volume 2 - university of newcastle · mba(scu), dipteach(newc.), fami, cpm member appointed by...

ANNUAL REPORT 2007VOLUME 2

CONTENTS TheUniversityofNewcastleFinancialStatements

03 TheUniversityofNewcastle–IndependentAuditReport

05 TheUniversityofNewcastle–StatementbyCouncilMembers

06 TheUniversityofNewcastle–ReportbyMembersofCouncil

11 TheUniversityofNewcastle–FinancialAccounts

GraduateSchool.comPtyLtd

57 GraduateSchool.com–IndependentAuditReport

59 GraduateSchool.com–Director’sReport

62 GraduateSchool.com–FinancialAccounts

81 GraduateSchool.com–Director’sDeclaration

82 GraduateSchool.com–Auditor’sIndependenceDeclaration

HunterUni-ClinicsPtyLtd

85 HunterUni-ClinicsPtyLtd–IndependentAuditReport

87 HunterUni-ClinicsPtyLtd–FinancialAccounts

96 HunterUni-ClinicsPtyLtd–Director’sDeclaration

CessnockUni-ClinicTrust

99 CessnockUni-ClinicTrust–IndependentAuditReport

101 CessnockUni-ClinicTrust–FinancialAccounts

116 CessnockUni-ClinicTrust–Director’sDeclaration

TUNRALtd

119 TUNRALtd–IndependentAuditReport

121 TUNRALtd–Director’sReport

124 TUNRALtd–FinancialAccounts

146 TUNRALtd–Director’sDeclaration

147 TUNRALtd–Auditor’sIndependenceDeclaration

UONFoundationLtd

151 UONFoundationLtd–IndependentAuditReport

153 UONFoundationLtd–Director’sReport

156 UONFoundationLtd–FinancialAccounts

164 UONFoundationLtd–Director’sDeclaration

165 UONFoundationLtd–Auditor’sIndependenceDeclaration

UONServicesLtd

169 UONServicesLtd–IndependentAuditReport

171 UONServicesLtd–Director’sReport

174 UONServicesLtd–FinancialAccounts

197 UONServicesLtd–Director’sDeclaration

198 UONServicesLtd–Auditor’sIndependenceDeclaration

UONSingaporePteLtd

201 UONSingaporePteLtd–IndependentAuditReport

203 UONSingaporePteLtd–FinancialAccounts

221 UONSingaporePteLtd–Director’sDeclaration

THEUNIVERSITYOFNEWCASTLEFINANCIALSTATEMENTS

ABN15736576735FinancialReportfortheyearended31December2007

ANNUALREPORT2007VOLUME2|03

04|VOLUME2ANNUALREPORT2007


THE UNIVERSITY OF NEWCASTLE STATEMENT BY COUNCIL MEMBERS The Council members state that:

1. The financial reports present a true and fair view of the financial position of the University at 31 December 2007 and the results of its operations and transactions of the University for the year then ended;

2. The financial reports have been prepared in accordance with the provisions of the New South Wales Public

Finance and Audit Act 1983, Financial Statement Guidelines for Australian Higher Education Providers for 2007 Reporting Period, Australian Equivalent International Financial Reporting Standards, consensus views of the Urgent Issues Group and other mandatory professional requirements;

3. We are not aware of any circumstances which would render any particulars included in the financial reports to

be misleading or inaccurate; 4. There are reasonable grounds to believe that the university will be able to pay its debts as and when they

become due and payable; 5. The amount of Australian Government financial assistance expended during the reporting period was for the

purpose for which it was intended and the University of Newcastle has complied with applicable legislation, contracts, agreements and programme guidelines in making expenditure.

Signed in accordance with a resolution of the members of Council made pursuant to s.16 of the University of Newcastle Act, 1989. On behalf of the Council of the University of Newcastle.

Conjoint Professor Trevor Waring AM Professor Nicholas Saunders Chancellor Vice-Chancellor and President

Dated 11 April 2008


REPORT BY THE MEMBERS OF THE COUNCIL The members of the Council present their report on the consolidated entity consisting of the University of Newcastle and the entities it controlled at the end of, or during, the year ended 31 December 2007. Members The following persons were members of the Council during the whole of the year and up to the date of this report, unless otherwise specified: The Official Members (3)

The Chancellor Professor Trevor C Waring AM BA, MSc, FAPS The Vice-Chancellor and President Professor Nicholas Saunders MD(Syd.), HonLLD(Monash), FRACP The President of the Academic Senate Professor Linda Connor BA(Hons), PhD(Syd.) Members appointed by the NSW Minister for Education and Training (6) Six external persons appointed by the Minister, from as far as practicable, the following categories (a) Persons experienced in the field of education or the arts (b) Persons experienced in technology, industry, commerce or industrial relations (c) Persons who are practising, or have practised, a profession. Ms Sharryn Brownlee Ms Crystal Condous OAM BCom, MLib(UNSW), GAICD Ms Catherine Henry BA, LLB(UNSW) Dr William Jonas AM BA(Hons), DipEd(UNSW), MA, PhD(PNG), DUniv(honoris causa) The Hon John Charles Price JP I.Eng(UK), AMI Mar.E, OFIE Aust Ms Deborah Wright MBA(SCU), DipTeach(Newc.), FAMI, CPM

Member appointed by Council (1) Mr Michael K Johns LLM(Syd.), FAICD

ANNUAL REPORT 2007 VOLUME 2 | 07

Elected Members (5) Two persons who are members of the academic staff of the University elected by members of the academic staff of the University: Professor Leonie Ashman

BSc(Hons)(Flinders), PhD(Adelaide) Mr Egbert Groen BA(ANU), LLB, MLLR(Syd.) One person who is a member of the non-academic staff of the University elected by members of the non-academic staff of the University: Ms Greta Davies BA, DipBus(Frontline Mgt)(Newc.) One person who is an undergraduate student of the University but who is not a member of the academic or non-academic staff of the University elected by the undergraduate students of the University: Ms Jarra Hicks (Term of office extended from 1 September 2007 to 31 December 2007) One person who is a postgraduate student of the University but who is not a member of the academic or non-academic staff of the University elected by the postgraduate students of the University: Mr Yuhua Shi MMktg (Term of office extended from 1 September 2007 to 31 December 2007) External persons who are members of Convocation appointed by the Council (4) Ms Dianne Allen, JP BCom(Newc.), CA MAICD Mr Peter Cockbain BScEng(Newc.), FIEAust, CPEng, FIPENZ (Appointed from 12 March 2007) Mr Neil Hatherly BSc(Hons), FAICD, FAIM, FAIMM Dr Geoff Leonard BCom, FCA, HonDBus(Ncle), FCPA


Meeting of Members The numbers of meetings of the members of the Council and of each Council committee meeting held during the year ended 31 December 2007, and the numbers of meetings attended by each member were:

Members (listed as per order above) Ordinary Meetings

Special Meetings

Audit & Risk Management Committee

Nominations & Legislation Committee #

Conjoint Professor Trevor C Waring AM 6/6 1/1 0/4 * 3/4

Professor Nicholas Saunders 6/6 1/1 2/4 * 3/4

Professor Linda Connor 6/6 1/1 Not a member 3/4

Ms Sharryn Brownlee 5/6 1/1 Not a member Not a member

Ms Crystal Condous OAM 5/6 1/1 Not a member 4/4

Ms Catherine Henry 4/6 1/1 1/4 Not a member

Dr William Jonas AM 5/6 1/1 Not a member Not a member

The Hon John Charles Price MP 5/6 0/1 3/4 Not a member

Ms Deborah Wright 4/6 1/1 Not a member Not a member

Mr Michael K Johns 6/6 1/1 3/4 3/4

Professor Leonie Ashman 4/6 1/1 Not a member Not a member

Mr Egbert Groen 5/6 0/1 Not a member Not a member

Ms Greta Davies 4/6 1/1 Not a member Not a member

Ms Jarra Hicks 4/6 1/1 Not a member Not a member

Mr Yuhua Shi 6/6 1/1 Not a member Not a member

Ms Dianne Allen 6/6 1/1 Not a member Not a member

Mr Peter Cockbain 5/5 0/0 Not a member Not a member

Mr Neil Hatherly 5/6 1/1 Not a member Not a member

Dr Geoff Leonard 4/6 1/1 4/4 Not a member

# The remuneration of the Vice-Chancellor and senior executive of the University falls within the Terms of Reference of the Nominations and Legislation Committee of Council. * The Chancellor and Vice-Chancellor are not members of the Audit and Risk Management Committee but are invited as ex-officio attendees.


Principal Activities During the year the principal continuing activities of the University consisted of:

the provision of facilities for education and research; the provision of courses of study across a range of disciplines; the conferring of degrees at Bachelor, Master and Doctoral levels as well as the awarding of other diplomas

and certificates; the encouragement, dissemination and advancement of knowledge through free enquiry; participation in public discourse; administration in support of teaching, learning and research activities; and community engagement in cultural, sporting, professional, technical and vocational services.

There were no significant changes in the nature of the activities of the University during the year. Review of Operations A review of the operations of the University of Newcastle during the year is provided in detail in the full version of the 2007 Annual Report. Changes in State of Affairs During the year there was no significant change in the state of the affairs of the University other than that referred to in the financial statements and notes following. Subsequent Events There has not been any matter or circumstance, other that referred to in the financial statements and notes following, that has arisen, significantly affected, or may significantly affect, the operations of the University, the results of those operations, or the state of affairs in future financial years. Future Developments There are no likely developments in the operations of the University and its controlled entities that were not finalised at the date of this report. Environmental Regulation The University is subject to various Commonwealth, State and local government statutes and requirements related to environmental matters. During the year there were no significant environmental regulations of the University other than that referred to in the financial statements and notes following. Insurance of Officers The University currently maintains comprehensive insurance policies in relation to Directors and Officers, Industrial Special Risk, Professional Indemnity, Public Liability, Motor Vehicle, Personal Accident (including travel), Goods in Transit and Marine. Directors' and Officers' Liability insurance covers damages (not fines and penalties) and legal expenses incurred due to a breach or alleged breach of duty, misleading statement or wrongful act by a director or officer acting in that capacity. The current level of Directors’ and Officers’ cover is $20 million. Directors' and Officers' Supplementary Legal Expenses covers legal expenses on behalf of directors, employees and organisations in defending against actions which are not covered in the standard Directors' and Officers Liability Policy, eg. prosecutions related to OH&S, EPA and some employment related matters such as harassment, discrimination or wrongful termination. The current policy provides coverage of $1 million. Statutory Liability covers penalties and defence costs arising out of an unintentional breach of legislation eg. acts relating to OH&S, environment etc. All Policies have an insurance period of 1 November 2007 to 1 November 2008. The current insurance period premium for each policy was Directors' and Officers' Liability - $20,000 (excl gst), Directors' and Officers' Supplementary Legal Expenses - $6,800 (excl gst) and Statutory Liability $6,500 (excl gst).


Legal Proceedings on behalf of the University of Newcastle The University currently has four matters which are subject to claims referred to in the financial statements and notes following. This report is made in accordance with the resolution of the members of the Council of the University of Newcastle.

Conjoint Professor Trevor Waring AM Professor Nicholas Saunders Chancellor Vice-Chancellor and President Dated 11 April 2008


The University of NewcastleIncome statement

Notes Consolidated2007 2006 2007 2006$'000 $'000 $'000 $'000

Revenue from continuing operationsAustralian Government financial assistance Australian government grants 2 177,071 164,074 177,071 164,074 HECS-HELP Australian Government payments 2 63,233 53,840 63,233 53,840 FEE-HELP 2 6,386 7,781 6,386 7,781 State and local Government financial assistance 3 1,126 986 1,126 986 HECS-HELP – Student payments 9,431 8,769 9,431 8,769 Fees and charges 4 75,307 74,807 55,051 56,616 Investment income 5 13,247 8,744 12,352 7,706 Royalties, trademarks and licenses 44 51 3,672 1,104 Consultancy and contracts 6 36,952 33,910 37,036 34,040 Other revenue 7 32,179 29,019 27,797 29,974

Total revenue from continuing operations 414,976 381,981 393,155 364,890

Share of net results of associates accounted for using the equity method 12 1,757 - -

414,988 383,738 393,155 364,890 Deferred Government Superannuation Contributions (18,966) (33,889) (18,966) (33,889)

Total revenue and income from continuing operations 396,022 349,849 374,189 331,001

Expenses from continuing operationsEmployee related expenses 8 221,385 198,371 212,184 190,409 Depreciation and amortisation 9 33,164 29,443 32,554 29,038 Repairs and maintenance 10 17,836 13,574 17,795 13,564 Finance costs 11 1,539 983 1,539 983 Impairment of assets 12 913 539 843 539 Other expenses 13 118,006 105,252 109,955 96,876

392,843 348,162 374,870 331,409 Deferred Employee Benefits for Superannuation 8 (18,966) (33,889) (18,966) (33,889)

Total expenses from continuing operations 373,877 314,273 355,904 297,520

22,145 35,576 18,285 33,481

Income tax expense 14 42 (338) - -

22,103 35,914 18,285 33,481

22,103 35,914 18,285 33,481 Operating result attributable to minority interest (22) - -

28(b) 22,103 35,936 18,285 33,481

for the Year Ended 31 December 2007

Operating result after income tax for the period

Operating result attributable to members of The University of Newcastle

Operating result before income tax

Operating result from continuing operations

Total income from continuing operations before deferred Government superannuation contributions

Total expenses from continuing operations before deferred employee benefits for superannuation

Parent Entity

The above income statement should be read in conjunction with the accompanying notes.

The University of NewcastleIncome statement


Revenue from continuing operationsAustralian Government financial assistance Australian government grants 2 177,071 164,074 177,071 164,074 HECS-HELP Australian Government payments 2 63,233 53,840 63,233 53,840 FEE-HELP 2 6,386 7,781 6,386 7,781 State and local Government financial assistance 3 1,126 986 1,126 986 HECS-HELP – Student payments 9,431 8,769 9,431 8,769 Fees and charges 4 75,307 74,807 55,051 56,616 Investment income 5 13,247 8,744 12,352 7,706 Royalties, trademarks and licenses 44 51 3,672 1,104 Consultancy and contracts 6 36,952 33,910 37,036 34,040 Other revenue 7 32,179 29,019 27,797 29,974

Total revenue from continuing operations 414,976 381,981 393,155 364,890

Share of net results of associates accounted for using the equity method 12 1,757 - -

414,988 383,738 393,155 364,890 Deferred Government Superannuation Contributions (18,966) (33,889) (18,966) (33,889)

Total revenue and income from continuing operations 396,022 349,849 374,189 331,001

Expenses from continuing operationsEmployee related expenses 8 221,385 198,371 212,184 190,409 Depreciation and amortisation 9 33,164 29,443 32,554 29,038 Repairs and maintenance 10 17,836 13,574 17,795 13,564 Finance costs 11 1,539 983 1,539 983 Impairment of assets 12 913 539 843 539 Other expenses 13 118,006 105,252 109,955 96,876

392,843 348,162 374,870 331,409 Deferred Employee Benefits for Superannuation 8 (18,966) (33,889) (18,966) (33,889)

Total expenses from continuing operations 373,877 314,273 355,904 297,520

22,145 35,576 18,285 33,481

Income tax expense 14 42 (338) - -

22,103 35,914 18,285 33,481

22,103 35,914 18,285 33,481 Operating result attributable to minority interest (22) - -

28(b) 22,103 35,936 18,285 33,481



Operating result attributable to members of The University of Newcastle



Total income from continuing operations before deferred Government superannuation contributions

Total expenses from continuing operations before deferred employee benefits for superannuation

Parent Entity



The University of NewcastleBalance sheetas at 31 December 2007

Notes Consolidated2007 2006 2007 2006

ASSETS $'000 $'000 $'000 $'000Current Assets

Cash and cash equivalents 15 28,212 47,496 21,962 42,976 Receivables 16 20,382 19,883 18,433 17,537 Inventories 17 504 491 - - Other financial assets 18 21,152 8,134 12,396 684 Other non-financial assets 19 3,266 17,143 3,830 17,507

Total Current Assets 73,516 93,147 56,621 78,704

Non-Current AssetsReceivables 16 81,342 102,132 81,340 102,131 Investments accounted for using the equity method 20 210 199 - - Property, plant & equipment 21 723,926 715,747 722,708 715,389 Intangible assets 22 19,821 2,296 19,460 1,995 Other financial assets 18 76,205 56,163 75,178 54,297 Other non-financial assets - 1 - -

Total Non-Current Assets 901,504 876,538 898,686 873,812

Total Assets 975,020 969,685 955,307 952,516

LIABILITIESCurrent Liabilities

Trade and other payables 23 25,308 26,570 23,531 24,154 Borrowings 24 2,502 2,502 2,502 2,502 Provisions 25 43,878 40,363 42,740 39,559 Other liabilities 26 15,385 12,928 8,376 5,867

Total Current Liabilities 87,073 82,363 77,149 72,082

Non-Current LiabilitiesTrade and other payables 23 938 1,010 936 1,008 Borrowings 24 18,537 21,039 18,537 21,039 Provisions 25 111,685 130,899 111,442 130,801 Other liabilities 26 - 5,000 - 5,000

Total Non-Current Liabilities 131,160 157,948 130,915 157,848

Total Liabilities 218,233 240,311 208,064 229,930

Net Assets 756,787 729,374 747,243 722,586

EquityParent entity interest Statutory Funds 27 21,857 27,901 21,857 27,901 Reserves 28 387,495 381,014 385,787 379,526 Retained surplus 28 347,435 319,962 339,599 315,159 Parent entity interest 756,787 728,877 747,243 722,586 Minority interest 29 - 497 - -

Total Equity 756,787 729,374 747,243 722,586

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

Parent Entity

The University of NewcastleBalance sheetas at 31 December 2007

Notes Consolidated2007 2006 2007 2006

ASSETS $'000 $'000 $'000 $'000Current Assets

Cash and cash equivalents 15 28,212 47,496 21,962 42,976 Receivables 16 20,382 19,883 18,433 17,537 Inventories 17 504 491 - - Other financial assets 18 21,152 8,134 12,396 684 Other non-financial assets 19 3,266 17,143 3,830 17,507

Total Current Assets 73,516 93,147 56,621 78,704

Non-Current AssetsReceivables 16 81,342 102,132 81,340 102,131 Investments accounted for using the equity method 20 210 199 - - Property, plant & equipment 21 723,926 715,747 722,708 715,389 Intangible assets 22 19,821 2,296 19,460 1,995 Other financial assets 18 76,205 56,163 75,178 54,297 Other non-financial assets - 1 - -

Total Non-Current Assets 901,504 876,538 898,686 873,812

Total Assets 975,020 969,685 955,307 952,516


Trade and other payables 23 25,308 26,570 23,531 24,154 Borrowings 24 2,502 2,502 2,502 2,502 Provisions 25 43,878 40,363 42,740 39,559 Other liabilities 26 15,385 12,928 8,376 5,867

Total Current Liabilities 87,073 82,363 77,149 72,082

Non-Current LiabilitiesTrade and other payables 23 938 1,010 936 1,008 Borrowings 24 18,537 21,039 18,537 21,039 Provisions 25 111,685 130,899 111,442 130,801 Other liabilities 26 - 5,000 - 5,000


Total Liabilities 218,233 240,311 208,064 229,930

Net Assets 756,787 729,374 747,243 722,586

EquityParent entity interest Statutory Funds 27 21,857 27,901 21,857 27,901 Reserves 28 387,495 381,014 385,787 379,526 Retained surplus 28 347,435 319,962 339,599 315,159 Parent entity interest 756,787 728,877 747,243 722,586 Minority interest 29 - 497 - -

Total Equity 756,787 729,374 747,243 722,586


Parent Entity


The University of Newcastle


Total equity at the beginning of the year 729,374 613,023 722,586 608,653

Gain on revaluation of land and buildings, net of tax 28 14,248 87,141 14,249 87,141 Issued capital - - - Exchange difference on translation of foreign operations 28 (1) (12) - Amounts recognised directly in equity (305) - 112 - Available-for-sale financial assets, net of tax 28 (7,985) (6,692) (7,988) (6,689)

Net income recognised directly in equity 5,957 80,437 6,373 80,452 Operating result for the period 22,103 35,914 18,285 33,481 Total recognised income and expense for the period 28,060 116,351 24,658 113,933

Disposal of minority interest equity (647) - -

Total equity at the end of the year 756,787 729,374 747,244 722,586

Total recognised income and expense for the year is attributable to:Members of The University of Newcastle 28,060 116,373 24,658 113,933 Minority interest (647) (22) - -

27,413 116,351 24,658 113,933

Parent Entity

Statement of changes in equityfor the Year Ended 31 December 2007

The above statement of changes in equity should be read in conjunction with the accompanying notes.

The University of Newcastle


Total equity at the beginning of the year 729,374 613,023 722,586 608,653

Gain on revaluation of land and buildings, net of tax 28 14,248 87,141 14,249 87,141 Issued capital - - - Exchange difference on translation of foreign operations 28 (1) (12) - Amounts recognised directly in equity (305) - 112 - Available-for-sale financial assets, net of tax 28 (7,985) (6,692) (7,988) (6,689)

Net income recognised directly in equity 5,957 80,437 6,373 80,452 Operating result for the period 22,103 35,914 18,285 33,481 Total recognised income and expense for the period 28,060 116,351 24,658 113,933

Disposal of minority interest equity (647) - -

Total equity at the end of the year 756,787 729,374 747,244 722,586

Total recognised income and expense for the year is attributable to:Members of The University of Newcastle 28,060 116,373 24,658 113,933 Minority interest (647) (22) - -

27,413 116,351 24,658 113,933

Parent Entity

Statement of changes in equityfor the Year Ended 31 December 2007



The University of NewcastleCash flow statementfor the Year Ended 31 December 2007


Cash flows from operating activitiesAustralian Government Grants received 2 245,636 209,471 245,636 209,471 State Government Grants received 1,126 986 1,126 986 HECS-HELP – Student payments 9,431 8,769 9,431 8,769 Receipts from student fees and other customers 139,884 125,237 117,947 108,437 Dividends received 53 1,634 5 205 Interest received 4,087 1,618 3,239 1,087 Payments to suppliers and employees (incl. GST) (354,054) (318,745) (333,445) (302,513) Interest and other costs of finance paid (1,465) (901) (1,461) (901) Income taxes paid (31) - - -

Net cash provided by/(used in) operating activities 38 44,667 28,069 42,478 25,541

Cash flows from investing activitiesProceeds from sale of property, plant and equipment 1,472 1,075 1,429 1,075 Payments for property, plant and equipment (50,042) (42,927) (49,684) (42,786) Proceeds from sale of financial assets 65,725 162,124 65,474 162,086 Payments for financial assets (79,465) (128,730) (78,059) (128,109) Payment for intellectual property (473) (327) - - Loans to related parties - (500) - (500) Repayments of loans by related parties (150) (150) (150) (150) Transfer in of cash assets acquired on transfer 1,678 - - -

Net cash provided by/(used in) investing activities (61,255) (9,435) (60,990) (8,384)

Cash flows from financing activitiesProceeds from issue of shares (185) 83 - - Proceeds from borrowings - 24,950 - 25,000 Repayment of borrowings (2,502) (1,485) (2,502) (1,460)

Net cash provided by/(used in) financing activities (2,687) 23,548 (2,502) 23,540

Net increase/(decrease) in cash and cash equivalents (19,275) 42,182 (21,014) 40,697

Cash and cash equivalents at the beginning of the financial year 47,496 5,314 42,976 2,279

Effects of exchange rate changes on cash and cash equivalents (9) - - -

15 28,212 47,496 21,962 42,976

Cash and cash equivalents at the end of the financial year

Parent Entity

The above cash flow statement should be read in conjunction with the accompanying notes.

The University of NewcastleCash flow statementfor the Year Ended 31 December 2007


Cash flows from operating activitiesAustralian Government Grants received 2 245,636 209,471 245,636 209,471 State Government Grants received 1,126 986 1,126 986 HECS-HELP – Student payments 9,431 8,769 9,431 8,769 Receipts from student fees and other customers 139,884 125,237 117,947 108,437 Dividends received 53 1,634 5 205 Interest received 4,087 1,618 3,239 1,087 Payments to suppliers and employees (incl. GST) (354,054) (318,745) (333,445) (302,513) Interest and other costs of finance paid (1,465) (901) (1,461) (901) Income taxes paid (31) - - -

Net cash provided by/(used in) operating activities 38 44,667 28,069 42,478 25,541

Cash flows from investing activitiesProceeds from sale of property, plant and equipment 1,472 1,075 1,429 1,075 Payments for property, plant and equipment (50,042) (42,927) (49,684) (42,786) Proceeds from sale of financial assets 65,725 162,124 65,474 162,086 Payments for financial assets (79,465) (128,730) (78,059) (128,109) Payment for intellectual property (473) (327) - - Loans to related parties - (500) - (500) Repayments of loans by related parties (150) (150) (150) (150) Transfer in of cash assets acquired on transfer 1,678 - - -

Net cash provided by/(used in) investing activities (61,255) (9,435) (60,990) (8,384)

Cash flows from financing activitiesProceeds from issue of shares (185) 83 - - Proceeds from borrowings - 24,950 - 25,000 Repayment of borrowings (2,502) (1,485) (2,502) (1,460)

Net cash provided by/(used in) financing activities (2,687) 23,548 (2,502) 23,540

Net increase/(decrease) in cash and cash equivalents (19,275) 42,182 (21,014) 40,697

Cash and cash equivalents at the beginning of the financial year 47,496 5,314 42,976 2,279

Effects of exchange rate changes on cash and cash equivalents (9) - - -

15 28,212 47,496 21,962 42,976


Parent Entity



The University of NewcastleContents of the Notes to the Financial Statementsfor the Year Ended 31 December 2007 Note Contents

1. Summary of significant accounting policies2.3. State and Local Government financial assistance4. Fees and charges5. Investment income6. Consultancy and contracts7. Other revenue8. Employee related expenses9. Depreciation and amortisation

10. Repairs and maintenance11. Finance costs12. Impairment of assets13. Other expenses14. Income tax15. Cash and cash equivalents16. Receivables17. Inventories18. Other financial assets19. Other non-financial assets20. Investments accounted for using the equity method21. Property, plant and equipment22. Intangible assets23. Trade and other payables24. Borrowings25. Provisions26. Other liabilities27. Statutory funds28. Reserves and retained surplus29. Minority interest30. Key management personnel disclosures31. Remuneration of auditors32. Contingencies33. Commitments34. Subsidiaries35. Investments in associates36. Interests in joint ventures37. Events occurring after the balance sheet date38.39. Financial risk management40. Superannuation commitments41. Acquittal of Commonwealth Government financial assistance

Reconciliation of operating result after income tax to net cash flows from operating activities

Australian Government financial assistance including HECS-HELP and other Australian Government loan programmes


The University of NewcastleNotes to the Financial Statementsfor the Year Ended 31 December 2007

1. SUMMARY OF ACCOUNTING POLICIES

a) Basis of preparation

Compliance with IFRSs

Historical cost convention

Critical accounting estimates

b) Principles of consolidation

Joint venture operations;

c) Foreign currency translation

i) Subsidiaries

The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying The University's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in paragraph (y) on page 22.

The financial statements and notes of The University comply with Australian Accounting Standards, some of which contain requirements specific to not-for-profit entities that are inconsistent with IFRS requirements.

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit and loss, certain classes of property, plant and equipment and investment property.

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for The University as an individual entity and the consolidated entity consisting of The University and its subsidiaries.

-assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;-income and expenses for each income statement are translated at average exchange rates;-all resulting exchange differences are recognised as a separate component of equity.

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Australian dollars, which is the University's functional and presentation currency.

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.

This financial report is a general purpose financial report which has been prepared on an accrual basis in accordance with Australian Accounting Standards, AASB Interpretations, Public Finance and Audit Act 1983, the requirements of the Department of Education, Employment and Workplace Relations (DEEWR) and other State/Australian Government legislative requirements.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income statement and balance sheet respectively.

The proportionate interests in the assets, liabilities and expenses of a joint venture operation have been incorporated in the financial statements under the appropriate headings. These contributions are immaterial and have therefore not been disclosed separately in the notes to the financial statements.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are taken to shareholders' equity. When a foreign operation is sold or any borrowings forming part of the net investment repaid, a proportionate share of such exchange differences are recognised in the income statement as part of the gain or loss on sale where applicable.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of The University of Newcastle ("parent entity") as at 31 December 2007 and the results of all subsidiaries for the year then ended. The University and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.

ii) Joint Ventures

(i) Functional and presentation currency

(ii) Group companies



1. Summary of Accounting Policies (cont'd)

d) Revenue recognition

(i) Government grants

(ii) Student fees and charges

(iii) Human resources

e) Income tax

f) Leases

g) Business combinations

Contract revenue is recognised in accordance with the percentage of completion method. The stage of completion is measured by reference to labour hours incurred to date as a percentage of estimated total labour hours for each contract. Other human resources revenue is recognised when the service is provided.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance date and are expected to apply when the related deferred income tax asset is realised or the deferred Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The purchase method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the fair value of the instruments is their published market price as at the date of exchange, unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Groups shares of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases (note 33). Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

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

The University is exempt from income tax under Commonwealth income taxation legislation. Within the consolidated entity however, there are entities that are not exempt from this legislation.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Group and specific criteria have been met for each of the Group's activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised for major business activities as follows:

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the

The University treats operating grants received from Australian Government entities as income in the year of receipt.

Fees and charges are recognised as income in the year of receipt, except to the extent that fees and charges relate to courses to be held in future periods. Such income is treated as income in advance. Conversely, fees and charges relating to debtors are recognised as revenue in the year to which the prescribed course relates.

The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.




h) Impairment of assets

i) Cash and cash equivalents

j) Trade receivables

k) Inventories

l) Investments and other financial assetsClassification

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

(ii) Loans and receivables

(iii) Held-to-maturity investments

Financial assets at fair value through profit or loss include financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other 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. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in the income statement.

For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

Work in progress is stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour, and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet.

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's management has the positive intention and ability to hold to maturity.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement within "other expenses". When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against other expense in the income statement.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are due for settlement no more than 30 days after end of month from the date of recognition.




(iv) Available-for-sale financial assets

Subsequent measurement

Fair Value

Impairment

m) Fair value estimation

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows a the current market interest rate that is available to the Group for similar financial instruments.

Regular purchases and sales of investments are recognised on 'trade-date', the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expenses in the income statement. Financial assets are derecognised when the right to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Gains or losses arising from changes in the fair value of the "financial assets at fair value through profit or loss' category are included in the income statement within other income or other expenses in the period in which they arise.

Changes in the fair value of monetary security denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes inc carrying amount are recognised in equity. Changes in the fair value of other monetary and on-monetary securities classified as available-for-sale are recognised in equity.

When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from investment securities.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These includes reference to the fair values of recent arm's length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances.

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest- rate swaps is calculated as the present value of the estimated future cash flows.

The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.




n) Property, Plant and Equipment

Buildings and infrastructure 4 - 40 yearsLibrary Collections 2 - 5 yearsPlant and equipment 3 - 10 years

Land was valued by Global Valuation Services in June 2007.Buildings and Infrastructure was valued by Global Valuation Services in June 2007.

o) Intangible assets(i) Intellectual property

(ii) Software

p) Unfunded superannuation

Expenditure on intellectual property, being the application of research findings or other knowledge to a plan or design for the production of new or substantially improved products or services before the start of commercial production or use, is capitalised if the product or service is technically and commercially feasible and adequate resources are available to complete development. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of overheads. Other intellectual property expenditure is recognised in the income statement as an expense incurred. Capitalised expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected benefit, which varies from 10 to 16 years.

Expenditure on software, being software that is not an integral part of the related hardware, is capitalised. Capitalised expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected benefit, to a maximum of 5 years.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than itsestimated recoverable amount.

Art works were revalued in 2007 by Gael Davies Independent Valuers.

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

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An arrangement exists between the Australian Government and the State Government to meet the unfunded liability for the University's beneficiaries of the State Superannuation Scheme on an emerging cost basis. This arrangement is evidenced by the State Grants (General Revenue) Amendment Act 1987, Higher Education Funding Act 1988 and subsequent amending legislation. Accordingly the unfunded liabilities have been recognised in the Balance Sheet under Provisions with a corresponding asset recognised under Receivables. The recognition of both the asset and the liability consequently does not affect the year end net asset position of the University and its controlled entities. Refer to Note 40 for further detail.

