624

Expenditure

Cost of national publication 2(i)(i) 573,963 570,477

Depreciation and amortisation 2(c)(ii), 2(j)(ii) 54,881 44,601

Employee benefits expense 2(d) 618,705 500,068

Refurbishment of office suite and relocation - 89,934

Occupancy Costs 31,080 40,312

Marketing and promotion 2(i)(ii) 329,376 189,700

Insurance premiums 2(i)(iii) 2,405,504 1,298,079

Postage, print and stationery 372,201 411,793

Management and administration 2(i)(iv) 380,391 402,949

Finance costs 44,870 30,516

Auditors’ remuneration 71,601 88,843

Bad and doubtful debts 2(n) 5,500 386

Computer services 35,212 42,351

Foreign currency translation losses 2(g)(i) 16,774 66,387

Rent - 24,413

Other expenses 15,560 25,209

Expenditure 3(b) 4,955,618 3,826,018

Net deficit before income tax expense (293,827) (17,394)

Income tax expense 2(b), 4 (127,807) (230,000)

Net deficit after income tax expense (421,634) (247,394)

Other comprehensive income

Revaluation of office suite 8 - 95,729

Other comprehensive income for the year - 95,729

Total comprehensive deficit for the year (421,634) (151,665)

The statement of profit or loss and other comprehensive income is to be read in conjunction with the attached notes

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Financial statements for the year ended 31 March 2014




Financial statements for the year ended 31 March 2014 Statement of financial position

Notes 2014 $

2013 $

Assets

Current assets

Cash and cash equivalents 5 329,802 448,333

Trade debtors and other receivables 6 98,901 47,544

Other assets 7 1,255,116 849,418

Total current assets 1,683,819 1,345,295

Non-current assets

Office suite 8 1,165,000 1,195,000

Property, plant and equipment 9 59,503 67,292

Intangible asset 10 115,107 44,449

Total non-current assets 1,339,610 1,306,741

Total assets 3,023,429 2,652,036

Liabilities

Current liabilities

Trade creditors and other payables 11 464,047 494,810

Tax liability 12 - 230,000

Premium funding facility 13 1,223,400 310,580

Provisions 14 153,546 142,839

Other liabilities 15 245,316 -

Total current liabilities 2,086,309 1,178,229

Non-current liabilities

Provisions 14 78,196 68,249

Commercial bill 16 175,000 300,000

Total non-current liabilities 253,196 368,249

Total liabilities 2,339,505 1,546,478

Net assets 683,924 1,105,558

Funds

Accumulated funds 588,195 1,009,829

Asset revaluation reserve 95,729 95,729

Total funds 683,924 1,105,558

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

STATEMENT OF FINANCIAL POSITION





Financial statements for the year ended 31 March 2014 Statement of changes in funds

Notes

Accumulated

funds $

Asset revaluation

reserve $

Total funds $

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

Net deficit (247,394) - (247,394)

Other comprehensive income 8 - 95,729 95,729

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

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

Balance at 1 April 2013 1,009,829 95,729 1,105,558

Net deficit (421,634) - (421,634)

Other comprehensive income 8 - - -

Total comprehensive income for the year (421,634) - (421,634)

Balance at 31 March 2014 588,195 95,729 683,924

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

STATEMENT IN CHANGES OF FUNDS






Statement of cash flows

Notes 2014 $

2013 $

Cash flows from operating activities

Cash receipts from customers 5,250,851 4,114,642

Interest income 34,753 36,718

Payments to suppliers, employees and others (5,746,399) (4,198,470)

Income tax paid (357,807) -

Net cash flows used in operating activities 19 (818,602) (47,110)

Cash flows from investing activities

Purchase of property, plant and equipment (10,502) (28,456) Proceeds from disposal of property, plant and equipment - 3,988

Purchase of trademarks (77,247) (46,382)

Net cash flows used in investing activities (87,749) (70,850)

Cash flows from financing activities

Repayment of commercial bill borrowing (125,000) (275,000)

Proceeds from premium fund facility 1,825,300 1,213,680

Repayment of premium fund facility (912,480) (903,100)

Net cash flows provided by financing activities 787,820 35,580

Net decrease in cash and cash equivalents (118,531) (82,380)

