Stone and Chalk Limited... · 2020-01-15 · key needs of every startup and scaleup. They are: 1....

Stone and Chalk Limited

ABN 29 603 489 229

Financial Report

For the year ended

30 June 2019


ABN 29 603 489 229

2 30 June 2019 Financial Statements

Contents

Chairman’s and CEO’s Report 3

Directors’ Report 8

Lead Auditor’s Independence Declaration 10

Statement of Profit or Loss and Other Comprehensive Income 11

Statement of Financial Position 12

Statement of Changes in Equity 13

Statement of Cash Flows 14

Notes to the Financial Statements 15

Directors’ Declaration 25

Independent Auditor’s Report 26


ABN 29 603 489 229


Chairman’s and Chief Executive Officer’s Report

Australian Fintech continues to increase adoption and expand globally

Fintech continues to dominate investment capital globally. According to KPMG, an incredible

USD$120Bn was invested into fintech globally in 2018 with a further USD$38Bn in the first half

of 2019.

Over $700m was invested into fintech in Australia alone in the FY 2018/2019.

Additionally, global fintech adoption continues its rapid climb. Global FinTech adoption has

reached 64% and has become mainstream. Australia’s fintech adoption increased from 37%

in 2017 to 58% in 2019, however, Australia’s rate of increase has slowed compared to other

developed markets such as Canada, Singapore and Hong Kong. In the UK for example, fintech

adoption increased from 42% in 2017 to 71% in 2019. This has meant that Australia has slipped

from 5th in 2017 to 20th despite having increased fintech adoption in real terms.

This last 12 months has seen the initial impact of the Royal Commission into Financial Services.

Many incumbent financial institutions have been impacted with legislative and regulatory

changes implemented and potentially ongoing.

In the face of the current and emerging business environment, together with our residents,

alumni and partners, we are doing all possible to address the need for balancing risk,

customer led behaviours and innovation. We are doing this by helping partners translate

their problems and provide access to resident and alumni scaleups to assist in providing

solutions.

That’s why a key focus for Stone & Chalk is to support startups to commercialise and scale

their ventures by providing access to our Impact NetworkTM. We help them gain the right skills,

experience, capabilities and opportunities at the lowest possible cost and in the fastest possible

time through partnerships with corporates and governments, our hand-picked mentors and

also through direct investment with Angels and VC’s.

All of the efforts, activities and major initiatives of Stone & Chalk are aimed at meeting the five

key needs of every startup and scaleup. They are:

1. Acquiring customers

2. Securing growth capital

3. Accessing top talent

4. Accessing affordable expertise

5. Collaborating within a carefully curated community

Stone & Chalk's fourth year of operations has been a period of evolution and tightening of

our operations and value proposition.


ABN 29 603 489 229


Over the past year our collective family has come together to achieve many significant

milestones, including:

Growing our Sydney residency base to 503 residents and over 100 startups

Growing our Melbourne residency base to 170.

Helping resident and alumni startups cumulatively raise over $420 million of funding

in just under four years since we opened in 2015.

Holding over 760 resident and public events, including hosting more than 35

international & VIP delegations

Redesigning and relaunching key initiatives such as Investor & Mentor programs for

residents, and Fintern Fever to provide internships, which has provided over 40

internships in startup for university students to date - The mentor program saw 75

founders participating in FY 19 (across 2 cohorts), matched to an active pool of over

70 mentors. Over 250 initial matches, resulting in about 100 formal mentoring

relationships lasting at least 3 months, with 60% of them ongoing, and 10% resulting

in mentors coming onboard as Investors, formal advisors or non-executive directors.

Some success stories and graduations from S&C residents and alumni:

Sydney

Flare HR (S&C founding member) graduated in February 2019

Flamingo AI (started 2016) also graduated in February 2019

Hyperanna re-joined the fold in June 2019

Data republic graduated in October 2019

Trade Ledger/ Money Place / Enosi awards at Finnies

Melbourne

In partnership with LaunchVic, the hub has become the epicentre of

accelerator activities in Melbourne as we support:

Baryamal - an Indigenous entrepreneurship platform & accelerator

Medtech Actuator - a medtech accelerator

SproutX - backed by Findex - an agricultural accelerator

Cyrise - the First Cyber security accelerator in Australia

Blockchain Centre - Australia’s leading blockchain incubator

Verrency, raised $14.6m and has over 32 employees, featured on the top

fintechs in Melbourne (top 10).

