Southern Cross Care (Broken Hill)...

Southern Cross Care (Broken Hill) Ltd ABN 47 718 250 645

Financial Statements

For the Year Ended 30 June 2018


Contents 30 June 2018

Page

Financial Statements Directors' Report 1 Auditor's Independence Declaration 13 Statement of Profit or Loss and Other Comprehensive Income 14 Statement of Financial Position 15 Statement of Changes in Equity 16 Statement of Cash Flows 18 Notes to the Financial Statements 18 Directors' Declaration 41 Independent Auditor's Report 42


Directors' Report For the Year Ended 30 June 2018

1

The directors present their report together with the financial statements of Southern Cross Care (Broken Hill) Ltd (the Company) for the financial year ended 30 June 2018 and the auditor's report thereon.

Southern Cross Care (Broken Hill) Ltd is a public company limited by guarantee under the Corporations Act 2001, is registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC), is endorsed as an income tax exempt charity by the Australian Taxation Office and recognised as a Public benevolent Institution.

1. General information

Information on directors

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

Mr Robert L. Johnson, BSc. (Eng) Mechanical with Merit, JP (Chairperson)

Experience:

Retired Professional Engineer. Inspector of Mechanical Engineering (NSW) under the Mines Inspection Act for 18 years. Board member of St Joseph Catholic Church School. Former President of the Sacred Heart Primary School Parents & Friends Association. Bob has extensive experience in mining, government and service enterprises and has been a member of several Local Government committees. Chairperson of the Knights of the Southern Cross.

Mr William A. Hiscox, FIPA, MAMI, ACIS, JP (Deputy Chairperson and Company Secretary)

Experience:

Member of the Knights of the Southern Cross since 1972. Worked as accounting officer for Broken Hill City Council. OACC Small Business Field Officer for 7 years. Worked as GST Sign Post Officer in Broken Hill Regional Consultative Committee. Administrator and Investment Manager of Broken Hill Mine Employees' Pension Fund. Circulation Manager of Barrier Miner newspaper and accountant for Radio 2BH. Treasurer of the Rotary Club of Broken Hill. Director of Broken Hill Community Credit Union. Member of the Finance Committee of the Catholic Cathedral Parish in Broken Hill. Significant experience in finance, administration, investment and voluntary organisations, including 6 years with 1st Broken Hill South Scout Group, 10 years with Alma Broken Hill Swimming Club - Life Member and 38 years as a committee member then Director of Southern Cross Homes Committee/Southern Cross Care (Broken Hill) Ltd.





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Mr Patrick E. Smith

Experience:

Welfare Officer of the Knights of the Southern Cross and member since 1999. Retired Small Business Operator. Managed property for 11 years. Managed stock contracting business in Wilcannia for 14 years. Member of St Vincent de Paul Sacred Heart Conference. Member of the Silver City Bush Treadle. Member of the Sacred Heart Conference of St Vincent de Paul for 8 years.

Mr Brian J. Uhl (resigned 17 May 2018)

Experience:

Member of the Knights of the Southern Cross since 1996. St Vincent de Paul Society Volunteer. Managed hotel business in Warwick, Queensland for 10 years. Storekeeper in Wilcannia Merchandise Store for 7 years. Former storeman of RTA formerly known as Department of Main Roads (NSW). Former President of Wilcannia Lions Club. Active in Catholic Church Liturgy and was recognised for dedicated work with St Vincent de Paul. Experience in rural fields building, windmill and bore maintenance.

Mr Kenneth L. Martin, JP

Experience:

Mine Fire Rescue Emergency Services Coordinator (Retired) Boilermaker / welder. Member of the Knights of the Southern Cross for more than 39 years. Past Chairman of St Vincent de Paul Wilcannia Forbes. Commander of the most venerable order of the Hospital of St John of Jerusalem Priory. Former Vice President of St Pat's race club and life member. Former President of Broken Hill Jaycees, awarded Jaycee International Senatorship and life member. Former Executive member of Boilermakers Society, Australian Metal Workers and Shipwrights Union. Former President of Broken Hill Theatrical Union and life member. Former President of the Broken Hill City Council Mutual Assistance Fund and Picnic Committee. Life member of St John Ambulance Australia and Barrier Social Democratic Club. Service member Returned Servicemen League of Australia and Legion of Ex Service Men & Women of Australia. Foundation member of the Broken Hill Branch of the Royal Australian Engineers Association of Australia. Citizen of the year 2012. Admitted to Nydia Edes Hall of Fame Honour Board for Volunteer Service May 2014.





4

Mr Patrick J. Mythen

Experience:

Member of the Knights of the Southern Cross A builder for 46 years. Mr Barry J. King (resigned 19 April 2018) (Chairperson Infrastructure & Projects Committee Broken Hill)

Experience:

Vice Chairman of Aruma Lodge Incorporated before it merged with Southern Cross Care (Broken Hill) Ltd in 2005. Electrical contractor. Superintendent of Electrical Services at Pasminco mines for 15 years. Secretary and life member of the Broken Hill Speed Boat Club for more than 15 years. Former Chairman of the Regional Cadet Unit and BH Scouts Association. Trustee Broken Hill Regional Events Centre Trust.

Mr Bernard Ross Nankivell, BFin. Admin, CPA (resigned 19 June 2018) Chairperson Corporate Committee

Experience:

Chief Financial Officer, Consolidated Group of Companies Partner in Public Accounting Practice and then sole practitioner Public Accountant for 12 years. Director of supermarket business for 29 years. Member of Broken Hill Chamber of Commerce Executive for 8 years. Member of the Board of Federal Government Area Consultative Committee 1994-2000 Member of the Knights of the Southern Cross.





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Mr Salvatore Emilio Iamarino (Sam), LLB

Experience:

1972: Articles to John Duck. 1973: Admitted as a Barrister and Solicitor of the Supreme Court of Victoria. 1973: Admitted as an Attorney, Solicitor and Proctor of the Supreme Court of New South Wales. 1973 - 1977: Employed by Duck Crothers and Co. 1977: Purchased the practice of Andrew Krummins & Co and became Iamarino Krummins & Co. 1981: Iamarino Krummins & Co merged with Duck Crothers & Co and became Duck and Iamarino 1991: Sam commenced practice as Salvatore E Iamarino from 1 November 1991 to present day. 2008: Appointed as a Notary Public, providing notarial services in the north-west of Victoria and south-west of New South Wales. Proprietor of Sunraysia Funerals Extensive knowledge of the horticultural and real estate industries. Sole legal practitioner in Mildura with extensive experience in business and commercial law, property law, property conveyancing in Victoria and New South Wales, succession planning and wills and probate. Member and Secretary of the Dante Alighieri Society. Member of the steering committee which established the Italian Pensioner's Club Former committee member of the Club da Vinci

Mrs Margaret Grillett, MAPA (Chairperson Residents Care Committee)

Experience:

Registered Physiotherapist since May 1975 graduating with Diploma in Physiotherapy (SAIT). Intern year Queen Elizabeth Hospital Adelaide. Registered Physiotherapist at Broken Hill Base Hospital since 1976. Senior Pediatric Physiotherapist working with Novita Children's Services and Silverlea Early Intervention Centre over the last 20 years. Manager Physiotherapy Broken Hill Base Hospital from June 1992 to July 2013. Post Graduate Certificate in Rural and Remote Physiotherapy June 1995. Experienced in wide range Physiotherapy interventions with special interest in lymphoedema management, aged care rehabilitation and working with children with disabilities. Former Executive Manager of Allied Health Broken Hill Health Service in 2001. Extensive experience in OH&S, as an accredited Workcover Manual Handling co-ordinator. Former Board member and President of the Parents and Friends Association of Sacred Heart College Broken Hill.





