Narrogin Cottage Homes Inc.

ANNUAL GENERAL MEETING

& Annual Report

Date: 27th October 2016

Time: 6pm

Location: Karinya Clubroom

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Index • Letter to the Members Page 2

• About Narrogin Cottage Homes Page 4

• Mission, Vision and Values Page 5

• Strategic Direction Page 6

• Board of Management Page 7

• Our Staff Page 8

• Training Page 9

• Fundraising and our Volunteers Page 10

• Current Construction Projects Page 11

• AGM 2016 – Agenda Page 12

– 2015 Minutes Page 13-15

– Chairman’s Report Page 16 - 21

– Independent Auditors Report Page 22

– Audited Financial Statement (Summary) Page 23 - 25

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Letter to the Society members We are delighted to be able to look back on a very productive year with many positive developments for Narrogin Cottage Homes. They are reflected in our organisations growth and operating results that are also projected to impact positively on the services we provide to our aging community over the next 12 – 24 months. In the past 12 months we have commenced a major capital investment Project into “Karinya”, our residential care facility, with the assistance of a State Government Royalties for Regions Grant that will see us expand from a 35 bed facility to 50 beds. Critically this Project revolves around the construction of a 14 bed secure dementia wing and upgrading our existing residential facility’s building code to “Nursing Home” status, known in the industry as 9c . This has not been an overnight achievement. Many years of investment by the CEO and the Board in research, community participation and building of close relationships between our many “partner” bodies (Wheatbelt Development Commission, Regional Development Australia and our Local Government bodies) will ensure that this investment in Narrogin Cottage Homes infrastructure will assist in meeting the future aged care needs of our Region. We have much pleasure in presenting for you our 2015/2016 Annual Report and hope that the information contained herein allows you share with us the strength and future prosperity of our charitable, not-for-profit service and celebrate those who have achieved this outcome and the highly regarded reputation of our service to the Southern Wheatbelt community on your behalf.

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About Narrogin Cottage Homes • Narrogin Cottage Homes is a not-for-profit charitable organisation administered

by a voluntary committee comprised of community members, service groups, business people and representatives from the Shire of Narrogin.

• The development of Narrogin Cottage Homes commenced in the early 1960’s when local service organisations joined together to address the need to provide affordable housing for aged members of their local community. Development has taken place in stages over the years with our original Karinya Residential Care facility being constructed in 1979 and subsequently expanded in 1985 and 2002.

• Today the Cottage Homes is comprised of ‘Karinya’ (a 35 bed ageing-in-place residential care facility), 22 Joint Venture (JV) rental units with the Department of Housing, 31 ‘Lease for Life’ units and 11 NCH rental units.

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Mission, Vision and Values

OUR MISSION

• To provide affordable, appropriate housing and residential aged care

services to the seniors in our community

OUR VISION

• To be the premier rural residential aged care facility and alternate

community housing provider for seniors in WA

OUR VALUES

• We believe in, and respect:

– The individual worth and dignity of all people;

– The right of all people to live in comfort and security;

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Strategic Focus At Narrogin Cottage Homes (inc) our Strategic Planning Process is about creating an awareness of the opportunities and the possibilities that are available for our organisation and subsequently the Southern Wheatbelt Aged Community both now and into the future.

When setting our direction for Narrogin Cottage Homes we have looked at:

• trends in our regional community and;

• taken into account regional challenges currently acknowledged by the peek industry bodies along with;

• an understanding of local priority areas for the community

Our Strategic Plan clearly outlines how Narrogin Cottage Homes will focus on our services and on how best to meet the needs of our residents / tenants, their families and our staff.

Our planning process is ongoing and the Strategic Plan is reviewed annually and when able, incorporates success measures. The Plan, whilst ensuring excellence in our existing services, also promotes growth and opportunities for change.

Priority area 1

• Success and Financial Viability – Long term Financial Viability/ Growing Community, Housing & Residential based services/

Enhancing the reputation of NCH and developing new models of respite care

Priority Area 2

• Stable Workforce and Effective Asset Management – Workforce planning/ Using Technological solutions/ Effective Asset Management

Priority Area 3

• Asset and Service Growth – Asset Growth/ Service Growth/ Partnerships

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Board of Management

Robert Maxwell Frank Goater Greg Scott Chairman 1980 Vice Chairman 2003 Vice Chairman 1999

Mel Crosby Ross Eckersley Henry Lyons Helen Maxwell

Board Member 1999 Board Member 2015 Board Member 2014 Board Member 2003

Ken Short Ian McMullan Tim Wiese

Board Member 2014 Board Member 2015 Shire Of Narrogin Representative 2012

We Value: Community Staff Commitment Safety Passion Integrety Innovation Responsibility Dedication

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Our Staff (over the years) A GREAT team is what holds an organisation together. We have grown

over the years to have an amazing group of staff who do not hesitate to ‘get down and party’ to help make the lives of our Residents as

enjoyable as they can be.