Anchor residdent MoneyPlace, was acquired by Stone & Chalk partner Liberty

Financial.

Gobbill has expanded overseas, and had incredible collaborations with

Cointree, Deloitte and more.

Daisee raised Series A funding since their inception in August 2017, Daisee has

grown to 22 employees, with offices in both S&C Sydney and Melbourne.

Revolut are London’s fastest growing scaleup and now have over 1500

employees worldwide and growing rapidly to 30-40 people in Victoria.


ABN 29 603 489 229


We are seeing a larger number of existing and new corporate partners embrace “outside-in”

innovation through collaboration with Stone & Chalk residents and alumni. We are extremely

pleased that this trend has continued with an increasing number of corporate partners piloting

and commercialising Stone & Chalk resident and alumni solutions.

It is this symbiosis of mutual benefit that S&C continually seeks to encourage, cultivate and

curate.

Examples of success stories with partners, programs and startups in programs:

2 Hackathons (CA ANZ and Bankwest)

1 Cyber Battle

3 Roundtables (Insurtech, Life Insurance and Open Banking)

5 Masterclasses (Cybersecurity, Automation, employee shares scheme,

financial services)

2 Demo Day (Regtech and DXC)

2 Resident Development Series (HSBC Chief Economist and Thomson Reuters)

S&C Academy product development beta

AICD webinar

Stone & Chalk was also selected by the Irish Government to partner with Enterprise Ireland to

act as a landing pad for Irish scaleups coming to Australia.

Additionally, Stone & Chalk was appointed by the South Australian Government as its Strategic

Innovation Partner to help South Australia lead the region in Defence, Space, Artificial

Intelligence and Cleantech.

Our corporate members choose to partner with Stone & Chalk for a range of reasons, which

means from time to time, some will move on while new partners will also join us. This year we

were very pleased to welcome new corporate partner; EFTPOS, Chartered Accountants, the

Australian Institute of Company Directors and the Royal Bank of Canada as our first overseas-

only partner.


ABN 29 603 489 229


Financial results

Statement of Profit or Loss and Other Comprehensive Income for the year ended 30

June 2019

2019

$

Revenue from desk rentals 4,414,371

Less: Operating expenses (8,463,512)

Net deficit from ordinary activities (4,049,141)

Events & programs income 390,825

Less: Events & programs expenses (122,804)

Net surplus from events & promotions 268,021

Net surplus from other income & expenses 3,342,749

Total changes in funds from non-owner related

transactions

(438,371)

It has been a strong year for S & C as we have seen one of our key priorities, generating

income from alternative revenue streams, improve our financial position and assist in

covering the revenue shortfall between desk rental and operating expenses. Enabling us to

continue to provide added value for our members.

Valued contribution from NSW and Victorian State Governments

The support of both the NSW and Victorian State Governments, financially and otherwise, has

been integral to the successful launch and development of Stone & Chalk and the support we

are able to provide towards building a leading startup ecosystem. We also welcome the South

Australian Government to the Stone & Chalk family as we now connect three startup and

scaleup ecosystems in one network which across Sydney, Melbourne and Adelaide covers

approximately 85% of Australia’s startup ecosystem.

We are grateful that all three state governments recognise the critical role that fintech will

continue to play in the modernisation of the Australian economy and for the support and

commitment to growing fintech and the startup ecosystem more broadly in Australia.

The Victorian Innovation Hub, the Sydney Startup Hub and soon Lot14 in Adelaide will play a

vital role in helping to nurture, develop and scale the high growth potential startup ecosystems

within and across all three cities. We are already seeing the benefits of having a presence in

Sydney & Melbourne as startups gain access to our national capability and Impact NetworkTM.


ABN 29 603 489 229


Directors’ report

The directors present their report together with the financial report on the company for the year

ended 30 June 2019 and the auditor’s report thereon.

Directors

The directors of the company to the date of this report are:

Andrea Gardiner (appointed 17 March 2016 and resigned 31 August 2018)

Andrea is the Founding Partner and Principal of Jelix Ventures as well as a Non-Executive Director of

Viocorp.

Anthony Eisen (appointed November 2018)

Anthony is the Chief Executive Officer and Co-founder of Afterpay Touch as well as a Non-Executive

Director of Foundation Life (NZ) Limited.

