abn 85 364 219 298 annual financial report 31 december …...annual financial report 31 december...

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Schofields Flying Club Limited ABN 85 364 219 298

Annual Financial Report 31 December 2016

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Schofields Flying Club Limited Table of Contents

Directors’ Report 1

Directors’ Declaration 4

Auditor’s Independence Declaration 5

Independent Auditor’s Report 6

Statement of Profit or Loss and Other Comprehensive Income 8

Statement of Financial Position 9

Statement of Changes in Equity 10

Statement of Cash Flows 11

Notes to the Financial Statements 12

1

Schofields Flying Club Limited Directors' Report

The Directors of Schofields Flying Club Limited present their report together with the financial statements for the year ended 31 December 2016. Director Details The following persons were Directors of Schofields Flying Club Limited during or since the end of the financial year.

Paul Blackshaw (President) Airline Pilot Training Captain CFI, Grade 1, ME IFR. Private Pilot SFC Director since 2013

Steve Kastanias -LLB,MAICD (Treasurer) Associate Director, Infrastructure Advisory, Private Pilot. SFC Director Since 2014 Colin Jones - P.Eng (Secretary) Professional Engineer & IT Specialist Director experience in Medium sized associations, Private Pilot. SFC Director Since 2014 Amir Hyster (appointed May ’16) Experienced Entrepreneur in Manufacturing and Logistics Industries. Private Pilot. SFC Director since 2016

Allan Bligh - OAM Aircraft Sales & Support VP. Federation Aero Clubs Au, Director AOPA, Private Pilot. SFC Director since 2005 Francesco Peronace (Vice President) Chief Operations Officer Ace Ceramics and Skheme Pty Ltd, Private Pilot. SFC Director since 2013 Cameron Sandell Director, Engineering Operations Private Pilot SFC Director Since 2015 Scott Pringle (resigned March, 2017) Licenced Aircraft Engineer, Chief Pilot, Director/Owner Maintenance Organisation, SFC Director since 2007

Yaron Nahmias (appointed May ’16) Director OSS, Operations & Assurance, Networks, Singtel Optus Pty Limited Private Pilot SFC Director since 2016 R Smyth-King(Resigned February 2016)

G Demetriou (Resigned April 2016) Solicitor

Directors have been in office since the start of the 2016 financial year to the date of this report unless otherwise stated.

Principal Activities The principal activities of the Company during the year were unchanged from previous years. The Company provides flying training services and aircraft hire services as its core activities. Ancillary services are provided to Club members in the form of Clubhouse functions, training events, group briefings and the organisation of flyaway holidays.

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Schofields Flying Club Limited Directors' Report

Short-Term Objectives The Company’s short-term objectives are to:

• Grow the Club;

• Renew existing fleet of aircraft; and

• Provide competitive private hire rates for members.

Long-Term Objectives The Company’s long-term objectives are to:

• Acquire new aircraft for members;

• Maintain a positive financial position; and

• Ensure suitable airspace for members in view of the proposed Badgery’s Creek Airport.

Strategy for Achieving Short and Long-Term Objectives To achieve these objectives, the Group had adopted the following strategies:

• Increase flying events for members e.g. “fly away” events;

• Continue packaged flying training options;

• Continue engagement with aviation industry including AOPA, RFACA and others at YSBK;

• Continue to represent the interests of members with respect proposed airspace changes for Badgery’s

Creek Airport.

Operating results

The profit of the club after providing for income tax amounted to $274,830 (2015: profit of $67,751).

Directors’ Meetings The number of meetings of Directors (including meetings of committees of Directors) held during the year and the number of meetings attended by each Director, is as follows:

Director Number

attended Number eligible to

attend

P Blackshaw 9 13

F Peronace 9 13

C Jones 12 13

S Kastanias 6 13

A Bligh 13 13

C Sandall 9 13

S Pringle 6 13

A Hyster (appointed May ’16) 6 8

Y Nahmias (appointed May ’16) 7 8

G Demetriou (resigned Apr ‘16) 3 3

R Smyth-King (resigned Feb ‘16) 2 2

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, other than for the acts or omissions of financial services licensees.