Cash and cash equivalents at beginning of year 448,333 530,713

Cash and cash equivalents at end of year 2(f), 5 329,802 448,333

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

STATEMENT OF CASH FLOWS





Financial statements for the year ended 31 March 2014 Notes to the financial statements 1) Corporate information The financial statements of Probus South Pacific Limited (“the Company”) for the year ended 31 March 2014 were authorised for issue in accordance with a resolution of the directors on 12 June 2014. The principal activities of the Company are described in the Directors’ report. 2) Summary of accounting policies a) Basis of preparation These general purpose financial statements have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board and Urgent Issues Group interpretations. The entity is a not-for-profit entity for financial reporting purposes under Australian Accounting Standards. The financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. i. Going concern The Directors have prepared the accounts on a going concern basis notwithstanding that the Company incurred a loss of $421,634 for the year ended 31 March 2014 and its current liabilities exceed its current assets by $402,490 at that date. These figures give rise to some uncertainty as to whether the Company will be able to pay its debts as and when they fall due. As outlined in the Directors Report, the Directors are satisfied and comfortable that adequate strategies and controls have been put in place to reverse this loss trend and that the Company will have positive cash flows for the financial year ended 31 March 2015. b) Income tax During the financial year a private binding ruling was received from the Australian Taxation Office (‘ATO’) confirming that the Company is a non-mutual fully taxable entity. The Company has been granted, by the ATO, a substituted accounting period of 1 April to 31 March. Tax payable is calculated by applying the applicable tax rate in any given year to an amount arrived at by deducting allowable tax deductions from taxable income. The income tax expense as disclosed in the Statement of profit or loss and other comprehensive income is $127,807 (2013 $230,000). The tax provision disclosed in the balance sheet at 31 March 2014 is $Nil (2013 - $230,000).

NOTES TO THE FINANCIAL STATEMENTS





Financial statements for the year ended 31 March 2014 c) Property, plant and equipment and office suite Depreciation is calculated on straight line basis, so as to write off the net cost of each fixed asset over its expected useful life to its estimated residual value. The gain or loss on disposal of all fixed assets is determined as the difference between the carrying amount of the asset at the time of disposal and the proceeds of disposal, and is included in operating (deficit) / surplus profit before income tax in the year of disposal. The carrying amount of the property, plant and equipment is reviewed annually by the Board, to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets' employment and subsequent disposal. The expected net cash flows have not been discounted to present values in determining recoverable amounts. The office suite is measured at fair value at date of revaluation less accumulated depreciation. i. Revaluation of office suite Following initial recognition at cost, the office suite will be carried at a revalued amount which is the fair value at the date of the revaluation less any subsequent depreciation on the office suite. Fair value is determined by reference to a market based appraisal, which is the amount for which the asset could be exchanged in an arm’s length transaction as at the valuation date. Fair values are confirmed by independent valuations which will be obtained on a regular cycle to ensure that the carrying amounts do not differ materially from the assets’ fair value at Statement of financial position date. The office suite is treated as a separate asset class. When the carrying amount of this asset class is increased as a result of a revaluation, the increase is credited to the revaluation reserve, except where it reverses a decrement previously recognised in the Statement of profit or loss and other comprehensive income, in which case it is credited to the profit and loss statement. When the carrying amount of the office suite is decreased as a result of a revaluation, the decrease is recognised in the Statement of profit or loss and other comprehensive income, except where a credit balance exists in the revaluation reserve, in which case it is debited to that reserve. ii. Depreciation Depreciation on property, plant and equipment and office suite is calculated on a straight line basis over their estimated useful lives to the Company commencing from the time the asset is held ready for use. The estimated useful life of the office furniture and equipment is 5 years. The estimated useful life of the office suite is 40 years. The depreciation rates used for each class of depreciable asset are:

Class of Fixed Asset Depreciation Fixed Rate

Office suite 2.50%

Office furniture and equipment 20.00%





Financial statements for the year ended 31 March 2014 Notes to the financial statements (continued) The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the Statement of profit or loss and other comprehensive income. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to accumulated funds. d) Employee benefits i. Wages and salaries, annual leave and sick leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. ii. Long service leave The liability for long service leave is recognised in the provision for employee entitlements as a non-current liability and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. iii. Retirement benefit obligation The Company contributes to accumulation superannuation plans. Contributions are recognised in the Statement of profit or loss and other comprehensive income when they are paid or payable.

e) Provisions Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period. In addition to the provision for employee entitlements as per note 2(d)(i) and (ii), the Directors of the Company approved a liability in the provision for the reimbursement to Australian Probus clubs for the re-registering of their clubs’ constitution which is expected to be settled within 12 months of the reporting date. f) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. These deposits earn interest at market rates. Bank overdrafts are shown within borrowings in current liabilities on the Statement of financial position. During the period and as at the reporting date, the Company does not have a bank overdraft.