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Staff Training 2015/2016 Each year we carry out training both on site at Karinya as well as supporting and encouraging our staff to attend training at other facilities or agencies (eg Alzheimers WA). 2015/2016 was a very busy year for us

with many staff taking the opportunity to develop their Dementia skills. Training Carried out in 2015/2016

• Manual Handling • Safe Chemical Handling/ Use

• Food Safety • Confidentiality • Accreditation • Elder Abuse

• Privacy and Dignity • Infection Control

• Aged Care Certificate 3 • Fire Safety

• Occupational Health & Safety • ACFI

• Dementia • Improving Nutrition in Aged Care

• Continence Management • Aged Care Channel (Televised Annual Program)

• Governance

Staff Roles within NCH Administration, Registered Nurses, Enrolled Nurses, Personal Care Staff, Catering, Cleaning, Laundry,

Maintenance, Gardening

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Fundraising and OUR Volunteers Behind every organisation is a band of merry and hard working Volunteers. These people represent

the best of the best. Those who work for very little recognition but contribute of their time, experience and expertise to help us make Narrogin Cottage Homes and especially Karinya a

‘special’ home away from home for the people who call our facility HOME. Many many thanks.

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Current Projects (7M) – completion late 2017

Dementia Wing/Extra resident rooms/ Family room/ Admin block and Entry Porte cohere (with road)

Internal renovations to Karinya and upgrade to Nursing Home Building Classification

At 7am we had 2 blocks of very old flats. By 3pm we had a pile of bricks and tiles. Residents lined up in chairs by the Clubroom window – it was great entertainment.

The retaining wall is in some places almost 2m high. A great feat of engineering.

In order to meet the current building code standards we are widening doors, recessing doorways and installing improved fire protection systems. We are also increasing the size of 10 of our older rooms by integrating little used courtyards into the floor plan of the residents bedroom.

We have also installed improved call monitoring and upgraded the electrical wiring.

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AGM 2016 Agenda

• Welcome & Introductions

• Apologies

• Review of actions from previous annual general meeting

• Acceptance of minutes from previous annual general meeting

• Chairman’s Report

• Questions to Board Members • Revision to Constitution

• Acceptance of Financial Statements and Annual Report

• Election of Board Members

• Meeting Closed

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MINUTES OF THE Annual General Meeting (AGM) HELD Page 1 of 3 Thursday the 20th August 2015 Present: R. Maxwell (Chairman), F. Goater (Vice Chairman), G. Scott (Deputy Vice Chairman), J. Christensen, M. Crosby, N. Holley, H. Maxwell, K. Short, S. Martin, D. Russell, H. Lyons, P. Lyons, T. Campbell, C. Campbell, I. Turner, M. Short, V. Pierce, J. Flavel, P. Coakley, D. Wiese, H. Wiese, R. Eckersley, P. Goater, I. McMullan, J. Fahey, K. Fahey, F. Grieve, B. Madej (Scribe) T. Wiese (arrived 7pm). Apologies: M. Ranieri, J. Robb, B. Davies, W. Butler, P. Evenis. Meeting opened: 6.34pm Minutes of the previous AGM meeting: Moved F. Goater seconded D. Russell that the minutes of the previous Annual General Meeting (AGM) held on the 17th July 2014 be adopted. Carried Welcome Chairman R. Maxwell welcomed everyone to the meeting and outlined the agenda of the night’s meeting. It was noted that the AGM was moved to August 2015 in an attempt to align the AGM with the completion of the Annual General Purpose Financial Report (AGPFR) and subsequently present this document to the Meeting. This audited report remains unavailable for tonight’s meeting. Business Arising: Rob suggested that the next AGM be moved to a later date due to the complexity of Narrogin Cottage Homes (NCH) accounts to ensure its availability for the 2016 meeting. AGM date alteration is within the rules of Constitution. Chairman’s Report: R. Maxwell presented his Chairman’s Report, commenting that he had incorporated the Garden Committee report into his Chairman’s report. He reflected the gardens are functioning extremely well and any issues were dealt with through administration and the gardener and maintenance. He then went on to outline events from the previous year’s activities, this included; - The successful grant application (with the Town of Narrogin) of 5.137 million dollars to construct the dementia wing and upgrade the administration area. - Power outages - Improved organisational viability After speaking to his report Rob asked if anyone had any questions. Moved K. Short seconded G. Scott that the Chairman’s report be adopted. Carried