General Collection Libraries were revalued in 2000 at depreciated replacement cost by applying current year average acquisition costs to the number of titles in the collection. A revaluation is currently in progress. Tests for impairment of significant items was performed in 2007.

In accordance with the 1998 instructions issued by the Department of Education, Training and Youth Affairs (DETYA), now known as the Department of Education, Employment and Workplace Relations (DEEWR), the effects of the unfunded superannuation liabilities of The University and its controlled entities were recorded in the Income statement and the Balance sheet for the first time in 1998. Previous practice had been to disclose liabilities by way of a note to the financial statements.

The unfunded liabilities recorded in the Balance sheet under Provisions have been determined by Mitchell & Co Pty Ltd and relate to the University of Newcastle Staff Superannuation Scheme. The values of the defined benefit obligations are made on the Projected Unit Credit method. Actuarial gains or loss as recognised as income or expenses immediately.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the income statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained

Increases in the carrying amounts arising on revaluation of land, buildings and infrastructure, artworks and libraries are credited to reserves in shareholder's equity. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit and loss. Decreases that reverse previous increases of the same asset are first charged against revaluation reserves directly in equity to the extent of the remaining reserve attributable to the asset; all other decreases are charged to the income statement.

Land and Rare books are not depreciated. Depreciation of other assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows:

Land, buildings and infrastructure, artworks and libraries are shown at fair value, based on periodic valuations by external independent valuers, less subsequent depreciation. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. All motor vehicles and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Rare Books were expertly valued during 2007 by applying the standard annual rate of appreciation for rare books. Tests for impairment of significant items was performed in 2007.




q) Trade and other payables

r) Borrowings

s) Borrowing costs

t) Provisions

u) Employee benefits(i) Wages and salaries, annual leave and sick leave

(ii) Long service leave

(iii) Retirement benefit obligations

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

All employees of the Group are entitled to benefits on retirement, disability or death from the Group's superannuation plans. The Group has a defined benefit section and a defined benefit contribution section within its plan. The defined benefit section provides defined benefit lump sum benefits based on years of service and final average salary. The defined contribution section receives fixed contributions from Group companies and the Group's legal or constructive obligation is limited to these contributions. The employees of the parent entity are all members of the defined contribution section of the Group's plans.

Provisions for legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as a finance cost.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employee's services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

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

A liability or asset in respect of defined benefit superannuation plans is recognised in the balance sheet, and is measured as the present value of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses) less the fair value of the superannuation fund's assets at that date and any unrecognised past service cost. The present value of the defined benefit obligation is based on expected future payments which arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the Group's outstanding borrowings during the year, in this case 6.5-7.3% (2006: 6-6.5%)

Interest bearing liabilities are initially recognised at fair value, net of transaction costs incurred. Interest bearing liabilities are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the interest bearing liabilities using the effective interest method.

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that it is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

Interest bearing liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.




(iv) Termination benefits

v) Rounding of amounts

w) Government grants

x) Goods and services tax

y) Critical accounting estimates and judgements

z) Comparative figures

(a) the nature of the reclassification;(b) the amount of each item or class of items that is reclassified; and(c ) the reason for the reclassification.

When it is impracticable to reclassify comparative amounts, the University shall disclose;

(b) the nature of the adjustments that would have been made, if the amounts have been reclassified.(a) the reason for not reclassifying the amounts; and

Employee benefits – these benefits are independently valued by an actuary where a significant amount of judgement is required.Leases – management makes judgements in determining when substantially all the significant risks and rewards of ownership of financial assets and lease assets are transferred to other entities.

Contributions to the defined contribution fund are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the Australian Taxation Office, are presented as operating cash flows.

Grants from the government are recognised at their fair value where the entity obtains control of the right to receive the grant, it is likely that economic benefits will flow to the entity and it can be reliably measured.

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance date are discounted to present value.

Where the presentation or reclassification of items in the financial report is amended, comparable amounts shall be reclassified unless reclassification is impracticable. When comparable amounts are reclassified, the University shall disclose:

Revenues, expenses, assets and certain liabilities 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 receivable or payable. The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included with other receivables or payables in the balance sheet.

Amounts in the financial report have been rounded off in accordance with the Public Finance and Audit Regulation 2005 to the nearest thousand dollars, or in certain cases, the nearest dollar.

The University makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Past service costs are recognised immediately in income, unless the changes to the superannuation fund are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past service costs are amortised on a straight-line basis over the vesting period.

Financial assets – managements makes judgements in determining whether assets are classified as available-for-sale, held-to-maturity or




aa) Capital Management

ab) New Accounting Standards and Interpretations

(i) AASB123 Borrowing Costs - Revised (1 January 2009) (ii) AASB2007-6 Amendments to Australian Accounting Standards (1 January 2009) (iii) AASB2007-7 Amendments to Australian Accounting Standards (1 January 2009) (iv) AASB2007-8 Amendments to Australian Accounting Standards (1 January 2009)

Interaction

The University's aim to achieve the most optimal financial outcome through active management of its limited capital resources. With its financial investments, the University's strategy is to achieve returns of approximately 4% above the prevailing rate of inflation as measured by the Consumer Price Index. Capital expenditure requirements for property, plant and equipment are subject to long term planning, prioritisation and the availability of sufficient resources.

(a) The University did not early adopt any new accounting standards.

In 2006 the University entered into a 10 year, $25 million financing agreement with Westpac Bank to provide additional resources to support its capital expenditure program. The financing agreement contains a number of covenants which the University monitors compliance with on a regular basis. At 31 December 2007 the outstanding balance of the financing arrangement was $21.039 million (see N 24 )

(b) The following new Accounting Standards have not been adopted and are not yet effective:

The University has assessed the impact of these new standards and Interpretations and considers the impact to be insignificant.

(v) Interpretation 14 AASB 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their



2.GOVERNMENT LOAN PROGRAMMES

Consolidated2007 2006 2007 2006

Notes $'000 $'000 $'000 $'000(a) Commonwealth Grants Scheme & Other Grants 41.1Commonwealth Grants Scheme# 118,006 107,776 118,006 107,776 Indigenous Support Fund 1,721 1,549 1,721 1,549 Equity Support Programme 438 571 438 356 Disability Support Programmes 210 - 210 215 Workplace Reform Programme 1,499 1,382 1,499 1,382 Workplace Productivity Programme 3,570 2,881 3,570 2,881 Learning & Teaching Performance Fund 500 - 500 - Capital Development Pool 902 1,491 902 1,491 Total Commonwealth Grants Scheme & Other Grants 126,846 115,650 126,846 115,650

(b) Higher Education Loan Programmes 41.2HECS-HELP 63,233 53,840 63,233 53,840 FEE-HELP 6,386 7,781 6,386 7,781 Total Higher Education Loan Programmes 69,619 61,621 69,619 61,621

(c) Scholarships 41.3Australian Postgraduate Awards 2,268 2,164 2,268 2,164 International Postgraduate Research Scholarships 419 375 419 375 Commonwealth Education Costs Scholarships 1,594 1,063 1,594 1,063 Commonwealth Accommodation Scholarships 2,061 1,544 2,061 1,544 Indigenous Scholarships 1 33 1 33 Total Scholarships 6,343 5,179 6,343 5,179

(d) DEEWR – Research 41.4Institutional Grants Scheme 7,587 7,023 7,587 7,023 Research Training Scheme 13,226 12,882 13,226 12,882 Research Infrastructure Block Grants 5,323 5,080 5,323 5,080 Regional Protection Scheme 590 838 590 838 Implementation Assistance Programme 61 - 61 - Australian Scheme for Higher Education Repositories 119 - 119 - Commercialisation Training Scheme 128 - 128 - Total DEEWR – Research Grants 27,034 25,823 27,034 25,823 Total DEEWR 229,842 208,273 229,842 208,273

(e) Voluntary Student Unionism 41.5 VSU Transition Fund 2,600 - 2,600 -

Total VSU 2,600 - 2,600 -

(f) Australian Research Council 41.6(f) (i) Discovery 41.6(a)

Projects 7,118 8,085 7,118 8,085 Fellowships 323 632 323 632 Indigenous Researchers Development 57 10 57 10 Total Discovery 7,498 8,727 7,498 8,727

(f) (ii) Linkages 41.6(b)Special Research Initiatives - 50 - 50

Infrastructure 400 2,013 400 2,013 International 12 210 12 210 Projects 2,418 2,582 2,418 2,582 Total – Linkages 2,830 4,855 2,830 4,855

(f) (iii) Networks and Centres 41.6(c)Centres 3,920 3,840 3,920 3,840 Total Networks and Centres 3,920 3,840 3,920 3,840 Total Australian Research Council 14,248 17,422 14,248 17,422 Total Australian Government financial assistance 246,690 225,695 246,690 225,695

AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE INCLUDING HECS-HELP AND OTHER AUSTRALIAN

# Includes the basic CGS grant amount. CGS - Regional Loading and CGS - Enabling Loading

Parent Entity



2.GOVERNMENT LOAN PROGRAMMES

Consolidated2007 2006 2007 2006$'000 $'000 $'000 $'000

ReconciliationAustralian Government grants 177,071 164,074 177,071 164,074 HECS-HELP – Australian Government payments 63,233 53,840 63,233 53,840 Other Australian Government loan programmes 6,386 7,781 6,386 7,781 Total Australian Government financial assistance 246,690 225,695 246,690 225,695

(g) Australian Government Grants received – cash basisCGS and Other DEEWR Grants 123,641 98,650 123,641 98,650 Higher Education Loan Programmes 71,772 62,396 71,772 62,396 Scholarships 6,342 5,179 6,342 5,179 DEEWR research 27,036 25,824 27,036 25,824 Voluntary Student Unionism 2,600 - 2,600 - ARC grants – Discovery 7,498 8,727 7,498 8,727 ARC grants – Linkages 2,830 4,855 2,830 4,855 ARC grants – Networks and centres 3,918 3,840 3,918 3,840 Other Australian Government Grants - - - - Total Australian Government Grants received – cash basis 245,637 209,471 245,637 209,471 OS-Help (Net) - - - - Total Australian Government funding received – cash basis 245,637 209,471 245,637 209,471

3. STATE AND LOCAL GOVERNMENT FINANCIAL ASSISTANCE

Grant for non-tertiary music activity – Newcastle Conservatorium of Music 1,126 986 1,126 986 Total state and local government financial assistance 1,126 986 1,126 986

4. FEES AND CHARGES

Course fees and chargesFee-paying overseas students 40,693 37,170 37,848 35,809 Continuing education;Fee-paying domestic postgraduate students 2,135 2,661 2,135 2,661 Fee-paying domestic undergraduate students 1,682 1,546 1,682 1,546 Fee-paying domestic non-award students 148 204 148 204 Other domestic course fees and charges: Fee-paying on-line students 7,309 4,945 - - Course & conference fees 12,177 13,304 1,742 1,419 Course materials 360 793 693 793 Total course fees and charges 64,504 60,623 44,248 42,432

Other non-course fees and chargesGeneral service charge - 3,437 - 3,437 Library fines 286 272 286 272 Music tuition 755 762 755 762 Parking fees 1,485 1,394 1,485 1,394 Rental charge 769 994 769 994 Student accommodation 6,540 6,269 6,540 6,269 Other fees and charges 968 1,056 968 1,056 Total other fees and charges 10,803 14,184 10,803 14,184 Total fees and charges 75,307 74,807 55,051 56,616

Parent Entity

AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE INCLUDING HECS-HELP AND OTHER AUSTRALIAN



5. INVESTMENT INCOME

2007 2006 2007 2006$'000 $'000 $'000 $'000

Dividends received 643 394 7 6 Distributions received 12,604 8,350 12,345 7,700 Total investment income 13,247 8,744 12,352 7,706

6. CONSULTANCY AND CONTRACTS

Consultancy 697 1,113 697 1,243 Contract research – National Health & Medical Research Centre 8,456 8,424 8,456 8,424 – Hunter Medical Research Institute 2,402 2,169 2,402 2,169 – Co-operative research centres 1,101 1,957 1,101 1,957 – Industry research 7,491 5,522 7,491 5,522 Other contract revenue 16,805 14,725 16,889 14,725 Total consultancy and contracts 36,952 33,910 37,036 34,040

7. OTHER REVENUECost recoveries 5,919 5,160 5,919 5,160 Donations and bequests 1,538 1,274 2,053 2,030 Insurance recoveries 375 451 375 451 Non-government grants 7,447 4,321 7,397 4,111 Sale of equipment 26 40 26 40 Sale of financial investments 3,818 10,637 3,818 10,637 Scholarships and prizes 659 421 659 421 Sponsorship 1,924 1,471 1,924 1,471 TAFE reimbursement 2,764 1,131 2,764 2,737 Other 7,709 4,113 2,862 2,916 Total other revenue 32,179 29,019 27,797 29,974

8. EMPLOYEE RELATED EXPENSES

AcademicSalaries 81,143 71,790 79,919 71,072 Contribution to superannuation and pension schemes: - Emerging cost 110 313 110 298 Funded 12,486 12,234 12,443 12,188 Payroll tax 5,959 5,441 5,932 5,411 Workers' compensation 558 427 553 422 Long service leave expense 2,988 2,452 2,988 2,449 Annual leave 6,510 5,758 6,510 5,751 Other: - Maternity leave 593 412 593 412 Fixed-term contract separation payment 382 18 382 18 Voluntary separation payments 1 880 1 880 Total academic 110,730 99,725 109,431 98,901

Parent Entity Consolidated



8. EMPLOYEE RELATED EXPENSES (cont'd) Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

Non-academicSalaries 80,852 70,501 74,585 65,078 Contribution to superannuation and pension schemes: - Emerging cost 103 343 103 339 Funded 11,569 10,315 10,709 9,574 Payroll tax 5,986 5,425 5,663 4,954 Workers' compensation 534 400 526 386 Long service leave expense 2,947 2,517 2,912 2,410 Annual leave 6,770 6,245 6,361 5,867 Other: - Maternity leave 565 397 565 397 Fixed-term contract separation payment - 18 - 18 Voluntary separation payments 1,329 2,485 1,329 2,485 Total non-academic 110,655 98,646 102,753 91,508 Total employee related expenses 221,385 198,371 212,184 190,409

Deferred government employee benefits for superannuation (18,966) (33,889) (18,966) (33,889)

Total employee related expenses, including deferred government employee benefits for superannuation 202,419 164,482 193,218 156,520

9. DEPRECIATION AND AMORTISATIONDepreciationBuildings 17,168 15,793 17,168 15,793 Infrastructure 2,998 2,628 2,998 2,628 Plant & Equipment 8,928 7,096 8,698 7,001 Motor Vehicles 465 545 443 523 Library resources 2,288 2,344 2,288 2,344 Total depreciation 31,847 28,406 31,595 28,289

AmortisationIntangibles 1,317 1,037 959 749 Total amortisation 1,317 1,037 959 749 Total depreciation and amortisation 33,164 29,443 32,554 29,038

10. REPAIRS AND MAINTENANCE

Buildings 6,190 5,099 6,190 5,099 Cleaning 5,023 3,794 5,023 3,794 Repairs and maintenance – general 6,623 4,681 6,582 4,671 Total repairs and maintenance 17,836 13,574 17,795 13,564

11. FINANCE COSTS

Finance costs 1,539 983 1,539 983 Total borrowing costs expensed 1,539 983 1,539 983

12. IMPAIRMENT OF ASSETS

Bad debts 719 789 719 789 Doubtful debts 124 (250) 124 (250) Leasehold improvements 70 - - - Total impairment of assets 913 539 843 539

Parent Entity



13. OTHER EXPENSES Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

Advertising, marketing & promotional expenses 3,334 2,406 2,780 2,122 General consumables 18,531 17,308 18,174 17,041 GSC Payments 80 3,475 80 3,475 Insurances 1,278 1,317 1,275 1,317 Net diminution in value of non-current assets - (233) Net loss on disposal of property, plant & equipment* 401 308 372 308 Non-capitalised equipment 6,658 5,783 6,619 5,751 Operating lease rental expenses 2,753 1,369 2,699 1,369 Professional services 25,802 25,225 22,283 19,232 Scholarships, grants & prizes 25,782 23,737 25,768 23,730 Telecommunications 3,155 2,442 3,149 2,432 Travel, staff development & entertainment 14,383 12,267 14,312 12,207 Utilities 3,793 3,336 3,637 3,332 Other expenses 12,056 6,512 8,807 4,560 Total other expenses 118,006 105,252 109,955 96,876

*Net loss on disposal of property, plant and equipment

14. INCOME TAX

(a) Income tax expenseCurrent tax 29 36 - - Deferred tax 13 4 - - Adjustments for current tax of prior periods - (378) - -

42 (338) - - Income tax expense is attributable to:Operating result from continuing operations 42 (338) - - Aggregate income tax expense 42 (338) - -

Deferred income tax (revenue) expense includedin income tax expense comprises: - Decrease (increase) in deferred tax assets 42 (338) - -

42 (338) - -

(b) Numerical reconciliation of income tax expense to prima facie tax payableOperating result from continuing operations before income tax expense

(49) 1,414 - -

Tax at the Australian tax rate of 30% (2006 – 30%) (15) 424 - -

Tax effect of amounts which are not deductible (taxable) in calculating taxable income:Sundry items 57 (388) - -

42 36 - -

Adjustments for current tax of prior periods (374) - - Difference in overseas tax ratesPrior year tax losses not recognised now recouped - - Income tax expense 42 (338) - -

The consolidated net gain on disposal of property, plant and equipment in 2007 includes a gain of $NIL on sale of buildings.

Parent Entity



15. CASH AND CASH EQUIVALENTS Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

Cash at bank and on hand 28,212 47,496 21,962 42,976 Total cash and cash equivalents 28,212 47,496 21,962 42,976

a) Reconciliation to cash at the end of the yearThe above figures are reconciled to cash at the end of the year as shown in the of cash flow statement as follows:

Balance as above 28,212 47,496 21,962 42,976 Deposits held at banks - - - - Less: Bank overdrafts - - - - Balance per cash flow statement 28,212 47,496 21,962 42,976

b) Cash at bank and on hand

c) Deposits at call

16. RECEIVABLES Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

CurrentStudent fees 9,709 10,049 8,294 8,188 Less: Provision for impaired receivables (947) (693) (833) (538) Loan – Newcastle University Sport Ltd 200 200 200 200 Advances and prepayments 5,252 5,322 5,252 4,910 Other receivables 6,168 5,005 5,520 4,777 Total current receivables 20,382 19,883 18,433 17,537

Non-currentDeferred government contribution for superannuation 74,493 93,460 74,493 93,460 Prepaid superannuation contributions – SASS 5,598 4,999 5,598 4,999 Loan – Newcastle University Sport Ltd 1,251 3,673 1,249 3,672 Total non-current receivables 81,342 102,132 81,340 102,131 Total receivables 101,724 122,015 99,773 119,668

(a) Impaired receivables

The ageing of these receivables is as follows: Consolidated2007 2006$'000 $'000

3 to 6 months 293 - Over 6 months 654 693

947 693

Parent Entity

Parent Entity

Cash on hand is non-interest bearing

Cash at bank is interest bearing with the floating rates being determined by the daily balance of funds held in the account. This was 5.15% on average for 2007 (2006: 4.75%)

As at 31 December 2007 current receivables of the group with a nominal value of $947,000 (2006: $693,000) were impaired. The amount of the provision was $947,000 (2006: $693,000). The individually impaired receivables mainly relate to student fees and it was assessed that no portion of the receivable is expected to be recovered.



16. RECEIVABLES (cont'd)

Consolidated2007 2006$'000 $'000

3 to 6 months 650 812 Over 6 months 2,698 1,460

3,348 2,272

Movements in the provision for impaired receivables are as follows: Consolidated

2007 2006$'000 $'000

At 1 January 693 823 Provision for impairment recognised during the year 506 671 Receivables written off during the year as uncollectible (252) (801)

947 693

17. INVENTORIES Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

CurrentWork in progress 504 491 - - Total Inventories 504 491 - -

18. OTHER FINANCIAL ASSETS Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

CurrentAvailable for sale 12,312 684 12,396 684 Held-to-maturity 8,840 7,450 - - Loans and receivables - - - - Total current other financial assets 21,152 8,134 12,396 684

Non-currentAvailable for sale 76,180 56,138 75,178 54,297 Held-to-maturity 25 25 - - Loans and receivables - - - - Total non-current other financial assets 76,205 56,163 75,178 54,297 Total other financial assets 97,357 64,297 87,574 54,981

a) Held-to-maturity assets

Impairment and risk exposure

b) Derivative financial assets

As at reporting date, 31 December 2007, the fair value of the swap agreement was $817,113.25 in favour of the University.

The University of Newcastle entered into an unsecured financing arrangement with Westpac Bank by way of a Business Financing Agreement dated 25 November 2005. The financing agreement comprises three separate tranches, each of $25m. The University drew down the first tranche on 1 June 2006 and entered into a swap agreement at the same date. The interest rate charged is the BBSY rate plus a margin of 11 basis points.

Parent Entity

Parent Entity

Both the swap agreement and the business finance agreement provide for monthly reset dates for determining the interest rates to be used in calculating the interest payable under both agreements. The impact of the swap agreement is to ensure that the cost of borrowing $25m remains at 6.27% over the term of the loan, which is for a maximum of ten years.

Held-to-maturity assets consist of interest bearing term deposits.

The maximum exposure to credit risk at the reporting date is the carrying amount of the assets.None of the held-to-maturity assets are either past due or impaired.

As of 31 December 2007, trade receivables of $3,364,000 (2006: $3,775,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these receivables is as follows:



19. OTHER NON-FINANCIAL ASSETS Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

CurrentAccrued income 3,266 17,143 3,830 17,507 Total current other non financial assets 3,266 17,143 3,830 17,507

Non-currentFair value through profit or loss (incl. held for trading) - 1 - - Total non-current other non-financial assets - 1 - - Total other non-financial assets 3,266 17,144 3,830 17,507

20. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Consolidated2007 2006 2007 2006$'000 $'000 $'000 $'000

Shares in associates 35 210 199 - - Total investments accounted for using the equity method 210 199 - -

a) Shares in associates

Parent Entity

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting and are carried at cost by the parent entity (see note 35).

Parent Entity



21. PROPERTY, PLANT AND EQUIPMENT

Buildings & Equipment & Artworks &

Land Infrastructure Motor Vehicles Libraries Total

21.(a) CONSOLIDATED $’000 $’000 $’000 $’000 $’000

At 1 January 2006-Cost - - 67,131 3 67,134 -Valuation 30,550 558,653 - 25,892 615,095 Accumulated Depreciation - (28,071) (33,380) (12,693) (74,144) Net book amount 30,550 530,582 33,751 13,202 608,085

Year ended 31 December 2006Opening net book amount 30,550 530,582 33,751 13,202 608,085 Revaluation surplus 3,640 83,121 - 379 87,140 Additions - 11,668 16,153 214 28,035 Assets included in a disposal group classified as held for sale and other disposals - - (127) - (127) Depreciation charge - (18,421) (7,638) (2,345) (28,404) Closing net book amount 34,190 606,950 42,139 11,450 694,729

At 31 December 2006-Cost - - 82,384 18,315 100,699 -Valuation 34,190 606,975 - 8,172 649,337 Accumulated Depreciation - (25) (40,244) (15,038) (55,307) Net book amount 34,190 606,950 42,140 11,449 694,729

Buildings & Equipment & Artworks &

Land Infrastructure Motor Vehicles Libraries Total

21.(a) CONSOLIDATED $’000 $’000 $’000 $’000 $’000

Year ended 31 December 2007Opening net book amount 34,190 606,950 42,140 11,449 694,729 Revaluation surplus 566 10,032 - 3,651 14,249 Additions 400 14,827 19,990 955 36,172 Transfer to Intangibles - - (70) - (70) Assets included in a disposal group classified as held for sale and other disposals - - (1,872) - (1,872) Depreciation charge - (20,165) (9,395) (2,288) (31,848) Closing net book amount 35,156 611,644 50,793 13,767 711,360

At 31 December 2007-Cost - 25 98,547 19,187 117,759 -Valuation 35,156 617,648 883 11,906 665,593 Accumulated Depreciation - (6,029) (48,637) (17,326) (71,992) Net book amount 35,156 611,644 50,793 13,767 711,360



Freehold Freehold Plant &

Land Buildings Equipment Library Total

21.(a) PARENT ENTITY $’000 $’000 $’000 $’000 $’000

At 1 January 2006-Cost - - 66,127 - 66,127 -Valuation 30,550 558,653 - 25,895 615,098 Accumulated Depreciation - (28,071) (32,760) (12,693) (73,524) Net book amount 30,550 530,582 33,367 13,202 607,701

Year ended 31 December 2006Opening net book amount 30,550 530,582 33,367 13,202 607,701 Revaluation surplus 3,640 83,121 - 379 87,140 Additions - 11,668 15,937 214 27,819 Assets included in a disposal group classified as held for sale and other disposals - - - - - Depreciation charge - (18,421) (7,523) (2,345) (28,289) Closing net book amount 34,190 606,950 41,781 11,450 694,371

At 31 December 2006-Cost - - 81,345 18,315 99,660 -Valuation 34,190 606,975 - 8,172 649,337 Accumulated Depreciation - (25) (39,563) (15,038) (54,626) Net book amount 34,190 606,950 41,782 11,449 694,371



21.(a) PARENT ENTITY $’000 $’000 $’000 $’000 $’000

Year ended 31 December 2007Opening net book amount 34,190 606,950 41,782 11,449 694,371 Revaluation surplus 566 10,032 - 3,651 14,249 Additions 400 14,827 18,735 955 34,917 Assets included in a disposal group classified as held for sale and other disposals - - (1,801) - (1,801) Depreciation charge - (20,165) (9,141) (2,288) (31,594) Closing net book amount 35,156 611,644 49,575 13,767 710,142

At 31 December 2007-Cost - 25 97,280 19,187 116,492 -Valuation 35,156 617,647 - 11,906 664,709 Accumulated Depreciation - (6,028) (47,705) (17,326) (71,059) Net book amount 35,156 611,644 49,575 13,767 710,142

21.(b) WORK IN PROGRESS Freehold Freehold Plant &


$’000 $’000 $’000 $’000 $’000Year ended 31 December 2006Carrying amount at 1 January 2006 - 1,431 1,618 - 3,049 Additions/(Transfers) - 1,890 16,079 - 17,969 Carrying amount at 31 December 2006 - 3,321 17,697 - 21,018



$’000 $’000 $’000 $’000 $’000Year ended 31 December 2007Carrying amount at 1 January 2007 - 3,321 17,697 - 21,018 Additions/(Transfers) - (705) (7,747) - (8,452) Carrying amount at 31 December 2007 - 2,616 9,950 - 12,566



21.(c) TOTAL PROPERTY, PLANT AND EQUIPMENT Consolidated2007 2006 2007 2006$'000 $'000 $'000 $'000

Property, plant and equipment 711,360 694,729 710,143 694,371 Work in progress 12,566 21,018 12,565 21,018 Total property, plant and equipment 723,926 715,747 722,708 715,389

(a) Valuations of land and buildings

22. INTANGIBLE ASSETS

CONSOLIDATED Intellectual

Property Software Total

$’000 $’000 $’000At 1 January 2006Cost 1,908 5,581 7,489 Accumulated amortisation and impairment (1,646) (4,436) (6,082) Net book amount 262 1,145 1,407

Year ended 31 December 2006Opening net book amount 262 1,145 1,407 Additions 327 1,577 1,904 WIP - 21 21 Amortisation charge (288) (748) (1,036) Closing net book amount 301 1,995 2,296

At 31 December 2006Cost 1,647 7,179 8,826 Accumulated amortisation and impairment (1,346) (5,184) (6,530) Net book amount 301 1,995 2,296

Year ended 31 December 2007Opening net book amount 301 1,995 2,296 Additions 473 15,219 15,692 WIP - 3,205 3,205 Disposals (55) - (55) Amortisation charge (358) (959) (1,317) Closing net book amount 361 19,460 19,821

At 31 December 2007Cost 2,707 25,603 28,310 Accumulated amortisation and impairment (2,346) (6,143) (8,489) Net book amount 361 19,460 19,821

Parent Entity

The University's land and buildings were revalued at 30 June 2007 by independent valuers. Valuations were made on the basis of open market value. The revaluation surplus net of applicable deferred income taxes was credited to an asset revaluation reserve in equity.



22. INTANGIBLE ASSETS (cont'd)

PARENT Intellectual

Property Software Total

$’000 $’000 $’000At 1 January 2006Cost - 5,581 5,581 Accumulated amortisation and impairment - (4,436) (4,436) Net book amount - 1,145 1,145

Year ended 31 December 2006Opening net book amount - 1,145 1,145 Additions - 1,577 1,577 Impairment charge - 21 21 Amortisation charge - (748) (748) Closing net book amount - 1,995 1,995

At 31 December 2006Cost - 7,179 7,179 Accumulated amortisation and impairment - (5,184) (5,184) Net book amount - 1,995 1,995

Year ended 31 December 2007Opening net book amount - 1,995 1,995 Additions - 15,219 15,219 WIP - 3,205 3,205 Amortisation charge - (959) (959) Closing net book amount - 19,460 19,460

At 31 December 2007Cost - 25,603 25,603 Accumulated amortisation and impairment - (6,143) (6,143) Net book amount - 19,460 19,460

23. TRADE AND OTHER PAYABLES Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

CurrentTrade creditors 4,945 5,159 3,882 4,119 Accrued expenses 12,858 13,969 13,205 13,327 Property 150 150 150 150 Credit card liability 1,710 1,667 1,710 1,667 Payroll tax 6 4 - - Superannuation 1,630 1,643 1,661 1,637 PAYG tax 1,561 1,839 1,492 1,794 Workers compensation premium (63) (5) (63) (16) OS-HELP liability to Australian Government 88 2 88 2 Other current payables 2,423 2,142 1,406 1,474 Total current trade and other payables 25,308 26,570 23,531 24,154

Non-currentProperty 938 1,010 936 1,008 Total non-current trade and other payables 938 1,010 936 1,008 Total trade and other payables 26,246 27,580 24,467 25,162

Parent Entity



24. BORROWINGS Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

CurrentUnsecured

Unsecured Westpac loan 2,502 2,502 2,502 2,502 Total current unsecured borrowings 2,502 2,502 2,502 2,502

Non-currentUnsecured

Unsecured Westpac loan 18,537 21,039 18,537 21,039 Total non current unsecured borrowings 18,537 21,039 18,537 21,039 Total borrowings 21,039 23,541 21,039 23,541

(a) Fair value disclosuresThe carrying amount and fair values of borrowings at balance date are:

Carrying amount Fair value

Carrying amount Fair value

$'000 $'000 $'000 $'000On-balance sheetNon-traded financial liabilitiesUnsecured Westpac Loan 21,039 21,039 23,541 23,541

21,039 21,039 23,541 23,541

(i) On-balance sheet

(b) Risk exposures

Consolidated2007 2006 2007 2006$'000 $'000 $'000 $'000

6 months or less6 - 12 months 1,251 1,251 1,251 1,251 1 - 5 years 1,251 1,251 1,251 1,251 Over 5 years 18,537 21,039 18,537 21,039

21,039 23,541 21,039 23,541

Current borrowings 2,502 2,502 2,502 2,502 Non-current borrowings 18,537 21,039 18,537 21,039 Total borrowings 21,039 23,541 21,039 23,541

The carrying amounts of the Group's borrowings are denominated in the following currencies:

Consolidated2007 2006 2007 2006$'000 $'000 $'000 $'000

Australian dollar 21,039 23,541 21,039 23,541 21,039 23,541 21,039 23,541

For an analysis of the sensitivity of borrowings to interest rate risk and foreign exchange risk refer to note 39.

Parent Entity

Parent Entity

20062007

The fair value of current borrowings equals their carrying amount, as the impact of discounting is not significant. The fair values of non-current borrowings are based on cash flows discounted using borrowing rates varying from 6.5% to 7.3% depending on the type of borrowing (2006 – 6% to 6.5%).