6

Mr Glen A Hornsby BBus CA (Chairperson Infrastructure & Projects Committee Sunraysia)

Experience:

Chief Financial Officer, Mallee Family Care Principal consultant, Murray Consulting Group, specialising in financial management consulting services for the health, aged care, social services and local government sectors. Former Director of Lower Murray Medicare Local. Independent member of the audit committee of Lower Murray Water. Former President, Oasis Aged Care Inc. Past president and long term board member of the Rotary Club of Mildura Deakin and member of Rotary District committees.

Mr Dion Woodman (appointed 28 March 2018)

Bachelor of Science (Chemistry major) through the University of New England Graduate Diploma of Mineral Resources at the University of Queensland in 2006 Industry qualifications - Industrial Radiation Safety Officer Occupational Health and Safety Cert IV Frontline Management Cert IV

Experience: Laboratory Technician Industrial Chemist Research Scientist in the UK Laboratory Manager OSA Technician Plant Metallurgist Senior Metallurgist and Metallurgy Superintendent at Perilya Broken Hill Ltd. Member of the Broken Hill Community FM Radio Association and President since 2016 Member of the Australasian Institute of Mining and Metallurgy and held the office of Branch Secretary from 2006-17. Secretary of the Perilya OHS Committee from 2007-2014





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Miss Danielle Kennedy (appointed 21 June 2018)

Bachelor of Speech Pathology (Honours) at University of Newcastle in 2014 Experience: Speech Pathologist Speech Pathologist Level 2 – Generalist role Speech Pathologist – Remote Speech Pathology – Adult Speech pathology services. Professional Membership: Speech Pathology Australia- Certified Practicing Member Services for Australian Rural and Remote Allied Health – 2014 Palliative Care NSW – 2017 Professional Development: Completion of NSW Health’s Clinical Leadership Program delivered by Clinical Excellence Commission Speech Pathology Australia Conference 2018 Development of interagency local speech pathology in-service

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Principal activities

The principal activities of Southern Cross Care (Broken Hill) Ltd during the financial year were the provision of Residential Aged Care to the communities of Broken Hill and Sunraysia and Retirement Living to the communities of Broken Hill and Sunraysia. These principal activities assist in achieving the strategic objectives of the Company by meeting the aged care needs of Broken Hill and Sunraysia; and to meet the financial objectives of the Company.

No significant changes in the nature of the Company's activity occurred during the financial year.

Objectives and strategies The mission statement of the Company is “Inspired by the knowledge of God’s goodness, compassion and wisdom we will provide holistic support to the aging community and to those in most in need”.

The core values that orientate and guide the conduct of the Board, employees and volunteers of the Company are: Compassion - our care and concern for people is fostered by our understanding of their needs as individuals. Respect - we will treat everyone fairly and as individuals. Integrity – we will be ethical, respectful, honest and trustworthy in everything we do. Partnership – we will foster a relationship between Board, staff, volunteers and families that is characterised by

mutual cooperation. Southern Cross Care (Broken Hill) Ltd Strategic Plan sets the direction of the company for the period 2017 to 2020. This plan is reviewed annually as part of the business planning process and gives focus to how the Company will achieve its purpose by successfully serving the frail and aging people in the community, staff, volunteers and carers.




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The Company’s Strategic plans are: 1. To effectively respond to changes in the industry and consumer demand through the provision of quality services and incorporating the mission and values by ensuring good governance and ensuring flexibility and plan for replacement of the built environment to enable a variety of services and ensure service delivery is at optimal level 2. To enhance sustainable and educated workforce by increasing effective learning and development skills and by supporting employee engagement in the workplace 3. Sound financial management will ensure the viability and continuity of quality services that will support future growth by maintaining a strong financial position to maximize service delivery to our customers and with as focus on consumer needs, identify opportunities that will strengthen the operations. 4. To provide high quality care and services to consumers by utilising new and cost effective technologies by ensuring organisational awareness of latest technologies in order to maximize efficiency and delivery of services. 5. To heighten the awareness of the Company and service through marketing by developing and implementing a marketing plan to ensure the Company is front of mind in relevant markets.

Performance management

The Company uses the following key performance indicators to measure performance:

Customer satisfaction surveys for each operations; WHS incidents and lost time; Audits on all accreditation standards; Returns on investments; Financial indicators including performance against the Board approved budget; and Staff turnover and responses to the staff satisfaction survey.

Composition of the Board

Resignations were received from three long serving directors on the Board of Southern Cross Care (Broken Hill) Ltd. Two new Directors have been appointed who are young professionals.

Senior Leadership Team Changes

Following the organisational review two new positions were established: CFO and Executive Manager People and Culture.

Chris Wright CEO – Commenced January (Resigned 10th October 2018) Alan Hollway Executive Manager of People and Culture (a new position) – Commenced January Ron Grinsell Executive Manager Infrastructure and Asset Management – Commenced February Clare Borchard Finance Manager promoted to the new Chief Financial Officer Sharon Williams Executive Manager of Residential Services

Business Planning

The ongoing aged care reform is changing the aged care sector landscape and further putting the consumer in focus. The Company will have to deal with the implications of the reform in having to compete for customers, potentially restructure business models and implement alternative income streams in order to remain financially sustainable and drive business growth and viability. The executive team continues working on completing the Divisional Operational Plans through the Company’s 2017-2020 Strategic Priorities being that of operational effectiveness, financial sustainability, technology and innovation, workforce capability and branding.




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Operational Effectiveness Specified Objective: The Company will deliver the highest standard and quality of services to the aged and vulnerable in our community.

Spiritual Care has been imbedded into our orientation and inductions programs in line with the National guidelines, enhancing the lives of our residents. We were successful in being a finalist in the Quality in Pastoral and Spiritual Practice Awards. The application focused on our Meaningful training package which has been delivered to the pastoral carers for the past 12 months. Staff training is now compulsory and in line with the organisations values.

Care benchmarking systems – Quality team has worked on putting together a benchmarking system that will run in parallel with our current system.

Southern Cross Care (Broken Hill) Ltd was invited to take part in the recent ACFI survey where the challenges and deficiencies in the present system appears to be based upon operation in the urban setting without any close focus upon the challenges for rural and remote organisations.