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Page 2 of 3 Financials: R. Maxwell summarised the 2014/2015 financial activity of Karinya Residential Care, the Resident Funded Units (RFU), Joint Venture (JV) Units and Narrogin Cottage Homes (NCH) Rental Units. He made note that Karinya was now in surplus after operating at a deficit in 2013/2014. Agency staff wages were a large contributor to this deficit when access locally trained staff was limited. The Commonwealth Care Subsidy (ACFI) has increased substantially after management have focussed on this revenue source during the year. We are confident that this increase in revenue will continue as a direct reflection of the increased care needs of our residents. D. Wiese asked if the general public attending the meeting could receive a copy of the financial sheet, as it had only been received by the board members. J. Christensen left the room to make photocopies of this report for these attendees. F. Grieve said that an AGM should have an audited report presented. Rob said that this was correct and that was why the meeting had been moved to August and should be moved again next year to a later date to give the Registered Company Accountants enough time to complete this report. Moved N. Holley seconded F. Grieve that the EFY Financials be adopted subject to final audit. Carried General Business: D. Wiese spoke regarding the (new) RFU bathrooms, he said that after viewing the plans he felt that these were not built according to the plans. Although the bathrooms were currently being corrected he voiced concern that this should not be allowed to occur with future construction projects occurring at Narrogin Cottage Homes, especially the Dementia Wing. R. Maxwell confirmed that functional repairs were being carried out to the bathrooms. The (new) RFU development was a substantial project undertaken by the Board and issues identified during design, construction and practical completion provided the Board with substantial improvement in their construction knowledge. Future developments will benefit from attainment of these skills. Mr Maxwell requested that tenants who have any other building issues contact Administration. P. Coakley asked how the Board could ensure that this does not happen again now that the Dementia Wing Project was going to be built. J Christensen responded with a description of the Sub-committees created to facilitate and oversee the design and construction phase of the Dementia project and the ‘mix’ of skills sets on these sub-committees. V. Pierce made the comment that they were very lucky to have the facilities within Narrogin Cottage Homes available to the community and the wonderful staff we have to care for them. She indicated she was very happy with her unit within the complex. D. Wiese commented on the rules and regulations regarding the Narrogin “Men’s Shed”, he wanted to know if the same rules would apply to the “Community Shed” being built at NCH. Mel Crosby, Board member and member of the “Men’s Shed” group did not feel that it would as there was no membership fees involved in the proposed NCH “shed”. J. Christensen thanked the Board for providing this “shed” to the tenants, using surplus NCH funds, but requested that when completed the tenants be mindful that the running costs of electricity etc. as this would be paid for by NCH.

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Page 3 of 3 F. Grieve said she could see the need for a space/shed for activities for the unit Tenants as they needed a meeting place. Election of Office Bearers: There are four members of the Board whose term has expired, and also one vacant (2 year) position that has still not been filled. Nominations for the positions are: Mr Ross Eckersley Mr Henry Lyons Mrs Helen Maxwell Mr Ian McMullan Mr Michael Ranieri Mr Greg Scott Rob asked if there were any further nominations from the floor. As there were none, he declared the nominations closed. The vote was taken by secret ballot; R. Maxwell appointed B. Madej and P. Coakley to adjudicate the vote. They then left the room to count the votes. On return R. Maxwell announced that the successful nominees were Henry Lyons, Greg Scott, Ross Eckersley, Ian McMullan and Helen Maxwell (2 year). The unsuccessful nominee was Michael Ranieri. Helen Maxwell thanked Michael for all his work and contribution not only on the Board but his contribution to Narrogin Cottage Homes for voluntary work carried out over the past 30 years. 2016 AGM: Moved F. Goater seconded D. Russell that the 2016 A.G.M.be moved to September to allow completion and subsequent presentation of the AGPFR. Carried. K. Short thanked Rob Maxwell for the work and his commitment to Narrogin Cottage Homes throughout the year. Meeting closed: 7.50 pm

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Page 1 of 5

Chairman’s Annual Report July 2015 – October 2016

It has begun!