Financial statements for the year ended 31 March 2014 g) Functional and presentation currency The financial statements are presented in Australian dollars (AUD), which is also the functional currency of the Company. i. Foreign currency transactions and balances Foreign currency transactions are translated into the functional currency, using the exchange rates on a quarterly basis. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in the Statement of profit or loss and other comprehensive income. Non-monetary items which are not retranslated at year-end are reported at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items are measured at fair value and are reported at the exchange rate at the date when fair value was determined. ii. Foreign operations In the Company’s financial statements, all assets, liabilities and transactions of the Company with a functional currency other than the AUD are translated into AUD at reporting date. h) Revenue and other income Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, duties and taxes paid. Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset. i) Expenses Expenses are recognised upon utilisation of the service or at the date of their origin. i. Cost of national publication This includes cost of producing the Active Retirees magazine in Australia and includes production, commission and printing costs. ii. Marketing and promotion This includes the costs of promoting and marketing the Company, such as brand awareness, members’ benefits, public relations and membership development. iii. Insurance premiums This includes premiums paid for the national insurance program in Australia and New Zealand and Probus travel insurance. iv. Management and administration This includes Directors’ expenses, legal fees, bank charges, telephone expenses, registration of Australian club constitutions and RDPC training costs.





Financial statements for the year ended 31 March 2014 Notes to the financial statements (continued)

j) Intangible asset i. Trademarks During the year, the Company registered additional trademarks in Australia and New Zealand. The trademarks are capitalised on the basis of the costs incurred to register the trademarks. ii. Subsequent measurement and amortisation Trademarks are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over the estimated useful life. The useful life applied is 10 years. Amortisation has been included within depreciation and amortisation expenses. Subsequent expenditure on registered trademarks are expensed as incurred. The amortisation method and useful life are reviewed at each reporting date. k) Goods and Services Tax (‘GST’) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables in the Statement of financial position are shown inclusive of GST. Cash flows are presented in the Statement of cash flow on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. l) Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. m) Critical accounting estimates and assumptions The Directors evaluate estimates and judgments incorporated in financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events that may impact the financial position of Company and are based on current trends and economic data, obtained both externally and within the Company. n) Debtors and prepayments These are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debtors. The recoverability of these assets is reviewed on an ongoing basis. Debts that are known to be uncollectable are written off. A provision for doubtful debtors is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of debtors. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the Statement of profit or loss and other comprehensive income.



Probus South Pacific Limited (A company limited by guarantee)Probus South Pacific Limited (A company limited by guarantee)

Financial statements for the year ended 31 March 2014 o) Trade creditors and accruals These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid at year end. These amounts are unsecured and are usually paid within 30 days of recognition. p) Geographical information The Company operates in Australia, New Zealand and other countries within the South Pacific. The Company provides all management and administration services from Australia. q) New accounting standards for application in future periods The Australian Accounting Standards Board (‘AASB’) has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods. The Company has determined to adopt the new standards when they become mandatory.

2014 $

2013 $

3) Revenue, other income and expenses a) Revenue

Sale of publications 415,482 357,032

Advertising revenue 558,116 516,765

Royalties and gratuities 20,345 22,940

Subsidies and sponsorships 11,891 22,808

Travel insurance income 2,644,650 1,827,958

Capitation fees (incl. administration and insurance) 976,554 1,024,403

Interest received 34,753 36,718

Total revenue 4,661,791 3,808,624





2014 $

2013 $

b) Expenditure

Cost of goods sold – Australian national publication 573,963 570,477

Depreciation and amortisation 54,881 44,601

Employee benefits expenses 618,705 500,068

Refurbishment of office suite and relocation - 89,934

Occupancy 31,080 40,312

Marketing and promotion 329,376 189,700

Insurance premiums 2,405,504 1,298,079

Postage, printing and stationery 372,201 411,793

Management and administration 380,391 402,949

Finance costs 44,870 30,516

Auditors’ remuneration

- Audit and compilation of financial report 28,909 10,104

- Taxation compliance service 42,692 78,739

Bad and doubtful debts 5,500 386

Computer services 35,212 42,351

Foreign currency translation losses 16,774 66,387

Rent - 24,413

Other expenses 15,560 25,209

Total expenditure 4,955,618 3,826,018

4) Tax expense The prima facie tax on deficit from ordinary activities before income tax is reconciled to income tax as follows: Prima facie tax payable on deficit from ordinary activities

before income tax at 30% - -

Add:

