annual financial statements fy19 - community health service · communities they live in. we do this...

cohealth Limited

ABN 57 167 212 302

Financial Statements – 30 June 2019

cohealth LimitedContents30 June 2019

Directors’ report 1 Auditor’s Independence Declaration 6Statement of profit or loss and other comprehensive income 7Statement of financial position 8Statement of changes in equity 9Statement of cash flows 10Notes to the financial statements 11Directors' declaration 23Independent auditor's report to the members of cohealth Limited 24

General information

The financial statements cover cohealth Limited as an individual entity. The financial statements are presented in Australian dollars, which is cohealth Limited's functional and presentation currency.

The financial statements were authorised for issue 25 September 2019

cohealth LimitedDirectors' report30 June 2019

1

The directors present their report, together with the financial statements, on cohealth Limited (“cohealth”) for the year ended 30 June 2019.

Directors The following persons were directors of cohealth during the whole of the financial year and up to the date of this report, unless otherwise stated:

Kerry Thompson,

Chair

Qualifications - BBus, GradDip Management, FAICD

Role within the Company

- Chair and member of the Finance and Audit Committee (ex officio).

Other current experience and expertise - Highly accomplished and experienced senior executive and CEO within the state and

local government and not for profit sectors including CEO at both Maribyrnong and Wyndham City Councils, and the Lost Dogs Home;

- Currently CEO at Municipal Association of Victoria; - Director on various boards for over 15 years; and - Previously Deputy Secretary role in Transport for Victoria and acting Chief Executive

VicRoads.

Khoi Cao-Lam,

Deputy Chair

Qualifications - BBus, LLB (Hons), MSt


- Deputy Chair, Director and member of the Quality and Risk Committee.

Other current experience and expertise - Lawyer by background and experience in corporate law, international development,

community legal centres and the public sector; - Experience in establishing health justice partnerships, organisational development and

social innovation; - Coaching Lead, Agile Delivery Office, Department of Premier and Cabinet - Former Executive Committee member of the Vietnamese Association of Victoria.

Sally Cunningham Qualifications - BOT, GradDipMHSci (Community), MPubPol&Mgmt, GAICD


- Director and member of the Quality and Risk Committee

Other current experience and expertise - Clinical, project, and management roles in acute, sub-acute, mental health and

community health services; - Manager Strategy and Innovation, Allied Health, Melbourne Health; - Workforce and service development roles in health networks since 2008; - Director on not for profits boards for more than 15 years; and - Practitioner member of the Occupational Therapy Board of Australia.


2

Directors

(continued)

Leanne Dillon

Qualifications - BHSci (Nursing), GradDipAdminMgmt, LLB, GradDipLegPract


- Director and Chair of the Quality and Risk Committee

Other current experience and expertise - Current Manager Legal and Compliance at Dental Health Services Victoria - Previously worked in the health sector as a clinician and in senior management roles

including Board Secretary, Legal Counsel and Director Clinical Governance and Medico Legal at Western Health.

- Former Project Director at Alcidion Corporation, a health informatics company that builds software to support the delivery of patient care; and

- Former Board Secretary with the National Disability Insurance Agency.

Ron Exiner Qualifications - BA, BEc, BSW, Dip Ed


- Director, member of the Finance and Audit Committee and Chair of the Community

Advisory Committee.

Other current experience and expertise - Extensive background in local government and a wealth of experience in corporate

governance, strategic planning and accountability; - Former Director at Inner North Community Foundation; and - Committee member of the Hanny Exiner Memorial Foundation - Former Committee member of Post Polio Victoria (until November 2018).