On September 9th, the wreckers moved in and by the end of the day the nine units and carports (numbers 8-15) adjacent to the Karinya Club room were a pile of rubble which was swiftly removed over the next few days and the site cleared and ready for commencement of the extensions for which we have waited so long.

It is now with extreme pleasure, that on behalf of the Board of Management I present my report on the activities and performance of Narrogin Cottage Homes (Inc.) for the period just concluded, including the Audited Financial Statements for the year July 2015 – June 2016. As you will recall, the Board decided to defer the Annual General Meeting of the Society until after the Annual Audited Financial Statements had been received, which is why this and in future years the AGM will be held in late October.

Firm Construction was the successful tenderer for the Dementia Wing Project and they have already shown their willingness to work with local suppliers and sub-contractors, which is very pleasing and will be great for the local economy. Some setbacks with permits and reports did cause some delay to the start of the building process, but we are expecting to be completed and functioning by August 2017. Firm have been offered the use of units 17 and 18 as an office and lunch room for their workers.

I must commend and thank the Dementia Building Committee under Chairmanship of Frank Goater, well and truly and ably supported by CEO Julie for their dedication, expertise and time (including travel to other facilities) in putting together and arguing with Architects and consultants, resulting in the final design for this magnificent project. You can and should be justifiably proud of what you have achieved.

Apart from the 14 bed Dementia wing addition we have planned for 3 extra rooms to be built, a family room and an ambulance entrance to the new wing. The current entrance to Karinya will be upgraded with covered access from Felspar Street and there will be an increase in work space and waiting areas. As part of this new interior an Honour Board will be added showing all members of the Board of Management since its inception in 1962.

We have also planned for an Administration building to be added at the Western end of Karinya near the Staff Kitchen which will also be enlarged.

As part of the total upgrade we have contracted L.R. Sims Construction to work on ‘Karinya’ to bring this building into line with new fire safety requirements, including enlarging the 10 rooms off the North wing, setting back and enlarging doorways in this wing, whilst enlarging and setting back doorways through the remaining two wings of Karinya. With the addition of a Fire safety sprinkler system to the whole building and together with a new roof and insulation as part of the Dementia Wing construction, this will bring the whole of Karinya to a fire safety standard and Building Code known as 9c. After the disastrous fires in a NSW Nursing Home, all states are moving to this new Safety Rating. This separate project, including the new vinyl flooring and wardrobes is estimated to cost $380,000.00

The initial Architect’s designs and consultation plus all the reports required (Hydraulics, Electrical, Environmental, Quantity Surveyors, due diligence and so on) added up to close to $600,000.00 of the initial grant monies and this was even before a shovel was on site. With all costs adding up to $8 million plus, we have made application to an alternate funding source to assist in the completion of the Project. When all is done the total asset value of the Narrogin Cottage Homes will be in excess of $36 million.

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Page 2 of 5

Items of note:

Independent Living Housing. With demand still high for our Rental and Lease for Life housing we have had to close our waiting lists for these Units, particularly the rental units. The funds for the Government assisted Joint Venture units, which we have used extensively over the past, has for the moment dried up. Narrogin Cottage Homes and the (new) Shire of Narrogin have joined with three other Local Governments, the Shires of Wickepin, Corrigin and Cuballing in applying for grant money to build 38 Rental Housing units across the 4 Shires through the Well-Aged Housing project. If successful we will receive funds to assist us in building 12 more of these rental units over the next 3-4 years. To do this we will need to provide the land. To this purpose we did approach the previous Shire of Narrogin to purchase their former works site in Felspar Street. There has since been a site report showing contamination on the land and in light of this the (new) Shire of Narrogin has set aside funds to firstly obtain a detailed Contamination report and if feasible to clean up and then sell on to us. This will take some time.

We have approached the Department of Housing to either purchase or lease their block at the western end of Felspar Street together with an application to the (new) Shire of Narrogin to purchase their adjoining block. We have received favourable replies from both and I am sure the Department is waiting on the success or otherwise of the grant application before making a final decision. These blocks are already zoned for Aged Care housing use. This land totals 4000sq.m in size.

We also have just recently purchased the large (4000sq.m) block on the corner of Glyde and Furnival Streets. This is an ideal site for future housing developments, be it either Lease for Life or Rental.

To increase our rental stock we recently re-purchased unit 51 from Lease for Life and will do so with the adjoining unit when it becomes available.