Under provision for income tax in prior years 127,807 230,000

Other –non allowable items - -

Income tax attributable to the Company 127,807 230,000

As disclosed in Note 2 (b), during the year the Australian Taxation Office (‘ATO’) confirmed that the Company is a taxable entity.






2014 $

2013 $

5) Cash and cash equivalents

Cash on hand 311 311

Cash at bank - Australia 320,871 425,511

Cash at bank – New Zealand 8,620 13,059

Cash at bank - Philippines - 9,452

329,802 448,333

6) Trade debtors and other receivables

Trade debtors 43,637 42,536

Other debtors 55,264 5,008

98,901 47,544

7) Other assets

Prepayments - expenses 1,255,116 849,418

8) Office suite

Independent valuation

As at 1 April 1,221,277 1,125,548

Revaluation increment - 95,729

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

Accumulated depreciation

As at 1 April (26,277) -

Depreciation for the year (30,000) (26,277)

As at 31 March (56,277) (26,277)

Net carrying amount as at 31 March 1,165,000 1,195,000

In December 2011 the Company purchased a partial ground floor suite within a strata building on 85 George St, Parramatta. The Company’s relocated to the new office suite on 1 May 2012. On 1 February 2013, the Company engaged an independent and accredited Real Estate Valuer & Consultant, to determine the fair value of its office suite. The fair value was $1,200,000 and has been determined directly by reference to market-based evidence, which is the amount for which the office suite could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date. Based on the information provided by the independent and accredited Real Estate Valuer & Consultant, the Directors have determined to adjust the value of the office suite as per the valuation less any applicable depreciation.






2014 $

2013 $

9) Property, plant and equipment

Cost value

As at 1 April 102,338 77,870

Additions 10,502 28,456

Disposal of asset - (3,988)

As at 31 March 112,840 102,338

Accumulated depreciation

As at 1 April (35,046) (18,655)

Depreciation for the year (18,291) (16,844)

Disposal of asset - 453

As at 31 March (53,337) (35,046)

Net carrying amount as at 31 March 59,503 67,292

10) Intangible asset

Trademarks

Cost value

As at 1 April 46,382 -

Additions 77,247 46,382

As at 31 March 123,629 46,382

Accumulated amortisation

As at 1 April (1,933) -

Amortisation for the year (6,589) (1,933)

As at 31 March (8,522) (1,933)

Net carrying amount as at 31 March 115,107 44,449






2014 $

2013 $

11) Trade creditors and other payables

Sundry creditors 434,047 464,810

Money Cover Insurance Fund 30,000 30,000

464,047 494,810

The Probus Travel insurance policy was renewed on 30 November 2013 for the period 1 December 2013 to 30 November 2014. The Insurer of the Probus Travel insurance policy has issued the Company with an adjustable insurance policy. At the end of the insurance policy period, the premium paid in advance is adjusted based on the number of policies accessed by members and guests of Probus clubs. As per the terms and conditions of the adjustable insurance policy, a premium of $1,825,349 (2013 - $1,236,680) was paid in advance to the Insurer for the period 1 December 2013 to 30 November 2014 based on the number members and guests of Probus clubs that accessed the Insurance policy in the previous reporting period, claims experience and management’s assumptions. Based on the number of members and guests of Probus clubs that had accessed the Probus Travel Insurance policy as at reporting date, a sundry creditor of $260,772 (2013 - $389,765) has been recognised as additional premium that may be payable in addition to the premium that has been paid in advance.