The Company has been chosen as a trial site for E-Script in relation to S8 drugs.

Partnerships have seen great successes this year we have embarked on a pilot program with Outback Pharmacies. The trial is of an electronic medication management solution and e-prescribing in two of SCC’s facilities. The Company is the first to start the trial due to the advanced processes that have been in place for a number of years. The TRAC (GP Video) program has been extended to June next year. The Company applied for the Australian Business Achievement Award because of the success of these partnerships and successful government pilots. We were also advised to apply for the Employer of Excellence in Aged Care Award. The ongoing student placements and best practice E learning was a major influence for the suggestion

Occupancy this year has seen a change in focus to community packages as well as residential care, the impact has been more empty bed days than in previous years. Our occupancy rate is still much higher than the industry standard of 92%.

There were three unannounced accreditation visits this year, each facility received positive results. Full accreditation audit for St Anne’s was done in September and was successful in meeting all standards with one year accreditation granted.

Workforce Capability Specified Objective: The Company is distinguished by a sustainable and educated workforce that delivers the highest standard of services.

The ‘Knights Program’, a comprehensive and holistic human resource organisational change and development program has been worked on and is currently being embedded in our organisation. It is our people blue print for success and it strategically links our corporate strategy with our people strategy and secondly links all or most areas of human resource disciplines and strategies into a dynamic process identifying our talented people, recruiting, retaining and developing our talented people and engaging more effectively and transparently with our staff to become a company where we can differentiate ourselves through the quality of our people and the strength of our culture.

Staff surveys of the organisation's personnel engagement have been undertaken via two internal processes; a survey of personnel engagement / enablement and mood, and the Executive Manager of People & Culture performing one to one interviews with all staff. Findings are being evaluated and recommendations implemented.




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Financial Strength Specified Objective: The Company financial strength ensures it is viable and able to achieve its growth and service delivery plans.

A decision was taken by the Board to utilise reserves to reduce debt on our residential facilities. The reduction of debt will take effect in 2018/2019 financial year. The Board also approved to increase the refundable accommodation deposits (RAD) of Oasis Aged Care and we will be undertaking review for Broken Hill facilities’ RADs.

The primary growth objective Business Plan is to implement sustainable strategic growth and diversification initiatives including:

Develop and implement a Business Plan for Home Care Services.

The Company's core competencies and infrastructure would be maximised and diversified in the entry and delivery of ‘value added’ home care services that complement our existing business model. Home care services would also complement and enhance our current CHSP service delivery.

Develop and implement a ‘whole of business’ Sunraysia strategic business plan incorporating ILU’s, residential aged care and community services.

Investigation is being undertaking on market, demographic and financial analysis for the Sunraysia ILU and aged care market. The intent is to determine market absorption and align with demographic analysis for both the aged care and ILU market. An ACAR submission has been lodged as the initial stage.

Investigate other core and non-core business growth opportunities

Technology and Innovation Specified Objective: The Company will continually improve high quality care and services by embracing innovation and utilising effective technology.

The supporting and concurrent technology and innovation initiatives being reviewed are:

A present critical project is to develop, rationalise and implement an Information and Communication Technology (‘ICT’) strategy of all current and pending ICT systems including establishment and employment of a specialist ICT Manager.

Develop and implement an asset management plan integrated with ICT for a detailed understanding of our assets that are currently held, their value, future value, and costs associated with maintaining them for lifecycle planning.

Develop and implement a procurement strategy that is integrated with purchasing, vendor management and ICT.

Branding and Marketing Specified Objective: Heighten market awareness of The Company's vision and its service proposition to the community

A company-wide marketing plan that is integrated with our entry into home care services. We are currently canvassing an appointment of an external organisation to work on overall branding, category management, digital platform and marketing of the company.

Branding has picked up with the facilities contacting the media when having special events. There hasn’t been a month where the Company has not had a feel good article.




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Members guarantee

Southern Cross Care (Broken Hill) Ltd is a company limited by guarantee. In the event of, and for the purpose of winding up of the company, the constitution states that each member is required to contribute a maximum of $2 each towards meeting any outstanding obligations of the entity.

At 30 June 2018 the collective liability of members was $28 (2017: $28).

Meetings of directors

During the financial year, 13 meetings of directors were held. Attendances by each director during the year were as follows:

Directors' Meetings

Number eligible to

attend Number attended

Robert L. Johnson 13 10

William A. Hiscox 13 11

Patrick E. Smith 13 11

Brian J. Uhl 12 11

Kenneth L. Martin 13 12

Patrick J. Mythen 13 12

Barry J. King 13 11

Bernard Ross Nankivell 13 13

Salvatore Emilio Iamarino 13 11

Margaret Grillett 13 13

Glen A Hornsby 13 11

Dion Woodman 3 3

Danielle Kennedy - -

AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 60-40 OF THE AUSTRALIAN CHARITIES AND NOT-FOR PROFITS COMMISSION ACT 2012 TO THE DIRECTORS OF SOUTHERN CROSS CARE (BROKEN HILL) LTD.

I declare that, to the best of my knowledge and belief during the year ended 30 June 2018 there have been:

— no contraventions of the auditor independence requirements as set out in the Australian Charities and Not-for-profits Commission Act 2012 in relation to the audit; and

— no contraventions of any applicable code of professional conduct in relation to the audit. William Buck ABN 38 280 203 274 G.W. Martinella Partner Adelaide, 18th October 2018


Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2018

The accompanying notes from part of these financial statements. 14

Note

2018

$

2017

$

Operating revenue 2 24,848,767 25,306,580

Investment income 106,387 198,113

Interest income 106,278 128,216

Other non-operating income 120,026 965,363

Employee benefits expense (15,635,285) (14,634,021)

Depreciation and amortisation expense 3 (1,468,851) (1,500,139)

Cleaning (804,337) (783,498)

Consultancy fee (135,648) -

Electricity and water (608,549) (525,513)

Food and related costs (939,246) (917,877)

Kitchen fixed costs (1,791,098) (1,702,239)

Laundry fixed cost (464,147) (450,688)

Rates and taxes (167,322) (198,269)

Repairs and maintenance (462,777) (502,086)

Other expenses (2,802,053) (2,824,294)

Interest expense 3 (480,699) (534,808)

Surplus/(deficit) before income tax (578,554) 2,024,840 Income tax expense - -

Surplus/(deficit) from continuing operations (578,554) 2,024,840

Surplus/(deficit) for the year (578,554) 2,024,840

Other comprehensive income

Items that may be reclassified to profit or loss when specific conditions are met:

Net fair value gains on available-for-sale financial assets 39,413 74,139

Items that have been reclassified to profit or loss:

Reclassification of fair value gains on available-for-sale financial assets (52,165) (43,753)