Redundant rooms. Two of the rooms in Karinya still have the old narrow bathrooms and are unsuitable for most residents and their current location makes it virtually impossible to upgrade the bathrooms to the required standard. Once the Dementia extension project is complete we will restructure these rooms, one as an office and the other as an extension to the Doctors’ consulting area for treatment and consultation. This will make us a 50 Bed facility, including the 14 bed Dementia specific wing.

Maintenance: We have continued replacing the carpet in some Karinya rooms with vinyl. This is necessary with the increasing number of high care rooms now required. The 10 rooms being upgraded will all have a vinyl floor.

Repair and replacement of kitchen and laundry equipment is ongoing with the constant use. These items are replaced under repairs and maintenance not as Capital expenditure.

Air conditioners are slowly being integrated into the rooms at Karinya and the new wing and rooms will all be air conditioned.

Other maintenance around the Complex has seen the ever ongoing replacement of storage Hot Water Systems in most instances with Instant Gas Systems which are more efficient both cost wise and in offering continuous supply. All Hot Water supply to Karinya has now been replaced with instant systems and the new development will also use instant Gas systems.

The continuous painting and refurbishment of rental and JV units as tenants vacate is ongoing. We do most of the repairs and painting using our own Maintenance men and this applies to Karinya as room occupancy changes.

Garden and Grounds. Once again I must complement our past Gardener Rex and new Gardner Phil Garlick and Maintenance men, Cameron and Ashley, together with Max on the excellent condition of our Gardens, Lawns and surrounding outside areas. Continuing thanks to Lucy with her magnificent Vegetable Patch, providing a year round vegetable supply for tenants. 17

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Men’s Shed. As mentioned last year the Men’s Shed was rebuilt and located at the Northern end of the carports in Forrest Street. Following a survey among the residents there still doesn’t appear to be a consensus on its use. For the time being while the Dementia wing project is under way, the room is being used as a storage unit. The surplus materials we had to replace the Men’s shed have now been used to build an new gardener’s/storage shed between the Friend’s shed and Maintenance shed.

Photo Copier. With constant use the old Photo copier, some 7-8 years old wore itself out and has just been replaced. It is hooked directly into the Office Computer System which makes it easy for printing off reports etc.

Karinya Open Day: The Open Day in October 2015 was once again very successful and now with the Construction under way it may well be the last one, with the Friends recently conducting a successful garage sale and major raffle and also cake stall (2016) at the Town Hall site. Many thanks to Board members and volunteers who “manned” the stalls on the day and the local Community who supplied and then purchased items from the various stalls. Funds raised by the Friends go towards amenities for the residents in Karinya.

We passed our Three year Accreditation visit last year but were subject to a spot surprise visit during the early part of this year. Once again we passed with flying colours. Well done to all of our staff who work to meet these rigorous accreditation requirements and to the Residents and Families who also provided input to the Agency people.

Board of Management: For the first time to my knowledge we had an election for positions on the Board of Management. In the past we have had to go out and ask members of the Community to join us.

Sadly our long term member for 30 years, Michael Ranieri lost his position and we welcomed Ross Eckersley to a Board position. Elections are upon us this AGM and Frank Goater, Mel Crosby and I are at the end of our term and offer ourselves for re-election. There is one further vacant position due to the early resignation of Nola Holley. Jeanette Robb also resigned some months ago, but her position can be filled by the current Board co-opting someone into the position for the balance of the term, which is for one year. We thank Nola and Jeanette for their contribution over the years they have been on the Board. They now both concentrate their efforts for Karinya through the Friends. Our thanks to our Local Government representatives, Tim Wiese and David Russell. With the amalgamation of the two Local Governments into the Shire of Narrogin and retirement of David, Tim has put his hand up to continue as the Local Government representative. This should be confirmed at the next Council meeting.

In the design for the Dementia Wing and upgrades to Karinya we are investigating the provision of a generator to provide a continuous power supply to Karinya during Emergency/ Western Power outages, thus allowing our ancillary health support machines to keep functioning. The addition of Solar Panels to Karinya has been put on hold until the project is finished and a full costing and the financial implications investigated.

The Federal Government’s My Aged Care site which lists for comparison all Residential Care facilities in Australia and also shows how admission fees and charges are calculated has had its problems, but is still functioning. It is a valuable site in its ability for users to add their own financial details to calculate their individual fees and charges when entering an aged care facility.