Aris Allegos (appointed November 2018)

Aris is Chief Executive Officer and Co-founder of Moula.

Caroline Trotman (appointed November 2018)

Caroline is the Chief Operative Officer and Co-founder of 1WordFlow

Craig Dunn (Chairman) (appointed 30 April 2015 and resigned November 2018)

Craig’s previous experience includes being the CEO of AMP Limited, one of Australia’s largest listed

companies, and is a Non-Executive Director on various boards.

Daniel Gilligan (appointed 23 December 2014 and resigned 30 July 2018)

Daniel is Managing Director and Co-founder of Reinventure Group.

Debra Taylor (appointed November 2018)

Debra is the Chief Operating Office and Founder of Open Sparkz as well as the COO of Pax

Technology Australia.

Ian Pollari (appointed 23 December 2014)

Ian leads the banking practice in Australia and is Co-Head of Fintech globally at KPMG.

Kylie Rixon (appointed November 2018, resigned July 2019)

Kylie is the Chief Risk Officer (Australia Division) for ANZ.

Leona Murphy (appointed 7 September 2015, appointed Chairman November 2018)

Leona was previously the Chief Strategy Officer of IAG Limited and is a Non-Executive Director on

various boards.

Richard Kimber (appointed November 2018 to fill a casual vacancy)

Richard is the Chief Executive Officer and Founder of daisee.

Ron Arnold (appointed November 2018)

Ron is the Managing General Partner of IAG Firemark Ventures.

Level 11, 1 Margaret St Sydney NSW 2000 Australia

Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

DECLARATION OF INDEPENDENCE BY TIM AMAN TO THE DIRECTORS OF STONE AND CHALK LIMITED

As lead auditor of Stone and Chalk Limited for the year ended 30 June 2019, I declare that, to the best

of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of section 60-40 of the Australian

Charities and Not-for-profit Commission Act 2012 in relation to the audit; and

2. No contraventions of any applicable code of professional conduct in relation to the audit.

Tim Aman

Partner

BDO East Coast Partnership

Sydney

31 October 2019


ABN 29 603 489 229


Statement of Profit or Loss and Other Comprehensive Income for the year ended 30

June 2019

Note 2019 2018

$ $

Revenue from desk rentals 3 4,414,371 2,771,213

Less: Operating expenses

Advertising & marketing (100,020) (35,260)

Audit fees 4 (14,000) (13,400)

Community & entertainment supplies (169,837) (136,228)

Travel & promotions (74,678) (41,623)

Insurance (39,077) (28,098)

Other operating expenses (211,090) (126,200)

Professional fees & contractors (30,671) (169,129)

Property expenses (5,066,573) (3,697,806)

Salary, wages & support function costs (2,757,284) (1,937,202)

Foreign currency gains and losses (282) (1,276)

Net deficit from ordinary activities (4,049,141) (3,415,009)

Events & programs income 3 390,825 1,233,783

Less: Events & programs expenses (122,804) (722,852)

Net surplus from events & promotions 268,021 510,931

Membership fees 3 2,194,874 2,283,649

Government grant income 637,800 318,900

Government subsidies 330,175 37,108

Interest income 18,544 14,797

Less: Building fit out costs (1,000) (78,913)

Other Income 162,356 101,136

Net surplus from other income & expenses 3,342,749 2,676,677

Loss for the year (438,371) (227,401)

Total other comprehensive - -

Comprehensive Loss for the year (438,371) (227,401)

Total changes in funds from non-owner related

transactions

(438,371)

(227,401)

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

notes to the financial statements set out on the following pages.


ABN 29 603 489 229


Statement of Financial Position as at 30 June 2019

2019 2018

Note $ $

Current Assets

Cash and cash equivalents 6 (a) 5,855,171 1,748,436

Trade & other receivables 7 412,716 362,585

Prepayments 30,988 183,089

Total current assets 6,298,875 2,294,110

Non-Current Assets

Property, plant and equipment 5 4,756,542 5,932,623

Total Non-current assets 4,756,542 5,932,623

Total assets 11,055,417 8,226,733

Current liabilities

Trade & other payables 8 684,618 555,695

Employee benefit liabilities 364,231 293,849

Other unearned income 161,386 191,940

Unearned membership income 9 620,000 712,083

Deferred government grant income 10 3,048,633 637,800

Total current liabilities 4,878,868 2,391,367

Non-Current Liabilities

Deferred government grant income 10 1,594,500 2,232,300

Provisions 11 778,404 757,834

Lease incentive liability 12 2,381,973 985,189

Total Non-current liabilities 4,754,877 3,975,323

Total liabilities 9,633,745 6,366,690

Net assets 1,421,672 1,860,043

Funds

Retained surplus 1,421,672 1,860,043

Total Funds 1,421,672 1,860,043

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

statements set out on the following pages.