DECLARATION OF INDEPENDENCE BY PAUL CHEESEMAN TO THE DIRECTORS OF SCHOFIELDS FLYING

CLUB LIMITED

As lead auditor of Schofields Flying Club Limited for the year ended 31 December 2016, I declare that,

to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; and

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

Paul Cheeseman

Partner

BDO East Coast Partnership

Sydney, 12 May 2017

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, other than for the acts or omissions of financial services licensees.

INDEPENDENT AUDITOR'S REPORT

To the members of Schofields Flying Club Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Schofields Flying Club Limited (the Company), which comprises

the statement of financial position as at 31 December 2016, the statement of profit and 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 directors’ declaration.

In our opinion the accompanying financial report of Schofields Flying Club Limited, is in accordance

with the Corporations Act 2001, including:

(i) Giving a true and fair view of the Company’s financial position as at 31 December 2016 and of its

financial performance for the year ended on that date; and

(ii) Complying with Australian Accounting Standards – Reduced Disclosure Requirements and the

Corporations Regulations 2001.

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

Corporations Act 2001 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 confirm that the independence declaration required by the Corporations Act 2001, which has been

given to the directors of the Company, would be in the same terms if given to the directors as at the

time of this auditor’s report.

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

for our opinion.

Other information

The directors are responsible for the other information. The other information obtained at the date of

this auditor’s report is information included in the Directors report, but does not include the financial

report and our auditor’s report thereon.

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

express any form of assurance conclusion thereon.

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

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

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

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

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

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

Responsibilities of the directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a

true and fair view in accordance with Australian Accounting Standards – Reduced Disclosure

Requirements and the Corporations Act 2001 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.

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_files/ar3.pdf.

This description forms part of our auditor’s report.

BDO East Coast Partnership

Paul Cheeseman

Partner

Sydney, 12 May 2017

Schofields Flying Club Limited Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 31 December 2016

Note 2016 2015

$ $

Revenue 1 3,935,330 3,432,786

Employee benefits expense (1,229,501) (1,160,030)

Depreciation and amortisation expenses (179,476) (117,653)

Consultancy expenses (220,022) (73,819)

Borrowing costs expense (10,929) (21,687)

Aircraft operating expenses (1,617,805) (1,603,931)

Rent expense (61,557) (46,629)

Insurance expense (47,031) (34,788)

Other expenses (294,179) (306,498)

Net profit attributable to members of the Company 274,830 67,751

Other comprehensive income for the year - -

Total comprehensive income attributable to members of the Company

274,830 67,751

The Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes set out on pages 12 to 20.

Schofields Flying Club Limited Statement Of Financial Position As at 31 December 2016

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Note

2016 2015

$ $

Current Assets

Cash and cash equivalents 281,734 248,193

Trade and other receivables 4 612,207 140,535

Prepayments 16,906 49,843

Inventories 747 1,977

Total Current Assets 911,594 440,548

Non-Current Assets

Property, plant and equipment 3 1,608,705 1,673,048

Total Non-Current Assets 1,608,705 1,673,048

Total Assets 2,520,299 2,113,596

Current liabilities

Trade and other payables 5 315,314 240,611

Deferred revenue 6 162,200 79,320

Financial liabilities 7 115,404 188,797

Employee benefits 35,260 31,213

Total Current Liabilities 628,178 539,941

Non-current liabilities

Financial liabilities 7 20,437 -

Employee benefits 38,464 15,265

Total Non-Current Liabilities 58,901 15,265

Total Liabilities 687,079 555,206

Net Assets 1,833,220 1,558,390

Equity

Asset revaluation reserves 608,589 608,589

Retained profits 1,224,631 949,801

Total Equity 1,833,220 1,558,390

The Statement of Financial Position should be read in conjunction with the accompanying notes set out on pages 12 to 20.