The exposure of the Group's and parent entity's borrowings to interest rate changes and the contractual repricing dates at the balance dates are as follows:

Parent Entity

Other than those classes of borrowings denoted as "traded", none of the classes are readily traded on organised markets in standardised form.



25. PROVISIONS Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

Current provisions expected to be settled within 12 monthsEmployee benefits; Annual leave 12,306 7,144 11,889 6,788 Long service leave 4,235 3,355 4,011 3,352 Contract separation provision 428 57 428 57 Maternity leave provision 433 255 433 255 Redundancy provision 100 340 100 340 Professional indemnity claims (3) - - - Taxation 75 65 - - Subtotal 17,574 11,216 16,861 10,792

Current provisions expected to be settled after more than 12 monthsEmployee benefits; Annual leave 900 5,060 703 4,936 Long service leave 25,404 24,087 25,176 23,831 Subtotal 26,304 29,147 25,879 28,767 Total current provisions 43,878 40,363 42,740 39,559

Non-currentEmployee benefits;

Annual leave - - - Long service leave 5,576 5,136 5,333 5,038 Deferred non-government benefits for superannuation 26,018 27,304 26,018 27,304 Deferred government benefits for superannuation 80,091 98,459 80,091 98,459 Total non-current provisions 111,685 130,899 111,442 130,801 Total provisions 155,563 171,262 154,182 170,360

Provision for Annual Leave

Provision for Long Service Leave

Provision for Contract Separation

Provision for Maternity Leave

Provision for Redundancy

Provision for Taxation

Provision for Deferred Non-Government Benefits for Superannuation

Provision for Deferred Government Benefits for Superannuation

This provision is for costs relating to the redundancy of employees. In calculating the present value of future cash flows in respect of redundancies being taken, current signed redundancy contracts for the following 12 months are taken into account.

Parent Entity

A provision has been recognised for taxation. The measurement and recognition criteria relating to taxation has been calculated in accordance with the Income Tax Assessment Act.

This provision is for outstanding annual leave liabilities that employees have not yet taken. It is assumed the leave will be taken in the next twelve months. The measurement and recognition criteria relating to employee benefits has been included in note 1 to this report.

A provision has been recognised for employee entitlements relating to maternity leave. In calculating the present value of future cash flows in respect of maternity leave being taken, current approved leave entitlements for the following 12 months are taken into account.

This provision is for outstanding long service leave liabilities that employees have not yet taken. The calculation of the present value of future cash flows in respect of long service leave being taken has been calculated by independent third parties based on historical data provided by the University.

This provision is for payouts of contracts expected to occur during the next twelve months. In calculating the present value of future cash flows in respect of contract separation being taken is based on historical data.

A provision has been recognised for employee entitlements relating to deferred government benefits for superannuation. Refer to note 40 for detail.

A provision has been recognised for employee entitlements relating to deferred non-government benefits for superannuation. Refer to note 40 for detail.



25. PROVISIONS (cont'd)

25. (a) Movement in provisions

CONSOLIDATED Annual Leave Long Service Leave Redundancy Other Total

$’000 $’000 $’000 $’000 $’000CurrentCarrying amount at 1 January 2007 12,204 27,442 340 377 40,363 Additional provisions recognised 1,002 2,228 (240) 556 3,546 Carrying amount at 31 December 2007 13,206 29,670 100 933 43,909

Deferred

Long Service Leave Superannuation Total

$’000 $’000 $’000Non-currentCarrying amount at 1 January 2007 5,136 125,763 130,899 Additional provisions recognised 295 (19,540) (19,245) Carrying amount at 31 December 2007 5,431 106,223 111,654

26. OTHER LIABILITIES Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

CurrentFees in advance 349 655 - - Australian Government Unspent Financial Assistance - - - - Advance from DEEWR 5,000 3,000 5,000 3,000 Income received in advance 10,036 9,273 3,376 2,867 Total current other liabilities 15,385 12,928 8,376 5,867

Non-currentAdvance from DEEWR - 5,000 - 5,000 Total non-current other liabilities - 5,000 - 5,000 Total other liabilities 15,385 17,928 8,376 10,867

27. STATUTORY FUNDS Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

Donations and bequests 17,169 20,330 17,169 20,330 National Health & Medical Research Centre 423 2,313 423 2,313 Australian Research Council 4,265 5,258 4,265 5,258 Total statutory funds 21,857 27,901 21,857 27,901

Parent Entity

Parent Entity



28. RESERVES AND RETAINED SURPLUS Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

(a) ReservesProperty, plant & equipment reserve 387,483 373,234 387,483 373,234 Available-for-sale investments revaluation reserve (1,669) 6,315 (1,696) 6,292 Capital profits reserve 5 5 - - Contingency reserve 323 323 - - Research support reserve 1,358 1,149 - - Foreign currency translation reserve (5) (12) Total reserves 387,495 381,014 385,787 379,526

Movements in reserves were : Property, plant and equipment revaluation reserveLandBalance as at 1 January 16,544 12,903 16,544 12,903 Revaluation increment 566 3,641 566 3,641 Transfers Out - - - Buildings & InfrastructureBalance as at 1 January 354,979 271,858 354,979 271,858 Revaluation increment 10,032 83,121 10,032 83,121 Transfers Out - - - - Art worksBalance as at 1 January 547 168 547 168 Revaluation increment 208 379 208 379 Transfers Out - - - - LibraryBalance as at 1 January 1,164 1,164 1,164 1,164 Revaluation increment 3,443 - 3,443 - Transfers Out - - - - Balance as at 31 December 387,483 373,234 387,483 373,234

Available-for-sale investments revaluation reserveBalance as at 1 January 6,315 13,007 6,292 12,981 Revaluation increment (7,985) 3,946 (7,988) 3,949 Transfer to net profit - gross 1 (10,638) - (10,638) Balance as at 31 December (1,669) 6,315 (1,696) 6,292

Capital profits reserveBalance as at 1 January 5 5 - - Transfer from retained surplus - - - - Balance as at 31 December 5 5 - -

Contingency reserveBalance as at 1 January 323 323 - - Transfer from retained surplus - - - - Balance as at 31 December 323 323 - -

Research support reserveBalance as at 1 January 1,149 827 - - Transfer from retained surplus 209 322 - - Balance as at 31 December 1,358 1,149 - -

Foreign currency translation reserveBalance as at 1 January (3) - - -

Currency translation differences arising during the year (2) (12) - - Balance as at 31 December (5) (12) - -

Parent Entity



28. RESERVES AND RETAINED SURPLUS (cont'd) Consolidated

2007 2006 2007 2006$'000 $'000 $'000 $'000

(b) Retained SurplusMovements in retained surplus were as follows:

Retained surplus at 1 January 319,962 284,933 315,159 282,262 Disposal of minority interest (151) - - - Operating result for the period 22,103 35,936 18,285 33,481 Amounts recognised directly in equity (315) (1) 111 - Transfer from reserves (208) (322) - - Transfer from/(to) statutory funds 6,044 (584) 6,044 (584) Retained surplus at 31 December 347,435 319,962 339,599 315,159

(c) Nature and purpose of reserves

29. MINORITY INTEREST

2007 2006 2007 2006$'000 $'000 $'000 $'000

Interest in:Retained profits - (3) - - Share capital - 500 - - Total minority interest - 497 - -

30. KEY MANAGEMENT PERSONNEL DISCLOSURES

a) Names of responsible persons and executive directors

Professor Nicholas Saunders Professor Barney GloverDoctor Susan Gould Professor Linda ConnorProfessor Kevin McConkey

b) Remuneration of executive officers Consolidated Parent Entity2007 2006 2007 2006$'000 $'000 $'000 $'000

1,709 1,946 1,709 1,852

$0 to $9,999 2 2 - - $30,000 to $39,999 - 1 - 1 $60,000 to $69,999 - - - - $80,000 to $89,999 - 2 - - $160,000 to $169,999 - 1 - 1 $180,000 to $189,999 1 - 1 - $230,000 to $239,999 - 1 - 1 $240,000 to $249,999 - 1 - 1 $270,000 to $279,999 - - - - $280,000 to $289,999 - 1 1 $330,000 to $339,999 1 - 1 - $340,000 to $349,999 1 - 1 - $350,000 to $359,999 - - - - $360,000 to $369,999 1 1 1 1 $480,000 to $489,999 1 - 1 -

Parent Entity

Capital profits reserve – used for recognition of profits on disposal of capital items.

The following persons were responsible persons and executive officers of The University of Newcastle for the year, or part thereof:

Research support reserve – representing an appropriation of the net surplus of operating Divisions to support research by those Divisions.Contingency reserve – representing an appropriation of the net surplus to fund unforeseen circumstances resulting in losses.

Consolidated

Available-for-sale investment reserve – used for revaluation of financial assets.

Foreign currency reserve – exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve. The reserve is recognised in profit and loss when the investment is disposed of.

Parent Entity

Asset revaluation reserve – used for revaluation of land, buildings and infrastructure, artworks and libraries.

Income paid, or payable, or otherwise made available, to executive officers by entities in the consolidated entity and related parties:



Professor Nicholas Saunders Professor Barney GloverDoctor Susan Gould Professor Linda ConnorProfessor Kevin McConkey

b) Remuneration of executive officers Consolidated Parent Entity2007 2006 2007 2006$'000 $'000 $'000 $'000

Income paid, or payable, or otherwise made available, to executive officers by entities in the consolidated entity and related parties: 1,709 1,946 1,709 1,852

$0 to $9,999 2 2 - - $30,000 to $39,999 - 1 - 1 $60,000 to $69,999 - - - - $80,000 to $89,999 - 2 - - $160,000 to $169,999 - 1 - 1 $180,000 to $189,999 1 - 1 - $230,000 to $239,999 - 1 - 1 $240,000 to $249,999 - 1 - 1 $270,000 to $279,999 - - - - $280,000 to $289,999 - 1 1 $330,000 to $339,999 1 - 1 - $340,000 to $349,999 1 - 1 - $350,000 to $359,999 - - - - $360,000 to $369,999 1 1 1 1 $480,000 to $489,999 1 - 1 - $510,000 to $519,999 - 1 - 1

The following persons were responsible persons and executive officers of The University of Newcastle for the year,or part thereof:



30. KEY MANAGEMENT PERSONNEL DISCLOSURES (cont'd)

c) Key management personnel compensation Consolidated Parent Entity

2007 2006 2007 2006$'000 $'000 $'000 $'000

Short-term employee benefits 2,107 1,676 1,709 1,582 Termination benefits - 270 - 270 Total key management personnel compensation 2,107 1,946 1,709 1,852

31. REMUNERATION OF AUDITORS Consolidated Parent Entity

2007 2006 2007 2006$'000 $'000 $'000 $'000

Assurance services1. Audit ServicesFees paid to NSW Audit Office -Audit and review of financial reports 311 280 227 225 2. Non-audit servicesFees paid to other providers 149 158 128 140 Other 33 23 25 18 Total remuneration of auditors 493 461 380 383

32. CONTINGENCIES

Claims

33. COMMITMENTS

Expenditure contracted for at the reporting date but not recognised as liabilities is as follows:

Consolidated Parent Entity2007 2006 2007 2006$'000 $'000 $'000 $'000

i) Capital commitments (incl. GST)Property, plant and equipment - within one year 5,134 7,453 4,769 7,453 - Later than one year but not later than five years - - - -

5,134 7,453 4,769 7,453

ii) Operating lease commitments (incl. GST)Commitments for minimum lease payments in relation to non-cancellable operations leases are payable as follows: - within one year 2,851 1,950 2,683 1,865 - Later than one year but not later than five years 2,913 2,615 2,874 2,543

5,764 4,565 5,557 4,408

iii) Other expenditure commitments (incl. GST)Commitments for operating expenses in existence at the reporting date but not recognised as liabilities, payable: - within one year 2,895 15,574 2,281 15,574 - Later than one year but not later than five years - - - -

2,895 15,574 2,281 15,574

The University currently has four legal matters outstanding, none of which are expected to result in material claims against the University. The maximum financial settlement is likely to be $100,000 or less. It is estimated that settlement of matters will occur within twelve months.



34. SUBSIDIARIES

Name of EntityCountry of Incorporation

Class of Shares

2007 % 2006 %

Australia N/A N/A N/A

Cessnock Uni-Clinic Trust Australia Units 100% 100%

Hunter Uni-Clinics Pty Ltd Australia Ordinary 100% 100%

Gradschool.com Pty Ltd Australia Ordinary 100% 100%

TheraPPy Pty Ltd Australia Ordinary 0% 60%

Probiotic Health Pty Ltd Australia Ordinary 100% 100%

UON Services Ltd Australia N/A N/A N/A

UON Singapore Pte Ltd Singapore Ordinary 100% 100%

UON Foundation Ltd Australia N/A 100% 100%

35. INVESTMENTS IN ASSOCIATES

2007 2006 2007 2006

% % $'000 $'000(a) Carrying amountsNon listedVirotarg Pty Ltd 54.20% 54.20% 211 199 – principal activities are researching and developing a new treatment for cancer

(b) Movements in carrying amountsCarrying amount at the beginning of the financial year 198 668 Share of profits before income tax 12 1,757 Intercompany loans - (409) Dividends received - (1,817) Carrying amount at the end of the financial year 210 199

(c) Share of associate's operating resultNet operating results before income tax 2 2,332 Income tax expense 10 (575) Net operating result after income tax 12 1,757

(d) Summarised financial information of associates Groups share of

Liabilities$ $ $ $

2007Virotarg Pty Ltd 259 7 22 12

259 7 22 12

2006Virotarg Pty Ltd 1,041 391 3,077 1,757

1,041 391 3,077 1,757

Ownership InterestConsolidated carrying

amount

The University of Newcastle Research Associates Ltd

The Parent entity held no investment in associates for 2007 and 2006.

Equity Holding

Operating ResultRevenuesAssets



36. INTERESTS IN JOINT VENTURES

37. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

38.

Consolidated Parent Entity2007 2006 2007 2006$'000 $'000 $'000 $'000

Operating result for the year 22,103 35,914 18,285 33,481 Depreciation and amortisation 33,164 29,443 32,554 29,038 Net (gain) loss on sale of non-current assets 400 2,414 372 2,409 Net income recognised directly in equity (2,114) - - - Fair value gains on other financial assets at fair value through profit or loss (3,526) (10,870) (3,818) (10,637) Net exchange differences 6 (22) - - (Increase)/decrease in trade debtors 1,765 (316) 1,527 (535) (Increase)/decrease in inventories 319 (268) - - Decrease/(increase) in other financial assets at fair value through profit or loss (8,418) (6,238) (8,421) (6,238) (Increase)/decrease in deferred tax asset - 4 - - (Increase)/decrease in other operating assets (185) (719) (1,882) (522) Increase/(decrease) in trade creditors (605) 3,594 (124) 2,610 Increase/(decrease) in other operating liabilities (434) (15,770) 1,795 (16,029) Increase/(decrease) in provision for income taxes payable 10 (342) - - Increase/(decrease) in provisions 2,611 (7,537) 2,190 (8,036) Share of associates net profit (429) (1,218) - -

Net cash provided by/(used in) operating activities 44,667 28,069 42,478 25,541

RECONCILIATION OF OPERATING RESULT AFTER INCOME TAX TO NET CASH FLOWS FROM OPERATING ACTIVITIES

The University has reviewed its commercial arrangements with other entities and does not believe any of these arrangements fall within the definition of a joint venture as prescribed by AASB 131 "Interests in Joint Ventures".

The University is not aware of any material financial impacts or changes occuring after 31 December 2007.



39. FINANCIAL RISK MANAGEMENT

(a) Market risk(i) Foreign exchange risk

(ii) Price risk

2007 2006 2007 2006ASX 200 - N/A 3,520 N/ANYSE International 100 - N/A 810 N/AMSCI Index ex Australia - N/A 1,570 N/A

(iii) Cash flow and fair value interest rate risk

Post-tax profit for the year would increase/decrease as a result of gains/losses on equity securities classified as at fair value through profit or loss. Equity would further increase/decrease as a result of gains/losses on equity securities classified as available-for-sale.The price risk for unlisted securities is immaterial in terms of the possible impact on profit or loss or total equity. It has therefore not been included in the sensitivity analysis.

The Group's main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. Group policy is to maintain approximately 100% of its borrowings at fixed rates using interest rate swaps to achieve this when necessary. During 2007 and 2006, the Group's borrowings at variable rate were denominated in Australian Dollars.The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. The scenarios are run only for liabilities that represent the major interest-bearing positions.

Impact on equity $'000

The table below summarises the impact of increases/decreases of these two indexes on the Group’s post-tax profit for the year and on equity. The analysis is based on the assumption that the equity indexes had increased/decreased by 10% with all other variables held constant and all the Group’s equity instruments moved according to the historical correlation with the index.

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge certain risk exposures. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk.

Financial risk management is carried out by a central treasury department under policies aproved by the University Council. The treasury department identifies and evaluates financial risks in close co-operation with the Group’s operating units and external advisors. The Council provides written principals for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

The Group and the parent entity are exposed to equity securities price risk. This arises from investments held by the Group and classified on the balance sheet either as available-for-sale or at fair value through profit or loss. Neither the Group nor the parent entity are exposed to commodity price risk.

Index Impact on post-tax profit '$000

To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.The majority of the Group’s and the parent entity’s equity investments are publicly traded and are included either in the ASX200 Index or NYSE International 100 index.

Management has set up a policy requiring group companies to manage their foreign exchange risk against their functional currency.

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.

The Group Treasury’s risk management policy is not to hedge the cash flows at present, because the amount of exposure has been determined to be immaterial in terms of the possible impact on profit or loss or total equity. It has therefore not been included in the sensitivity analysis.

The Group operates internationally and is exposed to foreign exchange risk arising from various various currency exposures, primarily with respect to the Singapore dollar.



39. FINANCIAL RISK MANAGEMENT (cont'd)

(iv) Summarised sensitivity analysis

Profit $'000 Equity $'000 Profit $'000 Equity $'000Financial assetsCash and cash equivalents 28,212 (282) (282) 282 282 Other assets 97,357 - (974) - 974 Financial liabilitiesTotal increase/(decrease) (282) (1,256) 282 1,256

Profit $'000 Equity $'000 Profit $'000 Equity $'000Financial assetsCash and cash equivalents 979 (10) (10) 10 10 Receivables 3,608 (36) (36) 36 36 Other assets 97,357 - (974) - 974 Financial liabilitiesTrade and other payables (415) 4 4 (4) (4) Borrowings - - - - - Total increase/(decrease) (42) (1,015) 42 1,015

Profit $'000 Equity $'000 Profit $'000 Equity $'000Financial assetsCash and cash equivalents 28,212 (282) (282) 282 282 Other assets 97,357 - (974) - 974 Financial liabilitiesTotal increase/(decrease) (282) (1,256) 282 1,256

(b) Credit risk

(c) Liquidity risk

Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of ‘BBB+’ are accepted. If wholesale customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Council. Fees from students are settled in cash or using major credit cards, mitigating credit risk.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, Group Treasury aims at maintaining flexibility in funding by keeping committed credit lines available.

Other price risk

31-Dec-07 Carrying amount $'000

-1% 1%Foreign exchange risk

31-Dec-07 Carrying amount $'000

-1% 1%

Based on the various scenarios, the Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. The Group has raised long-term borrowings at floating rates and swapped them into fixed rates that are lower than those that were available if the Group borrowed at fixed rates directly. Under the interest rate swaps, the Group agrees with other parties to exchange, at monthly intervals, the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional principal amounts.

At 31 December 2007, if interest rates had changed by -/+ 1% from the year end rates of 7.06% with all other variables held constant, post-tax profit for the year would have been $1,869,000 lower/$1,869,000 higher, mainly as a result of higher interest income from cash and cash equivalents.

The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk and other price risk:

Interest rate risk31-Dec-07 Carrying

amount $'000 -1% 1%




31-Dec-08 2009-2012$'000 $'000

Opening balance for the period 109,536 109,714 Operating proceeds 53,882 314,518 Operating outflows (48,700) (227,900) Payments of debts and dividends (5,004) (20,016) Closing balance for the period 109,714 176,316

(d) Far value estimation

The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

Refer to Note 24(b) Borrowings for further details on the University's exposure to risk on its borrowings.

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.The fair value of financial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current redemption price.Derivative contracts classified as held for trading are fair valued by comparing the contracted rate to the current market rate for a contract with the same remaining period to maturity.The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date.

Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flow. Forecasted liquidity reserve as of 31 December 2007 is as follows:



40. SUPERANNUATION COMMITMENTS

SASS SANCS SSS2007 2007 2007$'000 $'000 $'000

Present value of defined benefit obligations 45,138 8,499 235,220 Fair value of plan assets (50,736) (7,828) (155,800)

(5,598) 671 79,420 Surplus in excess of recovery available from schemes - - - Unrecognised past service cost - - - Net (asset)/liability to be recognised in balance sheet (5,598) 671 79,420

Movements in the present value of the plan assets in the current period were as follows:

SASS SANCS SSS2007 2007 2007$'000 $'000 $'000

Net (asset)/liability at 1/1/07 (5,000) 714 97,744 Net expense recognised in the income statement 1,204 585 (17,192) Contributions (1,802) (628) (1,132) Net (asset)/liability at 31/12/07 (5,598) 671 79,420

Amounts recognised in income in respect of these defined benefit plans are as follows:

Current service cost 1,670 468 766 Interest on obligation 2,442 481 14,140 Expected return on plan assets (3,472) (687) (10,478) Net actuarial losses (gain) recognised during 2007 565 323 (21,620) Total included in 'employee benefits expense' 1,205 585 (17,192)

The actual return of these defined benefit plans are as follows:

Actual return on plan assets 3,635 680 11,547

Key assumptions used 2007

Discount rate at 31 December 6.40%Expected return on plan assets at 31 December 7.60%Expected salary increases 4.00% to June 2008; 3.50% pa thereafterExpected rate of CPI increase 2.50%

All assets of the Funds are invested by STC at arm's length through independent fund managers.

The University of Newcastle incurs an obligation for deferred contributions which become payable on and after retirement of staff in respect of the following defined benefit schemes;

– State Authorities Non-Contributory Superannuation Scheme (SANCS)

The benefits provided by this plan are derived from a multiple of member salary and years of membership. All schemes are closed to new members.

The amount included in the balance sheet arising from the entity's obligations in respect of its defined benefit plans is as follows:

Actuarial gains and losses are recognised in profit or loss in the year they occur. This is in accordance with the December 2004 version of AASB 119 Employee Benefits.

– State Authorities Superannuation Scheme (SASS) and – State Superannuation Scheme (SSS)

– The University of Newcastle Staff Superannuation Scheme



40. SUPERANNUATION COMMITMENTS (cont'd)

SASS SANCS SSS2007 2007 2007$'000 $'000 $'000

Accrued benefits 44,835 8,433 211,832 Net market value of Fund assets (50,735) (7,829) (155,800) Net (surplus)/deficit (5,900) 604 56,032

Recommended contribution rates for the entity 0.00% 17.00% 0.00%

The economic assumptions adopted for the last actuarial review of the Fund were:

Weighted-Average AssumptionsExpected rate of return on Fund assets backing current pension liabilities 7.70%Expected rate of return on Fund assets backing other liabilities 7.00%Expected salary increase rate 4.00%Expected rate of CPI increase 2.50%

From 31 December 2007%p.a.

Discount rate 6.4Rate of salary increase 4.5Rate of pension increases 4.5

The liability and prepaid contributions are comprised of:-State State Authorities University of

2007 State Authorities Non-Contributory Newcastle Staff Total

Superannuation Superannuation Superannuation Superannuation All

Scheme Scheme Scheme Scheme Funds

$'000 $’000 $'000 $’000 $’000

Gross liability assessed by actuariesas at 31 December 2007 235,220 45,138 8,499 26,018 314,875 Less investment reserve account balance 155,800 50,736 7,828 - 214,364

Liability/(Prepaid Contributions) 79,420 (5,598) 671 26,018 100,511

The University previously operated The University of Newcastle Staff Superannuation Scheme as a separate superannuation scheme for employee's with an external trustee and administrators operating under the schemes trust deed. Due to declining membership numbers, in 2001 the University ceased to operate the scheme as a separate entity and brought the administration in-house. The University has funds invested of an amount equal to the assessed deferred liability in respect of the current pensioners, plus an estimate of future obligations for those members of the former scheme still in the University's employment. A firm of consulting actuaries provided an assessment of the deferred liability for The University of Newcastle Staff Superannuation Scheme as at 31 December 2007 using the following assumptions:

If a surplus exists in the employer's interest in the Fund, the employer may be able to take advantage of it in the form of a reduction in the required contribution rate, depending on the advice of the Fund's actuary.

The method used to determine the employer contribution recommendations at the last actuarial review was the Aggregate Funding method. The method adopted affects the timing of the cost to the employer.

Under the Aggregate Funding method, the employer contribution rate is determined so that sufficient assets will be available to meet benefit payments to existing members, taking into account the current value of assets and future contributions.

Where a deficiency exists, the employer is responsible for any difference between the employer's share of fund assets and the defined benefit obligation.

The following is a summary of the 31 December 2007 financial position of the Fund calculated in accordance with AAS 25 Financial Reporting by Superannuation Plans.



40. SUPERANNUATION COMMITMENTS (cont'd)

State State Authorities University of

2006 State Authorities Non-Contributory Newcastle Staff Total

Superannuation Superannuation Superannuation Superannuation All

Scheme Scheme Scheme Scheme Funds

$'000 $’000 $'000 $’000 $’000

Gross liability assessed by actuariesas at 31 December 2006 243,098 42,040 8,516 27,354 321,008 Less investment reserve account balance 145,354 47,040 7,802 - 200,196

Liability/(Prepaid Contributions) 97,744 (5,000) 714 27,354 120,812


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GRADUATESCHOOL.COMPTYLTD

ACN092374546FinancialReportfortheyearended31December2007


Notes2007 2006

$ $Revenue from continuing operations

Fees and charges 2 7,328,766 4,944,602 Investment income 3 151,181 119,941 Other revenue 4 840 -

Total revenue from continuing operations 7,480,787 5,064,543

Expenses from continuing operationsEmployee related expenses 5 881,698 970,812 Depreciation and amortisation 6 11,310 2,754 Repairs and maintenance 7 1,327 27 Other expenses 8 6,635,694 2,676,547

Total expenses from continuing operations 7,530,029 3,650,140

(49,242) 1,414,403

Income tax expense 9 41,738 (337,701)

(90,980) 1,752,104

Operating result attributable to members of GraduateSchool.com Pty. Ltd (90,980) 1,752,104

GraduateSchool.com Pty Ltd



Income Statementfor the Year Ended 31 December 2007


Notes2007 2006


Fees and charges 2 7,328,766 4,944,602 Investment income 3 151,181 119,941 Other revenue 4 840 -


Expenses from continuing operationsEmployee related expenses 5 881,698 970,812 Depreciation and amortisation 6 11,310 2,754 Repairs and maintenance 7 1,327 27 Other expenses 8 6,635,694 2,676,547


(49,242) 1,414,403

Income tax expense 9 41,738 (337,701)

(90,980) 1,752,104

Operating result attributable to members of GraduateSchool.com Pty. Ltd (90,980) 1,752,104







GraduateSchool.com Pty LtdBalance SheetAs at 31 December 2007

Notes2007 2006

ASSETS $ $Current Assets

Cash and cash equivalents 10 1,529,540 3,216,343 Receivables 11 793,946 65,132 Inventories 12 288,520 329,908 Other non-financial assets 13 213,657 374,391

Total Current Assets 2,825,663 3,985,774

Non-Current AssetsProperty, plant & equipment 14 30,514 12,954 Intangible assets 15 116,419 -

Total Non-Current Assets 146,933 12,954

Total Assets 2,972,596 3,998,728


Trade and other payables 16 194,750 720,988 Current tax liabilities 17 62,774 64,967 Deferred tax liabilities 18 12,744 - Provisions 19 8,137 23,184 Other liabilities 20 118,520 522,938

Total Current Liabilities 396,925 1,332,077

Non-Current LiabilitiesOther liabilities 20 - -

Total Non-Current Liabilities - -

Total Liabilities 396,925 1,332,077

Net Assets 2,575,671 2,666,651

EquityIssued capital 21 3 3 Retained surplus 22 2,575,668 2,666,648

Total Equity 2,575,671 2,666,651


GraduateSchool.com Pty LtdBalance SheetAs at 31 December 2007

Notes2007 2006


Cash and cash equivalents 10 1,529,540 3,216,343 Receivables 11 793,946 65,132 Inventories 12 288,520 329,908 Other non-financial assets 13 213,657 374,391


Non-Current AssetsProperty, plant & equipment 14 30,514 12,954 Intangible assets 15 116,419 -


Total Assets 2,972,596 3,998,728


Trade and other payables 16 194,750 720,988 Current tax liabilities 17 62,774 64,967 Deferred tax liabilities 18 12,744 - Provisions 19 8,137 23,184 Other liabilities 20 118,520 522,938

Total Current Liabilities 396,925 1,332,077

Non-Current LiabilitiesOther liabilities 20 - -


Total Liabilities 396,925 1,332,077

Net Assets 2,575,671 2,666,651

EquityIssued capital 21 3 3 Retained surplus 22 2,575,668 2,666,648

Total Equity 2,575,671 2,666,651




Notes2007 2006

$ $

Total equity at the beginning of the year 2,666,651 914,547

Operating result for the period (90,980) 1,752,104

Total recognised income and expense for the period (90,980) 1,752,104

Total equity at the end of the year 2,575,671 2,666,651

Total recognised income and expense for the year is attributable to:GraduateSchool.com Pty Ltd (90,980) 1,752,104


Statement of Changes in Equityfor the Year Ended 31 December 2007


Notes2007 2006

$ $

Total equity at the beginning of the year 2,666,651 914,547

Operating result for the period (90,980) 1,752,104

Total recognised income and expense for the period (90,980) 1,752,104

Total equity at the end of the year 2,575,671 2,666,651

Total recognised income and expense for the year is attributable to:GraduateSchool.com Pty Ltd (90,980) 1,752,104




GraduateSchool.com Pty LtdCash Flow Statementfor the Year Ended 31 December 2007

Notes2007 2006$'000 $'000

Cash flows from operating activitiesReceipts from student fees and other customers 6,181,241 4,937,691 Investment income 148,709 92,479 Payments to suppliers and employees (incl. GST) (7,836,054) (3,473,219) Interest and other costs of finance paid (4,223) - Income taxes paid (31,187) -

Net cash provided by/(used in) operating activities 28 (1,541,514) 1,556,951

Cash flows from investing activitiesPayments for property, plant & equipment (22,045) (7,968) Payments for intellectual property (123,244) -

Net cash provided by/(used in) investing activities (145,289) (7,968)

Cash flows from financing activitiesNet cash provided by/(used in) financing activities - -

Net increase/(decrease) in cash and cash equivalents (1,686,803) 1,548,983 Cash and cash equivalents at the beginning of the financial year 3,216,343 1,667,360

10 1,529,540 3,216,343



GraduateSchool.com Pty LtdCash Flow Statementfor the Year Ended 31 December 2007

Notes2007 2006$'000 $'000

Cash flows from operating activitiesReceipts from student fees and other customers 6,181,241 4,937,691 Investment income 148,709 92,479 Payments to suppliers and employees (incl. GST) (7,836,054) (3,473,219) Interest and other costs of finance paid (4,223) - Income taxes paid (31,187) -

Net cash provided by/(used in) operating activities 28 (1,541,514) 1,556,951

Cash flows from investing activitiesPayments for property, plant & equipment (22,045) (7,968) Payments for intellectual property (123,244) -


Cash flows from financing activitiesNet cash provided by/(used in) financing activities - -

Net increase/(decrease) in cash and cash equivalents (1,686,803) 1,548,983 Cash and cash equivalents at the beginning of the financial year 3,216,343 1,667,360

10 1,529,540 3,216,343




GraduateSchool.com Pty LtdContents of the Notes to the Financial Statementsfor the Year Ended 31 December 2007

Note Contents1. Summary of significant accounting policies2. Fees and charges3. Investment income4. Other revenue 5. Employee related expenses6. Depreciation and amortisation7. Repairs and maintenance8. Other expenses9. Income tax10. Cash and cash equivalents11. Receivables12. Inventories13. Other non financial assets 14. Property, plant and equipment15. Intangibles16. Trade and other payables17. Current tax liabilities18. Deferred tax liability19. Provisions20. Other liabilities21. Issued capital22. Reserves and retained surplus23. Key management personnel disclosures24. Remuneration of auditors25. Contingencies26. Related parties27. Events occurring after the balance sheet date28. Reconciliation of operating result after income tax to net cash flows from operating activities 29. Financial risk management


GraduateSchool.com Pty LtdNotes to the Financial Statementsfor the Year Ended 31 December 2007

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Compliance with IFRS



b) Revenue recognition

(i) Student fees and charges

c) Income tax


Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances rebates and amounts collected on behalf of third parties. The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the company and specific criteria have been met for each of the company's activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the transaction have been resolved. The company bases any estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

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

The financial statements and notes of the Company comply with Australian Accounting Standards, some of which contain requirements specific to not-for-profit entities that are inconsistent with IFRS requirements.