ABN 29 603 489 229


Statement of Changes in Equity for the year ended 30 June 2019

2019 2018

$ $

Opening balance 1,860,043 2,087,444

Net deficit for the year (438,371) (227,401)

Comprehensive Income/(loss) for the year - -

Closing balance 1,421,672 1,860,043

The statement of changes in equity is to be read in conjunction with the notes to the financial

statements set out on the following pages.


ABN 29 603 489 229


Statement of Cash Flows for the year ended 30 June 2019

Note 2019 2018

$ $

Cash flows from operating activities

Cash receipts in the course of operations 7,100,666 5,939,783

Cash received from government grants 2,630,000 3,189,000

Cash received from government contributions - 850,400

Cash payments in the course of operations (5,474,349) (5,233,561)

Interest received 18,544 14,797

Net cash from operating activities 6 (b) 4,274,861 4,760,419

Cash flows from investing activities

Payments for plant and equipment (168,126) (6,484,699)

Net cash used in investing activities (168,126) (6,484,699)

Cash flows from financing activities

Net cash from financing activities - -

Net increase/(decrease) in cash held 4,106,735 (1,724,280)

Cash and cash equivalents at the beginning of the year 1,748,436 3,472,716

Cash and cash equivalents at end of the year 6 (a) 5,855,171 1,748,436

The statement of cash flows is to be read in conjunction with the notes to the financial statements set

out on the following pages.


ABN 29 603 489 229


Notes to the financial statements for the year ended 30 June 2019

Note 1: Report

This financial report covers Stone and Chalk Limited (the “Company”), as an individual entity. Stone

and Chalk Limited is a company limited by guarantee, incorporated and domiciled in Australia.

The address of the Company’s registered office Level 4, 126-130 Phillip Street, Sydney NSW 2000.

Note 2: Basis of preparation and significant accounting policies

(a) Statement of compliance

The directors have prepared the financial statements on the basis the Company is a non-reporting

entity because there are no users dependent upon general purpose financial statements. The financial

statements are therefore special purpose financial statements that have been prepared in order to meet

the requirements of the Australian Charities and Not-for-profit Commission Act 2012. The Company is

a not for profit entity for financial reporting purposes under Australian Accounting Standards.

The financial statements have been prepared in accordance with the mandatory Australian Accounting

Standards applicable to entities reporting under the Australian Charities and Not-for-profit Commission

Act 2012 and the significant accounting policies disclosed below, which the Directors have determined

are appropriate to meet the needs of members. Such accounting policies are consistent with the

previous period unless stated otherwise:

AASB 101 Presentation of Financial Statements

AASB 107 Statement of Cash Flows

AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors

AASB 110 Events After the End of the Reporting Period

AASB 1031 Materiality

AASB 1048 Interpretation of Standards

AASB 1054 Australian Additional Disclosures

The financial statements except for cash flow information have been prepared on an accruals basis and

are based on historical costs unless otherwise stated in the notes. Material accounting policies adopted

in the preparation of these financial statements are presented below. Amounts presented in the financial

statements have been rounded to the nearest dollar. The financial report was authorised for issue by

the directors on 31 October 2019.

(b) Revenue recognition

Revenue is recognised when it is probable that the economic benefit will flow to the Company and

the revenue can be reliably measured. Revenue is measured at the fair value of the consideration

received or receivable.

Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method

of calculating the amortised cost of a financial asset and allocating the interest income over the

relevant period using the effective interest rate, which is the rate that exactly discounts estimated

future cash receipts through the expected life of the financial asset to the net carrying amount of the

financial asset.


ABN 29 603 489 229


(b) Revenue recognition (continued)

Membership

Membership fees are recognised as revenue over the life of the membership agreement.