Schofields Flying Club Limited Statement of Changes in Equity For the Year Ended 31 December 2016

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Retained Earnings Revaluation Reserve

Total

$ $ $

Balance at 1 January 2015 882,050 608,589 1,490,639

Profit for the year 67,751 - 67,751

Other comprehensive income for the year - - -

Total other comprehensive income for the year 67,751 - 67,751

Balance at 31 December 2015 949,801 608,589 1,558,390

Profit for the year 274,830 - 274,830

Other comprehensive income for the year - - -

Total other comprehensive income for the year 274,830 - 274,830

Balance at 31 December 2016 1,224,631 608,589 1,833,220

The Statement of Changes in Equity should be read in conjunction with the accompanying notes set out on pages 12 to 20.

Schofields Flying Club Limited Statement Of Cash Flows For the Year Ended 31 December 2016

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2016 2015

$ $

Cash Flow From Operating Activities

Receipts from customers (inclusive of GST) 3,900,708 3,328,853

Payment to suppliers and employees (inclusive of GST) (3,697,772) (3,224,375)

Interest received 439 2,539

Interest paid (10,928) (21,687)

Net cash provided by operating activities 192,447 85,330

Cash Flow From Investing Activities

Payments for property, plant and equipment (105,950) (145,543)

Net cash used in investing activities (105,950) (145,543)

Cash Flow From Financing Activities

Repayment of finance leases (52,956) (54,247)

Net cash used in financing activities (52,956) (54,247)

Net change in cash and cash equivalents 33,541 (114,460)

Cash and cash equivalent at the beginning of the financial year

248,193 362,653

Cash and cash equivalent at the end of the financial year 281,734 248,193

The Statement of Cash Flows should be read in conjunction with the accompanying notes set out on pages 12 to 20.

Schofields Flying Club Limited

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Notes to the Financial Statements For the Year Ended 31 December 2016

About this report

Schofields Flying Club Limited is a company limited by guarantee, incorporated and domiciled in Australia and is a not-for-profit entity for the purposes of preparing the financial statements. The financial statements are for Schofields Flying Club Limited as a standalone legal entity. The financial statements were approved for issue by the Directors on 12 May 2017. The financial statements are general purposes financial statements which:

• Have been prepared in accordance with the requirements of the Corporations Act 2001 and Australia Accounting Standards – Reduced Disclosure Requirements of the Australia Accounting Standards Board;

• Have been prepared under the historical cost convention;

• Are presented in Australian dollars;

• Where necessary comparative information has been restated to conform with changes in presentation in the current year; and

• Adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are relevant to the operations of the Company and effective for reporting periods beginning on or after 1 January 2016.

• Have been prepared on a going concern basis.

The notes to the financial statements The notes include information which is required to understand the financial statements and is material and relevant to the operations, financial position and performance of the company. Information is considered material and relevant if, for example:

• The amount in question is significant because of its size or nature;

• It is important for understanding the results of the company;

• It helps to explain the impact of significant changes in the company’s business

• It relates to an aspect of the Company’s operations that is important to its future performance

Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements.

Critical Accounting Judgements, Estimates and Assumptions In the process of applying the company’s accounting policies, management has made a number of judgements and applied estimates of future events. Judgements and estimates that are material to the financial statements include: Estimation of useful lives of assets Note 3 Long service leave liability Note 13

Change in accounting policy – adoption of AASB 2015-2

The Company adopted AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure initiative: Amendments to AASB 101 with a date of initial application of 1 January 2016.


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Notes to the Financial Statements (continued) For the Year Ended 31 December 2016

1 Revenue and Other Income

2016 2015

$ $

Operating activities

Rendering of flight services 3,873,330 3,350,911

Sale of goods 10,376 3,670

Membership revenue 50,299 75,075

3,934,005 3,429,656

Non-operating activities

Interest 439 2,539

Sundry revenue 886 592

Total Revenue 3,935,330 3,432,786

Recognition and Measurement

Revenue is measured by reference to the fair value of consideration received or receivable by the Company for goods supplied and services provided, excluding sales taxes, rebates, and trade discounts.