The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, refer to relevant paragraphs below for further detail.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

These financial statements have been prepared under the historical cost convention.

The financial report is a general purpose financial report which has been prepared on an accrual basis in accordance with Australian Accounting Standards, AASB Interpretations, the requirements of the Department of Education, Employment and Workplace Relations (DEEWR), the Public Finance and Audit Act 1983, the Corporations Act 2001, and other State/Australian Government legislative requirements.

GraduateSchool.com Pty. Limited (the Company) is a registered company limited by shares and is a controlled entity of the University of Newcastle. Principal activities and registered office details are disclosed in the annual report.


Fees and charges are recognised as income in the year of receipt, except to the extent that fees and charges relate to courses to be held in future periods. Such income is treated as income in advance. Conversely, fees and charges relating to debtors are recognised as revenue in the year to which the prescribed course relates.


Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Financial assets - managements makes judgements in determining whether assets are classified as available-for-sale, held-to-maturity or other.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

d) Impairment of assets

e) Cash and cash equivalents

f) Trade receivables

g) Inventories

h) Property, Plant and Equipment

Furniture and Fittings 5 yearsMotor Vehicle 8 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in the income statement.

For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown with interest bearing liabilities in current liabilities on the balance sheet.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impaired receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows. Cash flows relating to short-term receivables are not discounted, as the effect of discounting is immaterial. The amount of the provision is recognised in the income statement.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. Trade receivables are due for settlement no more than 30 days from recognition.

All items of plant and equipment are carried at cost less any accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated using the straight line method to allocate the cost , net of any residual value, over the estimated useful life of the asset.The estimated useful life of each asset class are as follows.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probably that future economic benefits associated with the item will flow to the GraduateSchool.com Pty Ltd and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Inventories are stated at the lower of cost and net realisable value. Costs are assigned to individual items of inventory on a first-in-first-out basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Assets that are subject to amortisation are reviewed for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other 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. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.




i) Intangible assets(i) Intellectual property

(ii) Formation Costs

j) Trade and other payables

k) Employee benefits(i) Wages and salaries, annual leave and sick leave

l) Rounding of amounts

m) Capital Management

n) New Accounting Standards and Interpretations

(i) AASB123 Borrowing Costs - Revised (1 January 2009)(ii) AASB2007-6 Amendments to Australian Accounting Standards (1 January 2009)(iii) AASB2007-7 Amendments to Australian Accounting Standards (1 July 2008)(iv) AASB2007-8 Amendments to Australian Accounting Standards (1 January 2009)(v) AASB2007-9 Amendments to Australian Accounting Standards (1 July 2008)

o)

Graduateschool.com's aim is to achieve the most optimal financial outcome through management of its limited capital resources. With its financial investments, the company's strategy is to utilise a high interest earning bank account for the majority of its assets. Capital expenditure requirements for property, plant and equipment are subject to planning, prioritisation and the availability of sufficient resources.

The financial report was authorised for issue on 18 April 2008.

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

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in payables or other provisions in respect of employee's services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

The company has assessed the impact of these new standards and Interpretations and considers the impact to be insignificant.

Expenditure on intellectual property, being the establishment costs for the Directors On Line program, has been capitalised as the program is expected to return future economic benefits to the entity. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services and direct labour. Capitalised expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected benefit, being 3 years.

Expenditure on Formation costs, being legal fees on establishment of the joint venture with Karridale Pty Ltd, has been capitalised. Capitalised expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected benefit, which is 5 years.

(a) The company did not early adopt any new accounting standards that are not yet effective.


(v) Interpretation 14 AASB 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

All amounts appearing in the financial report have been rounded to the nearest dollar.



2. FEES AND CHARGES

2007 2006$ $

Course fees and chargesStudent fee revenue 7,328,766 4,944,602 Total course fees and charges 7,328,766 4,944,602


2007 2006$ $

Distributions received 151,181 119,941

Total investment income 151,181 119,941

4. OTHER REVENUE

2007 2006$ $

Other – sale of folders 840

Total other revenue 840 -


2007 2006$ $

AcademicSalaries 418,025 466,831 Contribution to superannuation 36,808 46,469 Payroll tax 27,129 29,674 Workers' compensation (5,125) 4,817 Long service leave - 2,684 Maternity leave - 316 Annual leave - 6,858

Total academic 476,837 557,649

Non-academicSalaries 342,959 348,679 Contribution to superannuation 29,567 32,080 Payroll tax 23,803 22,933 Workers' compensation (4,204) 4,558 Long service leave - 241 Maternity leave - 16 Annual leave 12,736 4,656

Total non-academic 404,861 413,163 Total employee related expenses 881,698 970,812


GraduateSchool.com Pty LtdNotes to the Financial Statements


6. DEPRECIATION

2007 2006$ $

DepreciationPlant & Equipment 4,044 2,754 Motor Vehicle 441 -

Total depreciation 4,485 2,754

AmortisationFormation costs 505 - Program setup costs 6,320 -

Total amortisation 6,825 -

Total depreciation and amortisation 11,310 2,754


2007 2006$ $

Repairs and maintenance – general 1,327 27

Total repairs and maintenance 1,327 27

8. OTHER EXPENSES

2007 2006$ $

Advertising, marketing & promotional expenses 489,188 277,215 Agent commission 425,316 549,822 Course materials 662,171 395,855 Donations – The University of Newcastle 451,549 - General consumables 318,397 352,744 Licence fees 3,647,945 817,546 Non-capitalised equipment 242 5,788 Professional services 11,970 14,441 Travel, staff development & entertainment 16,648 24,594 University service fee 609,901 235,350 Utilities 2,367 3,192

Total other expenses 6,635,694 2,676,547

9. INCOME TAX2007 2006

$ $(a) Income tax expenseCurrent tax 28,994 35,982 Deferred tax 12,744 - Under (over) provided in prior years*:Current tax liabilities - (378,015) Deferred tax assets - 4,332

41,738 (337,701) Income tax expense is attributable to:Operating result from continuing operations 41,738 (337,701) Operating result from discontinued operations - -

Aggregate income tax expense 41,738 (337,701)


GraduateSchool.com Pty LtdNotes to the Financial Statements


9. INCOME TAX (cont'd)2007 2006

$ $(b) Numerical reconciliation of income tax expense to prima facie tax payableOperating result from continuing operations before income tax expense (49,242) 1,414,403

Operating result from discontinuing operations before income tax expense - -

Tax at the Australian tax rate of 30% (2006 - 30%) (14,773) 424,321

Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: 56,511 (388,339)

41,738 35,982 Under (over) provided in prior years*:Current tax liabilities - (378,015) Deferred tax assets - 4,332 Prior year tax losses not recognised now recouped - - Income tax expense 41,738 (337,701)

(c) Amounts recognised directly in equity

- -

- - (d) Tax losses

- -

Potential tax benefit @ 30% -

(e) Unrecognised temporary differences

- -

- -

10. CASH AND CASH EQUIVALENTS2007 2006

$ $

Cash at bank and on hand 1,529,540 3,216,343 Total cash and cash equivalents 1,529,540 3,216,343

a) Reconciliation to cash at the end of the year

Balance as above 1,529,540 3,216,343 Balance per cash flow statement 1,529,540 3,216,343

* Retrospective adjustment required as a result of favourable income tax ruling received in May 2007

Aggregate current and deferred tax arising in the reporting period and not recognised in net operating result but directly debited or credited to equity

Unused tax losses for which no deferred tax asset has been recognised

Temporary differences relating to investments in subsidiaries for which deferred tax liabilities have not been recognised

The above figures are reconciled to cash at the end of the year as shown in the cash flow statement as follows:



11. RECEIVABLES2007 2006

$ $CurrentStudent fees 741,222 - Provision for impaired receivables (7,250) - Other receivables 59,974 65,132 Total current receivables 793,946 65,132 Total Receivables 793,946 65,132


The ageing of these receivables is as follows:2007 2006

$ $

Over 6 months 7,250 - 7,250 -

2007 2006$ $

3 to 6 months 50,187 (36,364) Over 6 months 130,210 -

180,397 (36,364)

Movements in the provision for impaired receivables are as follows:2007 2006

$ $

At 1 January - - Provision for impairment recognised during the year 7,250 - Receivables written off during the year as uncollectible - -

7,250 -

(b) Fair value and credit risk

Due to the short-term nature of the current receivables, their carrying value is assumed to approximate their fair value.

As of 31 December 2007, trade receivables of $180,397 (2006: -$36,364) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these receivables is as follows:

As at 31 December 2007 current receivables of the entity with a nominal value of $7,250 (2006: $0) were impaired. The amount of the provision was $7,250 (2006: $0). The individually impaired receivables mainly relate to on-line teaching services, it was assessed that no portion of the receivable is expected to be recovered.



12. INVENTORIES2007 2006

$ $CurrentCourse materials 288,520 329,908 Total inventories 288,520 329,908

13. OTHER NON-FINANCIAL ASSETS

2007 2006$ $

CurrentPrepayments 213,657 374,391 Total other non-financial assets 213,657 374,391

14. PROPERTY, PLANT AND EQUIPMENTMotor Office Total

Vehicles Equipment$ $ $

At 1 January 2006-Cost - 9,013 9,013 -Valuation - - - Accumulated Depreciation - (1,273) (1,273) Net book amount - 7,740 7,740

Year ended 31 December 2006Opening net book amount - 7,740 7,740 Additions - 7,968 7,968 Depreciation expense - (2,754) (2,754) Closing net book amount - 12,954 12,954

At 31 December 2006-Cost - 16,981 16,981 -Valuation - - - Accumulated Depreciation - (4,027) (4,027) Net book amount - 12,954 12,954

Year ended 31 December 2007Opening net book amount - 12,954 12,954 Additions 15,909 6,136 22,045 Depreciation expense (441) (4,044) (4,485) Closing net book amount 15,468 15,046 30,514

At 31 December 2007-Cost 15,909 23,117 39,026 -Valuation - - - Accumulated Depreciation (441) (8,071) (8,512)

Net book amount 15,468 15,046 30,514



15. INTANGIBLE ASSETS Program

Setup Costs Formation Costs Total$ $ $

At 1 January 2006Cost - - - Accumulated amortisation and impairment - - - Net book amount - - -

Year ended 31 December 2006Opening net book amount - - - Additions - - - Impairment charge - - - Amortisation charge - - - Closing net book amount - - -

At 31 December 2006Cost - - - Accumulated amortisation and impairment - - - Net book amount - - -

Year ended 31 December 2007Opening net book amount - - - Additions 113,444 9,800 123,244 Impairment charge - - - Amortisation charge (6,320) (505) (6,825)

Closing net book amount 107,124 9,295 116,419

At 31 December 2007Cost 113,444 9,800 123,244 Accumulated amortisation and impairment (6,320) (505) (6,825)

Net book amount 107,124 9,295 116,419

16. TRADE AND OTHER PAYABLES2007 2006

$ $

CurrentTrade creditors – related parties* - 3,850 Trade creditors – other 85,324 91,960 Accrued expenses – related parties 57,430 548,551 Accrued expenses – other 33,688 36,880 Payroll tax 6,028 4,249 Superannuation 958 6,373 PAYG tax 11,322 18,589 Workers compensation - 10,536

Total payables 194,750 720,988

* All balances payable to related parties are on an unsecured basis



17.2007 2006

$ $

Current tax payable 62,774 64,967

Current tax liabilities at end of year 62,774 64,967

18. DEFERRED TAX LIABILITIES

2007 2006$ $

The balance comprises temporary differences attributable to:Amounts recognised in operating result

Investment income receivable 12,744 -

12,744 -

Amounts recognised directly in equity - - - - Tax deferred liabilities 12,744 -

Set-off of deferred tax liabilities pursuant to set-off provisions - - Net deferred tax liabilities 12,744 -

Deferred tax liabilities to be settled within 12 months 12,744 - 12,744 -

18 (a) Movement Accrued income TotalAt 1 January 2006Charged/(credited) to the income statement - - Charged directly to equity - - At 31 December 2006 - -

Charged/(credited) to the income statement 12,744 - Charged directly to equity - - At 31 December 2007 12,744 -

CURRENT TAX LIABILITIES



19. PROVISIONS2007 2006

$ $

Current provisions expected to be settled within 12 monthsEmployee benefits Annual leave 8,137 23,184 Subtotal 8,137 23,184

Current provisions expected to be settled after more than 12 monthsEmployee benefits Annual leave - - Subtotal - - Total current provisions 8,137 23,184

Non-currentEmployee benefits Annual leave - - Total non-current provisions - - Total provisions 8,137 23,184


19 (a) Movement in provisions

2007 2006$ $

CurrentCarrying amount at start of year 23,184 14,441 Additional provisions recognised/(reversed) (15,047) 8,743 Carrying amount at end of year 8,137 23,184

20. OTHER LIABILITIES2007 2006

$ $

CurrentFees in advance 21,770 522,938 Unclaimed Student Deposits 96,750 -

Total current other liabilities 118,520 522,938

Non-currentOther - - Total non-current other liabilities - - Total other liabilities 118,520 522,938

21. ISSUED CAPITAL

3 $1 (2006: 3) fully paid ordinary shares 3 3

The parent entity of the company is the University of Newcastle, by virtue of its full ownership.




22. RESERVES AND RETAINED SURPLUS2007 2006

$ $Retained SurplusMovements in retained surplus were as follows: Retained surplus at 1 January 2,666,648 914,544 Operating result for the period (90,980) 1,752,104

Retained surplus at 31 December 2,575,668 2,666,648


a) Names of responsible persons and executive officers

The following persons were responsible persons and executive officers of Graduateschool.com Pty Ltd during the year:Dr Susan Mary Gould - ChairpersonMs Sharryn Dawn Brownlee - DirectorProfessor Nicholas Andrew Saunders - DirectorMr Colin Douglas Parrish - DirectorProfessor Kevin McConkey - CEO

b) Remuneration of Executives

24. REMUNERATION OF AUDITORS

2007 2006$ $

Audit ServicesFees paid to NSW Audit Office -Audit and review of the financial report. 12,000 11,048

12,000 11,048

25. CONTINGENCIES

26. RELATED PARTY INFORMATION

26. (a) Parent entity

26. (b) Key management personnel

The ultimate parent entity is the University of Newcastle, by virtue of its full ownership of the Company's issued share capital.

No payment is made to any of the executive officers listed above.

There were no contingent assets or liabilities at the end of the reporting period.

Disclosures relating to directors and specified executives are set out in Note 23.



26. RELATED PARTY INFORMATION (cont'd)

26. (c) Transactions with related partiesThe following transactions occurred with related parties:

2007 2006$ $

Transactions during the periodi) The University of NewcastleServices provided to the University

Student revenueFee-HELP 2,496,929 - HECS-HELP 19,894 Commonwealth Training Scheme 18,480

2,535,303 - Services provided by the University

General services 213,151 413,723 Administrative support 396,750 235,350 Academic licence fees 3,647,945 817,546 Donation 451,549 -

4,709,395 1,466,619

ii) Newcastle InnovationServices provided by Newcastle Innovation 66,110 82,757

66,110 82,757

26. (d) Outstanding balances

2007 2006$ $

Receivables 556,764 - Payables 57,430


28.

2007 2006$ $

Operating result for the period (90,980) 1,752,104 Depreciation 11,310 2,754 (Increase)/decrease in trade debtors (772,808) (24,610) (Increase)/decrease in inventories 41,389 (148,465) (Increase)/decrease in other operating assets 171,088 109,134 (Increase)/decrease in deferred tax assets - 4,332 Increase/(decrease) in trade creditors (10,486) 199,294 Increase/(decrease) in other operating liabilities (886,531) (4,302) Increase/(decrease) in income taxes payable 10,551 (342,033) Increase/(decrease) in provisions (15,047) 8,743

Net cash provided by/(used in) operating activities (1,541,514) 1,556,951

The following balances are outstanding at the reporting date in relation to transactions with related parties:

Graduateschool.com Pty Ltd is not aware of any material financial impacts or changes after 31 December 2007.


All transactions with related parties were conducted under normal commercial terms and conditions.




(a) Market Risk(i) Foreign exchange risk

(ii) Price Risk



Carrying31 December 2007 Amount Profit Equity Profit Equity

$ $ $ $ $Financial AssetsCash and cash equivalents 1,529,540 (15,295) (15,295) 15,295 15,295 Receivables 793,946 (7,939) (7,939) 7,939 7,939 Financial LiabilitiesTrade payables (194,750) 1,948 1,948 (1,948) (1,948)

Total increase/(decrease) (21,287) (21,287) 21,287 21,287

(b) Credit Risk

(c) Liquidity Risk

31 Dec 2008Opening balance for the period 1,529,540 Operating proceeds 10,000,000 Operating outflows 10,000,000

Closing balance for the period 1,529,540

(d) Fair value estimation

END OF AUDITED FINANCIAL STATEMENTS

The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the company for similar financial instruments.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The company uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date.

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

Management monitors rolling forecasts of the company's liquidity reserve on the basis of expected cash flow. Forecast liquidity reserve as of 31 December 2007 is as follows:

Prudent liquidity risk management implies maintaining sufficient cash. Due to the dynamic nature of the underlying businesses, the Board aims at maintaining flexibility in funding by keeping sufficient cash reserves on hand.

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as outstanding receivables and committed transactions.

+1% Interest rate risk

-1%

The company's main interest rate risk arises from cash and cash equivalents. At 31 December 2007, if interest rates had changed by -/+ 1% from the year end rates with all other variables held constant, post-tax profit for the year would have been $21,287 lower/$21,287 higher, mainly as a result of higher interest income from cash and cash equivalents.

The company does not have any investments in equity securities and as such is not exposed to price risk.

The company is not exposed to foreign exchange risk.

Risk management is carried out under direction by the Board of Directors.

The company's activities expose it to a variety of financial risks: market risk (currency risk, price risk, cash flow interest rate risk and fair value risk), credit risk and liquidity risk. The company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the entity. The company uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate foreign exchange, and other price risks.

HUNTERUNI-CLINICSPTYLTD

FinancialReportfortheyearended31December2007


Notes 2007 2006


Other revenue - - Total revenue from continuing operations - -

Expenses from continuing operationsOther expenses - -

Total expenses from continuing operations - -

- -

Hunter Uni-Clinics Pty Ltd

Operating result attributable to members of The Hunter Uni-Clinics Pty Ltd



Notes 2007 2006


Other revenue - - Total revenue from continuing operations - -

Expenses from continuing operationsOther expenses - -

Total expenses from continuing operations - -

- -


Operating result attributable to members of The Hunter Uni-Clinics Pty Ltd




Hunter Uni-Clinics Pty LtdBalance Sheetas at 31 December 2007

Notes 2007 2006


Cash and cash equivalents 3 1,688 1,673 Other non-financial assets - -

Total Current Assets 1,688 1,673

Non-Current AssetsOther non-financial assets - -

Total Non-Current Assets - -

Total Assets 1,688 1,673


Trade and other payables - - Total Current Liabilities - -

Non-Current LiabilitiesTrade and other payables 4 1,685 1,670

Total Non-Current Liabilities 1,685 1,670

Total Liabilities 1,685 1,670

Net Assets 3 3

EquityRetained surplus - - Issued capital 8 3 3

Total Equity 3 3


Hunter Uni-Clinics Pty LtdBalance Sheetas at 31 December 2007

Notes 2007 2006


Cash and cash equivalents 3 1,688 1,673 Other non-financial assets - -


Non-Current AssetsOther non-financial assets - -

Total Non-Current Assets - -

Total Assets 1,688 1,673


Trade and other payables - - Total Current Liabilities - -

Non-Current LiabilitiesTrade and other payables 4 1,685 1,670

Total Non-Current Liabilities 1,685 1,670


Net Assets 3 3

EquityRetained surplus - - Issued capital 8 3 3

Total Equity 3 3




Notes 2007 2006

$ $

Total equity at the beginning of the year 3 3

Operating result for the period - - Total recognised income and expense for the period - -

Total equity at the end of the year 3 3

Total recognised income and expense for the year is attributable to:Hunter Uni-Clinics Pty Ltd - -




Notes 2007 2006

$ $

Total equity at the beginning of the year 3 3

Operating result for the period - - Total recognised income and expense for the period - -

Total equity at the end of the year 3 3

Total recognised income and expense for the year is attributable to:Hunter Uni-Clinics Pty Ltd - -




Hunter Uni-Clinics Pty LtdCash Flow Statementfor the Year Ended 31 December 2007

Notes 2007 2006

$ $Cash Flows From Operating Activities

Other payments - - Net cash provided by/(used in) operating activities 7 - -

Cash Flows From Investing ActivitiesLoans from related parties 15 - Repayments of loans by related parties - (45)

Net cash provided by/(used in) investing activities 15 (45)

Cash Flows From Financing ActivitiesProceeds from issue of shares - -

Net cash inflow (outflow) from financing activities - -

Net increase/(decrease) in cash and cash equivalents 15 (45)

Cash and cash equivalents at the beginning of the financial year 1,673 1,718

Cash and cash equivalents at the end of the financial year 3 1,688 1,673


Hunter Uni-Clinics Pty LtdCash Flow Statementfor the Year Ended 31 December 2007

Notes 2007 2006


Other payments - - Net cash provided by/(used in) operating activities 7 - -

Cash Flows From Investing ActivitiesLoans from related parties 15 - Repayments of loans by related parties - (45)

Net cash provided by/(used in) investing activities 15 (45)

Cash Flows From Financing ActivitiesProceeds from issue of shares - -

Net cash inflow (outflow) from financing activities - -

Net increase/(decrease) in cash and cash equivalents 15 (45)

Cash and cash equivalents at the beginning of the financial year 1,673 1,718

Cash and cash equivalents at the end of the financial year 3 1,688 1,673



Hunter Uni-Clinics Pty LtdContents of the Notes to the Financial Statementsfor the Year Ended 31 December 2007

Note Contents1. Summary of Significant Accounting Policies2. Trust liabilities and right of indemnity3. Cash and cash equivalents4. Trade and other payables5. Key management personnel disclosures6. Events occurring after the balance sheet date7. Reconciliation of operating result after income tax to net cash inflow from operating activities 8. Issued capital9. Financial risk management

5

92 | VOLUME 2 ANNUAL REPORT 2007

Hunter Uni-Clinics Pty LtdNotes to the Financial Statementsfor the Year Ended 31 December 2007


Australia

Corporate trustee of Cessnock Uni-Clinic Trust.


b) Compliance with IFRSs

c) Historical cost convention


e) Cash and cash equivalents

f)

For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.


The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report is for the entity known as Hunter Uni-Clinics Pty Ltd, as an individual entity. The company is a for-profit entity and it has no cash generating units. The company was established and has its domicile in Australia. The principal place of business is:

19 Foster Street

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

Cessnock NSW 2325

The principal activities of the business are:


This financial report is a general purpose financial report which has been prepared on an accrual basis in accordance with Australian Accounting Standards, AASB Interepretations, Public Finance and Audit Act 1983, the requirements of the Department of Education, Employment and Workplace Relations and other State/Australian Government legislative requirements.

The financial statements and notes of the entity comply with Australian Accounting Standards, some of which contain requirements specific to not-for-profit entities that are inconsistent with IFRS requirements.

6



2. TRUST LIABILITIES AND RIGHT OF INDEMNITY

2007 2006$ $

Current LiabilitiesPayables 241,185 81,197 Provisions 20,320 14,084 Total Current Liabilities 261,505 95,281

Non-Current LiabilitiesOther - - Total Non-Current Liabilities - -


Rights of indemnity for liabilities incurred by the company on behalf of the Cessnock Uni-Clinic Trust not recorded in the financial statements of Hunter Uni-Clinics Pty Ltd were: 261,505 95,281

3. CASH AND CASH EQUIVALENTS

2007 2006$ $

Cash at bank and on hand 1,688 1,673 Total cash and cash equivalents 1,688 1,673


Balance as above 1,688 1,673 Balance per statement of cash flows 1,688 1,673

The above figures are reconciled to cash at the end of the year as shown in the statement of cash flows as follows:

Liabilities of the Cessnock Uni-Clinic Trust not recorded in the financial statements of the company were:

Hunter Uni-Clinics Pty Ltd acts solely as trustee of Cessnock Uni-Clinic Trust and liabilities have been incurred on behalf of that trust in the company's capacity as corporate trustee.

Liabilities incurred on behalf of the Trust are not recognised in the financial report when it is not probable that Hunter Uni-Clinics Pty Ltd will have to meet any of those trust liabilities from its own resources. When it is probable that Hunter Uni-Clinics Pty Ltd will have to meet some trust liabilities a liability is brought to account. Details of the trust liabilities, the offsetting right of indemnity, and any deficiency in the right of indemnity are disclosed by way of note to the financial statements.

The assets of the trust, which lie behind the right of indemnity, are not directly available to meet any liabilities of Hunter Uni-Clinics Pty Ltd acting in its own right. The assets of the Cessnock Uni-Clinic Trust were sufficient to discharge all liabilities of the trust as at 31 December 2007 and 31 December 2006.

7

94 | VOLUME 2 ANNUAL REPORT 2007


4. TRADE AND OTHER PAYABLES

2007 2006$ $

CurrentOther current payables - - Total current trade and other payables - -

Non-currentLoan – The Cessnock Uni-Clinic Trust 1,685 1,670 Total non-current trade and other payables 1,685 1,670 Total trade and other payables 1,685 1,670


a) Names of responsible persons and executive officersThe following persons were responsible persons and executive officers of Hunter Uni-Clinics during the year:Professor John Marley - ChairmanDr Chris Matthews - DirectorHelen Milne - DirectorMr Gavin Rose - Director Mr John Price -Director

b) Remuneration of executive officers


7. RECONCILIATION OF OPERATING RESULT AFTER INCOME TAX TO NET CASH FLOWS FROM OPERATING ACTIVITIES

2007 2006

$ $

Operating result for the period - - Net cash provided by/(used in) operating activities - -

8. ISSUED CAPITAL

3 (2006: 3) fully paid ordinary shares 3 3

The parent entity of the company is the University of Newcastle, by virtue of its full ownership.

There are no matters or occurrences up to the present time which would materially affect the accounts or disclosures herein or which are likely to materially affect the future operations of Hunter Uni-Clinics Pty Ltd.

No remuneration was paid to any executive officers of Hunter Uni-Clinics Pty Ltd.

8





(ii) Price Risk


(b) Credit Risk

(c) Liquidity Risk



The company's activities expose it to very few financial risks, specifically credit risk. The company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the entity and its trusts.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The trust uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date.The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Trust for similar financial instruments.



The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

Risk management is carried out under guidance provided by the Board of Directors.

The company is not exposed to foreign exchange risk.

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.

The company's main interest rate risk arises from cash and cash equivalents.

The company does not have any investments in equity securities and as such is not exposed to price risk.

9

CESSNOCKUNI-CLINICTRUST



Notes 2007 2006


Investment income 2 7,267 7,997 Other revenue 3 1,727,103 1,485,729


Expenses from continuing operationsEmployee related expenses 4 1,464,244 1,057,975 Depreciation 5 38,368 26,719 Repairs and maintenance 6 8,575 10,243 Other expenses 7 282,984 349,889


(59,801) 48,901

- -

(59,801) 48,901

Cessnock Uni-Clinic TrustIncome Statement

Net profit available for distribution


Distribution to beneficiaries

Accumulated income at end of financial year


Notes 2007 2006


Investment income 2 7,267 7,997 Other revenue 3 1,727,103 1,485,729


Expenses from continuing operationsEmployee related expenses 4 1,464,244 1,057,975 Depreciation 5 38,368 26,719 Repairs and maintenance 6 8,575 10,243 Other expenses 7 282,984 349,889


(59,801) 48,901

- -

(59,801) 48,901

Cessnock Uni-Clinic TrustIncome Statement

Net profit available for distribution


Distribution to beneficiaries

Accumulated income at end of financial year



Cessnock Uni-Clinic TrustBalance Sheetas at 31 December 2007

Notes 2007 2006


Cash and cash equivalents 8 276,217 113,873 Receivables 9 21,309 50,118 Other non-financial assets 11 4,840 14,268


Non-Current AssetsReceivables 9 1,685 1,670 Property, plant and equipment 10 147,664 165,112 Other non-financial assets 11 456 707


Total Assets 452,171 345,748


Trade and other payables 12 241,185 81,197 Provisions 13 20,320 14,084

Total Current Liabilities 261,505 95,281

Non-Current LiabilitiesOther liabilities - -



Net Assets 190,666 250,467

Equity Retained surplus 14 40,666 100,467 Unit capital 150,000 150,000

Total Equity 190,666 250,467



Notes 2007 2006






Total Assets 452,171 345,748







Net Assets 190,666 250,467


Total Equity 190,666 250,467



Notes 2007 2006






Total Assets 452,171 345,748







Net Assets 190,666 250,467


Total Equity 190,666 250,467



Cessnock Uni-Clinic Trust

2007 2006

$ $

Total equity at the beginning of the year 250,467 201,566

Operating result for the period (59,801) 48,901 Total recognised income and expense for the period (59,801) 48,901

Total equity at the end of the year 190,666 250,467

Total recognised income and expense for the year is attributable to:Cessnock Uni-Clinic Trust (59,801) 48,901


for the Year Ended 31 December 2007Statement of Changes in Equity

Cessnock Uni-Clinic Trust

2007 2006

$ $

Total equity at the beginning of the year 250,467 201,566

Operating result for the period (59,801) 48,901 Total recognised income and expense for the period (59,801) 48,901

Total equity at the end of the year 190,666 250,467

Total recognised income and expense for the year is attributable to:Cessnock Uni-Clinic Trust (59,801) 48,901




Cessnock Uni-Clinic TrustCash Flow Statementfor the Year Ended 31 December 2007

Notes 2007 2006


Interest received 7,267 7,997 Receipts from other customers 1,786,324 1,463,937 Payments to employees and related agencies (1,414,133) (1,087,252) Payments to suppliers (incl. GST) (196,194) (375,183)

Net cash provided by/(used in) operating activities 19 183,264 9,499

Cash Flows From Investing ActivitiesPayments for property, plant and equipment (20,920) (84,133) Advance of loan – Hunter Uni-Clinics Pty Ltd - -


Cash Flows From Financing ActivitiesProceeds from issue of units - -

Net cash provided by/(used in) financing activities - -

Net increase/(decrease) in cash and cash equivalents 162,344 (74,634) Cash and cash equivalents at the beginning of the financial year

113,873 188,507

8 276,217 113,873



Cessnock Uni-Clinic TrustCash Flow Statementfor the Year Ended 31 December 2007

Notes 2007 2006


Interest received 7,267 7,997 Receipts from other customers 1,786,324 1,463,937 Payments to employees and related agencies (1,414,133) (1,087,252) Payments to suppliers (incl. GST) (196,194) (375,183)


Cash Flows From Investing ActivitiesPayments for property, plant and equipment (20,920) (84,133) Advance of loan – Hunter Uni-Clinics Pty Ltd - -


Cash Flows From Financing ActivitiesProceeds from issue of units - -

Net cash provided by/(used in) financing activities - -

Net increase/(decrease) in cash and cash equivalents 162,344 (74,634) Cash and cash equivalents at the beginning of the financial year

113,873 188,507

8 276,217 113,873




Cessnock Uni-Clinic TrustContents of the Notes to the Financial Statementsfor the Year Ended 31 December 2007

Note Contents1. Summary of significant accounting policies2. Investment income3. Other revenue4. Employee related expenses5. Depreciation6. Repairs and maintenance7. Other expenses8. Cash and cash equivalents9. Receivables10. Property, plant and equipment11. Other non-financial assets12. Trade and other payables13. Provisions14. Reserves and retained surplus15. Key management personnel disclosures16. Remuneration of auditors17. Commitments18. Events occurring after the balance sheet date19.20. Issued units21. Financial risk management

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

5


Cessnock Uni-Clinic TrustNotes to the Financial Statementsfor the Year Ended 31 December 2007


Australia

Health and medical services




d) Critical accounting estimates

e) Revenue recognition

(i) Services renderedServices rendered revenue is recognised when the service is performed.