Helena Maher

(Resigned 3 July

2019)

Qualifications - BA(Hons), PPubPol&Mgnt, GAICD


- Director and member of the Quality and Risk Committee

Other current experience and expertise - Twenty years’ experience in health policy and advocacy roles in peak bodies, acute

and community controlled health services; - Currently Manager Policy and Advocacy, Australasian College of Emergency Medicine; - Previously strategy, policy, project and community engagement roles in women’s

health, consumer participation and Aboriginal Health; - Publications related to violence against women and mental health; and - Member of Advisory Board for the Masters of Politics and Policy at Deakin University

and the Strategic Innovation and Planning Committee for Victorian Legal Aid.


3

Directors

(continued)

David Nairn

Qualifications - BComm and Admin, GAICD, FCA, FCPA


- Director and Chair of the Finance and Audit Committee.

Other current experience and expertise - More than forty years’ experience as a chartered accountant providing services to a

wide range of organisations including not for profit, family business, public sector organisations and listed companies in New Zealand, Canada and Australia;

- Chair of the Audit and Risk Committee of the Victorian Electoral Commission; and - Past member of the International Committee of the Red Cross.

Phillip Templeton Qualifications - BArch


- Director, member of the Finance and Audit Committee and Consumer Advisory

Committee

Other current experience and expertise - Director of PTA Architecture for over 20 years. The Practice portfolio includes

Retirement and aged care homes and primary care, as well as residential and Community Projects in the inner north west of Melbourne;

- Served as a Director on a number of Boards and community groups, including Rotary, Doutta Galla Aged Services and continues to be involved in the promotion of Community Health Services.

Helen Sui (Appointed

28 November 2018)

Qualifications - Master International Politics, Master Professional Accountancy, Grad. Dip

Local Government Law, EMBA .


- Director and member of the Finance and Audit Committee

Other current experience and expertise

- Over 20 years experience in both Not-for-Profit and local government

sectors.

- Currently Director Corporate Services at City of Whittlesea, which is a

large growth Council in Victoria with an annual turnover of $300 million.

- Brings a broad range of senior management experience, particularly in

financial management, people & culture development, and system &

process improvement.

- Other past and current board experience includes Reconciliation Victoria,

FinPro, and Local Government Funding Vehicle.


4

Principal activities

cohealth's mission is to improve health and wellbeing for all and tackle inequality, in partnership with people and the communities they live in. We do this by improving the health outcomes that matter to clients and communities, in the most sustainable way possible.

In delivering our mission we:

take a human rights-based approach to our practice and service delivery; promote externally the social model of health; promote health, social, racial, cultural and ecological equity; and address all forms of stigma and discrimination

The principal activities of cohealth during the financial year include:

the provision of integrated community-based health care services; specialised health and social support services for at risk populations; primary, secondary and tertiary prevention; and community education focused on reducing health inequity and improved access to health care for all.

No significant changes in the nature of the Company’s activities occurred during the financial year.

Short term objectives

The Company's short-term objectives are to be impactful and sustainable.

Impactful means –

delivering meaningful outcomes to the people that we serve. Ensuring our work is population focused, evidence informed, leading with quality and safety, and adaptive to individual and community needs; and

providing a strong voice for system reform and health equity.

Sustainable means –

striving to deliver meaningful outcomes to the consumers and communities we serve in the most effective and sustainable way possible;

supporting a diverse, welcoming and innovative workforce within a progressive and enduring organisation; and

integrating key systems that underpin leadership, good governance and quality outcomes.

Long term objectives

The Company's long term objectives are to: deliver high quality and purposeful outcomes to the consumers and communities that we serve. To do so our

work must be capable of being measured and monitored; demonstrate service user participation in all aspects of our work to ensure our responses are adaptive to

community and individual needs; strengthen understanding of the relationship between inequity, the social determinants of health and health

outcomes; build an agile workforce through sector-leading workforce learning, development, engagement and capacity

building; advance organisational financial sustainability by ensuring the activities we undertake are financially

sustainable, and through the diversification of revenue sources; develop infrastructure and assets that support organisational and community need and further their interests;

and create contemporary 'places and spaces' that support innovation, energise and enable people to flourish.