Note 2014 $

2013 $

12) Tax liability

Income tax liability 2(b) - 230,000

13) Premium funding facility

Premium funding facility 1,223,400 310,580

The Company has in place a short-term secured premium funding facility (‘facility’) for $1,825,349 (2013 - $1,213,680). The facility is secured by the assignment of all monies paid and payable under the Probus Travel Insurance policy. The purpose of the facility is to fund the payment to the Insurer for the renewal of the Probus Travel Insurance adjustable insurance policy, as described in Note 11. The facility is to be repaid by 30 November 2014. The interest rate of the facility is a fixed interest rate of 3.13% p.a (2013 – 0.96% p.a). and subject to the terms and conditions of the facility agreement. During the year, the Company made capital and interest repayments of $912,480 (2013 - $903,100).





Note 2014 $

2013 $

14) Provisions a) Current

Provision for annual leave 85,988 72,839

Provision for Probus Clubs Constitution expenses 2(e) 67,558 70,000

153,546 142,839

b) Non-current

Provision for long service leave 78,196 68,249

15) Other liabilities

Deferred income 245,316 -

16) Commercial bill

Commercial bill 175,000 300,000

The Company has in place a secured commercial bill facility (‘facility) for $675,000 with a financial institution, secured by a first registered real property mortgage over the office suite located at Ground Floor, Suite 1, Perth House, 85 George St Parramatta. The facility was used to partly finance the purchase of the office suite. The period of the facility is five years ending on 12 December 2016. The interest rate of the facility is a variable rate which is reset every 90 days subject to the terms of the facility agreement. During the year, the Company made capital repayments of $125,000 (2013 - $275,000). 17) Financial instruments Financial risk management – objectives and policies The Company’s main financial instruments are cash, term deposits, premium funding facility and a commercial bill. The main purpose for these financial instruments is to provide finance for the Company’s projects and operations. The Company has other financial instruments, such as trade debtors and creditors, which arise from its activities. The Company manages the risks by ongoing identification and monitoring. The Company’s activities expose it to a variety of financial risks: market risk, credit risk, interest rate risk and liquidity risk. All financial assets and liabilities are carried at the amounts that approximate fair values. a. Market risk Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Company's functional currency.




Financial statements for the year ended 31 March 2014 b. Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to discharge its obligation. The Company is exposed to two sources of credit risk: amounts receivable in respect to capitation and subscription fees from Probus Clubs and advertising fees from customers advertising in the Company’s magazine, and counterparty risk in respect of funds deposited with a number of financial institutions. The Company has no significant concentrations of credit risk. The Company has policies in place to ensure that sales of products and services are made to customers subject to appropriate credit history and a contractual agreement, which includes payment terms. Any amounts not received by the payment date are followed up in accordance with Company’s credit management policy. There are no significant financial assets that are impaired. Funds deposited with financial institutions are in accordance with the Company’s investment policy. The current maximum exposure at reporting date is equal to the fair value of the financial instruments disclosed on the Statement of financial position. c. Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments. The Company is exposed to interest rate fluctuations on its cash, term deposits and commercial bill. The Company monitors interest rates for cash and term deposits to maximise interest income. The Company monitors the interest rates on the commercial bill to minimise interest expense. d. Liquidity risk Liquidity risk is the risk that the Company will not be able to discharge its financial liabilities as they fall due. The Company manages liquidity risk by monitoring forecast cash flows and maintaining sufficient cash and cash equivalents to meet normal operating activities. The Company’s exposure to financial liabilities includes a secured commercial bill facility maturing 12 December 2016 and a secured premium funding facility maturing on 30 November 2014. The Company reviews its requirement for the commercial bill every 90 days and if the Company has excess liquidity it will repay part or the entire commercial bill prior to maturity. Trade and other payables are typically settled within 30 days. The tables below reflect the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity, as well as management's expectations of the settlement period for all other financial instruments. As such the amounts may not reconcile to the Statement of financial position. Financial statements for the year ended 31 March 2014




Notes to the financial statements (continued)

2014 $

2013 $

Financial liability and financial asset maturity analysis – within 1 year

Financial liabilities due for payment

Premium funding facility 1,223,400 310,580

Trade and other payables 434,047 105,045

Total contractual outflows 1,657,447 415,625

Total expected outflows 1,657,447 415,625

2014

$ 2013

$ Financial assets - cash flows realisable

Cash and cash equivalents 329,802 448,333

Trade debtors and receivables 98,901 47,544

Total anticipated inflows 428,703 495,877

Net (outflow) / inflow on financial instruments (1,228,744) 80,252

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

Financial liabilities due for payment

Commercial bill 175,000 300,000

Total contractual outflows 175,000 300,000

Total expected outflows 175,000 300,000

Net outflow on financial instruments (175,000) (300,000)