(ii) Grant IncomeGrant income is recognised when the milestone is reached.

f) Income tax

g) Business combinations

h) Impairment of assets


The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying The University's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below.

The Trust is exempt from income tax under Commonwealth income taxation legislation.

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other 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. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

The financial statements and notes of Cessnock Uni-Clinic Trust comply with Australian Accounting Standards, some of which contain requirements specific to not-for-profit entities that are inconsistent with IFRS requirements.

This financial report is a general purpose financial report which has been prepared on an accrual basis in accordance with Australian Accounting Standards, AASB Interpretations, Public Finance and Audit Act 1983, the requirements of the Department of Education, Employment and Workplace Relations (DEEWR).

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report is for the entity known as Cessnock Uni-Clinic Trust, as an individual entity. The trust is a not-for-profit entity (as profit is not its principal object) and it has no cash generating units. The trust was established and has its domicile in Australia. The principal place of business is:

Assist education and advancement of medical awareness

19 Foster Street

Revenue is recognised for the major business activities as follows:

Cessnock NSW 2325


The purchase method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the fair value of the instruments is their published market price as at the date of exchange, unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.


6




i) Cash and cash equivalents

j) Trade receivables

k)

Furniture and Fittings 3 - 15 yearsMedical equipment 3 - 15 years

l) Trade and other payables

m) Goods and services tax

n) Provisions

Property, Plant & Equipment are 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 asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Cessnock Uni-Clinic Trust and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Property, Plant and Equipment

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as a finance cost.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the Australian Taxation Office, are presented as operating cash flows.

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



Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment. Trade receivables are due for settlement no more than 30 days after end of month from the date of recognition.


The estimated useful life of each asset class is as follows:

Receivables and payables are state inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included with other receivables or payables in the balance sheet.

Provisions for legal claims are recognised when: Cessnock-Uni Clinic Trust has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.


Revenues, expenses, assets and certain liabilities are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the Australian Taxation Office. In this case, it is recognised as part of the cost acquisition of the asset or part of the expense.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the income statement.

7




o) Employee benefits(i) Wages and salaries, annual leave and sick leave


p) New Accounting Standards and Interpretations

(iii) AASB2007-7 Amendments to Australian Accounting Standards (1 January 2009)

q)


(i) AASB123 Borrowing Costs - Revised (1 January 2009)

Long service leave is not recognised until an employee accumulates five years of service or more.


(ii) AASB2007-6 Amendments to Australian Accounting Standards (1 January 2009)

(iv) AASB2007-8 Amendments to Australian Accounting Standards (1 January 2009)


Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employee's services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

The Trust has assessed the impact of these new standards and Interpretations and considers the impact to be insignificant.

(a) The Trust did not early adopt any new accounting standards that are not yet effective.

8




2007 2006$ $

Interest received 7,267 7,997 Total investment income 7,267 7,997

3. OTHER REVENUE 2007 2006$ $

Services rendered 1,477,798 1,061,281 Visiting medical officer payments 91,187 124,738 Practice incentive payment 73,799 54,051 Income from Hunter New England Health - 7,051 Government grants 49,664 209,563 General Practioner training allowance 28,460 28,041 Miscellaneous 6,195 1,004 Total other revenue 1,727,103 1,485,729


2007 2006$ $

Salaries 1,337,181 966,666 Superannuation 112,212 84,865 Workers' compensation 8,614 8,906 Annual leave 6,237 (2,462) Total employee related expenses 1,464,244 1,057,975

5. DEPRECIATION

2007 2006$ $

DepreciationFurniture and Fittings 36,562 25,784 Medical Equipment 1,806 935 Total depreciation 38,368 26,719


2007 2006$ $

Repairs and maintenance – general 8,575 10,243 Total repairs and maintenance 8,575 10,243

9



7. OTHER EXPENSES

2007 2006$ $

Advertising & international recruiting 5,185 6,552 After hours visits 6,987 11,735 Books & publications 237 421 Clinic rent 93,939 50,000 Consultancy 6,421 13,080 Legal and accounting 16,947 9,299 Medical supplies 52,514 60,322 Medicare repayment 23,614 - Non-capitalised equipment related expenses 22,609 23,230 Printing, postage & stationary 25,728 43,518 Staff amenities 4,323 3,814 Telecommunications 5,783 9,680 Travel, staff development & entertainment 12,048 29,510 Visiting medical office fees - 77,103 Other expenses 6,649 11,625 Total other expenses 282,984 349,889


2007 2006$ $

Cash at bank 276,217 113,873 Total cash and cash equivalents 276,217 113,873

a) Reconciliation to cash at the end of the year The above figures are reconciled to cash at the end of the year as shown in the cash flow statement as follows:

Balance as above 276,217 113,873 Balance per cash flow statement 276,217 113,873

9. RECEIVABLES

2007 2006$ $

CurrentDebtors 20,788 45,585 GST receivable 521 1,038 Advances and Prepayments - 3,495 Total current receivables 21,309 50,118

Non-currentLoan – Hunter Uni-Clinic Pty Ltd 1,685 1,670 Total non-current receivables 1,685 1,670 Total receivables 22,994 51,788

10



9. RECEIVABLES (cont'd)


The ageing of these receivables is as follows:2007 2006

$ $

3 to 6 months - - Over 6 months - -

- -

2007 2006$ $

3 to 6 months 508 1,095 Over 6 months - -

508 1,095

Movements in the provision for impaired receivables are as follows:

2007 2006$ $

At 1 January - - Provision for impairment recognised during the year - - Receivables written off during the year as uncollectible - -

- -

(b) Fair value and credit riskDue to the short-term nature of the current receivables, their carrying value is assumed to approximate their fair value.

As at 31 December 2007 current receivables of the group with a nominal value of $0 (2006: $0) were impaired. The amount of the provision was $0 (2006: $0).

As of 31 December 2007, trade receivables of $508.15 (2006: $1,095) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these receivables is as follows:

11




Furniture and fittings Medical Equipment Total

a) Cessnock Uni-Clinic Trust $ $ $

At 1 January 2006-Cost 132,081 9,352 141,433 Accumulated Depreciation (25,305) (694) (25,999) Net book amount 106,776 8,658 115,434

Year ended 31 December 2006Opening net book amount 106,776 8,658 115,434 Additions 76,397 - 76,397 Depreciation expense (25,784) (935) (26,719) Closing net book amount 157,389 7,723 165,112

At 31 December 2006-Cost 208,478 9,352 217,830 Accumulated Depreciation (51,089) (1,629) (52,718) Net book amount 157,389 7,723 165,112

Furniture and fittings Medical Equipment Total

b) Cessnock Uni-Clinic Trust $ $ $

Year ended 31 December 2007Opening net book amount 157,389 7,723 165,112 Additions 12,820 8,100 20,920 Depreciation expense (36,562) (1,806) (38,368) Closing net book amount 133,647 14,017 147,664

At 31 December 2007-Cost 221,298 17,453 238,751 Accumulated Depreciation (87,651) (3,436) (91,087) Net book amount 133,647 14,017 147,664


2007 2006$ $

CurrentAccrued Income 4,840 14,268 Total current other non-financial assets 4,840 14,268

Non-currentFormation expense 456 707 Total non-current other non-financial assets 456 707 Total non-financial assets 5,296 14,975

12




2007 2006$ $

CurrentTrade creditors - - Accrued expenses 107,623 20,628 Superannuation 7,866 - PAYG Tax 18,690 26,398 Medicare Australia 23,614 - Other current payables 83,392 34,171 Total current payables 241,185 81,197

Non-currentOther non-current payables - - Total non-current payables - - Total payables 241,185 81,197

13. PROVISIONS

2007 2006$ $

Current provisions expected to be settled within 12 monthsEmployee benefits; Annual Leave 20,320 14,084 Total current provisions 20,320 14,084

(a) Movements in Provisions

2007 2006Annual Leave $ $

Carrying amount at 1 January 14,084 16,546 Additional provisions recognised 6,236 (2,462) Carrying amount at 31 December 20,320 14,084

14. RETAINED SURPLUS

2007 2006

$ $Retained SurplusMovements in retained surplus were as follows: Retained surplus at 1 January 100,467 51,566 Operating result for the period (59,801) 48,901 Retained surplus at 31 December 40,666 100,467

13




a) Names of responsible persons and executive officersThe following persons were responsible persons and executive officers of the Cessnock Uni-Clinic Trust during the year:Professor John Marley - ChairmanDr Chris Matthews - DirectorMs Helen Milne - DirectorMr John Price - DirectorMr Gavin Rose - Director



2007 2006$ $

Assurance services1. Audit ServicesNSW Audit Office – audit of financial report 8,000 10,000

8,000 10,000

17. COMMITMENTS

2007 2006$ $

i) Operating Lease Commitments (excl. GST)

- within one year - 37,500 - 37,500


19.

2007 2006$ $

Operating result for the period (59,801) 48,900 Depreciation 38,368 26,719 (Increase)/decrease in receivables 24,782 (43,809)

13,174 (3,022) Increase/(decrease) in trade and other payables 136,891 (16,827) Increase/(decrease) in other provisions 29,850 (2,462) Net cash provided by/(used in) operating activities 183,264 9,499

(Increase)/decrease in property, plant & equipment

RECONCILIATION OF OPERATING RESULT TO NET CASH FLOWS FROM OPERATING ACTIVITIES

No payment is made to any of the executive officers listed above.

The Cessnock Uni Clinic Trust is not aware of any material financial impacts or changes date after 31 December 2007.

Commitments for minimum lease payments in relation to non-cancellable operations leases are payable as follows:

14



20. ISSUED UNITS

2007 2006

150,000 (2006: 150,000) fully paid ordinary units 150,000 150,000



(ii) Price Risk



Carrying 31 December 2007 Amount Profit Equity Profit Equity

$ $ $ $ $Financial AssetsCash and cash equivalents 276,217 (2,762) (2,762) 2,762 2,762 Accounts receivable 22,994 (230) (230) 230 230 Financial LiabilitiesTrade payables (241,185) 2,412 2,412 (2,412) (2,412) Total increase/(decrease) (2,992) (2,992) 2,992 2,992

(b) Credit Risk

(c) Liquidity Risk

31 Dec 2008Opening balance for the period 276,217 Operating proceeds 2,000,000 Operating outflows 1,800,000 Closing balance for the period 476,217


1%

The trust is not exposed to foreign exchange risk.

The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Trust for similar financial instruments.

The trust does not have any investments in equity securities and as such is not exposed to price risk.

The trust's main interest rate risk arises from cash and cash equivalents.


Prudent liquidity risk management implies maintaining sufficient cash. Due to the dynamic nature of the underlying businesses, the Board aims at maintaining flexibility in funding by keeping sufficient cash reserves on hand.Management monitors rolling forecasts of the Trust's liquidity reserve on the basis of expected cash flow. Forecast liquidity reserve as of 31 December 2007 is as follows:


Interest rate risk


The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The trust uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date.

-1%

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.

The trust's activities expose it to a variety of financial risks: market risk (price risk, cash flow interest rate risk and fair value risk), credit risk and liquidity risk. The Trust's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the entity. The Trust uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and other price risks.

Risk management is carried out under guidance provided by the Board of Directors.

15

TUNRALTD

TheUniversityofNewcastleResearchAssociatesLimitedanditsControlledEntitiesACN000710074FinancialReportfortheyearended31December2007


DIRECTORS’ REPORT TUNRA Ltd

Your Directors submit the Financial Report of the Company and the consolidated Financial Report of the consolidated entity, being the Company and its controlled entities, for the year ended 31 December 2007 and the auditors’ report thereon.The Company is a public company limited by guarantee incorporated in NSW, Australia. The registered office and principal place of business is the Industry Development Centre, Callaghan NSW 2308.

DirectorsThe names of the Directors in office at any time during and since the end of the financial year:Geoffrey James Leonard (Chairman)Glenn Thurston Turner (Deputy Chairman)Graeme John Jameson (resigned October 07)Alan William Roberts (resigned October 07)Nicholas Andrew Saunders (resigned December 07)John CoyleBevil Milton Glover Jodi Leyanne McKay (resigned Februrary 07)John James O'Brien (appointed August 07)Lisa Maree Sutton-Gardner (appointed August 07)

Principal ActivitiesThe principal activities of the consolidated entity during the financial year were the undertaking of research and consulting projects. No significant changes in the nature of these activities occurred during the year.

DividendsThe Company, being a company limited by guarantee, does not pay dividends.

Review of OperationsOperations of the consolidated entity during the financial year were consistent with those of prior years. The consolidated entity derived a surplus of $303,822 for the year. The main source of income was from research, consulting and testing services provided

Likely Developments and Expected Results of OperationsThe consolidated entity will continue to pursue its policy of increasing its profitability in its major divisions in the next financial year.Further information is not included on the likely developments of the operations of the consolidated entity and the expected results of those operations because disclosure of the information would be likely to result in unreasonable prejudice to the consolidated entity.

Matters Subsequent to the End of the Financial YearThe Company is in the process of applying for a new name which has been resolved by the Board and the Council of the University of Newcastle. The new name to be adopted in 2008 will be Newcastle Innovation Ltd. No other matters or circumstances have arisen since the end of the financial year which have significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in financial years subsequent to the financial year ended 31 December 2007.

Significant Changes in the State of AffairsNo significant changes in the state of affairs of the consolidated entity occurred during the financial year.


The particulars of the qualifications, experience and special responsibilities of each Director are as follows:

Geoffrey James Leonard (Chair)B.Com. Hon.D.Bus (N’cle, NSW) F.C.A., F.C.P.A.Chartered Accountant. Graduate University of Newcastle in Commerce 1967. Member, Council University of Newcastle, 2006-2007. Member, Audit and Risk Management Committee, University of Newcastle 2006-2007. Chair, Faculty of Business and Law Advisory Board 2006-2007.Chairman, TUNRA 2006-2007. Chairman, The Salvation Army Newcastle Advisory Board 2001 - 2007. Chairman, Special Names Salvation Army Red Shield Appeal. Director H.M.R.I. 1998-2007. Member, The University of Newcastle Foundation Board 2004-2007. Chair, The University of Newcastle Endowment & Bequest Committee, 2005 – 2006. Awarded Hon. Doctor of Business, The University of Newcastle, 2002. Awarded the University of Newcastle Newton-John Award 1999. Formerly Managing Director and Deputy Chairman of Hospitals of Australia Limited 1986-1991.Board Member and Deputy Chairman of Private Hospitals Association of NSW 1989 - 1991. Board Member Australian Private Hospitals Association 1989-1991. Director of Healthscope Limited 1994-2000. Director The University of Newcastle Sport and Aquatic Centre Limited 1997-2001. Chairman, Hunter Medical Research Institute 1998 – 2003. Chairman, The University of Newcastle Graduate School of Business Advisory Board 2002-2005. TUNRA Director since 1992, Deputy Chairman since 1994 – 2005, Chairman since 2006.

Glenn Thurston Turner (Deputy Chair)B Comm, FCPA, FAICD(Dip), Comp IE Aust. Previously Managing Director Ludowici Limited. Director, Hunter Medical Research Institute. TUNRA Director since May, 1995, Deputy Chairman since 2006.

Graeme John JamesonA.O., BSc(UNSW) 1960, PhD (Cambridge) 1963, ASTC, HonFIEAust, FIChemE, FRACI, FAusImm, FTSE, FREng, FAA, Laureate Professor, Professor of Chemical Engineering; Director, Centre for Multiphase Processes since 1997, Head, Department of Chemical Engineering, the University of Newcastle, 1978 – 1990; Reader in Chemical Engineering, University of London 1971 – 1978; Peter Nicol Russell Medal, Institution of Engineers, 2005; Ian Wark Medal, Australian Academy of Science 2003; Centenary Medal 2003; Chemeca Medal, Institution of Engineers 2002; Honorary Fellow, Institution of Engineers 2000; President’s Medal, AusIMM 1999; K L Sutherland Memorial Medal, Australian Academy of Technological Sciences 1998; Fellow of the Australian Academy of Science 1996; Fellow of the Royal Academy of Engineering 1994; Fellow of the Australian Academy of Technological Sciences and Engineering 1991; R K Murphy Medal, Royal Australian Chemical Institute 1993; Applied Research Medal, Royal Australian Chemical Institute 1992; Clunies Ross National Science and Technology Award 1991; CSIRO External Research Medal 1990; CRA Award of Excellence in Chemical Engineering 1990. Officer, Order of Australia in the General Division (AO) 2005. TUNRA Director from December 1992 to October 2007.

Alan William RobertsAM, BE, PhD(UNSW), Hon.D.Univ, Hon D.Sc (Wollongong), ASTC, CPEng, HonFIEAust, MIMechE (UK), FTSE, Emeritus Professor, Centre for Bulk Solids and Particulate Technologies, The University of Newcastle. Dean, Faculty of Engineering and Professor, Department of Mechanical Engineering 1974-93. Engineering Applied to Agriculture Award, The Institution of Mechanical Engineers 1962; Institution Award Medal, The Institution of Engineers, Australia 1967; Sir George Julius Medal, The Institution of Engineers, Australia 1982; Award of Distinction, International Powder and Bulk Solids Conference, Chicago USA 1986; A.G.M. Michell Medal, The Institution of Engineers, Australia 1989; Elected Fellow, The Australian Academy of Technological Sciences and Engineering 1989;Elected Member Order of Australia (AM) - General Division 1990. Elected Honorary Fellow, Institution of Engineers, Australia 1992. Trinity Solids Handling Award, Institution of Mechanical Engineers (UK) 1994. Award, Australian Society for Bulk Solids Handling, the Institution of Engineers Australia 2000. Centenary Medal, 2003. Lifetime Achievement Award, British Materials Handling Board 2007. TUNRA Director from March 1975 to October 2007.

Nicholas Andrew SaundersMD, Hon LLD (Monash), FRACP, Vice-Chancellor and President of the University of Newcastle. Chair of the National Health and Medical Research Council (2000 – 2003). Member of Higher Education Council (1994-1997), Prime Minister’s Science Engineering and Innovation Council (2000-2003), the Australian Research Council (2001-2003), the Aboriginal and Torres Strait Islander Health Council (2000-2003). Chair (2000 – 2002) of the Committee of Deans of Australian Medical Schools. Awarded the Centenary Medal from the Commonwealth Government for contribution to academic medicine in 2002. Director Neurosciences Australia Ltd. Director Hunter Medical Research Institute. Directorship of Graduate Careers Australia since 2005. TUNRA Director from October 2004 to December 2007.

John CoyleCommerce (Ecs) (Uni of NSW), Executive Officer of HunterNet, Managing Director of BEP Engineering and Treloar Group of Companies. Executive Officer Hunter Net Co-operative Ltd. Past Chairman of HunterNet, Director of HunterNet Group Training Company, Treloar and Section Councillor on NSW Council AIG, member and past Chairman of Hunter Manufacturing Council and past Director and Vice Chairman of the Hunter Export Centre. Member, TAFE NSW – Hunter Institute Advisory Council, Director of the Hunter Community Foundation, TUNRA Director since October 2005.

Bevil Milton GloverBSc (Honours), Masters of Science and Diploma in Education (University of Melbourne), PhD Applied Mathematics (University of Melbourne), current Deputy Vice-Chancellor (Research), The University of Newcastle in Newcastle, NSW. Adjunct Professorial Fellowship in the WA Centre of Excellence in Industrial Optimization. Has held various Board positions on Cooperative Research Centres and other research organisations.

Jodi Leyanne McKayCorporate Communications Director Enigma Pty Ltd, Director of Hunter Medical Research Institute (HMRI) and Director of Hunter Manufacturers Association (HMA). News Presenter and Executive Producer NBN Late Edition News (1994-2003), Past Chair of HMRI Foundation (2004-2006), Salvation Army Hunter Red Shield Appeal Committee Board Member (2000-2002). TUNRA Director from April 2006 to April 2007.

John James O'BrienB.V.Sc (Sydney). Managing Director of Jurox Pty Ltd. Past Chairman of the listed fashion group, Palmer Corporation (1994-2000). Current Chair of the Hunter Area Consultative Committee, Director of the National Basketball League representing Singapore and Director of the Hunter Founders Forum. TUNRA Director since August 2007.

Lisa Maree Sutton GardnerBusiness owner and Managing Director Enigma Group (1992-current). Young Business Person of the Year (2003) Hunter Business Chamber. Newcastle TUNRA Director since August 2007.

Directors' MeetingsThe number of directors' meetings held in the year and the number of meetings attended by each director while holding office in the Company during the year are:

BOARD MEETINGSDirector Number Held While in Office Number AttendedGJ Leonard 6 6GT Turner 6 6GJ Jameson 5 3AW Roberts 5 4N A Saunders 5 4J Coyle 6 6B M Glover 6 5J L McKay 2 0J J O'Brien 2 1 L M Sutton-Gardner 2 1

The Company is a company limited by guarantee and has no share capital.TUNRA currently has 7 members.

Insurance of OfficersDuring the year the Company paid a premium for the Directors and Officers Liability insurance policy. This insurance policy provides cover for the Directors named in this report, the Company Secretary, Officers and former Directors and Officers of the Company. The contract prohibits the disclosure of the nature of the liability and the amount of the premium.

Declaration of Audit IndependenceA copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page

Signed in accordance with a resolution of the Board of Directors, made pursuant to s298(2) of the Corporations Act 2001.......................................................Geoffrey James LeonardDirectorNewcastle


18/04/ 2008
























Notes Consolidated The Company

2007 2006 2007 2006

$ $ $ $

Revenue from continuing operations 2 10,501,087 12,004,493 10,501,087 11,964,501

Investment income 3 628,402 910,822 627,982 2,726,603

Other revenue and income 4 - (4,856) - 8,024

23 11,858 1,757,223 - -

Total revenue from continuing operations 11,141,347 14,667,682 11,129,069 14,699,128

Expenses from continuing operations

Project expenses and consumables 1,762,037 2,067,589 1,772,182 1,999,213

Depreciation and amortisation 5 430,403 373,717 393,347 331,005

Employee related expenses 6 5,184,275 5,615,943 5,184,275 5,587,613

Professional Services 3,235,512 5,885,148 3,233,652 5,864,654

Other expenses 7 225,298 516,680 237,977 902,051

Total expenses from continuing operations 10,837,525 14,459,077 10,821,433 14,684,536

303,822 208,605 307,636 14,592

- (21,927) - -

303,822 230,532 307,636 14,592

TUNRA Ltd

Profit/(loss) attributable to minority interests



Profit for the year

Profit attributable to members of TUNRA Ltd

Share of Net Profit of associates accounted for using the equity method


2007 2006 2007 2006

$ $ $ $

Revenue from continuing operations 2 10,501,087 12,004,493 10,501,087 11,964,501

Investment income 3 628,402 910,822 627,982 2,726,603

Other revenue and income 4 - (4,856) - 8,024

23 11,858 1,757,223 - -

Total revenue from continuing operations 11,141,347 14,667,682 11,129,069 14,699,128

Expenses from continuing operations

Project expenses and consumables 1,762,037 2,067,589 1,772,182 1,999,213

Depreciation and amortisation 5 430,403 373,717 393,347 331,005

Employee related expenses 6 5,184,275 5,615,943 5,184,275 5,587,613

Professional Services 3,235,512 5,885,148 3,233,652 5,864,654

Other expenses 7 225,298 516,680 237,977 902,051

Total expenses from continuing operations 10,837,525 14,459,077 10,821,433 14,684,536

303,822 208,605 307,636 14,592

- (21,927) - -

303,822 230,532 307,636 14,592

TUNRA Ltd

Profit/(loss) attributable to minority interests



Profit for the year

Profit attributable to members of TUNRA Ltd

Share of Net Profit of associates accounted for using the equity method


TUNRA LtdBalance Sheetas at 31 December 2007


2007 2006 2007 2006

ASSETS $ $ $ $

Current Assets

Cash and cash equivalents 8 499,694 1,074,058 490,183 857,053

Trade and other receivables 9 1,911,519 1,602,090 1,910,124 1,599,615

Inventories 10 - - - -

Other current assets 11 111,109 182,723 111,109 182,723

Held to maturity investments 12 8,840,000 7,450,000 8,840,000 7,450,000

Total Current Assets 11,362,322 10,308,871 11,351,416 10,089,391

Non-Current Assets

Investments accounted for using the equity method 23 210,580 198,722 - -

Other Financial Assets 13 - - 252,417 265,096

Available for sale financial assets 14 1,001,680 1,927,643 1,001,680 1,927,643

Property, plant & equipment 15 179,298 174,730 163,723 148,094

Intangible assets 16 244,760 300,509 225,382 219,448

Total Non-Current Assets 1,636,318 2,601,604 1,643,202 2,560,281

Total Assets 12,998,640 12,910,475 12,994,618 12,649,672

LIABILITIES

Current Liabilities

Trade and other payables 17 1,548,749 2,111,902 1,545,249 2,502,353

Provisions 18 665,563 702,829 665,563 702,829

Other liabilities 19 7,536,857 6,537,694 7,536,857 6,537,694

Total Current Liabilities 9,751,169 9,352,425 9,747,669 9,742,876

Non-Current Liabilities

Provisions 18 129,368 98,228 129,368 98,228


Total Liabilities 9,880,537 9,450,653 9,877,037 9,841,104

Net Assets 3,118,103 3,459,822 3,117,581 2,808,568

Equity

Reserves 20 1,711,102 1,500,373 1,711,102 1,500,373

Retained profits 20 1,407,001 1,462,594 1,406,479 1,308,195

Total entity interest 3,118,103 2,962,967 3,117,581 2,808,568

Minority Interest 24 - 496,855 - - Total Equity 3,118,103 3,459,822 3,117,581 2,808,568


TUNRA LtdBalance Sheetas at 31 December 2007


2007 2006 2007 2006

ASSETS $ $ $ $

Current Assets

Cash and cash equivalents 8 499,694 1,074,058 490,183 857,053

Trade and other receivables 9 1,911,519 1,602,090 1,910,124 1,599,615

Inventories 10 - - - -

Other current assets 11 111,109 182,723 111,109 182,723

Held to maturity investments 12 8,840,000 7,450,000 8,840,000 7,450,000

Total Current Assets 11,362,322 10,308,871 11,351,416 10,089,391

Non-Current Assets

Investments accounted for using the equity method 23 210,580 198,722 - -

Other Financial Assets 13 - - 252,417 265,096

Available for sale financial assets 14 1,001,680 1,927,643 1,001,680 1,927,643

Property, plant & equipment 15 179,298 174,730 163,723 148,094

Intangible assets 16 244,760 300,509 225,382 219,448

Total Non-Current Assets 1,636,318 2,601,604 1,643,202 2,560,281

Total Assets 12,998,640 12,910,475 12,994,618 12,649,672

LIABILITIES

Current Liabilities

Trade and other payables 17 1,548,749 2,111,902 1,545,249 2,502,353

Provisions 18 665,563 702,829 665,563 702,829

Other liabilities 19 7,536,857 6,537,694 7,536,857 6,537,694

Total Current Liabilities 9,751,169 9,352,425 9,747,669 9,742,876

Non-Current Liabilities

Provisions 18 129,368 98,228 129,368 98,228



Net Assets 3,118,103 3,459,822 3,117,581 2,808,568

Equity

Reserves 20 1,711,102 1,500,373 1,711,102 1,500,373

Retained profits 20 1,407,001 1,462,594 1,406,479 1,308,195

Total entity interest 3,118,103 2,962,967 3,117,581 2,808,568

Minority Interest 24 - 496,855 - - Total Equity 3,118,103 3,459,822 3,117,581 2,808,568



TUNRA Ltd


2007 2006 2007 2006

$ $ $ $

Total equity at the beginning of the financial year 3,459,822 3,254,026 2,808,568 2,796,785

Changes in the fair value of available-for-sale financial assets, net of tax

20 1,377 (2,809) 1,377 (2,809)

Net income recognised directly in equity 1,377 (2,809) 1,377 (2,809)

Profit for the year 303,822 208,605 307,636 14,592

Total recognised income and expense for the year 305,199 205,796 309,013 11,783

Transactions with equity holders in their capacity as equity holders:

Disposal of minority interest equity (646,918) - - -

Total equity at the end of the financial year 3,118,103 3,459,822 3,117,581 2,808,568



TUNRA Ltd


2007 2006 2007 2006

$ $ $ $

Total equity at the beginning of the financial year 3,459,822 3,254,026 2,808,568 2,796,785

Changes in the fair value of available-for-sale financial assets, net of tax

20 1,377 (2,809) 1,377 (2,809)

Net income recognised directly in equity 1,377 (2,809) 1,377 (2,809)

Profit for the year 303,822 208,605 307,636 14,592

Total recognised income and expense for the year 305,199 205,796 309,013 11,783

Transactions with equity holders in their capacity as equity holders:

Disposal of minority interest equity (646,918) - - -

Total equity at the end of the financial year 3,118,103 3,459,822 3,117,581 2,808,568




TUNRA LtdCash Flow Statement for the Year Ended 31 December 2007

Notes Consolidated The Company2007 2006 2007 2006

$ $ $ $Cash Flows From Operating Activities

Receipts from customers (inc. GST) 11,658,924 13,612,585 11,658,924 13,467,211 Payments to suppliers and employees (incl. GST) (11,070,285) (14,574,174) (11,067,016) (14,550,920) Interest received 628,402 522,648 627,982 521,077 Dividends Received 1,336,674 - 1,336,674

Net cash provided by/(used in) operating activities 31 1,217,041 897,733 1,219,890 774,042

Cash Flows From Investing ActivitiesPayments for property, plant & equipment (85,154) (125,880) (85,154) (125,880)

(349,944) (326,774) (329,756) (313,699) Proceeds from sale of property, plant & equipment - 122,244 - 119,994 Proceeds from sale of investment bonds 234,552 - 234,552 - Payments for held to maturity investments (1,390,000) (600,000) (1,390,000) (600,000) Payment for investments (16,402) (21,113) (16,402) (21,113)

Net cash provided by/(used in) investing activities (1,606,948) (951,523) (1,586,760) (940,698)

Cash Flows From Financing ActivitiesProceeds from issue of shares - - - - Payments to equity holders on subsidiary wind-up (184,457) - - -

Net cash provided by/(used in) financing activities (184,457) - - -

Net increase/(decrease) in cash and cash equivalents (574,364) (53,790) (366,870) (166,656) Cash and cash equivalents at beginning of the year 1,074,058 1,127,848 857,053 1,023,709

Cash and cash equivalents at end of the year 8 499,694 1,074,058 490,183 857,053

Payment for intellectual property


TUNRA LtdCash Flow Statement for the Year Ended 31 December 2007

Notes Consolidated The Company2007 2006 2007 2006

$ $ $ $Cash Flows From Operating Activities

Receipts from customers (inc. GST) 11,658,924 13,612,585 11,658,924 13,467,211 Payments to suppliers and employees (incl. GST) (11,070,285) (14,574,174) (11,067,016) (14,550,920) Interest received 628,402 522,648 627,982 521,077 Dividends Received 1,336,674 - 1,336,674

Net cash provided by/(used in) operating activities 31 1,217,041 897,733 1,219,890 774,042

Cash Flows From Investing ActivitiesPayments for property, plant & equipment (85,154) (125,880) (85,154) (125,880)

(349,944) (326,774) (329,756) (313,699) Proceeds from sale of property, plant & equipment - 122,244 - 119,994 Proceeds from sale of investment bonds 234,552 - 234,552 - Payments for held to maturity investments (1,390,000) (600,000) (1,390,000) (600,000) Payment for investments (16,402) (21,113) (16,402) (21,113)

Net cash provided by/(used in) investing activities (1,606,948) (951,523) (1,586,760) (940,698)

Cash Flows From Financing ActivitiesProceeds from issue of shares - - - - Payments to equity holders on subsidiary wind-up (184,457) - - -

Net cash provided by/(used in) financing activities (184,457) - - -

Net increase/(decrease) in cash and cash equivalents (574,364) (53,790) (366,870) (166,656) Cash and cash equivalents at beginning of the year 1,074,058 1,127,848 857,053 1,023,709

Cash and cash equivalents at end of the year 8 499,694 1,074,058 490,183 857,053

Payment for intellectual property



TUNRA LtdContents of the Notes to the Financial Statementsfor the Year Ended 31 December 2007 Note Contents

1. Summary of significant accounting policies2. Revenue3. Investment income4. Other revenue and income5. Depreciation and Amortisation6. Employee related expenses7. Other expenses8. Cash and cash equivalents9. Trade and other receivables

10. Inventories11. Other current assets12. Held to maturity investments13. Other financial assets14. Available-for-sale financial assets15. Property, plant and equipment16. Intangible assets17. Trade and other payables18. Provisions19. Other liabilities20. Reserves and retained surplus21. Directors' renumeration22. Subsidiaries23. Investments accounted for using the equity method24. Minority interest25. Related party information26. Renumeration of auditors27. Segment reporting28. Contingencies29. Commitments30. Events occurring after reporting date31.32. Financial Risk Management

Reconciliation of profit for the period to net cash inflow from operating activities


TUNRA Ltd


The Company is a public company limited by guarantee incorporated in NSW, Australia.