Total other comprehensive income for the year (12,752) 30,386

Total comprehensive income for the year (591,306) 2,055,226


Statement of Financial Position As At 30 June 2018


Note

2018

$

2017

$

ASSETS

CURRENT ASSETS

Cash and cash equivalents 4 11,479,547 12,850,372

Trade and other receivables 5 247,248 320,661

Other assets 6 181,399 231,808

Other financial assets 7 980,000 -

TOTAL CURRENT ASSETS 12,888,194 13,402,841

NON-CURRENT ASSETS

Financial assets 7 8,201,097 7,880,352

Property, plant and equipment 8 28,895,078 29,576,744

Investment property 9 37,700,866 37,267,588

Intangible assets 10 99,256 136,551

TOTAL NON-CURRENT ASSETS 74,896,297 74,861,235

TOTAL ASSETS 87,784,491 88,264,076

LIABILITIES

CURRENT LIABILITIES

Trade and other payables 11 1,951,828 1,578,193

Financial liabilities 12 1,578,481 1,547,738

Employee benefits 13 3,073,773 3,019,226

Other liabilities 14 38,707,939 37,608,205

TOTAL CURRENT LIABILITIES 45,312,021 43,753,362

NON-CURRENT LIABILITIES

Financial liabilities 12 8,873,425 10,302,301

Employee benefits 13 152,292 152,292

TOTAL NON-CURRENT LIABILITIES 9,025,717 10,454,593

TOTAL LIABILITIES 54,337,738 54,207,955

NET ASSETS 33,446,753 34,056,121

EQUITY

Reserves 16 3,603,103 4,541,844

Retained earnings 29,843,650 29,514,277

TOTAL EQUITY 33,446,753 34,056,121


Statement of Changes in Equity For the Year Ended 30 June 2018


2018

Note

Accumulated Surplus

$

Vines Capital Replacement

Fund Reserve

$

TVRV Sinking Fund

Reserve

$

General Reserve

$

Financial Assets

Reserve

$

Total

$

Balance at 1 July 2017 29,514,277 705,250 37,967 3,380,381 418,246 34,056,121

Deficit for the year (578,554) - - - - (578,554)

Transfer from Sinking Fund 500,000 - - (500,000) - -

Decrease in Vines Capital Replacement Fund - (5,818) - - - (5,818)

Decrease in TVRV Sinking Fund - - (12,244) - - (12,244)

Interest relating to reserves (3,141) 2,899 242 - - -

Adjustment to correct reserves 16 411,068 (409,505) (1,563) - - -

Net fair value gains on available-for-sale financial assets - - - - 39,413 39,413

Reclassification of fair value gains on available-for-sale financial assets - - - - (52,165) (52,165)

Balance at 30 June 2018 29,843,650 292,826 24,402 2,880,381 405,494 33,446,753

2017

Accumulated Surplus

$

Vines Capital Replacement

Fund Reserve

$

TVRV Sinking Fund

Reserve

$

General Reserve

$

Financial Assets

Reserve

$

Total

$

Balance at 1 July 2016 27,489,437 478,610 37,967 3,380,381 387,860 31,774,255

Surplus for the year 2,024,840 - - - - 2,024,840

Increase in Vines Capital Replacement Fund - 226,640 - - - 226,640

Net fair value gains on available-for-sale financial assets - - - - 74,139 74,139

Reclassification of fair value gains on available-for-sale financial assets - - - - (43,753) (43,753)

Balance at 30 June 2017 29,514,277 705,250 37,967 3,380,381 418,246 34,056,121


Statement of Cash Flows For the Year Ended 30 June 2018


Note

2018

$

2017

$

CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers 27,399,761 27,691,097

Payments to suppliers and employees (26,067,845) (23,238,304)

Dividends received 106,387 198,113

Donations received 47,788 6,066

Interest received 92,083 112,564

Interest paid (480,699) (534,808)

Net cash provided by operating activities 1,097,475 4,234,728

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of plant and equipment 57,608 37,156

Proceeds from sale of available-for-sale investments 1,929,373 1,948,563

Payment for intangible asset - (14,690)

Purchase of property, plant and equipment (807,498) (1,336,684)

Purchase of available-for-sale investments (3,157,577) (1,646,000)

Net cash used in investing activities (1,978,094) (1,011,655)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from borrowings 907,927 -

Repayment of borrowings (1,398,133) (1,497,453)

Net cash used in financing activities (490,206) (1,497,453)

Net (decrease)/increase in cash and cash equivalents held (1,370,825) 1,725,620

Cash and cash equivalents at beginning of year 12,850,372 11,124,752

Cash and cash equivalents at end of financial year 4 11,479,547 12,850,372


Notes to the Financial Statements For the Year Ended 30 June 2018

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The financial statements are for Southern Cross Care (Broken Hill) Ltd as a not-for-profit individual entity.

The functional and presentation currency of Southern Cross Care (Broken Hill) Ltd is Australian dollars.

1 Summary of Significant Accounting Policies

Reporting entity

Southern Cross Care (Broken Hill) Ltd (the “Company”) is public company limited by guarantee and is recognised as a Public Benevolent Institution domiciled in Australia. The address of the Company’s registered office is 238 Piper Street, Broken Hill, NSW 2880. The financial statements are as at and for the year ended 30 June 2018.

The Company is a not- for-profit entity and is primarily involved in the provision of aged care and operation of retirement villages.

(a) Basis of Preparation

Statement of Compliance

Southern Cross Care (Broken Hill) Ltd applies Australian Accounting Standards – Reduced Disclosure Requirements as set out in AASB 1053: Application of Tiers of Australian Accounting Standards and AASB

2010–2: Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements.

The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards - Reduced Disclosure Requirements of the Australian Accounting Standards Board (AASB) and the Australian Charities and Not-for-profits Commissions Act 2012. The company is a not-for-profit entity for financial reporting purposes under Australian Accounting Standards.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated.

The financial statements were approved by the Board of Directors on 18 October 2018.

Basis of Measurement

The financial statements, except for the cash flow information, have been prepared on an accrual 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. The amounts presented in the financial statements have been rounded to the nearest dollar.

(b) Comparative Amounts

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(c) Income Tax

No provision for income tax has been raised as the Company is exempt from income tax under Div 50 of the Income Tax Assessment Act 1997.




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(d) Revenue and other income

Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the entity and specific criteria relating to the type of revenue as noted below, has been satisfied.

Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates.

Government subsidies are recognised as income when the Company has an unconditional right to receive and the Company complies with the conditions associated.

Gross Income from residents and clients is recognised as income when services provided to residents and clients are rendered.

The daily price of a room is calculated based on the lump sum RAD and the current interest rate (MPIR) at the time of admission. The Daily Accommodation Payment (DAP) is subject to fluctuation depending on the interest rate movement.

Retention income from accommodation bonds, interest on unpaid refundable accommodation deposit, refundable accommodation contribution and the non-refundable portion of ingoing contributions are recognised as income according to the relevant resident agreement in accordance with government regulations.

Southern Cross Care (Broken Hill) Ltd receives non-reciprocal contributions of assets from the government and other parties for zero or at a nominal value. These assets are recognised at fair value on the date of acquisition in the statement of financial position, with a corresponding amount of income recognised in profit or loss.