Financial statements for the year ended 31 March 2014 e. Fair values Fair value estimation – the fair values of financial assets and financial liabilities are as per carrying amounts as presented in the Statement of financial position. Fair value is an amount at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. 18) Fair value measurement When financial assets and financial liabilities are measured at fair value the Statement of financial position they are grouped into three Levels of a fair value hierarchy. The Levels are defined based on the observability of significant inputs to the measurement as follows

Level 1: Quoted prices (unadjusted) 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 following table shows the carrying amount of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximate of fair value. Financial assets measured at fair value - 31 March 2014 As at end of the financial year, the Company does not hold any financial assets that are required to be measured at fair value.

Financial assets not measured at fair value – 31 March 2014 (see note A)

Notes Loans and receivables

Level 1 Level 2 Level 3 Total

Cash and cash –equivalents 5 329,802 - - - -

Trade debtors and other receivables

6 98,901 - - - -

428,703 - - - -

Financial liabilities measured at fair value - 31 March 2014

Borrowings Level 1 Level 2 Level 3 Total

Premium funding facility 13 1,223,400 - 1,223,400 - 1,223,400

Commercial bill 16 175,000 - 175,000 - 175,000

1,398,400 - 1,398,400 - 1,398,400




Financial statements for the year ended 31 March 2014 Notes to the financial statements (continued) Financial liabilities not measured at fair value - 31 March 2014 (see note A)

Creditors and other liabilities


Trade creditors and other payables

11 464,047 - - - -

464,047 - - - -

Note A – The Company does not include fair value information for financial assets and financial liabilities such as short-term trade debtors and payables because their carrying amounts are reasonable approximation of fair value. Non-financial instruments fair value measurement – 31 March 2014


Office suite 8 - - - 1,165,000 -

- - - 1,165,000 -

Fair value of the Company’s office suite is estimated by independent, professionally-qualified property values as disclosed in note 8.

Financial assets measured at fair value - 31 March 2013 As at end of the financial year, the Company does not hold any financial assets that are required to be measured at fair value.

Financial assets not measured at fair value (see note A)

Notes Loans and receivables


Cash and cash –equivalents 5 448,333 - - - -

Trade debtors and other receivables 6 47,544 - - - -

495,877 - - - -

Financial liabilities measured at fair value – 31 March 2013

Borrowings Level 1 Level 2 Level 3 Total Premium funding facility 13 310,580 - 310,580 - 310,580

Commercial bill 16 300,000 - 300,000 - 300,000

610,580 - 610,580 - 610,580





Financial statements for the year ended 31 March 2014 Financial liabilities not measured at fair value - 31 March 2013 (see note A)

Creditors and other liabilities


Trade creditors and other payables

11 494,810 - - - -

494,810 - - - -

Note A – The Company does not include fair value information for financial assets and financial liabilities such as short-term trade debtors and payables because their carrying amounts are reasonable approximation of fair value. Fair value measurement of non-financial instruments – 31 March 2013


Office suite 8 - - - 1,195,000 -

- - - 1,195,000 1,195,000

Fair value of the Company’s office suite is estimated by independent, professionally-qualified property values as disclosed in note 8.

2014 $

2013 $

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

Cash on hand 311 311

Cash at bank 329,491 448,022

329,802 448,333





Notes to the financial statements (continued) b) Reconciliation of net deficit for the year after income tax with net cash flows from operations

Net deficit after income tax for the year (421,634) (247,394)

Non-cash flows in operating deficit:

Depreciation and amortisation 54,881 44,601

Bad debts 5,500 386

Loss on disposal of property, plant and equipment - -

Changes in assets & liabilities:

Increase in debtors (56,857) (17,375)

Increase in prepayments - expenses (405,698) (453,395)

(Decrease) / increase in creditors (30,763) 281,243

Increase in deferred income 245,316 -

(Decrease) / increase in tax liability (230,000) 230,000

Increase in other provisions 20,653 114,824

Net cash flows used in operating activities (818,602) (47,110)