(i) Subsidiaries

(ii) Associates

b) Revenue recognition

Rendering of Services

Interest Income

Interest income is recognised as it accrues.

Dividends Received

c) Income tax

The consolidated financial report of the consolidated entity includes the financial report of the Company, being the chief entity, and its controlled entities. Where an entity began to be controlled during the year, the results are included only from the date control commenced. Where an entity ceases to be controlled during the year, results are included only up to the date control ceases.

The balances, and effects of transactions between the controlled entities and the chief entity included in the consolidated financial report have been eliminated.

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid.

The consolidated entity is exempt from income tax.

Revenue from rendering of services is recognised in the period in which the services are provided.

Revenue from dividends received is recognised in the period in which the dividends are received.

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

This general purpose financial report has been prepared in accordance with Australian Accounting Standards, including the Australian Accounting Interpretations, Corporations Act 2001 and the Public Finance and Audit Act 1983.

Associates are all entities over which the Group has significant influence but not control. Investments in associates are accounted for in the parent entity financial statements using the cost method and in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost.

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit and loss, certain classes of property, plant and equipment and investment property.

The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying TUNRA Ltd's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note (p) below. 2007 is the third reporting year under AIFRS.

for the Year Ended 31 December 2007Notes to the Financial Statements

Therappy Pty Ltd a 60% subsidiary of TUNRA was de-registered during 2007. The prior year financial report represents the consolidated figures for Therappy and Probiotic Health, whilst the 2007 report contains Probiotic Health for the whole year and Therappy until its


TUNRA Ltd


d) Acquisitions of assets

e) Impairment of assets

f) Cash and cash equivalents

g) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

In respect of not-for-profit entities, a reversal of an impairment loss on a revalued asset is credited directly to equity under the heading revaluation reserve. However, to the extent that an impairment loss on the same class of asset was previously recognised in profit or loss, a reversal of that impairment loss is also recognised in profit or loss.

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.


The recoverable amount for most assets is measured at the higher of depreciated replacement cost and fair value less costs to sell. Recoverable amount for assets held primarily to generate net cash inflows is measured at the higher of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell. It is deemed that, in the event of the loss of an asset, the future economic benefits arising from the use of the asset will be replaced unless a specific decision to the contrary has been made.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Groups shares of the identifiable net assets acquired is recorded as goodwill . If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

Goodwill and intangible assets with indefinite useful lives are tested annually as to whether their carrying value exceeds their recoverable amount. All other assets are assessed annually for indicators of impairment. If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset's carrying amount exceeds its recoverable amount, the difference is written-off by a charge to the income statement except to the extent that the write-down can be debited to an asset revaluation reserve amount applicable to that class of asset.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

In respect of not-for-profit entities, an impairment loss on a revalued asset is recognised directly against any revaluation reserve in respect of the same class of asset to the extent that the impairment loss does not exceed the amount in the revaluation reserve for that same class of

The purchase method of accounting is used to account for all acquisitions of assets (including business combinations) regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition.

Notes to the Financial Statements


TUNRA Ltd


h) Investments and other financial assets

(i) Held-to-maturity invesmtents

(ii) Available for sale financial assets

i) Fair value estimation

j) Property, Plant and Equipment

The useful life of asset classes is:

Motor vehicles and equipment 3 - 5 years

k) Intangible assets

(i) Intellectual property

(ii) SoftwareExpenditure on software, being software that is not an integral part of the related hardware, is capitalised. Capitalised expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected benefit, which is 3-5 years.


Available for sale finacial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available for sale financial assets, the cumulative loss - measured as the difference between the acquistion cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in the income statement, impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.


The fair value of financial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. TUNRA uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date.The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to TUNRA for similar financial instruments.

Expenditure on intellectual property, being the application of research findings or other knowledge to a plan or design for the production of new or substantially improved products or services before the start of commercial production or use, is capitalised if the product or service is technically and commercially feasible and adequate resources are available to complete development. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate production of overheads. Other intellectual property expenditure is recognised in the income statement as an expense incurred. Capitalised expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected benefit, which varies from 10 – 16 years.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.


The entity classifies its investments in the following categories: held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.

Notes to the Financial Statementsfor the Year Ended 31 December 2007

Motor vehicles and equipment are 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 asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.


TUNRA Ltd


l ) Trade and other payables

m) Provisions

n) Employee benefits(i) Wages and salaries, annual leave and sick leave


o) Rounding of amounts

p) Critical accounting estimates and judgements

q) Early Adoption

The following standards are likely to be applicable to the Company.

Standard Issue Date Operative DateAASB 101 - Presentation of Financial Statements Sep-07 1-Jan-092007-3 - Amendments to Australian Standards Feb-07 1-Jan-092007-6 - Amendments to Australian Standards Jun-07 1-Jan-092007-8 - Amendments to Australian Standards Sep-07 1-Jan-092007-9 - Amendments to Australian Standards Dec-07 1-Jul-08

r) Capital Risk Management

s) Issue Date

Financial assets - managements makes judgements in determining whether assets are classified as available-for-sale, held-to-maturity or

TUNRA makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Liabilities for wages and salaries, including on-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employee's services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

The financial report was authorised for issue on the 16th of April 2008.

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimate future cash outflows.

Provisions for legal claims are recognised when: TUNRA has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Australian Accounting Standards that have been recently issued or amended but are not yet effective have not been adopted in this financial report. It is considered that there will be no material changes to accounting policies and not material financial impact when these new accounting standards are first applied.

The company is of a kind referred to in Class order 98/0100, issued by the Australian Securities and Investments Commission, relating to the "rounding off" of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest the nearest dollar.


TUNRA’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide benefits for stakeholders.

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



TUNRA Ltd

Consolidated The Company2. REVENUE 2007 2006 2007 2006

$ $ $ $Sales RevenueRevenue from rendering services 10,501,087 12,004,493 10,501,087 11,964,501

10,501,087 12,004,493 10,501,087 11,964,501

3. INVESTMENT INCOMEInterest - other parties 628,402 522,648 627,982 521,077 Dividends Received 388,174 - 2,205,526 Total investment income 628,402 910,822 627,982 2,726,603

4. OTHER REVENUE AND INCOMEGains/(losses) on disposal of assets - (4,856) - 8,024

- (4,856) - 8,024

5. DEPRECIATION AND AMORTISATION

DepreciationPlant & Equipment 61,834 64,032 50,773 43,488 Motor Vehicles 18,752 21,653 18,752 21,653

80,586 85,685 69,525 65,141 AmortisationIntangibles 349,817 288,032 323,822 265,864

349,817 288,032 323,822 265,864 Total depreciation and amortisation 430,403 373,717 393,347 331,005


Consolidated The Company2007 2006 2007 2006

$ $ $ $Salaries 3,901,788 4,060,474 3,901,788 4,032,144 Payroll tax 290,590 447,848 290,590 447,848 Superannuation 651,363 624,580 651,363 624,580 Annual leave 334,915 375,960 334,915 375,960 Long Service Leave 5,619 107,081 5,619 107,081 Total employee benefits & on costs 5,184,275 5,615,943 5,184,275 5,587,613

7. OTHER EXPENSESDecrease/(increase) in value of subsidiaries and associates 29,639 (233,320) 42,318 152,051 Impairment loss for Available for Sale Financial Assets 193,659 - 193,659 - Donations to University 2,000 750,000 2,000 750,000 Total other expenses 225,298 516,680 237,977 902,051



TUNRA Ltd

8. CASH AND CASH EQUIVALENTSConsolidated The Company

2007 2006 2007 2006$ $ $ $

Cash at bank and on hand 499,694 1,074,058 490,183 857,053 Total cash and cash equivalents 499,694 1,074,058 490,183 857,053


Balance as above 499,694 1,074,058 490,183 857,053 Deposits held at banks - - - - Less: Bank overdrafts - - - - Balance per statement of cash flows 499,694 1,074,058 490,183 857,053

b) Cash at bank and on handCash at bank is interest bearing with interest rates on average being 5.63% (2006: 5.97%)

c) Deposits at call

9. TRADE AND OTHER RECEIVABLES Consolidated The Company

2007 2006 2007 2006$ $ $ $

CurrentDebtors 1,418,380 1,469,924 1,418,380 1,467,449 Less: Provision for Doubtful Debts (91,185) (154,872) (91,185) (154,872) Related Parties 72,779 129,610 72,779 129,610 Other Receivables 511,545 157,428 510,150 157,428 Total current receivables 1,911,519 1,602,090 1,910,124 1,599,615

Total Receivables 1,911,519 1,602,090 1,910,124 1,599,615

(a) Bad and doubtful trade receivables

(b) Other receivables

Consolidated The Company

10. INVENTORIES 2007 2006 2007 2006$ $ $ $

Current

Work in progress - - - - Total Inventories - - - -

11. OTHER CURRENT ASSETSConsolidated The Company

2007 2006 2007 2006

Current $ $ $ $

Accured income 111,109 161,390 111,109 161,390

Prepayments - 21,333 - 21,333

Total 111,109 182,723 111,109 182,723

Deposits held at banks are interest bearing with interest rates on average nil (2006: nil)

The above figures are reconciled to cash at the end of the year as shown in the statement of cash flows as follows:

The Company did not recognise a loss in respect of bad and doubtful trade receivables during the year ended 31 December 2007.

These amounts generally arise from transactions outside the usual operating activities of the Company. Interest may be charged at commercial rates where the terms of repayment exceed six months. Collateral is not normally obtained.



TUNRA Ltd

12. HELD TO MATURITY INVESTMENTS


2007 2006 2007 2006

$ $ $ $Interest Bearing Deposits (at cost) 8,840,000 7,450,000 8,840,000 7,450,000

13. OTHER FINANCIAL ASSETS


2007 2006 2007 2006

Non-Current Assets $ $ $ $

Shares in subsidiaries - - - 24,537

Shares in associates - - 252,417 240,559

Other listed securities - - - -

TOTAL - - 252,417 265,096

Consolidated The Company14. AVAILABLE-FOR-SALE FINANCIAL ASSETS 2007 2006 2007 2006

$ $ $ $Non-currentAt beginning of year 1,927,643 722,323 1,927,643 722,323 Revaluations (699,411) (72,282) (699,411) (72,282) Additions 8,000 1,277,602 8,000 1,277,602 Disposals (sale and redemption) (234,552) - (234,552) - At end of year 1,001,680 1,927,643 1,001,680 1,927,643

Listed Securities at Fair ValueShares – Matrikon 55,317 73,296 55,317 73,296 Shares – Viralytics 938,363 1,619,795 938,363 1,619,795 Options – Nusep Ltd 8,000 8,000 -

1,001,680 1,693,091 1,001,680 1,693,091 -

Unlisted Securities at Fair ValueCommonwealth Bank – Bonds - 234,552 - 234,552

- 234,552 - 234,552 TOTAL 1,001,680 1,927,643 1,001,680 1,927,643



TUNRA Ltd

15. PROPERTY, PLANT AND EQUIPMENTConsolidated The CompanyEquipment &

Motor VehiclesEquipment &

Motor Vehicles

$ $

At 1 January 2007

-Fair Value 797,672 754,447

Accumulated Depreciation (622,942) (606,353) Net book amount 174,730 148,094

Year ended 31 December 2007

Opening net book amount 174,730 148,094

Additions 85,154 85,154

Disposals -

Depreciation expense (80,586) (69,525) Carrying amount at 31 December 2007 179,298 163,723

At 31 December 2007

-Fair Value 882,826 839,601


At 1 January 2006

-Fair Value 855,549 774,394




Additions 125,880 125,880

Disposals (127,101) (111,970)

Depreciation expense (85,685) (65,141) Carrying amount at 31 December 2006 174,730 148,094

At 31 December 2006

-Fair Value 797,672 754,447




TUNRA Ltd

16. INTANGIBLE ASSETS


Intellectual Property

Intellectual Property

$ $

At 1 January 2007

Fair Value 2,234,330 1,713,878

Accumulated amortisation and impairment (1,933,821) (1,494,430) Net book amount 300,509 219,448



Additions 349,944 329,756

Disposals (55,876) -

Amortisation charge (349,817) (323,822) Closing net book amount 244,760 225,382

At 31 December 2007

Fair Value 2,156,126 2,043,634


At 1 January 2006

Fair Value 1,907,556 1,400,179




Additions 326,774 313,699

Impairment charge - -

Amortisation charge (288,037) (265,865) Closing net book amount 300,509 219,448

At 31 December 2006

Fair Value 2,234,330 1,713,878




TUNRA Ltd

17. TRADE AND OTHER PAYABLES Consolidated The Company

2007 2006 2007 2006$ $ $ $

CurrentTrade Creditors and Accruals 337,123 451,169 337,123 446,495 University Staff Funds 196,729 292,740 196,729 292,740 Related Parties Creditors 417,680 749,400 417,680 749,400 Other Creditors 597,217 618,593 593,717 1,013,718 Total current payables 1,548,749 2,111,902 1,545,249 2,502,353

18. PROVISIONS


$ $ $ $Current provisions expected to be settled within 12 monthsEmployee benefits;

Annual Leave 313,487 318,814 313,487 318,814 Long Service Leave 2,302 2,600 2,302 2,600

Professional Indemnity - - - - Sub-total 315,789 321,414 315,789 321,414

Current provisions expected to be settled after more than 12 monthsEmployee benefits;

Annual Leave 121,911 123,983 121,911 123,983 Long Service Leave 227,863 257,432 227,863 257,432

Sub-total 349,774 381,415 349,774 381,415

Total Current Provisions 665,563 702,829 665,563 702,829

Non Current

Provision for Long Service Leave 129,368 98,228 129,368 98,228

Total non-current provisions 129,368 98,228 129,368 98,228 Total provisions 794,931 801,057 794,931 801,057

Annual Leave

Long Service Leave

Professional Indemnity

18.(a) Movement in provisionsCONSOLIDATED

Annual Long Service Professional Leave Leave Indemnity

$ $ $CurrentCarrying amount at 1 January 2007 442,797 260,032 - Additional provisions recognised (7,399) (29,867) - Carrying amount at 31 December 2007 435,398 230,165 -

Non-CurrentCarrying amount at 1 January 2007 - 98,228 - Additional provisions recognised - 31,140 - Carrying amount at 31 December 2007 - 129,368 -

19. OTHER LIABILITIES Consolidated The Company

2007 2006 2007 2006$ $ $ $

CurrentFees in advance 230,439 131,587 230,439 131,587 Current Borrowings - - - - Project Liabilities 7,306,418 6,406,107 7,306,418 6,406,107 Total current other liabilities 7,536,857 6,537,694 7,536,857 6,537,694

Long service leave entitlements accrue at the rate of 13 weeks for 10 years service per full-time employee. It is estimated that 1% of all long service leave entitlements will be used within 12 months.

Professional Indemnity is provided for based on the reporting of potential projects which may involve professional indemnity issues. All provisions for professional indemnity would be settled within a 12 month period.

Annual leave entitlements accrue at the rate of 20 days per annum per full-time employee. It is estimated that 72% of all annual leave entitlements provided for will be used within a 12 month period.



TUNRA Ltd

20. RESERVES AND RETAINED SURPLUS

2007 2006 2007 2006$ $ $ $

(a) ReservesCapital profits reserve 5,000 5,000 5,000 5,000 Contingency reserve 323,128 323,128 323,128 323,128 Research support reserve 1,358,382 1,149,030 1,358,382 1,149,030 Available-for-sale assets reserve 24,592 23,215 24,592 23,215 Total reserves 1,711,102 1,500,373 1,711,102 1,500,373

Movements in reserves were :Capital profits reserveBalance as at 1 January 5,000 5,000 5,000 5,000 Transfer from accumulated funds - - - - Balance as at 31 December 5,000 5,000 5,000 5,000

Contingency reserveBalance as at 1 January 323,128 323,128 323,128 323,128 Transfer from accumulated funds - - - - Balance as at 31 December 323,128 323,128 323,128 323,128

Research support reserveBalance as at 1 January 1,149,030 826,917 1,149,030 826,917 Transfer from accumulated funds 209,352 322,113 209,352 322,113 Balance as at 31 December 1,358,382 1,149,030 1,358,382 1,149,030

Available-for-sale assets reserveBalance as at 1 January 23,215 26,024 23,215 26,024 Valuation gain recognised 1,377 (2,809) 1,377 (2,809) Balance as at 31 December 24,592 23,215 24,592 23,215

(b) Retained Surplus

Retained surplus at beginning of year 1,462,594 1,554,175 1,308,195 1,615,716 Adjustment on adoption of AASB 132 and139, net of tax - - - - Net operating result 303,822 230,532 307,636 14,592 Disposal of minority interest (150,063) Transfer to reserves (209,352) (322,113) (209,352) (322,113) Retained surplus at the end of the year 1,407,001 1,462,594 1,406,479 1,308,195

(c) Nature and purpose of reservesCapital Profits Reserve – used for recognition of profits on disposal of capital itemsContingency Reserve – representing an appropriation of the net surplus to fund unforeseen circumstances resulting in lossesResearch Support Reserve – representing an appropriation of the net surplus of operating Divisions to support research by those Divisions


Available-for-sale Assets Reserve – used to record gains and losses arising from changes in the fair value of available-for-sale assets, until the investment is disposed of or is determined to be impaired, at which time the cumulative gain or loss recognised in the reserve is included in the profit or loss for the period.



TUNRA Ltd

21. DIRECTORS' REMUNERATION

All Directors of the Company and consolidated entity act in an honorary capacity.

22. SUBSIDIARIES

Name of EntityCountry of

IncorporationClass of Shares

2007 % 2006 %Australia Ordinary 0% 60%

Probiotic Health Pty Ltd Australia Ordinary 100% 100%

23. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

2007 2006 2007 2006

% % $ $(a) Carrying amountsNon listedVirotarg Pty Ltd 54.20% 54.20% 210,580 198,722 -principal activities are researching and developing a new treatment for cancer

Keystone Product Developments Pty Ltd - - - - - principal activities are researhing and developing a novel method of ambulatory device

(b) Movements in carrying amountsCarrying amount at the beginning of the financial year 198,722 667,601 Share of profits after income tax 11,858 1,757,223 Intercompany loans - (408,750) Investments in associates disposed during the year - - Dividends received - (1,817,352) Carrying amount at the end of the financial year 210,580 198,722

(c) Share of associate's operating resultNet operating results before income tax 1,659 2,331,812 Income tax expense 10,199 (574,589) Net operating result after income tax 11,858 1,757,223

(d) Summarised financial information of associates Groups share of:

Assets Liabilities Revenues Profit$ $ $ $

2007Virotarg Pty Ltd 259,227 6,810 22,388 11,858

259,227 6,810 22,388 11,858

2006Virotarg Pty Ltd 1,040,613 391,304 3,077,166 1,757,223

1,040,613 391,304 3,077,166 1,757,223

Consolidated carrying amountOwnership Interest

Probiotic Health Pty Ltd has ceased receiving matching government grant funding during the period to support its research and development activities. Probiotic Health is planning to raise additional funds, however TUNRA will continue to support the activities of the company during 2008.

Virotarg Pty Ltd through its shareholders agreement prevents TUNRA Ltd from having ultimate control of the company even though TUNRA's shareholding is 54.2%. The arrangement in place was negotiated with the other shareholder of Virotarg Pty Ltd, which enforces equal control of the company.

Equity Holding

TheraPPy Pty Ltd

TheraPPy Pty Ltd was wound-up and deregistered on the 21st October 2007.

for the Year Ended 31 December 2007Notes to the Financial Statements


TUNRA Ltd

24. MINORITY INTEREST

2007 2006 2007 2006$ $ $ $

Interest in:Retained Profits - (3,145) - - Share capital - 500,000 - - Total minority interest - 496,855 - -


Controlling entities

Ownership interests in related partiesInterests held in related companies are set out in note 22 and 23.

Directors and Director related entitiesGeoffrey James LeonardGraeme John Jameson (resigned October 2007)Alan William Roberts (resigned October 2007)Glenn Thurston TurnerBevil Milton Glover Nicholas Andrew SaundersJohn Francis Coyle Jodi Leyanne McKay (resigned February 2007)John James O'BrienLisa Maree Sutton-Gardner

Each held office as a Director of the Company during the year ended 31 December 2007.

Remuneration received or receivable by the directors of the company is disclosed in Note 21 to the accounts.

The ultimate chief entity is the University of Newcastle by virtue of its capacity under the Articles of Association to appoint Members, who in turn elect the majority of the Directors.

Parent Entity Consolidated



TUNRA Ltd

Transactions with other related parties

Transaction type The Company

2007 2006 2007 2006$ $ $ $

Reimbursement of research & infrastructure costs.University of Newcastle 570,850 1,890,301 570,850 1,890,301

Donations to UniversityUniversity of Newcastle 2,000 750,000 2,000 750,000

Received from University for services provided by TUNRAUniversity of Newcastle 1,129,018 1,076,294 1,129,018 1,076,294

Sales to associated entityVirotarg Pty Ltd 12,500 2,000,603 12,500 2,000,603

Sales to controlled entity

Probiotic Health Pty Ltd - - - (53,089)

Sales to related partyGradschool.com Pty Ltd 60,100 75,234 60,100 75,234

Technical Consulting paidBulk Solids Research & Technology Pty Limited 3,645 67,861 3,645 67,861

Technical Consulting paidEwell Downs Pty Ltd 57,688 142,938 57,688 142,938

Members Fees paid HunterNet 4,221 2,364 4,221 2,364

The above transactions, except for donations to the University, were made on commercial terms and conditions and at market rates.

Directors concerned in the Related Parties are:University of Newcastle Professor GJ Jameson

Professor AW RobertsProfessor NA SaundersProfessor B M GloverDr GJ Leonard

OJF Technology Pty Limited Professor GJ Jameson

OJF R&D Pty Limited Professor GJ Jameson

Bulk Solids Research andTechnology Pty Limited Professor AW RobertsEwell Downs Pty Ltd Professor GJ JamesonHunterNet Mr John Coyle

Related Party

Consolidated

The aggregate amounts brought to account in respect of the following types of transactions and each class of related party involved were:



TUNRA Ltd


$ $ $ $Amounts receivable from and payable to related partiesAggregate amounts receivable at balance date from:

Current- Controlling entity 70,029 126,860 70,029 126,860- Controlled entity - - - - Related entity 2,750 2,750 2,750 2,750

Aggregate amounts payable at balance date to:

Current- Controlling entity 365,660 749,400 365,660 749,400- Director Related entity 28,020 0 28,020 0

26. REMUNERATION OF AUDITORSConsolidated The Company

2007 2006 2007 2006$ $ $ $

Fees paid to Audit Office NSW - audit of the financial report 37,500 39,000 34,000 32,000

27. SEGMENT REPORTINGAs the Company is a not for profit entity the exemption under AASB 114 is applied to these accounts regarding segment reporting.

28. CONTINGENCIES

There were no other contingent liabilities.

29. COMMITMENTS Consolidated The Company

2007 2006 2007 2006$ $ $ $

Operating Lease Commitments (incl. GST)Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: - within one year 45,489 42,324 45,489 42,324 - Later than one year but not later than five 19,098 61,269 19,098 61,269

64,587 103,593 64,587 103,593

GST of 10% of this lease payment is recoverable from the Australian Tax Office.

The company has entered into agreements to develop certain intellectual property through Virotarg Pty Limited. As part of these arrangements the company will be obliged to forward part of any net proceeds from the exploitation of this intellectual property to third parties. The extent and timing of these outflows of funds is dependent on the future receipt of the net proceeds by the company. At reporting date an estimate of these contingent outflows was $189,313



TUNRA Ltd

30. EVENTS OCCURRING AFTER REPORTING DATE

31. RECONCILIATION OF PROFIT FOR THE PERIOD TO NET CASH INFLOW FROM OPERATING ACTIVITIES


$ $ $ $

Profit for the year 303,822 208,605 307,636 14,592 Depreciation of non-current assets 80,586 85,685 69,525 65,141

349,817 288,032 323,822 265,864 (Increase)/Dimunition in Value of Investments - Subsidiaries 223,268 (233,320) 235,977 152,051 Profit on Sale - Plant, Equipment & Motor Vehicles - 4,856 - (8,024) Dividends Received from Associate 1,817,352 - - Shares Received (1,277,602) - (1,277,602) Return of capital from associated company (408,750) - Share Options Received (8,000) - (8,000) - Share of Associates' net profit (11,858) (1,757,223) - - Decrease/(Increase) in Inventories 161,390 (119,960) 161,390 (119,960) (Increase)/Decrease in Receivables (423,013) 478,742 (421,618) 299,859 Increase/(Decrease) in Payables 537,679 844,682 547,808 911,227 (Increase)/Decrease in other current assets 21,333 65,657 21,333 (21,333) Increase/(Decrease) in Provisions 390,767 492,227 (17,983) 492,227 Net cash inflow from operating activities 1,217,041 897,733 1,219,890 774,042


TUNRA's activities exposes it to a variety of financial risks, as follows:

(a) Market risk

(i) Foreign exchange risk

(ii) Price risk

(iii) Fair Value interest rate risk

Refer to (d) overleaf.

Amortisation of non-current assets

As the Group does not operate internationally or have equity securities the risk is minimal. The Company does makes small, infrequent transactions in foreign currencies which do not pose a significant financial risk.

The Group is exposed to equity securities risk. This arises from investments held by the Group and classified on the balance sheet as available for sale. The risk is managed by management obtaining regular updates from those companies which The Group holds equity, and making regular assessments on whether to hold or sell these securities. The Group is not exposed to commodity price risk.


TUNRA holds a material number of shares in the publicly listed company Viralytics (as per note 14 of these accounts). The value of this investment has reduced significantly from the market value as at 31 December 2007. The net decrease in value of this investment to TUNRA after balance date(i.e. as at 14th April 2008) is estimated at $53,000 decrease in Net Assets.There are no other matters or occurrences up to the present time which would materially affect the accounts or disclosures therein or which are likely to materially affect the future operations of TUNRA Ltd.


TUNRA Ltd

(b) Credit risk

(c) Liquidity risk

(d) Cash flow and fair value interest rate risk

Interest Rate Risk


The company maintains sufficient liquid assets to meet its short term obligations. Sufficient cash reserves are kept in our 24 hour access account. These cash accounts are reviewed regularly by management to ensure all payments can be made when they fall due.

The Company has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. The credit risk on financial assets of the Company which have been recognised on the statement of financial position, is the carrying amount net of any provision for doubtful debts. The value of doubtful debts is $91,185 and we have staff and sub-contractors dedicated to collect these debts.


The net fair value of other monetary financial assets is based on market price where a market exists.

The Company's exposure to interest rate risk is limited for most of its financial assets.

All other financial assets and financial liabilities are not subject to interest rate risk as they are non-interest bearing.

The majority of interest bearing deposits held are subject to fixed interest rates and are due to mature within twelve months. The weighted average effective interest on these is 6.9% (2006: 6.0%). If interest rates had changed by 1% the effect on the surplus would have been

The Group has interest bearing assets which are dependent on market interest rate changes. Interest rates for interest bearing deposits are reviewed by management to ensure that the most appropriate rates are sought based on the terms and conditions offered by the financial institution. The interest rates are fixed as part of the term of investment which means there is no risk of losing interest income accrued.

Notes to the Financial Statements


DIRECTOR’S DECLARATIONTUNRA Ltd

Pursuant to Section 41C (1B) and (1C) of the Public Finance and Audit Act 1983 and Section 295 of the Corporations Act. I, Geoffrey James Leonard, being a Director of TUNRA Limited, do hereby state, in accordance with a Resolution of the Directors that in the opinion of the Directors:

1. The financial statements and notes of the Company and Consolidated Entity are drawn up so as to give a true and fair view of the financial position of the Company and Consolidated Entity as at 31 December, 2007 and of its performance, as represented by the results of its operations and its cash flows, for the period ended on that date.

2. The financial statements have been prepared in accordance with the provisions of the Public Finance and Audit Act 1983, the Public Finance and Audit Regulation 2005 and the Corporations Act 2001.

3. The attached financial statements of the Company and Consolidated Entity have been made out in accordance with applicable Australian Accounting Standards (including the Australian Accounting Interpretations) and other mandatory professional reporting requirements.

4. At the date of the declaration there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

Further, I am not aware of any circumstances which would render any particulars included in the financial statements to be misleading or inaccurate.