Donations and bequests are recognised as revenue when received.

Interest revenue is recognised using the effective interest rate method, which for floating rate financial assets is the rate inherent in the instrument.

Dividend revenue is recognised when the right to receive a dividend has been established.

All revenue is stated net of the amount of goods and services tax (GST).

Retirement Villages income and expenditure

The Company maintains separate resident statements of income and expenditure in accordance with Retirement Villages Act 1999 (NSW) and Retirement Villages Act 1986 (Vic). The Vines Retirement Village resident income and expenditure is controlled by the residents committee.




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(e) Property, Plant and Equipment

Classes of property, plant and equipment are measured using the cost or revaluation model as specified below.

Where the cost model is used, the asset is carried at its cost less any accumulated depreciation and any impairment losses. Costs include purchase price, other directly attributable costs and the initial estimate of the costs of dismantling and restoring the asset, where applicable.

Assets measured using the revaluation model are carried at fair value at the revaluation date less any subsequent accumulated depreciation and impairment losses. Revaluations are performed whenever there is a material movement in the value of an asset under the revaluation model.

Land and buildings

Land and buildings are measured using the cost model.

Freehold land and buildings that have been contributed at no cost, or for nominal cost are valued and recognised at the fair value of the asset at the date it is acquired.

Plant and equipment

Plant and equipment are measured using the cost model.

Plant and equipment that have been contributed at no cost, or for nominal cost are valued and recognised at the fair value of the asset at the date it is acquired.

Depreciation

The depreciable amount of all property, plant and equipment, except for freehold land is depreciated on a straight-line method from the date that management determine that the asset is available for use.

The depreciation rates used for each class of depreciable asset are shown below:

Fixed asset class Depreciation rate

Buildings 2.5% - 10%

Plant and Equipment 10% - 33.3%

Motor Vehicles 20% - 25%

At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any revisions are accounted for prospectively as a change in estimate.

When an assets is disposed, the gain or loss is calculated by comparing proceeds received with its carrying amount and is taken to profit or loss.




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(f) Investment property

Investment property, comprising The Vines Retirement Village, Con Crowley Village and the War Veterans Retirement Living, are held to generate income from the rollover of units over time and the subsequent entitlement to a cash retention at each time unit occupancy changes. Investment property is initially measured at cost and subsequently measured at fair value. Fair value is determined annually and any changes to fair value are recorded in the statement of profit or loss and other comprehensive income as other income.

The fair value of an investment property is the amount for which the asset could be exchanged between knowledgeable, willing parties in an arm's length transaction. Fair value of investment properties is determined based on a valuation by an independent valuer who has recognised and appropriate professional qualifications and recent experience in the location and category of investment property being valued, performed bi-annually. Fair values are determined by the valuer using market information, including prices for similar properties in comparable locations.

(g) Intangible Assets

Software

Software is recorded at cost. Software has a finite life and is carried at cost less any accumulated amortisation and impairment losses. It has an estimated useful life of between one and three years. It is assessed annually for impairment.

Bed Licences

The Directors consider that an active market does not currently exist for bed licences in the region and the dollar value of bed licences to the Company in an open and unbiased market is not able to be determined. An intangible asset for licences on hand has not therefore been recognised in the Company's statement of financial position. Any bed licences received as part of a business combination are not allocated a value.

Water Licences

The water licences consist of 30.96 mega litres of tradable water right. At the time the licences were assumed, the Directors had determined that a fair value for this right to be set at $1,400 per mega litre based on recommendations from management at local water authority. This represents deemed cost and is assessed annually for impairment.

Amortisation

Amortisation is based on the cost of an asset less its residual value.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.




22

(h) Financial instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the instrument. For financial assets, this is the equivalent to the date that the Company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transactions costs, except where the instrument is classified 'at fair value through profit or loss' in which case transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties in an arm's length transaction. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective

interest method.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.

The Company's financial assets are designated into the following categories which are described in detailed below:

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost.

Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting year.

(ii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

Available-for-sale financial assets are included in non-current assets, except for those which are expected to be sold within 12 months after the end of the reporting period.




(h) Financial instruments

23

(iii) Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Fees payable on the establishment of loan facilities are recognised as transaction costs of the loan.

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

Impairment of financial assets

At the end of the reporting period the Company assesses whether there is any objective evidence that a financial asset or group of financial assets is impaired.

Financial assets at amortised cost

If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial assets original effective interest rate.

Impairment on loans and receivables is reduced through the use of an allowance accounts, all other impairment losses on financial assets at amortised cost are taken directly to the asset.

Available-for-sale financial assets

A significant or prolonged decline in value of an available-for-sale asset below its cost is objective evidence of impairment, in this case, the cumulative loss that has been recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. Any subsequent increase in the value of the asset is taken directly to other comprehensive income.

Derecognition

Financial assets are derecognised when the contractual rights to receipt of cash flows expire or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised when the related obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability, which is extinguished or transferred to another party, and the fair value of consideration paid, including the

transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

(i) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.




24

(j) Employee benefits

Short-term employee provisions

Provision is made for the company’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and personal leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.

The company’s obligations for short-term employee benefits such as wages, salaries and personal leave are recognised as part of current trade and other payables in the statement of financial position.

Other long-term employee provisions

Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures, and are discounted at rates determined by reference to market yields at the end of the reporting period on corporate bonds that have maturity dates that approximate the terms of the obligations. Upon the remeasurement of obligations for other long-term employee benefits, the net change in the obligation is recognised in profit or loss as a part of employee benefits expense.

The Company’s obligations for long-term employee benefits are presented as non-current employee provisions in its statement of financial position, except where the Company does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions.

(k) Accommodation bonds

Accommodation bonds, refundable accommodation deposits and refundable accommodation contributions are non-interest bearing deposits made by aged care residents to the Company upon their admission. Accommodation bonds are measured at the principal amount net of retention or any other amounts deducted from the bond at the election of the resident. Refundable accommodation deposits and refundable accommodation contributions are measured at the principal amount less interest and / or daily accommodation payments or daily accommodation contributions at the election of the resident.

In accordance with AASB 101, all accommodation bonds, refundable accommodation deposits and refundable accommodation contributions are classified as current liabilities as there is no unconditional right to defer settlement of the liability for at least twelve months after the reporting date. However, based upon the Company's historical data, it is anticipated that only a small percentage of total accommodation bonds, refundable accommodation deposits and refundable accommodation contributions will be repaid within the next twelve months.




25

(l) Trade and other payables

Trade and other payables represent the liabilities for goods and services received by the Company during the reporting period that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.

(m) Resident Loans (ingoing contributions)

Resident loans are received from residents of self care villages known as "Retirement Villages" and are non-interest bearing, the net amount of which is repayable upon departure. Resident loans are measured at the principal amount net of any retentions/draw-downs or any other amounts deducted from the loan at the election of the resident.