Constitution: Much has been said about the Constitution. Due to many litigious situations on the East Coast and the need for particularly Not for Profit organisations to up-date their Constitutions, the WA State Government introduced legislation on July 1st 2016 requiring all Not for Profit incorporated bodies to amend or adopt a new Constitution that contains specified minimal information. We have until July 1st 2018 to do this. We have appointed a Consultant to review our current Constitution, amend as necessary and present the first draft to the Board at a day seminar we are holding in February. We can suggest other additions but they will be subject to the requirements of the new legislation. When the Board has developed a satisfactory Constitution it will be presented to the Membership for comment and subsequent adoption at the AGM in October 2017. It must be remembered that when set up in 1962 it was a Community organisation put together by the Community for the Community.

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Page 4 of 5

Security: Sadly we suffered several (successful and unsuccessful) break-ins into our units with one resident suffering a substantial loss. There has also been trespass by individuals through and onto our property. Police have been informed and have been in attendance. We have also asked our Security Company to increase patrols at times. I ask residents to firmly secure their doors and windows and ring 000 at the first signs of danger.

We formed a Board Risk Management sub-committee comprised of Ian McMullan, Henry Lyons and Julie Christensen to review our risk management procedures and put together a document collating all risks and the protocol for dealing with them. This is nearing completion and will be adopted by the Board when finished. I thank Henry Lyons, who has just resigned for his contribution as well as the work still being done by the remaining members Thanks to a grant from Lotterywest we have appointed a Web consultant to develop a web-site for Narrogin Cottage Homes. This is nearly completed and once we are ‘live’ in cyberspace the site can be amended and added to by the Administration staff.

With many seniors being hospitalised with broken bones or other acute illnesses and then being discharged too early to go home, where they may have found it difficult to cope, we have petitioned both Federal and State Governments to provide funding for transitional beds to allow some time for the healing process to finish before patients have to go home. If successful it will certainly be a cheaper option than a Hospital bed.

In presenting the Audited Annual Financial Statements for your acceptance, I note that we have maintained a surplus in our operations after allowing for adjustment of Depreciation. The accounts show operating revenue of $2,839,965 plus Interest of $229,144, Donations and Fundraising $43,310, Royalties for Regions Grant drawdown $1,200,000 and accrued income from the Resident Funded units of $236,588, a total of $4,548,978. Expenses include Employee Benefits $2,235,015 and Suppliers $762,765. Allowing for Royalties drawdown and Depreciation allowance we generated a surplus of nearly $351,000. $236,558 of this surplus, as mentioned is the accrued income from the decreasing liability generated annually in the assessed resale price of the Resident Funded units. This coming year with two rooms down for most of the year, whilst Karinya is being upgraded, we will probably run at a deficit and will do so until all rooms are back on line. It has been demonstrated to us by Financial Consultants that with 50 beds occupied we will return to generating surpluses in future years. The full Audited report is available for Members’ scrutiny through the Administration Office.

The new accounting system, Inerva, recommended by our Accountants and many members of the Aged Care Community and introduced at the end of March 2016, now provides comprehensive accrual reporting for the Board, which is how we are required to present to all our reporting agencies.

Wages have again increased this year. Agency staff had to be employed on several occasions, due to resignations, sick leave and occasions when we just couldn’t get qualified staff for the short term. It is hoped when we move to a 50 bed facility and we can offer more full time positions, the situation will improve.

New fees and rents were set to commence July 1st 2016. These are set at the previous April Committee meeting taking into consideration projected CPI increases. The ATO’s rent rates for 1, 2 and 3 bedroom dwellings for our region are used and the discount as applicable to Charitable Organisations is then applied. The ATO rents did increase quite substantially, due mainly to the increased maintenance costs of bringing many of the State Housing units back to a suitable standard after abuse by some tenants. We may only charge 75% of the ATO standard rate to maintain our charitable organisation status. The RFU monthly fee rose to $280.00

The Refundable Accommodation Deposit (RAD), the old Accommodation Bond, was maintained at $350,000 from the previous year. This is now a fully refundable amount as per legislation. This sum is the maximum we charge and the amount is assessed only once, on admission by an assets declaration from the resident to Centerlink, which is also subsequently used by the Department of Health and Aged Care to set Daily Fees and charges. If assessed as eligible to pay a RAD, residents can either pay all, part of or no amount. The unpaid balance is then paid in interest instalments to the facility by the resident. The Interest rate is set by the Federal Government.