Government grant income

Government grant income is recognised in the statement of profit or loss and other comprehensive

income when the company obtains control of the grant and it is probable that the economic benefits

gained from the grant will flow to the company and the amount of the grant can be measured reliably.

If conditions are attached to the grant which must be satisfied, the recognition of the grant as revenue

will be deferred until those conditions are satisfied.

Government grant income provided to meet costs of an expense nature are recognised as income as

the costs are incurred.

(c) Taxation

No provision for income tax has been raised as the Company is exempt from income tax under Division

50 of the Income Tax Assessment Act 1997. GST obligations are remitted to the Australian Taxation

Office quarterly on an accruals basis.

(d) Cash and cash equivalents

Cash and cash equivalents and term deposits are carried at face value of the amounts deposited or

drawn.

Cash and cash equivalents include cash on hand, deposits held at call with banks, and other short

term highly liquid investments with maturities of three months or less.

(e) Trade and other receivables

Trade and other receivables include amounts due from customers for goods sold and services

performed in the ordinary course of business. Receivables expected to be collected within 12 months

of the end of the reporting period are classified as current assets. All other receivables are classified as

non-current assets.

Trade and other receivables are initially recognised at fair value and subsequently measured at

amortised cost using the effective interest method, less any expected credit loss.

(f) Payables

Liabilities are recognised for amounts to be paid in the future for goods or services rendered. Trade

accounts payable are normally settled within 30 days. The carrying amount of accounts payable

approximates net fair value.

(g) Employee benefits

Provision is made for the Company’s liability for employee benefits arising from services rendered by

employees to the end of the reporting period. Employee benefits that are expected to be settled

within one year have been measured at the amounts expected to be paid when the liability is settled.

In determining the liability, consideration is given to employee wage increases.


ABN 29 603 489 229


(h) Financial instruments

Non-derivative financial assets

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the Company becomes a party to the

contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair

value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and

financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss)

are added to or deducted from the fair value of the financial assets or financial liabilities, as

appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial

assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or

loss.

Classification and subsequent measurement

Financial assets that meet the following conditions are measured subsequently at amortised cost:

- Held within a business model whose objective is to hold financial assets in order to collect

contractual cash flows;

The contractual terms of the financial asset gives rise on specified dates to cash flows that are solely

payments of principal and interest on the principal amount outstanding.

Financial assets that meet the following conditions are measured subsequently at fair value through

other comprehensive income (FVTOCI):

The financial asset is held within a business model whose objective is achieved by both collecting

contractual cash flows and selling the financial assets;

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely

payments of principal and interest on the principal amount outstanding.

By default, all other financial assets are measured subsequently at fair value through profit or loss

(FVTPL).

As at 30 June 2019, the Company’s financial assets consist of cash and cash equivalents and trade and

other receivables which are measured at amortised cost in accordance with the above accounting

policy.

Non-derivative financial liabilities

Non-derivative financial liabilities are initially measured at fair value and are subsequently measured at

amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and

when the financial liability is derecognised.

As at 30 June 2019, the Company’s financial liabilities consist of trade and other payables which are

measured at amortised cost.


ABN 29 603 489 229


(h) Government grants

Government grants are not recognised until there is reasonable assurance that the Company will

comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which

the Company recognises as expenses the related costs for which the grants are intended to

compensate. Specifically, government grants whose primary condition is that the company should

purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in

the statement of financial position and transferred to profit or loss on a systematic and rational basis

over the useful lives of the related assets.

(i) Property, plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated

impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land

and properties under construction) less their residual values over their useful lives, using the straight-

line method. The estimated useful lives, residual values and depreciation method are reviewed at the

end of each reporting period, with the effect of any changes in estimate accounted for on a

prospective basis.

(j) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a

result of a past event, it is probable that the Company will be required to settle the obligation, and a

reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the

present obligation at the end of the reporting period, taking into account the risks and uncertainties

surrounding the obligation. When a provision is measured using the cash flows estimated to settle the

present obligation, its carrying amount is the present value of those cash flows (when the effect of the

time value of money is material).

(k) Operating leases

Operating lease payments are recognised as an expense on a straight-line basis over the lease term,

except where another systematic basis is more representative of the time pattern in which economic

benefits from the leased asset are consumed. Contingent rentals arising under operating leases are

recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are

recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental

expense on a straight-line basis, except where another systematic basis is more representative of the

time pattern in which economic benefits from the leased asset are consumed.