Revenue is recognised when the amount of revenue can be measured reliably, collection is probable, the costs incurred or to be incurred can be measured reliably, and when the criteria for each of the Company’s different activities have been met. Details of the activity-specific recognition criteria are described below.

Rendering of Flight Services

Revenue from rendering services comprises revenue from aircraft flight services provided to customers is recognised when the services are provided. Revenue from TAFE training flights for students is recognised on the basis of stage of completion of each individual training course.

Sale of goods

Revenue from the sale of goods comprises revenue earned from the sale of goods. Sales revenue is recognised when the control of goods passes to the customer.

Membership revenue

Fees charged for care or services provided to customers and members are recognised when the service is provided.


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2 Expenses 2016 2015 $ $

Profit before income tax includes the following specific expenses

Cost of sales 2,230,490 2,445,238 Borrowing costs 10,928 21,687 Depreciation of property, plant and equipment 179,476 117,653 Bad and doubtful debts 1,321 800 Defined contribution superannuation expense 102,666 96,148 Rental expenses on operating leases - Rent 61,557 46,629 - Rates 5,516 4,832

3 Property Plant and Equipment

2016 2015

$ $

Buildings – at cost 842,599 842,599

Less accumulated depreciation (189,166) (167,841)

Total Buildings 653,433 674,758

Plant & equipment – at cost 197,765 187,900


Total Plant and equipment 79,950 87,463

Aircraft equipment – at cost 171,345 146,263


Total Aircraft equipment 90,104 77,468

Aircraft – at cost 1,508,440 1,474,163


Total Aircraft 738,071 793,701

Total Aircraft and equipment 828,175 871,169

Computer equipment – at cost 139,574 93,665


Total Computer 47,147 39,658

Total Property, Plant and Equipment 1,608,705 1,673,048


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3 Property Plant and Equipment (continued)

Reconciliations

Building

Plant and Equipment

Aircraft Equipment

Aircraft Computer Total

$ $ $ $ $ $ Balance at the beginning of year

674,758 87,463 77,468 793,701 39,658 1,673,048

Addition - 9,865 25,082 34,277 45,909 115,133

Depreciation expense

(21,325) (17,378) (12,446) (89,907) (38,420) (179,476)

Carrying amount at the end of year

653,433 79,950 90,104 738,071 47,147 1,608,705


All property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.

The depreciable amount of all fixed assets excluding aircraft frames, is depreciated using the straight line basis over their useful lives to the Company commencing from the time the asset is held ready for use. Aircraft frame depreciation is calculated on a diminishing value basis over their estimated useful lives to the Company commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Depreciation Rate Depreciation Method Buildings 2.5% Straight line Plant and equipment 10 – 40% Straight line Aircraft frames 5% Diminishing value Aircraft engines Per hours Utilisation Straight line

Property, plant and equipment residual value estimates and estimates of useful life are updated as required, but at least annually. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other income or other expenses.

Key estimate and Judgement: Estimation of Useful Lives of Assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.


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4 Trade and Other Receivables 2016 2015

$ $

Trade debtors 612,207 140,535

612,207 140,535


Trade receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial.

Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other shared credit risk characteristics.

5 Trade and Other Payables 2016 2015

$ $

Trade creditors 157,367 96,855

Accrued expenses 122,701 109,626

Deposits for gate keys 1,690 1,690

GST payable 6,869 5,753

Deposits received – HIH Insurance 26,687 26,687

315,314 240,611


These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.


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6 Deferred revenue 2016 2015

$ $

Flying fees received in advanced 116,994 79,320

TAFE revenue billed in advanced 45,206 -

162,200 79,320


Revenue for aircraft flight services is recognised as revenue as the service is performed, with unearned revenue from services to be provided in future periods deferred. Revenue from the billing of training services to TAFE is deferred until such time as the student reaches their census date.