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Page 5 of 5

We have increased the purchase price of the older two bedroom Lease for Life units to $150,000 but kept the newer Glyde Street properties at $285,000. We note how prices in Narrogin compare, whilst remembering that to retain our Charitable Organisation status we must keep all charges and prices at a reasonable level.

There is still an amount of $450,000 outstanding on two of the new RFU units. This was negotiated at the original building of the units and the interest charges on this loan are being born by the residents concerned. We are working with Residents and their families to reduce this liability and now the sale of any unit is by full payment only. Waiting for a sale of a home in a small country town can be frustrating and distressing.

We have been the recipient of many donations during the year with several individuals and families being very generous. One donation for $25,000, has given us a total of $43,310 which will go to improved amenities for residents in the extension.

This year 2015 – 2016 has been one of anticipation with the new project developing around us and a completion now in sight. With the opportunity to further progress by being successful with the Well-aged Project Grant we must still look for any opportunities in our field of operations and take advantage whenever possible. The purchase of more land is indicative of this. Our role as the major player in the field of Aged residential care and seniors’ housing is well defined.

Whatever the result, we will continue to do what we have always done and that is to provide the same quality of care and service to our residents that has been evident for so many years. This is and has been made possible by the care and commitment of those who work in and for Narrogin Cottage Homes and who have positively indicated they will continue to work with us in these new circumstances, to maintain and meet the high standards we have achieved over those past 54 years.

On behalf of the Board of Management, I wish to personally thank Julie, our CEO for her commitment, perseverance and contribution to Narrogin Cottage Homes, especially this past year, as we work together to keep NCH held in the high esteem it deserves. To all our other caring people I say thankyou. To Carol our Care Manager, Bronwyn, Margaret, Diane, Margaret/Karen and Karene in Activities and Wendy our new Catering Manager and the highly valued dedicated team of carers, domestics, catering and laundry staff, our outside workers, Friends of Karinya and all the others who in some way or another contribute to what is life at Narrogin Cottage Homes and of course to the Management Committee, who give freely of their time, expertise and support.

I sincerely thank you all.

Rob Maxwell. Chairman

October 2016

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3rd October 2016 CONSTITUTIONAL REVIEW Open letter to all Society Members of Narrogin Cottage Homes Dear Members, On the 1st of July 2016 Legislative changes were made to the Associations Incorporations Act that requires the Constitution of all Incorporations to meet a minimum set of standards. The Board has commenced the process of reviewing and updating our Constitution to make sure it meets the requirements of the new legislation by engaging a very well qualified third party to: - Identify areas that our existing Constitution may be lacking and update this so that it meets the new requirements. This is a mandatory requirement for the organisation - (1st Draft) - Provide other useful constitutional options for consideration, including consideration of any items already identified for suggestion by the Membership or others to date (eg the Tenants Constitutional Subcommittee) - Hold a workshop with the Board of Management (who will represent the membership during this part of the process) early in 2017 where the 1st Draft and other constitutional options can be discussed for legitimacy/ organisational/ member benefit – (2nd Draft) - Assist Narrogin Cottage Homes by circulating the 2nd Draft Constitutional document to the membership for consideration and feedback. Review this feedback again with regards legitimacy/ organisational/ member benefit – (3rd Draft) Any changes that are proposed to be made to the constitution that are non-mandatory will require Members to approve the change through a formal Member meeting that will require 75% support from the membership for these changes to be accepted. The Board, as your representatives, are confident that this process will provide maximum transparency to the members, whilst allowing interested members to participate in a manner that is not cumbersome or ineffectual. We hope that this correspondence will clarify the Constitutional review process over the next 8 months or so and look forward to receiving your feedback: either through your Board representatives or after you receive a copy of the 2nd Draft document. Narrogin Cottage Homes has been a well-respected Community organisation for over 52 years. Growing from humble beginning when we built our first 3 units to our most current construction being the expansion of Karinya to a 50 bed Nursing Home. Our assets have recently passed the $20,000,000 mark and our continual re-investment of all surplus monies into the organisation has enabled us to grow and expand to meet Community need. As discussed previously this Constitutional review does not affect any tenancy agreements in place between Rental tenants and Narrogin Cottage Homes or any Lease for life Contracts in place between RFU tenants and Narrogin Cottage Homes. What is a Constitution? “A constitution is a set of rules defining a system of governance. It describes the institutional structure, the conditions under which power is held and exercised, and the procedures through which the rules themselves may be changed.” The Board of Management look forward to this process achieving a revised Constitution that benefits the Community for another 52 years.