(l) Critical accounting estimates and judgements

The Directors evaluate estimates and judgements incorporated into the financial statements based on

historical knowledge and the best available current information. Estimates assume a reasonable

expectation of future events and are based on current trends and economic data, obtained both

externally and within the company.


ABN 29 603 489 229


(l) Critical accounting estimates and judgements (continued)

Key estimates: allocation of grant income to the profit or loss

The allocation of grant income is based on the estimate of costs related to that grant income

attributable to the period and those costs occurring in future periods.

Key Judgements

There were no key judgements that have a significant risk of causing a material adjustment to the

carrying amount of assets and liabilities.

(m) New and amended Standards Adopted by the Company

During the current period, the Company has adopted all of the new and revised Australian

Accounting Standards and Interpretations applicable to its operations which became mandatory. The

adoption of these revised standards have had the following impacts on the preparation of the

financial statements:

AASB 9 Financial Instruments

The Company has adopted AASB 9 from 1 July 2018. The standard introduced new classification and

measurement models for financial assets. A financial asset shall be measured at amortised cost if it is

held within a business model whose objective is to hold assets in order to collect contractual cash

flows which arise on specified dates and that are solely principal and interest. A debt investment shall

be measured at fair value through other comprehensive income if it is held within a business model

whose objective is to both hold assets in order to collect contractual cash flows which arise on

specified dates that are solely principal and interest as well as selling the asset on the basis of its fair

value.

All other financial assets are classified and measured at fair value through profit or loss unless the

entity makes an irrevocable election on initial recognition to present gains and losses on equity

instruments (that are not held-for-trading or contingent consideration recognised in a business

combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset

may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of,

or eliminate, an accounting mismatch.

For financial liabilities designated at fair value through profit or loss, the standard requires the portion

of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it

would create an accounting mismatch). New simpler hedge accounting requirements are intended to

more closely align the accounting treatment with the risk management activities of the entity.

New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance.

Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument

has increased significantly since initial recognition in which case the lifetime ECL method is adopted.

For receivables, a simplified approach to measuring expected credit losses using a lifetime expected

loss allowance is available. The adoption of AASB 9 did not have a material effect on the financial

position or performance of the Company.

(n) Functional and presentation currency

The functional and presentation currency of the Company is Australian Dollars ($).


ABN 29 603 489 229


(o) Accounting standards issued but not yet effective

Accounting Standards issued by the Australian Accounting Standards Board not yet effective and not

adopted which may materially impact on the financial statements are:

i. AASB 15 Revenue from contracts with customers and AASB 1058 Income of Not-for-Profit Entities

AASB 15 is applicable to annual reporting periods beginning on or after 1 January 2018. However, per

AASB 1058 application has been deferred by one year for not-for-profit entities. This standard will

replace the current accounting requirements applicable to revenue with a single, principles-based

model. Except for a limited number of exceptions, including leases, the new revenue model in AASB

15 will apply to all contracts with customers as well as non-monetary exchanges between entities in

the same line of business to facilitate sales to customers and potential customers. The core principle

of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or

services to customers in an amount that reflects the consideration to which the entity expects to be

entitled in exchange for the goods or services.

The main areas of impact for AASB 1058 will be when accounting for the receipt of volunteer services

and transactions where the consideration to acquire an asset is significantly less than its fair value.

The combined operation of AASB 1058 and AASB 15 will come in to affect for periods commencing

after 1 January 2019 and the Company will make more detailed assessments of the impact over the

next twelve months.

iii. AASB 16 Leases

The standard is effective for periods beginning on or after 1 January 2019.

Leases will be adopted by the Company for the financial year starting on 1 July 2019. For leases

currently classified as operating leases, under current accounting requirements the entity does not

recognise assets or liabilities, and instead spreads the lease payments on a straight-line basis over the

lease term, disclosing in its annual financial statements the total commitment. The impact of the new

standard will result in operating lease arrangements capitalised onto the statement of financial

position, with a right of use asset and corresponding financial liability recognised on transition.

The entity has material operating lease commitment as set out in Note 13 and therefore the adoption

of the standard is expected to have a material impact on the Financial Statements of the Company.