20) Related parties and related party transactions From time to time, Directors and employees of the Company are covered by the company’s travel insurance policy when attending and conducting company business activities. Directors of the Company or director related entities may purchase Probus Travel Insurance for private travel at normal commercial rates. Apart from the details disclosed in this note, no director has entered into a material contract with the Company since the end of the previous financial year and there were no material contracts involving Directors’ interests existing at year end. Directors’ compensation The following people were Directors of the Company during the financial year and to the date of this report: G Blackler M Jensen MNZM D Allen (resigned 30 May 2013)

B Cameron OAM M Robinson K Brand (resigned 30 May 2013)

P Carroll I Scott W Lake (deceased 17 November 2013)

D Geekie V Semmler J Lewis (resigned 1 April 2014)

R Goldstone G Williams D Wylie (resigned 30 May 2013) In accordance with the Company’s Constitution, the Directors are entitled to be reimbursed for travel and other associated expenses incurred in attending Directors’ meetings and other meetings in connection with the Company’s business. During the year, travel and other expenses totalling $91,875 (2013 - $75,149) were incurred by the Directors in fulfilling their role. Note that, in 2014, two additional Directors (Rotary appointees in accordance with the Constitution) were appointed to the Board. Remuneration paid to the Directors during the year was $Nil (2013 - $Nil).



Financial statements for the year ended 31 March 2014 Notes to the financial statements (continued) Key management personnel compensation The positions held within the Company having authority and responsibility for planning, directing and controlling the Company’s activities, directly or indirectly (not including directors), are

General Manager Financial Controller Executive Assistant / Office Manager

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

2014 $

2013 $

Short-term employee benefits 372,922 337,077

Post-employment benefits 36,828 34,242

Long-term employee benefits 78,196 62,044

487,946 433,363

21) Additional company information a) Company details As at reporting date, the registered office and principal place of business of the Company is Ground Floor, Suite 1, Perth House, 85 George St Parramatta, NSW. b) Structure In 1981, Governors of Rotary Districts in Australia and New Zealand established The Probus Centre – South Pacific Inc. as a community service activity and encouraged Rotary Clubs to sponsor the establishment of Probus Clubs throughout the region.




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Financial statements for the year ended 31 March 2014 In August 2011, Probus Centre – South Pacific Inc. became a company limited by guarantee. The Company is a company limited by guarantee registered under the Corporations Act and registered with Australian Securities and Investment Commission (‘ASIC’). The Constitution of the Company lists the objects of the Company, its legal powers, composition of the Board, conduct of elections and general meetings, membership and other information on the management and administration of the Company. 22) Contingent liability There are no known contingent liabilities as at 31 March 2014 (2013 - $170,000). 23) Events after the reporting period At the date of this report, there are no other matters or circumstances which have arisen since 31 March 2014 which have significantly affected or may significantly affect: (i) The operations of the Company; or (ii) The results of those operations; or (iii) The state of affairs of the Company; in financial years subsequent to 31 March 2014.



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DIRECTOR’S DECLARATION




INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF

PROBUS SOUTH PACIFIC LIMITED

Report on the Financial Report We have audited the accompanying financial report of Probus South Pacific Limited (the company), which comprises the statement of financial position as at 31 March 2014 and the statement of comprehensive income, statement of changes in funds and statement of cash flows for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the directors’ declaration. The Responsibility of the Directors for the Financial Report The Directors of the company are responsible for the preparation of a financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risk of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.




Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors of Probus South Pacific Limited on 21st May 2014, would be in the same terms if provided to the directors as at the date of this auditor’s report. Auditor’s Opinion In our opinion, the financial statements present fairly, in all material respects the financial position of Probus South Pacific Limited as of 31 March 2014, and its financial performance for the year then ended in accordance with Corporations Act 2001, and the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

CABEL Partners Chartered Accountants

Alan Grevler Registered Company Auditor [email protected]

North Sydney Dated this 21st day of May 2014


Perth House, Ground levelSuite 1, 85 George Street Parramatta

NSW 2150 Australia

PO Box 1294 Parramatta NSW 2124 Australia

Australia: 1300 630 488 or +61 2 9689 0200New Zealand: 0800 1477 6287

Email: [email protected]: www.probussouthpacific.org.au

COPYRIGHT 2014

PROBUS SOUTH PACIFIC LIMITED ANNUAL REPORT 2013/14

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