All resident loans are classified as current liabilities in accordance with AASB 101 as there is no unconditional right to defer repayment of the loans. However historical turnover statistics indicate that only a small percentage of loans are likely to be required to be repaid within the next twelve months. The rolling nature of resident loans is such that the repayment of a resident contribution is usually offset by a new resident funded ingoing contribution.

(n) Critical accounting estimates and judgments

Key estimates - impairment

At the end of each reporting period, the Company assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information and internal sources of information. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use to the asset's carrying amount. Any excess of the asset's carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116). Any impairment loss of a revalued asset is treated as revaluation decrease in accordance with that other Standard.

Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

(o) Economic dependence

Southern Cross Care (Broken Hill) Ltd considers that it is economically dependent on revenue received from the Commonwealth Government Department of Health with respect to its residential aged care facilities. At the date of this report the directors have no reason to believe that the Commonwealth Government Department of Health will not continue to support Southern Cross Care (Broken Hill) Ltd.




26

(p) Goods and Services Tax (GST)

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).

Receivables and payables are stated inclusive of GST.

The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the statement of financial position.

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

(q) New Accounting Standards and Interpretations

The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods. The Company has decided not to early adopt these Standards. The following table summarises those future requirements, and their impact on the Company where the standard is relevant:

Standard Name

Mandatory Application

Date Requirements Impact

AASB 15 Revenue from contracts with customers

1 January 2019 The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer – so the notion of control replaces the existing notion of risks and rewards.

The Company has not yet considered the impact of the new rules on its revenue recognition policies. It will undertake a detailed assessment in the near future.

AASB 16 Leases 1 January 2019 When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases.

Although the directors anticipate that the adoption of AASB 16 will impact the Company’s financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.



27

2 Revenue and Other Income

Revenue from continuing operations

2018

$

2017

$

Operating revenue

- Government subsidies 14,486,675 15,197,202

- Resident fees 5,851,456 5,966,028

- Means tested fee & income tested fee 255,650 -

- Bequest 311,703 -

- Donations 47,788 6,066

- Fundraising 10,102 9,602

- Entry contribution 296,540 256,585

- ILU administration fees 20,356 19,509

- Accommodation charges 2,070,952 1,624,710

- Bond retention and interest 29,375 58,527

- Concessional supplement 42,190 87,435

- Commonwealth Home Support Programme (CHSP) grant 158,621 156,586

- CHSP service income 13,895 14,935

- Other income 1,253,464 1,909,395

24,848,767 25,306,580

Other non-operating income

Other non-operating income

Gain on sale of available-for-sale financial assets 59,789 83,187

Investment property valuation gain/loss 60,237 882,176

120,026 965,363

3 Result for the Year

(a) Expenses Depreciation and Amortisation

Depreciation - buildings 863,736 943,718

Depreciation - motor vehicles 58,509 49,744

Depreciation - plant and equipment 479,550 468,226

Depreciation - computer software 67,056 38,451

Total Depreciation and Amortisation 1,468,851 1,500,139

Finance Cost

Interest expense on financial liabilities 430,066 475,665

Investment management fees 50,633 59,143

Total Finance Cost 480,699 534,808



28

4 Cash and cash equivalents

2018

$

2017

$

Cash on hand 6,000 5,600

Cash at bank 5,368,283 5,508,359

Short-term bank deposits 3,799,842 3,282,233

Other cash and cash equivalents 2,305,422 4,054,180

11,479,547 12,850,372

5 Trade and other receivables

CURRENT

Trade receivables 159,091 246,699

Interest receivable 88,157 73,962

247,248 320,661

6 Other assets

CURRENT

Prepayments 132,280 145,144

Accrued income 49,119 86,664

181,399 231,808

7 Other financial assets

CURRENT

Other financial assets 980,000 -

980,000 -

NON-CURRENT

Available for sale financial assets 7,630,958 7,880,352

Other financial assets 570,139 -

8,201,097 7,880,352

Total 9,181,097 7,880,352

Available-for-sale financial assets comprise of investments in the ordinary issued capital of various entities. There are no fixed returns or fixed maturity dates attached to these investments. No intention to dispose of any unlisted available-for-sale financial assets existed at 30 June 2018.



29

8 Property, plant and equipment

2018

$

2017

$

LAND AND BUILDINGS

Land

At cost 1,668,109 1,668,109

Total Land 1,668,109 1,668,109

Buildings

At cost 33,152,986 33,160,656

Accumulated depreciation (9,000,071) (8,051,217)

Total buildings 24,152,915 25,109,439

PLANT AND EQUIPMENT

Capital works in progress

At cost 342,618 187,802

Plant and equipment

At cost 6,058,975 5,550,846

Accumulated depreciation (3,514,396) (3,090,201)

Total plant and equipment 2,544,579 2,460,645

Motor vehicles

At cost 357,273 301,123

Accumulated depreciation (170,416) (150,374)

Total motor vehicles 186,857 150,749

Total property, plant and equipment 28,895,078 29,576,744

(a) Movements in Carrying Amounts

Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year:

Land

$

Buildings

$

Capital Works in Progress

$

Plant and Equipment

$

Motor Vehicles

$

Total

$

Year ended 30 June 2018 Balance at the beginning of the year 1,668,109 25,109,439 187,802 2,460,645 150,749 29,576,744

Additions - - 154,816 509,511 143,170 807,497

Disposals - written down value - (7,669) - (1,384) (48,553) (57,606)

Depreciation - (948,855) - (424,193) (58,509) (1,431,557)

Balance at the end of the year 1,668,109 24,152,915 342,618 2,544,579 186,857 28,895,078



30

9 Investment Property

2018

$

2017

$

The Vines Retirement Village (TVRV) 34,693,235 34,279,763

War Veterans Retirement Living (WVRL) 699,115 713,104

Con Crowley Village (CCV) 2,308,516 2,274,721

37,700,866 37,267,588

(a) Movements in Carrying Amount

TVRV

$

WVRL

$

CCV

$

Total

$

Year ended 30 June 2018 Balance at the beginning of the year 34,279,763 713,104 2,274,721 37,267,588

Fair value adjustments (recognised in resident loan liability) 251,416 17,078 104,547 373,041

Fair value adjustments (recognised in profit or loss) 162,056 (31,067) (70,752) 60,237

Balance at end of year 34,693,235 699,115 2,308,516 37,700,866

10 Intangible Assets

2018

$

2017

$

Computer software

Cost 255,654 255,654

Accumulated amortisation and impairment (199,742) (162,447)

55,912 93,207

Water Licences

Cost 43,344 43,344

Total Intangible Assets 99,256 136,551

(a) Movements in Carrying Amount

Computer software

$

Water Licences

$

Total

$

Year ended 30 June 2018

Balance at the beginning of the year 93,207 43,344 136,551

Amortisation (37,295) - (37,295)

Balance at the end of the year 55,912 43,344 99,256



31

11 Trade and other payables

2018

$

2017

$

CURRENT

Trade and other payables 1,002,924 707,022

Accrued expenses 770,859 565,372

Resident fees in advance 175,045 183,009

Other payables 3,000 122,790

1,951,828 1,578,193

12 Borrowings

CURRENT

Loans - unsecured 370,154 379,785

Loans - secured 1,208,327 1,167,953

Total current borrowings 1,578,481 1,547,738

NON-CURRENT

Loans - unsecured 514,584 886,230

Loans - secured 8,358,841 9,416,071

Total non-current borrowings 8,873,425 10,302,301

Loans are secured by the properties and investment property which are under loan arrangements.