How principal activities assisted in achieving the objectives

The principal activities assisted the Company in achieving its objectives by: integrating activities and planning; implementing improved and highly responsive, targeted community health and wellbeing services across the

wide range of programs delivered by cohealth; and improving organisational financial sustainability.


5

Performance measures

The following key domains are identified in the cohealth Performance Framework and are used within the Company to monitor performance:

Financial Performance Operational Performance Quality Client Experience Staff culture / climate.

Members guarantee

cohealth Ltd. is a company limited by guarantee. In the event of, and for the purpose of winding up of the company, the amount capable of being called up from each member and any person or association who ceased to be a member in the year prior to the winding up, is limited to a maximum of $5 each.

At 30 June 2019 the collective liability of members was $380 (2018: $235).

Meetings of directors

During the financial year, 23 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows:

Auditor’s independence declaration

The lead auditor's independence declaration in accordance with section 60-40 of the Australian Charities and Not-For-Profit Commission Act 2012, for the year ended 30 June 2019 has been received and can be found on page 6 of the financial report.

Signed in accordance with a resolution of the Board of Directors:

___________________________ _____________________________ Kerry Thompson David Nairn Chair Director

25 September 2019 25 September 2019 Melbourne Melbourne

Directors

Number eligible to attend

Number attended


Number attended


Number attended

Kerry Thompson,Chair 10 9 9 2 N/A N/A

Khoi Cao-Lam, Deputy Chair 10 9 N/A N/A 4 4

Ron Exiner 10 9 9 7 N/A N/A

Sally Cunningham 10 8 N/A N/A 4 3

Leanne Dillon 10 9 N/A N/A 4 4

Helena Maher 10 9 N/A N/A 4 4

David Nairn 10 9 9 9 N/A N/A

Helen Sui (Appointed November 2018) 6 6 5 5 N/A N/A

Philip Templeton 10 8 9 5 N/A N/A

Directors Meeting Finance and Audit Committee Meetings

Quality and Risk Committee Meetings

6

THE POWER OF BEING UNDERSTOODAUDIT | TAX | CONSULTING

RSM Australia Pty Ltd is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

RSM Australia Pty Ltd ACN 009 321 377 atf Birdanco Practice Trust ABN 65 319 382 479 trading as RSM

Liability limited by a scheme approved under Professional Standards Legislation

RSM Australia Partners

Level 21, 55 Collins Street Melbourne VIC 3000PO Box 248 Collins Street West VIC 8007

T +61 (0) 3 9286 8000F +61 (0) 3 9286 8199

www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of cohealth Ltd for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of Australian professional accounting bodies; and

(ii) any applicable code of professional conduct in relation to the audit.

RSM AUSTRALIA PARTNERS

K J DUNDON Partner

Dated: 25 September 2019Melbourne, Victoria

cohealth LimitedStatement of Profit or Loss and Other Comprehensive IncomeFor the year ended 30 June 2019

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

7

Note 2019 2018

$ $

Income from continuing operations

Operating revenue 3 75,834,564 70,105,311Capital grant revenue 3 255,261 100,000

Other income 4 1,416,158 1,397,503

Total income from continuing operations 77,505,983 71,602,814

Expenses from continuing operations

Employee benefits expense (58,874,553) (56,116,319)

Depreciation expense (1,907,581) (2,066,000)Service delivery expenses (2,746,588) (2,512,680)

Client related expenses (5,085,451) (5,223,815)Consultancy and legal expenses (803,611) (673,967)

Information technology and communication expense (1,159,560) (1,240,255)Occupancy expense (3,071,834) (3,226,401)

Motor vehicle expenses (862,299) (850,448)

Administration and other expenses (3,271,772) (3,406,308)(Loss)/gain from sale of property, plant and equipment (586,482) 54,774

Total expenses from continuing operations (78,369,731) (75,261,419)

Deficit from operations for the year (863,748) (3,658,605)