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INDEPENDENT AUDIT REPORT TO THE MEMBERS OF NARROGIN COTIAGE HOMES INC AND THE SECRETARY, DEPARTMENT OF HEALTH FOR THE YEAR ENDED 30 JUNE 2016 Report on the Financial Report We have audited the accompanying financial report of Narrogin Cottage Homes Inc which comprises the balance sheet as at 30 June 2016 and the income statement, statement of recognised income and expenditure and cash flow statement for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the statement by members of the committee. Committee's Responsibility for the Financial Report The committee of the association is responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards and the Associations Incorporation Act (WA) (1987). This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the committee, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of Australian professional ethical pronouncements. Auditor's Opinion In our opinion: The financial report of Narrogin Cottage Homes Inc is in accordance with the Associations Incorporation Act (WA) (1987) including: - giving a true and fair view of the Association's financial position as at 30 June 2016 and of their performance for the year ended on that date; and - complying with Australian Accounting Standards and the Associations Incorporation Act (WA) (1987). The approved provider has complied, in all material respects, with the requirements on Division 3 of Part 4 of the User Rights Principles 1997 (as amended), for the period 1 July 2015 to 30 June 2016. LEANNE K OLIVER, Director, Registration No: 463021,BYFIELDS BUSINESS ADVISERS BELMONT WA Date: 11th October 2016 22

Audited Financial Report For the year ending 30th June 2016

Income Statement 2016 2015

Revenue from continuing operations 2,839,965 2,679,123

Other revenue 1,709,012 388,437

Employee benefits expense (2,235,015) (1,812,028)

Depreciation and amortisation expense (704,015) (723,806)

Other expenses (762,665) (858,700)

Surplus/ (Deficit) from operations 847,283 (236,974)

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Audited Financial Report For the year ending 30th June 2016

Current Assets 2016 2015

Cash & Cash Equivalents 2,943,916 2,305,303

Trade & other receivables 506,141 518,599

Other current assets 23,604 23,604

Total Current Assets 3,473,661 2,847,506

Non-Current Assets

Property, Plant & Equipment 24,089,105 24,574,844

Construction in Progress 581,565 -

Total Non-Current Assets 24,670,670 24,574,844

Total Assets 28,144,331

27,422,349

Current Liabilities

Trade & Other Payables 78,580 28,691

Provisions 292,618 230,228

Other current liabilities 42,500 53,391

Total Current Liabilities 413,698 312,310

Non-Current Liabilities

Provisions 61,150 36,275

Other Non-Current Liabilities 7,077,370 7,328,934

Total Non-Current Liabilities 7,138,520 7,365,209

Total Liabilities

7,552,218 7,677,520

Net Assets

20,592,113 19,744,830

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NARROGIN COTTAGE HOMES INC

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2016

INCOME

NARROGIN COTTAGE HOMES INC.

INCOME STATEMENT

FOR THE YEAR ENDED 30 JUNE 2016

INCOME 2016 2015

Accommodation Fees 880,970 825,722

Personal Care Subsidy 1,492,522 1,335,551

Bond Retention Receipts 22,986 56,676

Gas, Electricity & Sundry Recoups 27,960

Rent & Other Fees Received - Rental Units 103,948 102,462

Maintenance Fees 93,033 94,934

Rent Received - Joint Venture Units 205,031 196,935

Administration Fees 41,476 39,182

Interest Received 229,144 132,139

Donation/Grants 1,243,310 20,840

Resident Funded Units Income 236,558 235,458

TOTAL INCOME 4,548,978 3,067,560

EXPENSES

Administration Expense 14,933 27,989

Accounting & Audit 24,295 20,710

Bank Charges 1,518 1,326

Contract Service 86,169 75,225

Depreciation & Impairment Loss 704,015 723,806

Karinya Hostel Expense 439,348 511,724

Insurance Expense 26,327 29,014

Joint Venture Units Expense 50,834 99,463

Office Expenses 15,793 12,280

Rental Units Expense 30,821 28,757

R F U Units Expense 54,392 33,882

Telephone Expense 6,132 5,780

Security Patrols 12,104 9,145

Sundry Expense 3,406

Superannuation 178,309 147,218

Wages 2,056,707 1,664,810

TOTAL EXPENSES 3,701,695 3,394,534

SURPLUS/(DEFICIT) 847,283 {326,974}