........................................................Geoffrey James LeonardDirector and ChairmanNewcastle18/04/08

UONFOUNDATIONLTD



Notes 29/6 - 31/12

2007$

Income from continuing operationsOther revenue 2 -

Total revenue from continuing operations -

Expenses from continuing operationsOther expenses 3 -

Total expenses from continuing operations -

- Operating result attributable to members of UON Foundation Ltd


UON Foundation Ltd Income Statement For the period ended 31 December 2007

Notes 29/6 - 31/12

2007$

Income from continuing operationsOther revenue 2 -

Total revenue from continuing operations -

Expenses from continuing operationsOther expenses 3 -

Total expenses from continuing operations -

- Operating result attributable to members of UON Foundation Ltd


UON Foundation Ltd Income Statement For the period ended 31 December 2007


UON Foundation Ltd Balance SheetAs at 31 December 2007

Notes 29/6 - 31/12

2007

ASSETS $Current Assets

Other financial assets 4 - Total Current Assets -

Non-Current Assets Other financial assets 4 -

Total Non-Current Assets -

Total Assets -


Other liabilities 5 - Total Current Liabilities -

Non-Current Liabilities Other liabilities -

Total Non-Current Liabilities -

Total Liabilities -

Net Assets -

Equity Retained surplus -

Total Equity -


UON Foundation Ltd Balance SheetAs at 31 December 2007

Notes 29/6 - 31/12

2007

ASSETS $Current Assets

Other financial assets 4 - Total Current Assets -

Non-Current Assets Other financial assets 4 -

Total Non-Current Assets -

Total Assets -


Other liabilities 5 - Total Current Liabilities -

Non-Current Liabilities Other liabilities -

Total Non-Current Liabilities -

Total Liabilities -

Net Assets -

Equity Retained surplus -

Total Equity -



UON Foundation Ltd

29/6 - 31/12

2007$

Total equity at 29 June 2007 - -

Operating result for the period - Total recognised income and expense for the period -

Total equity at 31 December 2007 -


For the period ended 31 December 2007 Statement of Changes in Equity

UON Foundation Ltd

29/6 - 31/12

2007$

Total equity at 29 June 2007 - -

Operating result for the period - Total recognised income and expense for the period -

Total equity at 31 December 2007 -


For the period ended 31 December 2007 Statement of Changes in Equity


UON Foundation Ltd Cash Flow Statement

Notes 29/6 - 31/12

2007$

Cash Flows From Operating ActivitiesReceipts from student fees and other customers -

Net cash provided by/(used in) operating activities -

Cash Flows From Investing Activities Proceeds from sale of financial assets -

Net cash provided by/(used in) investing activities -

Cash Flows From Financing Activities Proceeds from issue of shares -

Net cash inflow (outflow) from financing activities -

Net increase/(decrease) in cash and cash equivalents - Cash at 29 June 2007 -

Cash and cash equivalents at 31 December 2007 -

For the period ended 31 December 2007


UON Foundation Ltd Cash Flow Statement

Notes 29/6 - 31/12

2007$

Cash Flows From Operating ActivitiesReceipts from student fees and other customers -

Net cash provided by/(used in) operating activities -

Cash Flows From Investing Activities Proceeds from sale of financial assets -

Net cash provided by/(used in) investing activities -

Cash Flows From Financing Activities Proceeds from issue of shares -

Net cash inflow (outflow) from financing activities -

Net increase/(decrease) in cash and cash equivalents - Cash at 29 June 2007 -

Cash and cash equivalents at 31 December 2007 -

For the period ended 31 December 2007



UON Foundation Ltd Contents of the Notes to the Financial Statements

Note Contents 1. Summary of significant accounting policies2. Other revenue3. Other expenses4. Other financial assets5. Other liabilities6. Members' guarantee7. Reserves and retained surplus8. Contingencies9. Commitments10. Key management personnel disclosures11. Events occurring after the balance sheet date12. Remuneration of Auditors13. Reconciliation of operating result to net cash inflows from operating activities

for the period ending 31 December 2007


UON Foundation Ltd Notes to the Financial Statementsfor the period ended 31 December 2007


The University of NewcastleUniversity DriveCallaghan NSW 2308

The principle activities of the business are:





e) New Australian Accounting Standards issued but not effective

f)



(ii) AASB2007-6 Amendments to Australian Accounting Standards (1 January 2009)

(iv) AASB2007-8 Amendments to Australian Accounting Standards (1 January 2009) (v) Interpretation 14 AASB 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

(iii) AASB2007-7 Amendments to Australian Accounting Standards (1 January 2009)

To establish, develop and maintain fundraising and philanthropic services, facilities and relationships for and in support of The University and its community for the purpose of providing money, property or benefit to or for The University whether to be used or expended for its general purposes or for the particular purposes of any of its schools, faculties, centres or groups.






The financial statements and notes of the Company comply with Australian Accounting Standards.

This financial report is a general purpose financial report which has been prepared on an accrual basis in accordance with Australian Accounting Standards, AASB Interpretations, Public Finance and Audit Act 1983, the Corporations Act 2001, the requirements of the Department of Education, Employment and Workplace Relations (DEEWR) and other state/Australian Government legislative.

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The figures presented are for the period from which UON Foundation Ltd was established, on 29th June 2007 but did not trade in the period to 31st December 2007. The company is a for-profit entity, pending finalisation of not-for-profit status. The company was established and has its domicile in the Australia. The principal place of business is:



2. OTHER REVENUE29/6 - 31/12

2007$

Other - Total other revenue -

3. OTHER EXPENSES29/6 - 31/12

2007$

Other - Total other expenses -

4. OTHER FINANCIAL ASSETS29/6 - 31/12

2007$

Other - Total other financial assets -

5. OTHER LIABILITIES29/6 - 31/12

2007$

Other - Total other liabilities -

6. MEMBERS' GUARANTEE

7. RESERVES AND RETAINED SURPLUS29/6 - 31/12

2007$

Retained SurplusMovements in retained surplus were as follows:

Retained surplus at 29 June - Net operating result -

Retained surplus at 31 December -

8. CONTINGENCIES

UON Foundation Ltd currently has no contingent liabilities or contingent assets.

The company is Limited by guarantee. If the company is wound up, the Constitution states that each member is required to contribute a maximum of $10 each towards meeting any outstanding obligations of the company. At 31 December 2007 the number of members was 7.



9. COMMITMENTS


a) Names of responsible persons and executive officersThe following persons were responsible persons and executive officers of the UON Foundation Ltd during the year:Mr Jeff Eather - ChairpersonProfessor Nicholas Saunders - DirectorMr Craig Wallis - DirectorDr Geoff Leonard - DirectorMs Julie Ainsworth - DirectorMr Phillip Smith - DirectorAssociate Professor Martin Fitzgerald - Director and Company Secretary


11.

12. REMUNERATION OF AUDITORS29/6 - 31/12

2007$

Assurance services1. Audit ServicesNSW Audit Office – audit of financial report * 4,300

4,300

13.FROM OPERATING ACTIVITIES

29/6 - 31/122007

$

Operating result for the year - Net cash provided by/(used in) operating activities -


UON Foundation Ltd is not aware of any material financial impacts or changes after 31 December 2007.

RECONCILIATION OF OPERATING RESULT TO NET CASH FLOWS

No remuneration was paid to any executive officers of UON Foundation Ltd.

EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

*The University of Newcastle in 2007 paid $4,300 in audit fees on behalf of UON Foundation Ltd.

UON Foundation Ltd currently has no commitments.

UONSERVICES



Notes2007 2006 2007 2006

$ $ $ $

SalesSales 4,307,514 - 4,290,541 -

Cost of Sales (1,969,803) - (1,964,511) -

2,337,711 - 2,326,030 -

Revenue from continuing operationsInvestment income 2 107,682 - 107,654 - Net assets acquired on transfer 27 2,114,390 - 2,121,863 - Rental income 3 440,914 - 468,214 - University contribution 4 1,880,000 - 1,880,000 -

Other revenue 5 126,993 - 126,811 -

Total revenue from continuing operations 4,669,979 - 4,704,542 -

Expenses from continuing operationsLoss on disposal of assets 28,875 - 28,875 - Direct trading expense 6 1,704,240 - 1,704,240 - Employee related expenses 7 682,094 - 652,419 - Depreciation and amortisation 8 106,863 - 106,863 - Repairs & maintenance 9 31,290 - 31,290 - Impairment of assets 10 70,067 - 70,067 -

Other expenses 11 975,544 - 1,028,020 -

Total expenses from continuing operations 3,598,973 - 3,621,774 -

3,408,717 - 3,408,798 -


Parent Entity

UoN Services Limited

Operating result attributable to members of UoN Services Limited

Gross Profit

Consolidated


Notes2007 2006 2007 2006

$ $ $ $

SalesSales 4,307,514 - 4,290,541 -

Cost of Sales (1,969,803) - (1,964,511) -

2,337,711 - 2,326,030 -

Revenue from continuing operationsInvestment income 2 107,682 - 107,654 - Net assets acquired on transfer 27 2,114,390 - 2,121,863 - Rental income 3 440,914 - 468,214 - University contribution 4 1,880,000 - 1,880,000 -

Other revenue 5 126,993 - 126,811 -

Total revenue from continuing operations 4,669,979 - 4,704,542 -

Expenses from continuing operationsLoss on disposal of assets 28,875 - 28,875 - Direct trading expense 6 1,704,240 - 1,704,240 - Employee related expenses 7 682,094 - 652,419 - Depreciation and amortisation 8 106,863 - 106,863 - Repairs & maintenance 9 31,290 - 31,290 - Impairment of assets 10 70,067 - 70,067 -

Other expenses 11 975,544 - 1,028,020 -

Total expenses from continuing operations 3,598,973 - 3,621,774 -

3,408,717 - 3,408,798 -


Parent Entity


Operating result attributable to members of UoN Services Limited

Gross Profit

Consolidated



Balance Sheetas at 31 December 2007

Notes2007 2006 2007 2006

ASSETS $ $ $ $

Current AssetsCash and cash equivalents 12 2,963,196 - 2,951,853 - Receivables 13 176,438 - 176,438 - Inventories 14 215,878 - 215,878 - Other financial assets 15 2,104 - 2,098 -

Other non-financial assets 16 67,317 - 67,317 -

Total Current Assets 3,424,933 - 3,413,584 -

Non-Current AssetsOther financial assets 15 800 - 801 - Other non-financial assets 16 - - - -

Property, plant & equipment 17 824,000 - 824,000 -

Total Non-Current Assets 824,800 - 824,801 -

Total Assets 4,249,733 - 4,238,385 -


Trade and other payables 18 362,188 - 358,949 - Provisions 19 362,694 - 357,340 - Other liabilities 20 - - - -

Total Current Liabilities 724,882 - 716,289 -

Non-Current LiabilitiesProvisions 19 114,110 - 111,274 - Other liabilities 20 - - - -

Total Non-Current Liabilities 114,110 - 111,274 -

Total Liabilities 838,992 - 827,563 -

Net Assets 3,410,741 - 3,410,822 -

EQUITYParent equity interest

Issued capital 21 1 - 1 - Reserves 22 2,023 - 2,023 -

Retained surplus 22 3,408,717 - 3,408,798 -

Total Equity 3,410,741 - 3,410,822 -

Consolidated



Parent EntityBalance Sheetas at 31 December 2007

Notes2007 2006 2007 2006

ASSETS $ $ $ $

Current AssetsCash and cash equivalents 12 2,963,196 - 2,951,853 - Receivables 13 176,438 - 176,438 - Inventories 14 215,878 - 215,878 - Other financial assets 15 2,104 - 2,098 -

Other non-financial assets 16 67,317 - 67,317 -

Total Current Assets 3,424,933 - 3,413,584 -

Non-Current AssetsOther financial assets 15 800 - 801 - Other non-financial assets 16 - - - -

Property, plant & equipment 17 824,000 - 824,000 -

Total Non-Current Assets 824,800 - 824,801 -

Total Assets 4,249,733 - 4,238,385 -


Trade and other payables 18 362,188 - 358,949 - Provisions 19 362,694 - 357,340 - Other liabilities 20 - - - -

Total Current Liabilities 724,882 - 716,289 -

Non-Current LiabilitiesProvisions 19 114,110 - 111,274 - Other liabilities 20 - - - -

Total Non-Current Liabilities 114,110 - 111,274 -

Total Liabilities 838,992 - 827,563 -

Net Assets 3,410,741 - 3,410,822 -

EQUITYParent equity interest

Issued capital 21 1 - 1 - Reserves 22 2,023 - 2,023 -

Retained surplus 22 3,408,717 - 3,408,798 -

Total Equity 3,410,741 - 3,410,822 -

Consolidated



Parent Entity


Notes2007 2006 2007 2006

$ $ $ $

Total equity at the beginning of the year - - - - Issued capital 1 - 1 -

Change in the fair value of available for sale financial assets 22 2,023 - 2,023 -

Net income recognised directly in equity 2,024 - 2,024 -

Operating result for the period 22 3,408,717 - 3,408,798 -

Total recognised income and expense for the period 3,410,741 - 3,410,822 -

Total equity at the end of the year 3,410,741 - 3,410,822 -

Total recognised income and expense for the year is attributable to:Members of UoN Services Limited 3,408,717 - 3,408,798 -

Consolidated



Parent Entity


Notes2007 2006 2007 2006

$ $ $ $

Total equity at the beginning of the year - - - - Issued capital 1 - 1 -

Change in the fair value of available for sale financial assets 22 2,023 - 2,023 -

Net income recognised directly in equity 2,024 - 2,024 -

Operating result for the period 22 3,408,717 - 3,408,798 -

Total recognised income and expense for the period 3,410,741 - 3,410,822 -

Total equity at the end of the year 3,410,741 - 3,410,822 -

Total recognised income and expense for the year is attributable to:Members of UoN Services Limited 3,408,717 - 3,408,798 -

Consolidated



Parent Entity



Cash Flow Statementfor the Year Ended 31 December 2007

Notes2007 2006 2007 2006

$ $ $ $

Cash flows from operating activitiesReceipts from customers 6,769,092 - 6,642,141 - Interest received 110,753 - 110,731 -

Payments to suppliers and employees (inclusive of goods and services tax) (5,477,924) - (5,357,118) - Interest and other costs of finance paid - - - -

Net cash provided by/(used in) operating activities 30 1,401,921 - 1,395,754 -

Cash flows from investing activitiesProceeds from sale of property, plant and equipment 41,824 - 41,824 - Payments for property, plant and equipment (158,898) - (158,898) - Transfer in of cash assets acquired on transfer 1,678,349 - 1,673,173 - Payments for financial assets - - - -

Net cash provided by/(used) in investing activities 1,561,275 - 1,556,099 -

Cash flows from financing activitiesProceeds from issue of share capital 1 - 1 - Proceeds from borrowings - - - - Repayment of borrowings - - - -

Net cash provided by/(used in) financing activities 1 - 1 -

Net increase/(decrease) in cash and cash equivalents 2,963,197 - 2,951,854 -

Cash and cash equivalents at the beginning of the financial year - - - -

12 2,963,197 - 2,951,854 -


Consolidated Parent Entity

year


Cash and cash equivalents at the end of the financial

Cash Flow Statementfor the Year Ended 31 December 2007

Notes2007 2006 2007 2006

$ $ $ $

Cash flows from operating activitiesReceipts from customers 6,769,092 - 6,642,141 - Interest received 110,753 - 110,731 -

Payments to suppliers and employees (inclusive of goods and services tax) (5,477,924) - (5,357,118) - Interest and other costs of finance paid - - - -

Net cash provided by/(used in) operating activities 30 1,401,921 - 1,395,754 -

Cash flows from investing activitiesProceeds from sale of property, plant and equipment 41,824 - 41,824 - Payments for property, plant and equipment (158,898) - (158,898) - Transfer in of cash assets acquired on transfer 1,678,349 - 1,673,173 - Payments for financial assets - - - -

Net cash provided by/(used) in investing activities 1,561,275 - 1,556,099 -

Cash flows from financing activitiesProceeds from issue of share capital 1 - 1 - Proceeds from borrowings - - - - Repayment of borrowings - - - -

Net cash provided by/(used in) financing activities 1 - 1 -

Net increase/(decrease) in cash and cash equivalents 2,963,197 - 2,951,854 -

Cash and cash equivalents at the beginning of the financial year - - - -

12 2,963,197 - 2,951,854 -



year


Cash and cash equivalents at the end of the financial


Contents of the Notes to the Financial Statementsfor the Year Ended 31 December 2007

Note Contents1. Summary of significant accounting policies2. Investment income3. Rental income4. University contribution5. Other revenue6. Direct trading expenses7. Employee related expenses8. Depreciation and amortisation9. Repairs and maintenance

10. Impairment of assets11. Other expenses12. Cash and cash equivalents13. Receivables14. Inventories15. Other financial assets16. Other non financial assets 17. Property, plant and equipment18. Trade and other payables19. Provisions20. Other liabilities21. Issued capital22. Reserves and retained surplus23. Key management personnel disclosures24. Remuneration of auditors25. Contingencies26. Commitments27. Business combinations28. Subsidiaries29. Events occurring after the balance sheet date30. Reconciliation of operating result to net cash flows from operating activities 31. Financial risk management






b) Compliance with IFRS



e) Principals of consolidation

f) Income recognition

(i) Trading income Food and beverage, retail, band ticket and art gallery sales.

The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the company and specific criteria have been met for each of the company's activities as described below. The amount of revenue is not considered to be reliably measured until all contigencies relating to the transaction have been resolved. The company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Level 5, Shortland Building University of Newcastle University Drive Callaghan NSW 2308

UoN Services Limited (the Company) is a registered company limited by guarantee and is a controlled entity of the University of Newcastle. UoN Services Limited is a not for profit entity.

Revenue is recognised for the major business activities as follows:

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.


The financial statements and notes of UoN Services Limited comply with Australian Accounting Standards, some of which contain requirements specific to not-for-profit entities that are inconsistent with IFRS requirements.

The financial report is a general purpose financial report which has been prepared on an accrual basis in accordance with Australian Accounting Standards, AASB Interpretations, the requirements of the Department of Education, Employment and Workplace Relations (DEEWR), the Public Finance and Audit Act 1983, the Corporations Act 2001 and other State/Australian Government legislative requirements.


Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income statement and balance sheet respectively.

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

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

i) SubsidiariesThe consolidated financial statements incorporate the assets and liabilities of all subsidiaries of UoN Services Limited ("parent entity") as at 31 December 2007 and the results of all subsidiaries for the year then ended. The company and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.

The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the UoN Services Limited accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, refer to relevant paragraphs below for further detail.

The principal activities of the business are: To enhance the shared University experience and academic pursuits of the University community through the commercially responsible provision of facilities and services.


The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for UoN Services Limited as an individual entity and the consolidated entity consisting of UoN Services Limited and its subsidiary. The company was established on 21 December 2006 and commenced trading on 1 April 2007. The company has its domicile in Australia. The principal place of business is:




f) Income recognition (cont'd)

(ii)University ContributionsUniversity Contribution to student services & capital expenditure.

(iii) Rental incomeLeasing contracts.

g) Income tax

h) Leases

i) Impairment of assets

j) Cash and cash equivalents

k) Trade receivables

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases (note 26). Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.




Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment. Trade receivables are due for settlement no more than 30 days from end of the month recognised.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

The parent entity is exempt from income tax under subdivision 50-B of the Income Tax Assessment Act 1997. The subsidiary is subject to income tax.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.


Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.







l) Inventories

m) Investments and other financial assets



(iii) Held-to-maturity


-Subsequent measurement

-Fair Value

-ImpairmentThe Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

Raw materials, stores and finished goods are stated at the lower of average cost and net realisable value. Cost comprises direct materials. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.






Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These includes reference to the fair values of recent arm's length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances.



Regular purchases and sales of investments are recognised on 'trade-date', the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expenses in the income statement. Financial assets are derecognised when the right to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont.

n) Fair value estimation

o) Property, Plant and Equipment

Motor Vehicles 8 years Plant & Equipment 10 years Leasehold Improvements 37 1/3 years Fixture & Fittings 13 1/3 years

p) Trade and other payables

q) Employee benefits(i) Wages and salaries, annual leave and sick leave


r) Rounding of amountsAll amounts appearing in the financial report have been rounded to the nearest dollar.

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

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

Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the income statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

Depreciation on assets is calculated using the diminishing value & straight line methods to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows:

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest- rate swaps is calculated as the present value of the estimated future cash flows.

Property, plant and equipment are shown at fair value, based on periodic valuations by external independent valuers, less subsequent depreciation. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. All motor vehicles and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.


The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows a the current market interest rate that is available to the Group for similar financial instruments.


Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables and provisions in respect of employee's services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont.

s) New Australian Accounting Standards issued but not effective

(ii) AASB2007-6 Amendments to Australian Accounting Standards (1 January 2009) (iii) AASB2007-7 Amendments to Australian Accounting Standards (1 January 2009) (iv) AASB2007-8 Amendments to Australian Accounting Standards (1 January 2009)










2007 2006 2007 2006

$ $ $ $

Interest received 19,606 - 19,578 -

Distributions received 88,076 - 88,076 - Total investment income 107,682 - 107,654 -

3. RENTAL INCOME

2007 2006 2007 2006

$ $ $ $

Rental Income - Shortland Union 352,405 - 379,705 -

Rental Income - Hunter Union 75,750 - 75,750 -

Tenant Outgoings 12,759 - 12,759 -

Total rental income 440,914 - 468,214 -

4. UNIVERSITY CONTRIBUTION

2007 2006 2007 2006

$ $ $ $

Student services 1,130,000 - 1,130,000 -

Capital expenditure 750,000 - 750,000 - Total University contribution 1,880,000 - 1,880,000 -

5. OTHER REVENUE

2007 2006 2007 2006

$ $ $ $

Advertising income 19,138 - 19,138 - Commissions received 15,324 - 15,324 - Discount allowed 25,396 - 25,396 - Other revenue 3,441 - 3,259 - Student membership fees 59,382 - 59,382 -

Tooheys reimbursement 4,312 - 4,312 - Total other revenue 126,993 - 126,811 -

6. DIRECT TRADING EXPENSES

2007 2006 2007 2006

$ $ $ $

Activities 98,368 - 98,368 - Annual leave 67,626 - 67,626 - Cleaning 31,675 - 31,675 - Functions 1,615 - 1,615 - Long service leave 41,277 - 41,277 - Other 11,862 - 11,862 - Retail 21,765 - 21,765 - Salaries & wages 1,261,471 - 1,261,471 - Security 24,720 - 24,720 - Superannuation 113,158 - 113,158 -

Workers compensation 30,703 - 30,703 - Total direct trading expenses 1,704,240 - 1,704,240 -

Consolidated

Consolidated

Parent Entity

Parent Entity

Parent Entity

Contribution from The University of Newcastle for;

Consolidated

Consolidated


Parent EntityConsolidated

Parent Entity




2007 2006 2007 2006

$ $ $ $

Salaries 530,843 - 512,428 - Superannuation 50,395 - 48,738 - Annual leave 54,918 - 50,307 - Long service leave 29,458 - 28,967 - Workers compensation 13,080 - 11,979 -

Payroll tax 3,400 - - -

Total employee related expenses 682,094 - 652,419 -

8. DEPRECIATION AND AMORTISATION

2007 2006 2007 2006

$ $ $ $

DepreciationPlant and equipment 80,298 - 80,298 - Motor Vehicles 4,181 - 4,181 -

Fixtures and Fittings 20,979 - 20,979 -

Total depreciation 105,458 - 105,458 -

Amortisation

Leasehold Improvements 1,405 - 1,405 -

Total amortisation 1,405 - 1,405 -

Total depreciation and amortisation 106,863 - 106,863 -


2007 2006 2007 2006

$ $ $ $

Air conditioning 1,513 - 1,513 - Building 578 - 578 - Electrical 6,455 - 6,455 - Fire prevention & safety 3,303 - 3,303 - General 8,575 - 8,575 - Kitchen 176 - 176 - Pest control 3,293 - 3,293 - Plumbing 1,721 - 1,721 - Refrigeration 5,676 - 5,676 -

Total repairs and maintenance 31,290 - 31,290 -

10. IMPAIRMENT OF ASSETS

2007 2006 2007 2006

$ $ $ $

Leasehold improvements 70,067 - 70,067 -

Total impairment of assets 70,067 - 70,067 -


Consolidated


Parent Entity

Parent Entity


Consolidated



11. OTHER EXPENSES

2007 2006 2007 2006

$ $ $ $

Accounting fees 800 - - - Activities expenses 86,011 - 86,011 - Advertising, marketing & promotional expenses 59,883 - 59,883 - Audit fees 27,000 - 27,000 - Bad debts written off 49 - 49 - Bank charges and fees 13,438 - 13,303 - Board expenses 14,796 - 14,796 - Cleaning & laundry 205,386 - 205,386 - Computer software & hardware maintenance 18,417 - 18,417 - Consulting fees 19,118 - 19,118 - Discounts given 30,245 - 30,245 - Insurance 2,717 - 2,717 - Loan - Degrees in Catering - Forgiven - - 54,899 Lease negotiation fees 44,000 - 44,000 - Lease payments 54,357 - 54,357 - Legal fees 22,256 - 22,256 - Minor equipment purchases 10,359 - 10,308 - Motor vehicle expenses 53,218 - 52,318 - Other expenses 40,599 - 40,063 - Provision for doubtful debts 16,172 - 16,172 - Security 30,443 - 30,443 - Staff meals 36,966 - 36,966 - Staff training and development 10,895 - 10,895 - Stationery, postage & photocopying 30,248 - 30,248 - Subscriptions & publications 11,037 - 11,037 -

Utilities expense 137,134 137,133 - Total other expenses 975,544 - 1,028,020 -


2007 2006 2007 2006

$ $ $ $

Cash at bank and on hand 273,097 - 261,754 -

Deposits at call 2,690,099 - 2,690,099 -

Total cash and cash equivalents 2,963,196 - 2,951,853 -

a) Reconciliation to cash at the end of the yearThe above figures are reconciled to cash at the end of the year as shown in the statement of cash flows as follows:

Balance as above 2,963,196 - 2,951,853 - Balance per statement of cash flows 2,963,196 - 2,951,853 -

b) Cash at bank and on hand

c) Deposits at call


Cash at bank is interest bearing with average interest calculated at 2.28%. Cash on hand is non-interest bearing.



Cash at bank is interest bearing with the floating rates being determined by the daily balance of funds held in the account. This was 4.42% on average for 2007 (2006: 0.00%).



13. RECEIVABLES

2007 2006 2007 2006

$ $ $ $

CurrentTrade debtors Rental 89,892 - 89,892 - Functions 7,763 - 7,763 - Shop sales 81,245 - 81,245 - Advertising 7,515 - 7,515 - Buying rebate 6,195 - 6,195 -

Less: provision for impaired receivables (16,172) - (16,172) -

Total current receivables 176,438 - 176,438 - Total receivables 176,438 - 176,438 -


2007 2006 2007 2006

The aging of these receivables are: $ $ $ $

2 to 6 months 16,172 - 16,172 - Over 6 months - - - -

16,172 - 16,172 -

2007 2006 2007 2006

The aging of these receivables are: $ $ $ $

2 to 6 months 26,106 - 26,106 - Over 6 months - - - -

26,106 - 26,106 -

Movements in the provision for Doubtful debts are as follows:At I January - - - - Provision for doubtful debts recognised during the year 16,221 - 16,221 -

Receivables written off during the year as uncollectible (49) - (49) -

16,172 - 16,172 -

14. INVENTORIES

2007 2006 2007 2006

$ $ $ $

Beverage 34,777 - 34,777 - Food 27,824 - 27,824 -

Retail 151,149 - 151,149 -

Chemicals 2,128 - 2,128 -

Total inventories 215,878 - 215,878 -


Consolidated

As at 31 December 2007 current receivables of UoN Services Limited with a nominal value of $16,172 (2006 : $ 0) were impaired. The amount of the provision was $16,172 (2006 : $ 0). The individially impaired receivables mainly relate to those debtors, where services were provided for a function or retail sale from the UoN Services Limited shop accounts, which are in unexpectedly difficult economic situations.

As of 31 December 2007, trade debtors of $42,178 (2006 : $ 0) were past due but not impaired. These relate to a number of customers for whom there is no history of recent default.

The creation and release of the provision for doubtful debts has been included in 'other expenses' in the income statement. Amounts charged to the provision account are generally written off when there is no expectation of recovering additional cash.

The other amounts within receivables do not contain doubtful debts and are not past due. Based on credit history, it is expected that these amounts will be received when due.

Parent Entity

Consolidated

Parent Entity

Consolidated

Consolidated

Parent Entity

Parent Entity




2007 2006 2007 2006

$ $ $ $

Current

Accrued interest 2,104 - 2,098 -

Total current other financial assets 2,104 - 2,098 -

Non-currentAcuma Buying Co-operative Limited 800 - 800 - Degrees In Catering Pty Limited - - 1 -

Total non-current other financial assets 800 - 801 - Total other financial assets 2,904 - 2,899 -


2007 2006 2007 2006

$ $ $ $

CurrentAccrued Income 41,719 - 41,719 - Advances and prepayments 15,498 - 15,498 -

Deposits paid 10,100 - 10,100 -

Total current other non financial assets 67,317 - 67,317 -

Non-currentLoan to Degrees In Catering Pty Limited - - - - Total non-current other non-financial assets - - - - Total other non-financial assets 67,317 67,317

17. PROPERTY, PLANT AND EQUIPMENTPlant and Motor Fixtures and Leasehold

Equipment Vehicles Fittings improvements Total

(a) CONSOLIDATED $ $ $ $ $

At 21 December 2006-Cost - - - - - -Valuation - - - - - Accumulated Depreciation - - - - - Net book amount - - - - -

Period ended 31 December 2006Opening net book amount - - - - - Additions through the acquisition of entity - - - - - Additions - - - - - Disposals - - - - - Impairment of assets - - - - - Depreciation charge - - - - - Closing net book amount - - - - -

At 31 December 2006-Cost - - - - - -Valuation - - - - - Accumulated Depreciation - - - - - Net book amount - - - - -

Consolidated



Parent Entity



17. PROPERTY, PLANT AND EQUIPMENT (cont'd)Plant and Motor Fixtures and Leasehold

Equipment Vehicles Fittings improvements Total

(a) CONSOLIDATED $ $ $ $ $

Year ended 31 December 2007Opening net book amount - - - - -

Additions through the acquisition of entity 675,962 30,445 206,325 - 912,732

Additions 54,181 - 33,244 71,472 158,897

Disposals (68,234) - (2,465) - (70,699) Impairment of assets - - - (70,067) (70,067)

Depreciation charge (80,298) (4,181) (20,979) (1,405) (106,863)

Closing net book amount 581,611 26,264 216,125 - 824,000

At 31 December 2007-Cost 661,909 30,445 237,104 71,472 1,000,930

-Valuation - - - - -

Accumulated Depreciation (80,298) (4,181) (20,979) (71,472) (176,930)

Net book amount 581,611 26,264 216,125 - 824,000

(b) PARENT ENTITY

At 21 December 2006-Cost - - - - -


Accumulated Depreciation - - - - -

Net book amount - - - - -

Period ended 31 December 2006Opening net book amount - - - - -

Additions through the acquisition of entity - - - - -

Additions - - - - -

Disposals - - - - -

Impairment of assets - - - - -

Depreciation charge - - - - -

Closing net book amount - - - - -

At 31 December 2006-Cost - - - - -


Accumulated Depreciation - - - - -

Net book amount - - - - -

(b) PARENT ENTITY

Year ended 31 December 2007Opening net book amount - - - - -

Additions through the acquisition of entity 675,962 30,445 206,325 - 912,732

Additions 54,181 - 33,244 71,472 158,897

Disposals (68,234) - (2,465) - (70,699)

Impairment of assets - - - (70,067) (70,067)

Depreciation charge (80,298) (4,181) (20,979) (1,405) (106,863)

Closing net book amount 581,611 26,264 216,125 - 824,000

At 31 December 2007-Cost 661,909 30,445 237,104 71,472 1,000,930


Accumulated Depreciation (80,298) (4,181) (20,979) (71,472) (176,930)

Net book amount 581,611 26,264 216,125 - 824,000





2007 2006 2007 2006

$ $ $ $

CurrentTrade creditors 14,031 - 14,031 - Accrued expenses – other 91,911 - 91,911 - Superannuation 13,348 - 13,348 - PAYG tax 39,483 - 36,244 - Wages 4,036 - 4,036 - GST 117,690 - 117,690 - Income in advance 77,858 - 77,858 - Deposits held 645 - 645 - Other 3,186 - 3,186 - Total current trade and other payables 362,188 - 358,949 -

19. PROVISIONS

2007 2006 2007 2006

$ $ $ $

Current provisions expected to be settled within 12 monthsEmployee benefits; Annual leave 68,991 - 63,438 - Fringe benefit tax (3,595) - - - Long service leave 222,268 - 222,268 -

Subtotal 287,664 - 285,706 -

Employee benefits; Annual leave 75,030 - 71,634 - Long service leave - - - - Subtotal 75,030 - 71,634 -

Total current provisions 362,694 - 357,340 -

Non-currentEmployee benefits; Annual leave - Long service leave 114,110 - 111,274 -

Total non-current provisions 114,110 - 111,274 -

Total provisions 476,804 - 468,614 -


Provision for Long Service Leave

(a) Movement in provisions

CONSOLIDATED Annual Long Service Fringe Benefit

Leave Leave Tax Total

$ $ $ $CurrentCarrying amount at 1 January 2007 - - - - Additions through acquisition of entity 155,914 224,265 (1,143) 379,036

Additional provisions recognised (11,893) (1,997) (2,452) (16,342) Carrying amount at 31 December 2007 144,021 222,268 (3,595) 362,694


This provision is for outstanding long service leave liabilities that employees have not yet taken. The measurement and recognition criteria relating to employee benefits has been included in note 1 to this report.