13 Employee Benefits CURRENT

Long service leave 2,002,269 1,986,456

Annual leave 1,071,504 1,032,770

3,073,773 3,019,226

Non-current liabilities

Long service leave 152,292 152,292

14 Other liabilities

CURRENT

Accommodation bonds 12,977,543 11,735,892

Resident Trust 767,249 993,918

The Vines Retirement Village Resident Loan 23,772,101 23,647,349

Entry contribution 1,190,686 1,230,686

Other liabilities 360 360

38,707,939 37,608,205



14 Other liabilities

32

Resident funded loans include Accommodation Bonds paid on entry to residential aged care facilities, Resident Trust funds that the Company is holding on behalf of the residents and in-going lease premiums paid on entry to retirement living and independent living units. Subject to deductions for retentions and deferred management fees, the major proportion of the resident funded loans are repayable on exit. All resident funded loans are recognised as current liabilities in accordance with AASB 101, however historical turnover statistics indicate that only a small percentage of loans are likely to be required to be repaid within the next twelve months. The rolling nature of resident funded loans is such that the repayment of a resident funded loan is usually offset by a new resident funded ingoing loan.

15 Capital Management

Management controls the capital of the Company to ensure that adequate cash flows are generated to fund its programs and that returns from investments are maximised. The corporate committee ensures that the overall risk management strategy is in line with this objective.

The corporate committee operates under policies approved by the Board of Directors. Risk Management policies are reviewed by the Board on a regular basis.

The entity's capital consists of financial liabilities, supported by financial assets.

Management effectively manages the entity's capital by assessing the entity's financial risk and responding to changes in these risks and in the market. These responses may include the consideration of debt levels.

The gearing ratio for the year ended 30 June 2018 and 30 June 2017 are as follows:

2018

$

2017

$

Total borrowings 10,451,906 11,850,039

Total resident loans 38,707,939 37,608,205

Less cash and cash equivalent (11,479,547) (12,850,372)

Net debt 37,680,298 36,607,872 Equity 33,446,753 34,056,121

Total capital 71,127,051 70,663,993 Gearing ratio 52.98% 51.81%

16 Reserves and retained surplus

(a) General Reserve

The general reserve records funds set aside for future expansion of the Company.

(b) Financial asset reserve

Change in the fair value of available-for-sale investment are recognised in other comprehensive income - financial asset reserve. Amounts are reclassified to profit or loss on disposal of the investment or when an impairment arises.



16 Reserves and retained surplus

33

(c) Vines capital replacement fund and TVRV sinking fund reserves

The purposes of the Vines capital replacement fund and TVRV sinking fund reserves are to set aside funds to maintain the village and provide for future capital expenditure. Historically the Company has paid for capital expenditure relating to the Vines from their operating account and not reflected this reduction in their reserve balances. The adjustments of $409,505 and $1,563 were made in financial year 2017/2018 to reflect the closing balances of the capital replacement fund and sinking fund in the reserves.

17 Leasing Commitments

Operating Leases

2018

$

2017

$

Minimum lease payments under non-cancellable operating leases:

- not later than one year 9,781 12,891

- between one year and five years 20,821 10,121

30,602 23,012

Operating leases have been have been taken out for photocopy machines.

18 Key Management Personnel Disclosures

The total remuneration paid to key management personnel of the Company is $ 832,241 (2017: $ 722,979).



34

19 Financial Risk Management

The main risks Southern Cross Care (Broken Hill) Ltd is exposed to through its financial instruments are credit risk, liquidity risk and interest rate risk.

The Company's financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable, financial institution loans and other liabilities (mainly resident funded loans).

The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows:

2018

$

2017

$

Financial Assets

Cash and cash equivalents 11,479,547 12,850,372

Trade and other receivables 247,248 320,661

Available-for-sale financial assets 7,630,958 7,880,352

Other financial assets 1,550,139 -

Total financial assets 20,907,892 21,051,385

Financial Liabilities

Financial liabilities at amortised cost

Trade and other payables 1,951,828 1,578,193

Borrowings 10,451,906 11,850,039

Resident funded loans 38,707,939 37,608,205

Total financial liabilities 51,111,673 51,036,437

Net fair values

Fair value estimation

Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

Fair values derived may be based on information that is estimated or subject to judgment, where changes in assumptions may have a material impact on the amounts estimated. Areas of judgment and the assumptions have been detailed below. Where possible, valuation information used to calculate fair value is extracted from the market, with more reliable information available from markets that are actively traded. In this regard, fair values for listed securities are obtained from quoted market bid prices. Where securities are unlisted and no market quotes are available, fair value is obtained using discounted cash flow analysis and other valuation techniques commonly used by market participants.

20 Members' Guarantee

Southern Cross Care (Broken Hill) Ltd is a company limited by guarantee. In the event of, and for the purpose of winding up the company, the constitution states that each member is required to contribute a maximum of $2 each towards meeting any outstanding obligations of the Company.

At 30 June 2018 the number of members was $28 (2017: $28).



35

21 Operating Segments

Identification of reportable segments

As the company is not a not-for-profit entity, it is not required to disclose segment reporting, however for the purposes

of the Department of Health segment information had been included. The company applies the requirements of AASB 8 Operating Segments.

The company comprises of the following business segments: - Residential Aged Care – The residential care of frail older people living in residential facilities. - Other Operations – Other operations comprise of self care units, CHSP maintenance, rental properties and corporate support services.

Basis of accounting for purposes of reporting by operating segments

(a) Accounting policies adopted

Unless stated below, all amounts reported to the Board of Directors by Chief Executive Officer, being the chief operating decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of Southern Cross Care (Broken Hill) Ltd.

(b) Inter-segment transactions

An internally determined transfer price is set for all inter-entity sales. This price is reset quarterly and is based on what would be realised in the event the sale was made to an external party at arm's-length. All such transactions are eliminated on consolidation of Southern Cross Care (Broken Hill) Ltd's financial statements.

Corporate charges are allocated to reporting segments based on the segments' overall proportion of revenue generation within Southern Cross Care (Broken Hill) Ltd. The Board of Directors believes this is representative of likely consumption of head office expenditure that should be used in assessing segment performance and cost recoveries.

Inter-segment loans payable and receivable are initially recognised at the consideration received/to be received net of transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market interest rates. This policy represents a departure from that applied to the statutory financial statements.

(c) Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.




36

(d) Segment liabilities

Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to Southern Cross Care (Broken Hill) Ltd as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

The Company's service provision comprises a number of related activities which to varying degree share common assets and support services. Where necessary, statistical methods have been used to estimate segment results and assets employed.