Other comprehensive income for the year

Items that will not be reclassified in subsequent periods to profit or loss

Revaluation of land and buildings - 2,820,486

Total comprehensive income for the year (863,748) (838,119)

cohealth LimitedStatement of Financial PositionAs at 30 June 2019

The above statement of financial position should be read in conjunction with the accompanying notes 8

Note 2019 2018

$ $

Assets

Current assets

Cash and cash equivalents 5 19,673,685 15,455,724

Trade and other receivables 6 1,147,171 801,029

Other assets 7 1,588,808 1,378,182Assets held for sale 9 666,229 -

Total current assets 23,075,893 17,634,935

Non-Current Assets

Property, plant and equipment 8 37,330,070 41,698,936

Total non-current assets 37,330,070 41,698,936

Total assets 60,405,963 59,333,871

Liabilities

Current liabilities

Trade and other payables 10 3,085,176 2,284,169

Employee benefits provisions 11 9,828,915 8,784,036Borrowings 12 2,752,781 2,752,781

Other liabilities 13 9,178,309 8,833,254

Total current liabilities 24,845,181 22,654,240

Non-Current liabilities

Employee benefits provisions 11 1,874,780 2,129,881

Total non-current liabilities 1,874,780 2,129,881

Total liabilities 26,719,961 24,784,121

Net assets 33,686,002 34,549,750

Equity

Contributed capital reserves 14 25,605,569 25,605,569Asset revaluation reserve 9,234,759 9,720,486

Accumulated losses (1,154,326) (776,305)

Total equity 33,686,002 34,549,750

cohealth LimitedStatement of Changes in EquityFor the year ended 30 June 2019

The above statement of changes in equity should be read in conjunction with the accompanying notes 9

Asset revaluation

reserve

Contributed

capital reserve

(Accumulated

losses)/

Retained earnings

Total equity

$ $ $

Balance at 1 July 2017 6,900,000 25,605,569 2,882,300 35,387,869

Deficit for the year - - (3,658,605) (3,658,605)

Revaluation of land and buildings 2,820,486 - - 2,820,486

Balance at 30 June 2018 9,720,486 25,605,569 (776,305) 34,549,750

Balance at 1 July 2018 9,720,486 25,605,569 (776,305) 34,549,750

Deficit for the year - - (863,748) (863,748)

(485,727) - 485,727 -

Balance at 30 June 2019 9,234,759 25,605,569 (1,154,326) 33,686,002

Transfer relating to disposal of property, plant and

equipment

cohealth LimitedStatement of Cash FlowsFor the year ended 30 June 2019

The above statement of cash flows should be read in conjunction with the accompanying notes 10

Note 2019 2018

$ $

Cash flows from operating activities

Receipts from customers (inclusive of GST) 77,634,894 82,459,488

Payments to suppliers and employees (inclusive of GST) (75,153,902) (80,510,410)

2,480,992 1,949,078

Interest received 370,830 310,962

Net cash inflow from operating activities 2,851,822 2,260,040

Cash flows from investing activities

Payments for property, plant and equipment (1,657,283) (1,072,496)

Proceeds from sale of property, plant and equipment 3,023,422 170,629

Net cash inflow/(outflow) from investing activities 1,366,139 (901,867)

Cash flows from financing activities

Repayment of borrowings - (240,000)

Net cash outflow from financing activities - (240,000)

Net increase in cash and cash equivalents 4,217,961 1,118,173

Cash and cash equivalents at the beginning of the financial period 15,455,724 14,337,551

Cash and cash equivalents at the end of the financial period 5 19,673,685 15,455,724

cohealth LimitedNotes to the financial statements30 June 2019

Note 1. Significant accounting policies

11

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

New or amended Accounting Standards and Interpretations adopted The company has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards changes are applicable to the company in the current reporting period:

AASB 9 Financial InstrumentsThe company has adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch

New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.

AASB 9 was adopted using the modified retrospective approach and as such comparatives have not been restated. There was no impact on opening retained profits as at 1 July 2018.

Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards - Reduced Disclosure Requirements and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Australian Charities and Not-for-profits Commission Act 2012.

Historical cost convention The financial statements have been prepared under the historical cost convention.

Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’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 2.


Note 1. Significant accounting policies (continued)

12

Revenue recognition Revenue is recognised when it is probable that the economic benefit will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. All revenue is stated net of the amount of goods and services tax (GST).

Grant revenue Grant revenue is recognised in the Statement of Profit or Loss and Other Comprehensive Income when there is reasonable assurance that the revenue will be received and all attached conditions will be complied with.

When grant revenue is received whereby the entity incurs an obligation to deliver economic value directly back to the contributor, this is considered a reciprocal transaction and the grant revenue is recognised in the Statement of Financial Position as a liability until the service has been delivered to the contributor, otherwise the grant is recognised as income on receipt.

Patient fees Patient fees are recognised as revenue at the time invoices are raised or accrued when a service is performed.

Rental income Revenue is recognised on a straight-line basis over the lease term.

Donations Donations and bequests are recognised when received.

Other revenue Other revenue is recognised when it is received or when the right to receive payment is established.

Income tax As the Company is a charitable institution in terms of subsection 50-5 of the Income Tax Assessment Act 1997, as amended, it is exempt from paying income tax.

Current and non-current classification Assets and liabilities are presented in the Statement of Financial Position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Company's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the Company’s normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Cash and cash equivalents 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.



13

Trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.

Property plant and equipment All other non-current physical assets are measured at cost and subsequently at fair value less accumulated depreciation. The fair value was determined when the assets were transferred as part of the amalgamation which occurred in the financial year ended 30 June 2014.

Land and buildings Land and buildings are held at fair value. An independent valuation of the cohealth’s property was performed by the M3Property Strategists in the financial year ended 2018 to determine the fair value of land and buildings. The valuation, which conforms to Australian Accounting Standards, was determined by using a market based direct comparison approach and the capitalisation of net income approach for both land and buildings. The valuations were based on independent assessments.

Capital work in progress Capital work in progress is measured using the cost model.

Leasehold improvements Leasehold improvements are measured using the cost model.

Depreciation Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Asset category Useful life Buildings 25 years Leasehold improvements 5 - 20 years** Plant and equipment 1- 10 years Motor vehicles 1- 4 years IT equipment 2- 3 years

** Subject to the terms of the lease

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

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Company. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

Assets held for sale Assets held for sale are treated as current and classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use.

This condition is regarded as met only when: the asset is available for immediate use in the current condition; and the sale is highly probable and the asset’s sale is expected to be completed within 12 months from the date of

classification.

These assets held for sale are measured at the lower of carrying amount and fair value less costs to sell, and are not subject to depreciation or amortisation.

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



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Trade and other payables These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30-60 days of recognition.

Employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. 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.

Grants in advance Grants in advance represent government funding that has been received for requested programs that have not been substantially completed or the performance conditions have not yet been met. The liability is short term in nature and income will be recognised once funding conditions are completed. The amounts received are not secured and are not discounted.

Borrowings Borrowings are held at fair value and they bear interest which is expensed in the Statement of Profit or Loss and Other Comprehensive Income.

Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Goods and Services Tax ('GST') Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part 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 tax authority is included in other receivables or other payables in the Statement of Financial Position.

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 tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.



15

New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the company for the annual reporting period ended 30 June 2019. The company's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the company, are set out below.

Title Summary Application date

Expected Impact

AASB 16 Leases AASB 16 has indicated that most operating leases, with the exception of short term and low value leases will come on to the balance sheet and will be recognised as right of use assets with a corresponding lease liability.

In the operating statement, the operating lease expense will be replaced by depreciation expense of the asset and an interest charge.

There will be no change for lessors as the classification of operating and finance leases remains unchanged.