Consolidated


Parent Entity

Current provisions expected to be settled after more than 12 months




19. PROVISIONS (cont'd)Annual Leave Long Service Leave Fringe Benefit Tax Total

$ $ $ $

Non-currentCarrying amount at 1 January 2007 - - - - Additions through acquisition of entity - 114,830 - 114,830

Additional provisions recognised - (720) - (720)

Carrying amount at 31 December 2007 - 114,110 - 114,110

PARENT ENTITYAnnual Leave Long Service Leave Fringe Benefit Tax Total

$ $ $ $

CurrentCarrying amount at 1 January 2007 - - - - Additions through acquisition of entity 151,577 224,265 - 375,842

Additional provisions recognised (16,505) (1,997) - (18,502)

Carrying amount at 31 December 2007 135,072 222,268 - 357,340

Annual Leave Long Service Leave Fringe Benefit Tax Total

$ $ $ $

Non-currentCarrying amount at 1 January 2007 - - - - Additions through acquisition of entity - 112,484 - 112,484

Additional provisions recognised - (1,210) - (1,210)

Carrying amount at 31 December 2007 - 111,274 - 111,274

20. OTHER LIABILITIES

Consolidated

2007 2006 2007 2006

$'000 $'000 $'000 $'000

CurrentUnearned income - - - - Total current other liabilities - - - -

21. ISSUED CAPITAL

1 (2006 : 1) fully paid ordinary share 1 1

22. RESERVES AND RETAINED SURPLUS

2007 2006 2007 2006

$ $ $ $

(a) Reserves

Available for sale investments revaluation reserve 2,023 - 2,023 -

2,023 - 2,023 -

Movements Available-for-sale investments revaluation reserve Balance as at 1 January - - - -

Revaluation increment 2,023 - 2,023 -

2,023 - 2,023 -

(b) Retained SurplusMovements in retained surplus were as follows:

Operating result for the period 3,408,717 - 3,408,798 -

Retained surplus at 31 December 3,408,717 - 3,408,798 -

(c) Nature and purpose of reserves


Parent Entity

Parent Entity

Consolidated

Available-for-sale investment reserve – used for revaluation of financial assets.

The parent entity of the company is the University of Newcastle by virtue of its full ownership.


UoN Services LimitedNotes to the Financial Statementsfor the Year Ended 31 December 2007



Dianne Allen -Chairperson & University on Newcastle Council RepresentativeDeborah Wright -University of Newcastle Council RepresentativeRodney Partridge -Student RepresentativeChristopher Gary Baker -Student RepresentativeCrystal Condous -University of Newcastle Council RepresentativeTimothy Peter Dawes -Student RepresentativeKylee Jo-Anne Dare -IndependentKristen Gai Perry -IndependentRossana Rossi -IndependentTim David Shanley -Student RepresentativeRichard Leslie Jones -Independent

b) Other key management personnel

Julian Paul Cook -Company Secretary/Chief Executive Officer

2007 2006 2007 2006

$ $ $ $

c) Remuneration of Board members and Executives

No Board members or Executive officers receive any remuneration.

d) Key management personnel compensation

Short-term employee benefits 85,755 - 85,755 - Post-employment benefits - - - - Termination benefits - - - -

Total key management personnel compensation 85,755 - 85,755 -


2007 2006 2007 2006

$ $ $ $

Assurance servicesAudit ServicesFees paid to Cutcher & Neale -Audit and review of financial reports 2,000 - 2,000 - Fees paid to NSW Audit Office

-Audit and review of financial reports 25,000 - 25,000 -

Total remuneration of auditors 27,000 - 27,000 -

Consolidated

Consolidated

The following persons were responsible persons and executive officers of UoN Services for the year, or part thereof:

Parent Entity

The following persons also had authority and responsibility for planning, directing and controlling the activities of UoN Services Limited during the financial year:

Parent Entity



25. CONTINGENCIES

26. COMMITMENTS

2007 2006 2007 2006

$ $ $ $

i) Capital commitments (incl. GST)Property, plant and equipment - within one year 365,090 - 365,090 - - Later than one year but not later than five years - - - -

365,090 - 365,090 -

ii) Operating lease commitments (incl. GST) - lesseeCommitments for minimum lease payments in relation to non-cancellable operations leases are payable as follows: - within one year 88,717 - 88,717 -

- Later than one year but not later than five years 3,020 - 3,020 -

91,737 - 91,737 -

iii) Operating lease commitments (incl. GST) - lessorCommitments for operating expenses in existenceat the reporting date but not recognised as assets,receivable: - within one year 614,339 - 614,339 -

- Later than one year but not later than five years 914,637 - 914,637 -

1,528,976 - 1,528,976 -

27. BUSINESS COMBINATIONS

(a) Summary of acquisition


$ $Purchase consideration Nil consideration - - Total purchase consideration - -

Fair value of net assets acquired (refer to (b) overleaf): 2,114,390 2,121,863


Expenditure contracted for at the reporting date but not recognised as liabilities is as follows:

Details of the fair value of assets and liabilities acquired and goodwill are as follows:

Limited existed to provide facilities, services and amenities for its Members.

There were no other contingent assets or liabilities at the end of the reporting period. Newcastle Union Limited to UoN Services Limited referred to in note 27 Business Combinations.

UoN Services Limited acquired the business from University of Newcastle Union Limited at 1 April 2007. University of Newcastle Union

UoN Services Limited has agreed to indemnify and keep indemnified, the University of Newcastle Union Limited and its directors in respect of any act, matter or thing, arising under or connected with, the transfer of the assets, liabilities and undertakings, from University of



27. BUSINESS COMBINATIONS (cont'd)(b) Assets and liabilities acquired

The assets and liabilities arising from the acquisition are as follows:Acquiree's Fair value Acquiree's Fair value

carrying carrying

amount amount

ASSETS $ $ $ $

Current AssetsCash and cash equivalents 1,678,349 1,678,349 1,673,173 1,673,173 Receivables 236,750 236,750 236,750 236,750 Inventories 333,098 333,098 333,098 333,098 Other financial assets 3,152 3,152 3,152 3,152 Other non-financial assets 64,225 64,225 64,225 64,225 Total Current Assets 2,315,574 2,315,574 2,310,398 2,310,398

Non-Current AssetsOther financial assets 801 801 801 801 Property, plant & equipment 912,732 912,732 912,732 912,732 Total Non-Current Assets 913,533 913,533 913,533 913,533

Total Assets 3,229,107 3,229,107 3,223,931 3,223,931

LIABILITIESCurrent LiabilitiesTrade and other payables 638,974 638,974 631,865 631,865 Provisions 376,087 376,087 375,842 375,842 Other liabilities 450 450 450 450 Total Current Liabilities 1,015,511 1,015,511 1,008,157 1,008,157

Non-Current LiabilitiesProvisions 99,206 99,206 93,911 93,911 Total Non-Current Liabilities 99,206 99,206 93,911 93,911


Net Assets 2,114,390 2,114,390 2,121,863 2,121,863

28. SUBSIDIARIES

Name of Entity 2007 2006

Degrees in Catering Pty Limited (effective 1 April 2007) Australia Ordinary 100% N/A


Class of Shares

UoN Services Limited is not aware of any material financial impacts or changes after 31 December 2007.

Country of Incorporation

Parent Entity

Equity Holding

Consolidated



30.

2007 2006 2007 2006

$ $ $ $

Operating result for the year 3,408,717 - 3,408,798 - Depreciation and amortisation 106,863 - 106,863 - Impairment of assets 70,068 - 70,068 - Net (gain) loss on sale of non-current assets 28,875 - 28,875 -

Fair value gains on other financial assets at fair value through profit or loss (2,114,390) - (2,121,863) - Net exchange differences - - - - (Increase)/decrease in trade debtors 60,312 - 60,312 - (Increase)/decrease in inventories 117,220 117,220

3,077 - 3,077 -

(Increase)/decrease in deferred tax asset - - - - (Increase)/decrease in other operating assets (3,098) - (3,092) - Increase/(decrease) in trade creditors (308,155) - (311,394) - Increase/(decrease) in other operating liabilities 25,380 - 38,028 - Increase/(decrease) in provision for income taxes payable - - - - Increase/(decrease) in provisions 7,051 - (1,139) -

Proceeds from Issue of share capital 1 - 1 -

Net cash provided by/(used in) operating activities 1,401,921 - 1,395,754 -


(a) Market Risk(i) Price Risk

(ii) Cash flow and fair value interest rate risk

(iii) Summarised sensitivity analysis

31 December 2007 Profit Equity Profit Equity

$ $ $ $ $

Financial AssetsCash and cash equivalents 2,963,196 (29,632) (29,632) 29,632 29,632 Receivables 176,438 (1,764) (1,764) 1,764 1,764 Financial Liabilities

Trade payables (362,188) 3,622 3,622 (3,622) (3,622)

Total increase/(decrease) (27,774) (27,774) 27,774 27,774

-1%

RECONCILIATION OF OPERATING RESULT TO NET CASH FLOWS FROM OPERATING ACTIVITIES


Decrease/(increase) in other financial assets at fair value through profit or loss

Consolidated

+1% Interest rate risk

Carrying amount

The Group does not have any investments in equity securities and as such is not exposed to price risk.

The company's main interest rate risk arises from cash and cash equivalents.

Parent Entity

The Group's activities expose it to a variety of financial risks: market risk (price risk, cash flow interest rate risk and fair value risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the entity. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and other price risks.

The Group's equity investments are not publicly traded.



31. FINANCIAL RISK MANAGEMENT cont.

(b) Credit Risk

(c) Liquidity Risk

31 Dec 2008Opening balance for the period 2,951,853 Operating proceeds 5,737,449

Operating outflows (6,641,239)

Closing balance for the period 2,048,063



The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date.




Management monitors rolling forecasts of the Company's liquidity reserve on the basis of expected cash flow. Forecast liquidity reserve as of 31 December 2007 is as follows:

UONSINGAPOREPTELTD



Notes 1/1 - 31/12 8/3 - 31/12

2007 2006$ $

Revenue from continuing operations

Fees and charges 2 2,845,086 1,360,507

Investment income 3 815 417 Other revenue 4 14,949 1,231


Expenses from continuing operationsEmployee related expenses 5 1,042,460 316,627 Depreciation 6 23,519 1,576 Other expenses 7 2,259,378 1,046,744


(464,507) (2,792)

(464,507) (2,792) Operating result attributable to members of UON, Singapore Pte Ltd

UON, Singapore Pte LtdIncome Statementfor the Year Ended 31 December 2007



Notes 1/1 - 31/12 8/3 - 31/12

2007 2006$ $

Revenue from continuing operations

Fees and charges 2 2,845,086 1,360,507

Investment income 3 815 417 Other revenue 4 14,949 1,231


Expenses from continuing operationsEmployee related expenses 5 1,042,460 316,627 Depreciation 6 23,519 1,576 Other expenses 7 2,259,378 1,046,744


(464,507) (2,792)

(464,507) (2,792) Operating result attributable to members of UON, Singapore Pte Ltd

UON, Singapore Pte LtdIncome Statementfor the Year Ended 31 December 2007




UON, Singapore Pte LtdBalance Sheetas at 31 December 2007

Notes 1/1 - 31/12 8/3 - 31/12

2007 2006ASSETS $ $Current Assets



Non-Current AssetsOther financial assets 10 23,697 24,834 Property, plant and equipment 12 36,034 5,384


Total Assets 1,854,676 1,114,822


Trade and other payables 13 250,167 96,874 Provisions 14 6,448 - Other liabilities 15 1,984,299 938,003

Total Current Liabilities 2,240,914 1,034,877

Total Liabilities 2,240,914 1,034,877

Net Assets (386,238) 79,945

EquityForeign currency translation reserve 16 (4,975) (3,299) Retained surplus 16 (467,299) (2,792) Issued capital 24 86,036 86,036

Total Equity (386,238) 79,945


UON, Singapore Pte LtdBalance Sheetas at 31 December 2007

Notes 1/1 - 31/12 8/3 - 31/12

2007 2006ASSETS $ $Current Assets



Non-Current AssetsOther financial assets 10 23,697 24,834 Property, plant and equipment 12 36,034 5,384


Total Assets 1,854,676 1,114,822


Trade and other payables 13 250,167 96,874 Provisions 14 6,448 - Other liabilities 15 1,984,299 938,003

Total Current Liabilities 2,240,914 1,034,877

Total Liabilities 2,240,914 1,034,877

Net Assets (386,238) 79,945

EquityForeign currency translation reserve 16 (4,975) (3,299) Retained surplus 16 (467,299) (2,792) Issued capital 24 86,036 86,036

Total Equity (386,238) 79,945



UON, Singapore Pte Ltd

1/1 - 31/12 8/3 - 31/12

2007 2006$ $

Total equity at the beginning of the year 79,945 - Issued capital - 86,036 Exchange differences on translation of foreign operations (1,676) (3,299)

Net income recognised directly in equity (1,676) 82,737

Operating result for the period (464,507) (2,792) Total recognised income and expense for the period (466,183) 79,945

Total equity at the end of the year (386,238) 79,945

Total recognised income and expense for the year is attributable to:UON, Singapore Pte Ltd (466,183) 79,945




1/1 - 31/12 8/3 - 31/12

2007 2006$ $

Total equity at the beginning of the year 79,945 - Issued capital - 86,036 Exchange differences on translation of foreign operations (1,676) (3,299)

Net income recognised directly in equity (1,676) 82,737

Operating result for the period (464,507) (2,792) Total recognised income and expense for the period (466,183) 79,945

Total equity at the end of the year (386,238) 79,945

Total recognised income and expense for the year is attributable to:UON, Singapore Pte Ltd (466,183) 79,945




UON, Singapore Pte LtdCash Flow Statementfor the Year Ended 31 December 2007

Notes 1/1 - 31/12 8/3 - 31/12

2007 2006$ $

Cash Flows From Operating ActivitiesReceipts from student fees and other customers 3,111,232 418,632 Interest received 595 396 Payments to suppliers and employees (2,183,670) (355,782)


Cash Flows From Investing ActivitiesProceeds from sale of property, plant and equipment 742 - Payments for property, plant and equipment (54,974) (7,013)


Cash Flows From Financing ActivitiesProceeds from issue of shares - 83,530 Payments for financial assets - (25,059)

Net cash inflow (outflow) from financing activities - 58,471

Net increase/(decrease) in cash and cash equivalents 873,925 114,704 Cash and cash equivalents at the beginning of the financial year 113,578 - Effect of exchange rate changes on cash and cash equivalents (8,723) (1,126)

8 978,780 113,578



UON, Singapore Pte LtdCash Flow Statementfor the Year Ended 31 December 2007

Notes 1/1 - 31/12 8/3 - 31/12

2007 2006$ $

Cash Flows From Operating ActivitiesReceipts from student fees and other customers 3,111,232 418,632 Interest received 595 396 Payments to suppliers and employees (2,183,670) (355,782)


Cash Flows From Investing ActivitiesProceeds from sale of property, plant and equipment 742 - Payments for property, plant and equipment (54,974) (7,013)


Cash Flows From Financing ActivitiesProceeds from issue of shares - 83,530 Payments for financial assets - (25,059)

Net cash inflow (outflow) from financing activities - 58,471

Net increase/(decrease) in cash and cash equivalents 873,925 114,704 Cash and cash equivalents at the beginning of the financial year 113,578 - Effect of exchange rate changes on cash and cash equivalents (8,723) (1,126)

8 978,780 113,578




UON, Singapore Pte LtdContents of the Notes to the Financial Statementsfor the Year Ended 31 December 2007

Note Contents1. Summary of significant accounting policies2. Fees and charges3. Investment income4. Other revenue5. Employee related expenses6. Depreciation7. Other expenses8. Cash and cash equivalents9. Receivables

10. Other financial assets11. Other non-financial assets12. Property, plant and equipment13. Trade and other payables14. Provisions15. Other liabilities16. Reserves and retained surplus17. Key management personnel disclosures18. Remuneration of auditors19. Contingencies20. Commitments21. Related parties22. Events occurring after the balance sheet date23. Reconciliation of operating result to net cash inflow from operating activities 24. Issued capital25 Financial risk management


UON, Singapore Pte LtdNotes to the Financial Statementsfor the Year Ended 31 December 2007


355 Jalan Bukit Ho SweeBlock BRoom 406Singapore 169567






e) Foreign currency translationi) Functional and presentation currency

ii) Transactions and balances

f) Revenue recognition

(i) Student fees and charges


The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying The University's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below.

The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the company and specific criteria have been met for each of the company's activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to it have been resolved.

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

Items included in the financial statements of the entity are presented in Australian dollars, which is The University of Newcastle's functional and presentation currency.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The figures presented are in Australian Dollars and are for the full year ended 31st December 2007 apart from the comparatives, which are for the period from which UON, Singapore Pte Ltd commenced trading, from 8th March 2006 to the year end date of 31st December 2006.The company is a for profit entity. The company was established and has its domicile in the Republic of Singapore. The principal place of business is:

Creating, developing and delivering educational programmes in business, management and related fields.

Fees and charges are recognised as income in the year of receipt, except to the extent that fees and charges relate to courses to be held in future periods. Such income is treated as income in advance. Conversely, fees and charges relating to debtors are recognised as revenue in the year to which the prescribed courses relate.

This financial report is a general purpose financial report which has been prepared on an accrual basis in accordance with Australian Accounting Standards, AASB Interpretations, Public Finance and Audit Act 1983, the requirements of the Department of Education, Employment and Workplace Relations (DEEWR) and other state/Australian Government legislative requirements.

The financial statements and notes of the company comply with Australian Accounting Standards


Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities, such as equities held at fair value through profit or loss, are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets are included in the fair value reserve in equity.




g) Impairment of assets

h) Cash and cash equivalents

i) Trade receivables

j) Investments and other financial assets



(iii) Held-to-maturity investments



Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet.



UON, Singapore Pte Ltd classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the company's management has the positive intention and ability to hold to maturity.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment. Trade receivables are due for settlement no more than 30 days after end of month from the date of recognition.Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows. discounted at the effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in the income statement.





Subsequent measurement

Fair Value

Impairment

k) Property, Plant and Equipment

Furniture and Fittings 3 - 15 yearsOffice Equipment 3 - 15 years

l) Trade and other payablesThese amounts represent liabilities for goods and services provided to the company prior to the end of year, which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the income statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

Regular purchases and sales of investments are recognised on 'trade-date', the date on which the company commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expenses in the income statement. Financial assets are derecognised when the right to receive cash flows from the financial assets have expired or have been transferred and the company has transferred substantially all the risks and rewards of ownership.






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

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the company establishes fair value by using valuation techniques. These includes reference to the fair values of recent arm's length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probably that future economic benefits associated with the item will flow to the UON, Singapore Pte Ltd and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The estimated useful life of each asset class is:

The company assesses at each balance date whether there is objective evidence that a financial asset or company of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.




m) Employee benefits(i) Wages and salaries, annual leave and sick leave


o) Going Concern

p) New Accounting Standards and Interpretations

(i) AASB123 Borrowing Costs - Revised (1 January 2009)(ii) AASB2007-6 Amendments to Australian Accounting Standards (1 January 2009)(iii) AASB2007-7 Amendments to Australian Accounting Standards (1 January 2009)(iv) AASB2007-8 Amendments to Australian Accounting Standards (1 January 2009)

o)

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

Long service leave is not recognised until an employee accumulates five years of service or more.



The initial business plan for the company showed it would not make profits for the first two years of operation. At the August 2007 Council meeting for The University of Newcastle (Parent Entity), a moratorium on debt repayment until a date to be determined, but no earlier than 30 June 2008 was endorsed. A report to Council in November 2007 highlighted the company's requirement for financial support in the first two years of operation, and by mid 2010 all outstanding debt would be repaid. Given the financial support from the University, the financial report has been prepared on a going concern basis.






2. FEES AND CHARGES

1/1 - 31/12 8/3 - 31/122007 2006

$ $Course fees and chargesFee-paying overseas students 2,845,086 1,360,507 Total course fees and charges 2,845,086 1,360,507


1/1 - 31/12 8/3 - 31/122007 2006

$ $

Interest received 815 417 Total investment income 815 417

4. OTHER REVENUE

1/1 - 31/12 8/3 - 31/122007 2006

$ $

Other revenue 14,949 1,231 Total other revenue 14,949 1,231


1/1 - 31/12 8/3 - 31/12

2007 2006$ $

AcademicSalaries 806,541 251,022 Contribution to superannuation 59,400 14,681 Total academic 865,941 265,703

Non-academicSalaries 158,619 47,021 Contribution to superannuation 17,900 3,903 Total non-academic 176,519 50,924 Total employee related expenses 1,042,460 316,627

6. DEPRECIATION

1/1 - 31/12 8/3 - 31/122007 2006

$ $

DepreciationOffice equipment 18,885 1,576 Furniture & Fittings 4,634 - Total depreciation 23,519 1,576



7. OTHER EXPENSES

1/1 - 31/12 8/3 - 31/122007 2006

$ $

Consumables 38,697 7,152 Equipment 15,920 2,625 Property, maintenance & rent 33,616 8,486 Services/Contractors - University service fees (direct) 1,218,973 317,660 - University service fees (indirect) 572,573 613,773 - Other contractors 232,499 85,497 Student support/scholarships 17,465 7,048 Travel & motor vehicles 61,218 1,575 Utilities 16,700 1,221 Others (excluding depreciation) 51,717 1,707

2,259,378 1,046,744


1/1 - 31/12 8/3 - 31/122007 2006

$ $

DBS Bank (SGD) current account 945,678 9,187 Trust account maintained with TRICOR Business Outsourcing 32,707 103,977 Petty cash 395 414 Total cash and cash equivalents 978,780 113,578


Balance as above 978,780 113,578 Balance per cash flow statement 978,780 113,578

The above figures are reconciled to cash at the end of the year as shown in the cash flow statement as follows:



9. RECEIVABLES

1/1 - 31/12 8/3 - 31/122007 2006

$ $CurrentGeneral debtors 721,915 402,699 Amount due from Directors - 6,815 Prepayment 3,162 10,302 Sundry Receivable 2,352 Refundable Deposit 3,555 816 Total current receivables 730,984 420,632

(a) Impaired receivablesAs at 31st December 2007 there were no impaired receivables (2006:$0).As at 31st December 2007 there were no receivables past due (2006:$0).

(b) Foreign exchange and interest rate risk

The carrying amounts of the entity's current receivables are denominated in the followings currencies:

2007 2006$ $

Singapore Dollars (SGD) SGD 925,413 SGD 1,174,014SGD 925,413 SGD 1,174,014

Current receivables 730,984 420,632 730,984 420,632

A summarised analysis of the sensitivity of receivables to foreign exchange and interest rate risk can be found in Note 25.

(c) Fair value and credit risk


1/1 - 31/12 8/3 - 31/122007 2006

$ $Non-currentHeld-to-maturity assets 23,697 24,834 Total non-current other financial assets 23,697 24,834

(a) Held to Maturity assets

(b) Impairment and risk exposureThe maximum exposure to credit risk at the reporting date is the carrying amount of the assets.None of the held-to-maturity assets are either past due or impaired.

A deposit of SGD$30,000 is assigned to the Comptroller of Goods and Services Tax (GST) of Singapore for the purposes of obtaining status under GST Scheme. The deposit will be held until 29th November 2008.

Due to the short-term nature of the current receivables, their carrying value is assumed to approximate their fair value.

All held-to-maturity assets are denominated in Singapore dollars. As a result there is exposure to foreign currency risk. Refer to Note 25 for further detail. There is no exposure to price risk as the assets will be held to maturity.




1/1 - 31/12 8/3 - 31/122007 2006

$ $CurrentAccrued income 85,181 550,394 Total current other non-financial assets 85,181 550,394


Office equipment Furniture & Fittings Total

UON Singapore Pte Ltd $ $ $

Year ended 31 December 2006Opening net book amount - - - Additions 6,960 - 6,960 Depreciation expense (1,576) - (1,576) Closing net book amount 5,384 - 5,384

At 31 December 2006-Cost 6,960 - 6,960 -Valuation - - - Accumulated Depreciation (1,576) - (1,576) Net book amount 5,384 - 5,384

Year ended 31 December 2007Opening net book amount 5,384 - 5,384 Exchange differences (164) 19 (145) Additions 37,298 17,449 54,747 Disposals 433 - 433 Depreciation expense 18,885 4,634 23,519 Closing net book amount 23,200 12,834 36,034

At 31 December 2007-Cost 42,633 17,449 60,082 -Valuation - - - Accumulated Depreciation 19,433 4,615 24,048 Net book amount 23,200 12,834 36,034

13. TRADE AND OTHER PAYABLES1/1 - 31/12 8/3 - 31/12

2007 2006$ $

CurrentOther creditors 141,429 45,174 Accrued expenses - 35,626 Goods & Services Tax 108,738 16,074 Total current payables 250,167 96,874

(a) Foreign currency risk

The carrying amounts of the entity's current trade and other payables are denominated in the followings currencies:

2007 2006$ $

Singapore Dollars (SGD) 298,100 117,124 298,100 117,124

A summarised analysis of the sensitivity of payables to foreign exchange and interest rate risk can be found in Note 25.



14. PROVISIONS2007 2006

$ $Current provisions expected to be settled within 12 monthsEmployee benefits Annual leave 6,448 - Subtotal 6,448 -

Current provisions expected to be settled after more than 12 monthsEmployee benefits Annual leave - - Subtotal - - Total current provisions 6,448 - Total provisions 6,448 -


Movement in provisions

CurrentCarrying amount at start of year - - Additional provisions recognised 6,448 - Carrying amount at end of year 6,448 -

15. OTHER LIABILITIES

1/1 - 31/12 8/3 - 31/122007 2006

$ $CurrentDeferred income 50,000 - Amount due to intercompany - The University of Newcastle 1,934,299 938,003 Total current other liabilities 1,984,299 938,003

16. RESERVES AND RETAINED SURPLUSES

1/1 - 31/12 8/3 - 31/122007 2006

$ $a) ReservesForeign currency translation reserve (4,975) (3,299) Reserves at the end of the year (4,975) (3,299)

Movements in reserves were :Foreign currency translation reserveBalance as at 1 January (3,299) -

Currency translation differences arising during the year (1,676) (3,299) Balance as at 31 December (4,975) (3,299)

b) Retained SurplusMovements in retained surplus were as follows: Retained surplus at 1 January (2,792) - Operating result for the period (464,507) (2,792) Retained surplus at 31 December (467,299) (2,792)

c) Nature and purpose of reservesForeign currency reserve - exchange differences arising on translation of the Singapore dollar financial statements into Australian dollars are taken to the foreign currency translation reserve. The reserve is recognised in profit and loss when the investment is disposed of.





a) Names of responsible persons and executive officers

Professor Nicholas Andrew Saunders - ChairpersonDr Susan Mary Gould - DirectorProfessor John Phillip Carter - DirectorProfessor William Raymond Purcell - DirectorProfessor Timothy Kilgore Roberts - Director, Chief Executive OfficerChandra Das S/O Rajagopal Sitaram - Independent DirectorMr Michael Grenville Gray - Independent Director

b) Remuneration of board members and executivesNumber Number

Remuneration of executive officersNil to $9,999 2 2$280,000 to $299,999 1 -

c) Key management personnel compensation

2007 2006$'000 $'000

Short-term employee benefits 228,287 107,004 Total key management personnel compensation 228,287 107,004


1/1 - 31/12 8/3 - 31/122007 2006

$ $

Assurance services1. Audit ServicesFees paid to KPMG 19,036 18,376 Fees paid to NSW Audit Office for Audit of Financial Report* 8,500 8,000

27,536 26,376

19. CONTINGENCIES

20. COMMITMENTS

1/1 - 31/12 8/3 - 31/122007 2006

$ $

Future Rental leases (excl. GST) - within one year 33,232 5,459 - Later than one year but not later than five 16,616 10,898

49,848 16,357

The rental lease relates to subtenancy of office premises at 355 Jalan Bukit Ho Swee, Singapore.

*The University of Newcastle paid $8,000 for 2006 audit fees to NSW Audit Office on behalf of the Company.

Consolidated

UON, Singapore Pte Ltd currently has no contingent liabilities or contingent assets.

The following persons were responsible persons and executive officers of UON, Singapore during the financial year:




a) Parent entity

b) Key management personnel

c) Transactions with related parties

1/1 - 31/12 8/3 - 31/122007 2006

$ $

Services rendered 1,844,143 938,003 1,844,143 938,003

d) Outstanding balances

The following balances are outstanding at the reporting date in relation to transactions with related parties:

1/1 - 31/12 8/3 - 31/122007 2006

$ $

Services rendered 1,934,299 938,003 1,934,299 938,003


23.

1/1 - 31/12 8/3 - 31/122007 2006

$ $

Operating result for the year (464,507) (2,792) Net exchange differences on conversion of financial statements 5,662 (13,021) Depreciation and amortisation 23,519 1,887 Net gain/(loss) on sale of non current assets (309) (Increase)/decrease in trade debtors (337,329) (486,881) (Increase)/decrease in other operating assets 448,542 (1,187,158) Increase/(decrease) in trade creditors 97,537 554,617 Increase/(decrease) in other operating liabilities 1,148,595 1,196,594 Increase/(decrease) in other provisions 6,447 - Net cash provided by/(used in) operating activities 928,157 63,246

24. ISSUED CAPITAL

2 fully paid ordinary shares 86,036 86,036

Disclosures relating to directors and specified executives are set out in Note 17.

The ultimate parent entity is the University of Newcastle, by virtue of its full ownership of the Company's issued share capital.


UON, Singapore Pte Ltd is not aware of any material financial impacts or changes after 31 December 2007.

All transactions with related parties were conducted under normal commercial terms and conditions

The following transactions occurred with related parties:


1




(ii) Price RiskThe company does not have any investments in equity securities and as such is not exposed to price risk.



31 December 2007 Profit Equity Profit Equity $ $ $ $ $

Financial AssetsCash and cash equivalents 978,780 (9,788) (9,788) 9,788 9,788 Financial LiabilitiesTotal increase/(decrease) 978,780 (9,788) (9,788) 9,788 9,788

31 December 2007 Profit Equity Profit Equity $ $ $ $ $

Financial AssetsCash and cash equivalents 978,780 (97,878) (97,878) 97,878 97,878 Accounts receivable 730,984 (73,098) (73,098) 73,098 73,098 Financial LiabilitiesTrade payables (250,167) 25,017 25,017 (25,017) (25,017) Other liabilities (1,984,299) 198,430 198,430 (198,430) (198,430) Total increase/(decrease) (524,702) 52,470 52,470 (52,470) (52,470)

(b) Credit RiskCredit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as outstanding receivables and committed transactions.

-10%


The company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Singapore and Australian dollar.Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.At 31 December 2007, had the Australian Dollar weakened/strengthened by 10% against the SG Dollar with all other variables held constant, post-tax profit for the year would have been $46,451 higher/ $46,451 lower, mainly as a result of foreign exchange gains/losses on translation of SG dollar denominated trade receivables and financial assets at fair value through profit or loss.

The company's main interest rate risk arises from cash and cash equivalents. At 31 December 2007, if interest rates had changed by -/+ 1% from the year end rates with all other variables held constant, post-tax profit for the year would have been $9,788 lower/ $9,788 higher, mainly as a result of higher interest income from cash and cash equivalents.

10%

The company's activities expose it to a variety of financial risks: market risk (currency risk, price risk, cash flow interest rate risk and fair value risk), credit risk and liquidity risk. The company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the entity. The company uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis of interest rates, foreign exchange, and other price risks.


Interest rate risk

Foreign exchange risk

-1% +1%Carrying Amount


2



(c) Liquidity Risk

31 December 2008Opening balance for the period 1,000,000 Operating proceeds 5,000,000 Operating outflows 4,500,000 Closing balance for the period 1,500,000



The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The company uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date.The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the company for similar financial instruments.

Prudent liquidity risk management implies maintaining sufficient cash. Due to the dynamic nature of the underlying businesses, the Board aims at maintaining flexibility in funding by keeping sufficient cash reserves on hand.Management monitors rolling forecasts of the company's liquidity reserve on the basis of expected cash flow. Forecast liquidity reserve as of 31 December 2007 is as follows:

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.

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OffiCe HOUrS 9am to 5pm Monday to friday

POSTal addreSSUniversity Secretary The University of NewcastleCallaghan NSW 2308

T +61 2 4921 5000 (General enquiries)T +61 2 4921 5351 (Media Unit)F +61 2 4921 6922 (records Management Office)E [email protected] www.newcastle.edu.au

Produced by the University of Newcastle. designed and formatted by Marketing and Communication, the University of Newcastle.

This annual report is available in electronic form at the following address: www.newcastle.edu.au/services/publications

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