(e) Segment information

Reisdential Aged Care Other Operations Total

2018

$

2017

$

2018

$

2017

$

2018

$

2017

$

Sales to external customers 22,696,198 22,647,713 2,472,508 3,980,945 25,168,706 26,628,658

Net Surplus from Ordinary Activities (1,099,524) 118,212 508,218 1,937,014 (591,306) 2,055,226

Segment Assets 38,533,726 39,567,971 49,250,765 48,696,102 87,784,491 88,264,073

Segment Liabilities 25,044,535 24,848,046 29,293,203 29,359,905 54,337,738 54,207,951

Capital expenditure 449,821 741,358 357,676 602,340 807,497 1,343,698

Depreciation & Amortisation 1,249,799 1,245,212 219,052 254,927 1,468,851 1,500,139




(f) Residential segment information

We have compiled the accompanying Residential Income Statement and Balance Sheet which is an extract of segment information from the Company's audited Statement of Profit or Loss and Other Comprehensive Income and audited Statement of Financial Position.

INCOME STATEMENT

2018

$

2017

$

INCOME

Care Income

Subsidies & Supplements (Commonwealth) 14,462,089 14,964,391

Residents Fees - Means Tested Fee 255,650 280,170

Residents Fees - Other - -

Total Residential Income 14,717,739 15,244,561

Accommodation Income

Subsidies & Supplements (Commonwealth) 1,776,530 1,730,808

Resident Accommodation Payments and Charges 625,107 620,575

Accommodation Bond Retention amounts 29,375 91,060

Total Residential Accommodation Income 2,431,012 2,442,443

Other Resident Fee Income

Basic Daily Fee 4,595,662 4,724,712

Additional Service Fees 73,214 -

Total Other Resident Fee Income 4,668,876 4,724,712

Financing Income

Interest Income 235,406 235,997

Total Financing Income 235,406 235,997

Other Income

Donations and Fundraising 380,810 -

Other Income 262,354 -

Total Other Income 643,164 -

TOTAL INCOME 22,696,197 22,647,713

37




2018

$

2017

$

EXPENSES

Care Expenses

Labour Costs 12,820,910 12,153,915

Other Expenses 500,108 493,640

Total Care Expenses 13,321,018 12,647,555

Accommodation Expenses

Labour Costs 602,400 482,324

Property Repairs, maintenance & replacement 439,692 468,071

Other Accommodation Expenses 748,339 579,063

Total Accommodation Expenses 1,790,431 1,529,458

Hotel Services Expenses

Contracted Services - External Service Organisations 4,081,799 3,810,345

Other Hotel Services Expenses 268,581 379,836

Total Hotel Services Expenses 4,350,380 4,190,181

Administration Expenses

Labour Costs 1,600,241 1,674,106

Other Administration Expenses 783,706 519,602

Total Administration Expenses 2,383,947 2,193,708

Capital and Financing Expenses

Depreciation 1,249,799 1,245,212

Interest Expense 273,793 310,490

Total Capital and Financing Expenses 1,523,592 1,555,702

Other Expenses

Other Expenses 426,353 412,897

Total Other Expenses 426,353 412,897

TOTAL EXPENSES 23,795,721 22,529,501

NET PROFIT/(LOSS) (1.099.524) 118,112

38




BALANCE SHEET

2018

$

2017

$

ASSETS

Current Assets

Other Current Assets 11,743,917 11,452,774

Total Current Assets 11,743,917 11,452,774

Non Current Assets

Property Plant & Equipment 26,789,809 28,115,197

Total Non Current Assets 26,789,809 28,115,197 TOTAL ASSETS 38,533,726 39,567,971

LIABILITIES

Current Liabilities

Bank Borrowings 834,315 985,207

Refundable Accommodation Deposits

Amount Due and Payable - -

Amount Payable within 12 months 1,876,000 1,936,000

Amount Payable after 12 months 11,101,543 9,799,892

Employee Benefits/Provisions 2,946,238 2,954,514

Other Current Liabilities 2,385,608 2,304,911

Total Current Liabilities 19,143,704 17,980,524

Non Current Liabilities

Bank Borrowings 5,748,539 6,715,231

Employee Benefits/Provisions 152,292 152,292

Total Non Current Liabilities 5,900,831 6,867,523

TOTAL LIABILITIES 25,044,535 24,848,047

NET ASSETS 13,489,192 14,719,924

EQUITY

Reserves 2,439,682 2,570,890

Retained Earnings

Opening Balance 12,149,034 12,030,822

Amount of Current Year NPAT Retained (1,099,524) 118,212

Closing Balance 11,049,510 12,149,034

TOTAL EQUITY 13,489,192 14,719,924

39



40

22 Contingencies

In the opinion of the Directors, the Company did not have any contingencies at 30 June 2018 (30 June 2017: None).

23 Events Occurring After the Reporting Date

The financial report was authorised for issue on 18th October 2018 by the Board of Directors.

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in future financial years.

24 Company Details

Registered office

The registered office of and principal place of business of the company is:

Southern Cross Care (Broken Hill) Ltd

238 Piper Street

BROKEN HILL NSW 2880

Southern Cross Care (Broken Hili) LtdABN 47 718 250 645

Directors' Declaration

The directors of the Company declare that:

1. The financial statements and notes, as set out on pages 14-40, are in accordance with the Australian Charities andNot -for -profits Commission Act 2012 and:

a. comply with Accounting Standards -Reduced Disclosure Requirements (and Interpretations) and the AustralianCharities and Not-for -profits Commission Regulation 2013; and

b. give a true and fair view of the financial position as at 30 June 2018 and of the performance for the year ended ont hat date of the Company.

2. In the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as andwhen they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Director ....... .....................,..,.................................Robert L. Johnson (Chairperson

Dated this 18th day of actober 2018

Director ......... .......................................................dfiam A. Hiscox (Deputy Chairperson)

41

Southern Cross Care Ltd

Independent auditor’s report to members

Report on the Audit of the Financial Statements

Opinion We have audited the financial report of Southern Cross Care Ltd (the Company), which comprises the statement of financial position as at 30 June 2018, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion the financial report of Southern Cross Care Ltd has been prepared in accordance with Division 60 of the Australian Charities and Not-for-profits Commission Act 2012, including:

a) giving a true and fair view of the Company’s financial position as at 30 June 2018 and of its financial performance for the year then ended; and

b) complying with Australian Accounting Standards – Reduced Disclosure Regime and Division 60 of the Australian Charities and Not-for-profits Commission Regulations 2013.

Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act) and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

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

Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards – Reduced Disclosure Regime and the ACNC Act 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 Company’s ability 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 Company or to cease operations, or has no realistic alternative but to do so. The Directors are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

— Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

— Obtain an understanding of internal control relevant to the audit 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 Company’s internal control.

— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

— Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion.

Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

— Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. William Buck ABN 38 280 203 274 G.W. Martinella Partner Adelaide, 18th October 2018

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