Annual reporting period beginning on or after 1 January 2019

The estimated impact for FY19/20 includes recognition of a Right of Use Asset and lease liability of approximately $3.2mil in the statement of financial position.

The relevant amortisation will be recognised in the statement of profit or loss and other comprehensive income.

Interest and depreciation expense will be recognised instead of the rental expenses.

AASB 15 Revenue from contracts with customers

The changes in revenue recognition requirements in AASB 15 may result in changes to the timing and amount of revenue recorded in the financial statements. Revenue from grants that are provided under an enforceable agreement that have sufficiently specific obligations, will now be deferred and recognised as the performance obligations attached to the grant are satisfied.


The impact of AASB 15 on FY19/20 revenue has been assessed as a low risk of a material impact. The main principals underpinning AASB15, in terms of matching recognition of revenue to achievement of performance obligations, has been applied in FY18/19 actuals.

No significant impact anticipated.



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New Accounting Standards and Interpretations not yet mandatory or early adopted (continued)

Title Summary Application date

Expected Impact

AASB 1058 Income for not for profit entities

AASB 1058 establishes principles for transactions that are not within the scope of AASB 15, where the consideration to acquire an asset is significantly less than fair value to enable not-for-profit entities to further their objective.

Grant revenue is currently recognised up front upon receipt of the funds under AASB 1004 Contributions.

The timing of revenue recognition for grant agreements that fall under the scope of AASB 1058 may be deferred. For example, revenue from capital grants for the construction of assets will need to be deferred and recognised progressively as the asset is being constructed.

The impact on current revenue recognition of the changes is the potential phasing and deferral of revenue recorded in the operating statement.


We are expecting to see 2 scenarios as a result of AASB1058:

Generic Grant Grant funding that is broad and generic in nature and has no specific performance obligations will be recognised upfront

Capital Grant cohealth will also be receiving capital grant to construct a specific class of asset, where revenue can be deferred and recognised over the construction period.

No significant impact anticipated.


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Note 2. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Impairment of non-financial assets The Company assesses impairment of non-financial assets at each reporting date by evaluating conditions specific to the Company and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal, which incorporate a number of key estimates and assumptions.

Employee benefits provision As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

Allowance for expected credit lossesThe allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience and historical collection rates.

Fair value of land and buildings The valuation of land and buildings involves various assumptions which are used by valuation experts which include useful lives and current market prices.

Deferred revenue Depending on the nature of the agreement, some grant payments will require to be recognised as deferred revenue until grant conditions are satisfied. There is some element of judgement in determining partial completion of some grant conditions.


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Note 3. Revenue 2019 2018

$ $

Revenue

Operating grant revenue 65,677,309 59,770,226Capital grant revenue 255,261 100,000

Patient fees 8,391,551 8,356,927

Client individual fees 641,702 510,990Other trading revenue 1,124,002 1,521,942

Total revenue 76,089,825 70,260,085

Note 4. Other income

Interest income 370,830 310,962

Rental revenue 1,034,164 1,065,513

Donations 11,164 21,028

Total other income 1,416,158 1,397,503

Note 5. Cash and cash equivalents

Cash on hand and at bank 9,825,383 7,758,873

Cash on deposits 9,848,302 7,696,851

19,673,685 15,455,724

Note 6. Trade and other receivables

Trade receivables 1,165,686 884,175Allowance for expected credit losses (18,515) (83,146)

1,147,171 801,029

Note 7. Other assets

Prepayments 305,999 495,932

Accrued income 1,274,911 875,225Rental bonds 7,898 7,025

1,588,808 1,378,182


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Note 8. Non-current assets - Property Plant and Equipment

Capital work in

progress

Land &

Buildings

Plant and

equipment

Motor

Vehicles

IT

Equipment

Leasehold

improvements Total

$ $ $ $ $ $ $

At 30 June 2018

Cost 760,208 - - - - - 760,208Fair value - 33,870,000 3,165,495 1,131,013 1,935,959 5,862,007 45,964,474Accumulated Depreciation - - (1,309,538) (916,999) (1,374,479) (1,424,730) (5,025,746)Net book amount 760,208 33,870,000 1,855,957 214,014 561,480 4,437,277 41,698,936