7 Financial liabilities 2016 2015

$ $

CURRENT

Finance leases 115,404 188,797

NON CURRENT

Finance leases 20,437 -

135,841 188,797


Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the profit or loss over the period of borrowings using the effective interest method.

Borrowings are classified as non-current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

Finance Leases

The finance leases represent leases of Aircraft and a Flight Simulator. A lease asset and a lease liability are recorded at their fair value at the inception of the lease or, if lower at the present value of the minimum lease payments.

Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed.


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8 Leases 2016 2015

Operating leases $ $

Future operating lease rentals not provided for in the financial statements payable:

Within one year 57,480 58,714

One year or later and no later than five years 124,540 190,591

Later than five years - -

182,020 249,305


Leases under which the company assumes substantially all the risks and benefits incidental to the ownership of the assets but not the legal ownership are classified as finance leases. Other leases are classified as operating leases.

Operating Leases

Payments made under operating leases are expensed on a straight-line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property. Associated costs, such as maintenance and insurance, are expensed as incurred.

The club’s lease property under non-cancellable operating lease is expiring in February 2020. Property leases did not provide the club with a right of renewal of lease rentals.

9 Related Parties

There were no related parties’ transactions during the year.

Key Management Personnel Disclosures relating to key management personnel are set out in Note 10.


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10 Key Management Personnel

The following person(s) having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, are considered key management personnel (KMP).

Name Position

Joseph Pilo Chief Executive Officer

Chris Koort Chief Pilot

The totals of remuneration paid to key management personnel of the Company during the year are as

follow:

2016 2015

$ $

Payments made to Key Management Personnel 282,114 257,272

Post-employment benefits to Key Management Personnel 17,900 27,219

300,014 284,491

11 Company Details

The Club is incorporated and domiciled in Australia as a company limited by guarantee. In accordance with the Constitution of the Company, every member of the company undertakes to contribute an amount limited to $20 per member in the event of the winding up of the. As at 31 December 2016 there were 332 members.

The registered office of the Company is 60 Birch Street, Bankstown Airport, NSW 2200.

12 Contingent Liabilities

It is noted that in the prior year financial statements Schofields Flying Club had a contingent liability in relation to a Workers Compensation Claim that was made by the Company in relation to the 1988 Bicentennial Air Show. The Company had a claim against Capita in respect of an unpaid insurance claim of $27,258 in 2015. By 31 December 2015, the Company had received $26,687 as part of the total insurance claim, thus leaving the Company liable for the remaining shortfall totalling $571. At 31 December 2016 this claim has now expired and no remaining contingent liability exists.

13 Summary of Other Significant Accounting Policies

The other principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.

Receivables and payables are stated inclusive of the amount of GST. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.

Cash flows are presented in the statement of cash flow on a gross basis, except for the GST components of investing or financing activities which are disclosed as operating cash flows.


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13 Summary of Other Significant Accounting Policies (continued)

(b) 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.

(c) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

(d) Reserves

Other components of equity include the following:

Revaluation reserve — comprises gains and losses from the revaluation of buildings, property and other equipment.

(e) Employee Benefits

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 twelve (12) months after the end of the annual reporting period in which the employees render the related service. Examples of such benefits include wages, salaries and accumulating annual leave entitlement. Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the obligation is settled.

Long Service Leave

The provision for employee benefits relating to long service leave represents the present value of the estimated future cash outflows to be made resulting from employees’ services provided to reporting date. The provision is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates based on turnover history and is discounted using the market yields on national government bonds at reporting date which most closely match the terms of maturity with the expected timing of cash flows. The unwinding of the discount is treated as long service leave expense.

(f) Impairment of Assets

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs to sell and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. Impairment losses are recognised in the income statement, unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the income statement.

abn 85 364 219 298 annual financial report 31 december …...annual financial report 31 december...

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