The Board will decide on the transition method it will adopt. It is noted that the application of AASB 16

will not impact the statement of cash flows. The portfolio of leases consists of property leases. For

leases with lease terms that end within 12 months from the date of transition the entity will apply the

practical expedient to account for these leases as a short-term lease. This will ensure that there is no

immediate impact to net assets on that date.

iiii. Inclusion of additional disclosures

The Company is currently estimating the effect of adoption of this standard.

At the date of this financial report, there are no other accounting standards which have been issued

which are not yet effective which could have a financial impact on the financial report of the

Company.


ABN 29 603 489 229


2019 2018

$ $

Note 3: Revenue from ordinary

activities

From operating activities

Desk revenue 4,414,371 2,771,213

Events & programs income 390,825 1,233,783

Membership fees 2,194,874 2,283,649

Total revenue 7,000,070 6,288,645

Note 4: Auditors’ remuneration

Audit services

Audit of the financial statements 14,000 13,400

14,000 13,400

Note 5: Property, Plant and Equipment

Office/computer equipment and furniture at cost 144,173 53,470

Less: accumulated depreciation (39,424) (19,511)

104,749 33,959

Melbourne premises fit out at cost

148,817 115,847

Sydney premises fit out at cost

Less: accumulated amortization

6,389,010

(1,886,034)

6,344,556

(561,739)

4,502,976 5,782,817

Net carrying amount 4,756,542 5,932,623


ABN 29 603 489 229


Note 6: Notes to the statement of cash flows

(a) Reconciliation of cash

For the purposes of the statement of cash flows, cash includes cash on hand and at bank and short term

deposits at call. Cash as at the end of the year as shown in the statement of cash flows is reconciled to

the related items in the statement of financial position as follows:

2019 2018

$ $

Cash at bank 5,748,277 1,641,543

Term deposit 106,894 106,893

Cash and cash equivalents 5,855,171 1,748,436

(b) Reconciliation of cash flow from operations with profit from ordinary activities after

income tax

Net (deficit)/surplus from ordinary activities (438,371) (227,401)

Non-cash flows in (deficit)/surplus for the year

Depreciation 1,344,208 570,075

Changes in assets and liabilities during the year

(Increase)/Decrease in trade and other receivables (50,131) (288,193)

(Increase)/Decrease in prepayments 152,101 (130,407)

Increase/(Decrease) in trade & other payables (365,195) 344,944

Increase/(Decrease) in GST payable/(asset) 494,117 (98,830)

Increase/(Decrease) in employee benefit liabilities 70,382 74,885

Increase/(Decrease) in other unearned income (30,554) 165,140

Increase/(Decrease) in unearned membership income (92,083) (262,917)

Increase/(Decrease) in deferred government grant income 1,773,033 2,870,100

Increase/(Decrease) in lease incentive liability 1,396,784 985,189

Increase/(Decrease) in provision for make good 20,570 757,834

Net cash provided by operating activities 4,274,861 4,760,419

Note 7: Trade & other receivables

Trade debtors 362,333 225,753

Accrued income - 107,625

GST receivable - 28,790

Other receivables 50,383 417

Trade & other receivables 412,716 362,585


ABN 29 603 489 229


2019 2018

$ $

Note 8: Trade & other payables

Trade creditors 109,584 374,185

Accrued expenses 44,399 69,337

Credit card liability 9,108 1,028

GST payable 494,117 -

Other payables 27,410 111,145

Trade & other payables 684,618 555,695

Note 9: Unearned membership income

Unearned membership income 620,000 712,083

Membership income received in advance represents revenue received in advance of subsequent financial

years and has therefore been deferred. This includes amounts received for which revenue recognition has

not yet been met.

Note 10: Deferred government grant income

Current Liability

Deferred government grant income 3,048,633 637,800

Non-Current Liability

Deferred government grant income 1,594,500 2,232,300

In accordance with AASB 120, government grants received by the company for leasehold fit-out costs

have been recognised in the statement of profit or loss on a systematic basis over the periods in which

the entity recognises as expenses the related costs for which the grant is intended to expense. Cash

flows from the receipt of government grants and the payments made for leasehold fit-out costs have

been presented in the statement of cash flows on a gross basis. Government grants received by the

company cover a period of 3 – 5 years.

Note 11: Provisions

Non-Current Provisions

Lease provision for make good 778,404 757,834

A provision is recognised in the statement of financial position when the Company has a present legal or

constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits

will be required to settle the obligation.