At 30 June 2019

Cost 1,055,020 - - - - - 1,055,020Fair value - 29,793,864 2,740,550 350,210 1,904,549 5,924,401 40,713,574Accumulated Depreciation - - (1,350,718) (319,565) (1,419,855) (1,348,386) (4,438,524)Net book amount 1,055,020 29,793,864 1,389,832 30,645 484,694 4,576,015 37,330,070

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial period are set out below:

Capital work in

progress

Land &

Buildings

Plant and

equipment

Motor

Vehicles

IT

Equipment

Leasehold

improvements Total

$ $ $ $ $ $ $

Balance at 1 July 2017 715,677 32,044,495 2,283,504 536,270 652,475 3,538,701 39,771,122

Additions 784,979 - 114,309 - 328,483 2,290 1,230,061Transfers from Building to

Leasehold Improvement - (781,138) - - - 781,138 -

Transfers (740,448) 382,170 - - - 358,278Disposals/Write offs - - - (56,733) - - (56,733)

Depreciation expense - (596,013) (541,856) (265,523) (419,478) (243,130) (2,066,000)Revaluation Increment - 2,820,486 - - - - 2,820,486

Balance at 30 June 2018 760,208 33,870,000 1,855,957 214,014 561,480 4,437,277 41,698,936

Additions 1,494,498 22,668 22,523 - 242,833 32,326 1,814,848

Transfer to assets held for sale - (666,229) - - - - (666,229)

Transfers (1,199,686) 671,161 11,746 - 19,322 497,457 -Disposals/Write offs - (3,506,565) (30,595) (67,678) - (5,066) (3,609,904)

Depreciation expense - (597,171) (469,799) (115,691) (338,941) (385,979) (1,907,581)Revaluation Increment - - - - - - -

Balance at 30 June 2019 1,055,020 29,793,864 1,389,832 30,645 484,694 4,576,015 37,330,070

Note 9. Assets held for sale 2019 2018

$ $

Current

Land and buildings 666,229 -

Total assets held for sale 666,229 -

A sale plan was approved by the board to dispose a property situated on 48 Unitt Street, Melton. cohealth is actively seeking a

buyer for this property and expects to complete the sale by 31 December 2019.


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2019 2018

$ $

Note 10. Trade and other payables

Trade payables 1,282,418 978,867 GST payable 585,963 273,333

Other payables 1,216,795 1,031,969

3,085,176 2,284,169

Note 11. Employee benefits

Current

Long service leave provision 5,709,676 4,843,491

Annual leave provision 4,119,239 3,940,545 Total current 9,828,915 8,784,036

Non-current

Long service leave provision 1,874,780 2,129,881

Total non-current 1,874,780 2,129,881

2018 2017

Note 12. Borrowings

Current

Borrowings - secured 2,752,781 2,752,781

2,752,781 2,752,781

Note 13. Other liabilities 2018 2017

$ $

Current

Grants in advance 5,758,959 4,435,717

Accrued expenses 3,369,533 4,348,337 Other liabilities 49,817 49,200

9,178,309 8,833,254

Note 14. Equity reserves

Contributed capital reserve

Assets pledged as security

The borrowings are secured by first registered mortgage over the property at 78 Paisley Street Footscray.

The contributed capital reserve was established by the Directors to permanently record the fair value of net assets contributed

by Doutta Galla Community Health, North Yarra Community Health and Western Region Health Centre at the date of merger (1 May 2014).


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Note 15. Leasing and capital commitments 2019 2018

$ $

(a) Operating leases

Within one year 1,581,393 1,966,294Later than one year but not later than five years 3,263,649 3,142,292

Later than 5 years 2,501,726 1,343,432

7,346,768 6,452,018

2019 2018

(b) Non-operating lease commitments $ $

Within one year 1,802,452 1,290,503

Later than one year but not later than five years 1,338,694 797,440Later than 5 years - -

3,141,146 2,087,943

Note 16. Key management personnel (KMP) disclosure

(a) Compensation

2019 2018

$ $

Total remuneration 1,736,698 2,112,727

(b) Other key management personnel transactions

For details of other transactions of key management personnel, refer to Note 18 Related party transactions.

Note 17. Contingent liabilities and contingent assets

The Company had no contingent liabilities or contingent assets as at 30 June 2019 or 30 June 2018.

There are no restrictions placed upon the lessee by entering into these leases. Future minimum rentals payable under non-cancellable operating leases as at 30 June are reported in the table above.

The agrgregate compensation made to officers and other members of key management personnel of the Company is set out below:

Non-operating lease commitments relate to capital commitments and other service agreements which were entered into by

cohealth and third parties.

Commitments for minimum lease payments in relation to non-cancelleable operating leases are payable as follows:

The Company has entered into commercial leases on certain premises from which services are rendered, office equipment and motor vehicles where it is not in the best interest of cohealth to purchase these assets.

These leases have an average life of between 1 and 30 years with renewal terms included in the contracts. Renewals are at the

option of the specific entity that holds the lease.


22

Note 18. Related party transactions

(a) Key management personnel

(b) Transactions with related parties

Note 19. Events after reporting period

No matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the

Company's operations, the results of those operations, or the Company's state of affairs in future financial years (2018: None noted).

Key management personnel of the Company includes Board of Directors and Executive management team. Disclsoures relating to remuneration to KMP are set out in Note 16.

Outside of ordinary business operation transactions with cohealth, there were no related parties transactions that involved key management personnel, their close family members and their personal business interest. No provision has been required, nor

any expense recognised, for impairment of receivables from related parties (2018: None noted).

cohealth LimitedDirectors' Declaration30 June 2019

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In the Directors' opinion:

● the attached financial statements and notes comply with the Australian Accounting Standards - Reduced Disclosure Requirements and the Australian Charities and Not-for-profits Commission Act 2012.

● the attached financial statements and notes give a true and fair view of the Company's financial position as at 30 June 2019 and of its performance for the financial year ended on that date; and

● there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Board of Directors:

___________________________ _____________________________ Kerry Thompson David Nairn Chair Director

25 September 2019 25 September 2019 Melbourne Melbourne

24

THE POWER OF BEING UNDERSTOODAUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

RSM Australia Partners

Level 21, 55 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007

T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199

www.rsm.com.au

INDEPENDENT AUDITOR’S REPORT To the Members of cohealth Ltd

Opinion

We have audited the financial report of cohealth Ltd. (the Company), which comprises the Statement of Financial Position as at 30 June 2019, the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Changes in Equity and the Statement of Cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration.

In our opinion, the accompanying financial report of the Company is in accordance with the Australian Charities and Not-for-profits Commission Act 2012 (“ACNC Act”), including:

(i) giving a true and fair view of the Company's financial position as at 30 June 2019 and of its financial performance for the year then ended; and

(ii) complying with Australian Accounting Standards – Reduced Disclosure Requirements and the Australian Charities and Not-for-profits Commission Regulation 2013 (“ACNC Regulations”).

Basis for Opinion

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

We confirm that the independence declaration required by the Australian Charities and Not-for-profits Commission Act 2012, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report.

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

25

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Company's annual report for the year ended 30 June 2019, but does not include the financial report and the auditor's report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards – Reduced Disclosure Requirements and the Australian Charities and Not-for-profits Commission Act 2012 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar4.pdf. This description forms part of our auditor's report.

RSM AUSTRALIA PARTNERS

K J DUNDON Partner

Dated: 4 October 2019 Melbourne, Victoria

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