ABN 29 603 489 229


The make good provision represents the present value of the estimated costs to make good the

premises leased by the Company at the end of the respective lease terms.

Note 12: Lease Incentive Liability

Non-Current

Lease incentive liability 2,381,973 985,189

The Company leases property under non-cancellable operating leases expiring from one to five years.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss

on a straight-line basis over the term of the lease. The difference between the straight-line lease charge

and the actual lease payments are recognised as a lease incentive in the statement of financial position.

Note 13: Non-Cancellable Operating Lease Commitments

Not later than 1 year 2,671,493 1,690,170

Later than 1 year and not later than 5 years 9,094,045 12,596,557

11,765,538 14,286,727

The operating leases related to properties located at Levels 4 and 5, 11-31 York Street, Sydney and 710

Collins Street, Melbourne, with respective leases until 22 September 2022 and 30 June 2022. Minimum

lease commitments increase annually to an agreed fixed amount. There is an option to renew the

Sydney lease for a further five years. No option for further leasing exists in the lease of the Melbourne

premises. The leases for the Sydney property does not allow for subletting. The lease for the Melbourne

premises does allow for subletting with the approval of the landlord.

Note 14: Member funds

The Company is a company limited by guarantee. Accordingly there is no equity in the form of share

capital contributed by the members. In the event of winding up the Company, each member

undertakes to continue an amount not exceeding $1 to the Company to pay outstanding liabilities

and the cost of winding up.

Note 15: Events after balance date

There were no events after balance date which would have a material effect on the Company’s

financial report for the year ended 30 June 2019.

Level 11, 1 Margaret St Sydney NSW 2000 Australia

Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

INDEPENDENT AUDITOR'S REPORT

To the members of Stone and Chalk Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Stone and Chalk Limited (the registered entity), which

comprises the statement of financial position as at 30 June 2019, the statement of profit or loss and

other comprehensive income, the statement of changes in equity and the statement of cash flows for

the year then ended, and notes to the financial report, including a summary of significant accounting

policies, and the responsible entities’ declaration.

In our opinion the accompanying financial report of Stone and Chalk Limited, is in accordance with

Division 60 of the Australian Charities and Not-for-profits Commission Act 2012, including:

(i) Giving a true and fair view of the registered entity’s financial position as at 30 June 2019 and of

its financial performance for the year then ended; and

(ii) Complying with Australian Accounting Standards to the extent described in Note 2 and Division

60 of the Australian Charities and Not-for-profits Commission Regulation 2013.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under

those standards are further described in the Auditor’s responsibilities for the audit of the Financial

Report section of our report. We are independent of the registered entity 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.

Emphasis of matter – Basis of accounting

We draw attention to the notes to the financial report, which describes the basis of accounting. The

financial report has been prepared for the purpose of fulfilling the registered entity’s financial

reporting responsibilities under the ACNC Act. As a result, the financial report may not be suitable for

another purpose. Our opinion is not modified in respect of this matter.

Other information

Those charged with governance are responsible for the other information. The other information

obtained at the date of this auditor’s report is information included in the registered entity’s annual

report, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not

express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information

and, in doing so, consider whether the other information is materially inconsistent with the financial

report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information obtained prior to the date of this

auditor’s report, we conclude that there is a material misstatement of this other information, we are

required to report that fact. We have nothing to report in this regard.

Responsibilities of responsible entities for the Financial Report

The responsible entities of the registered entity are responsible for the preparation of the financial

report that gives a true and fair view and have determined that the basis of preparation described in

Note 2 to the financial report is appropriate to meet the requirements of the ACNC Act and the needs

of the members or other appropriate term. The responsible entities’ responsibility also includes such

internal control as the responsible entities determine is necessary to enable the preparation of a

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 responsible entities are responsible for assessing the registered

entity’s ability to continue as a going concern, disclosing, as applicable, matters relating to going

concern and using the going concern basis of accounting unless the responsible entities either intend to

liquidate the registered entity or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free

from material misstatement, whether due to fraud or error, and to issue an auditor’s report that

includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an

audit conducted in accordance with the Australian Auditing Standards will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material

if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the

Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:

http://www.auasb.gov.au/auditors_responsibilities/ar4.pdf

This description forms part of our auditor’s report.

BDO East Coast Partnership

Tim Aman

Partner

Sydney, 31 October 2019

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