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National Affordable Housing Consortium Limited ABN 30 132 604 552

Financial Statements

For the Year Ended 30 June 2019


Contents For the Year Ended 30 June 2019

Financial Statements Directors' Report

Auditors Independence Declaration under Section 307C of the Corporations Act 2001

Statement of Profit or Loss and Other Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Responsible Persons' Declaration

Independent Audit Report

Page

8 9

10 11 12 13 39 40


Directors' Report 30 June 2019

The Directors present their report, together with the financial statements of the Group, being the Company and its control led entities , for the financial year ended 30 June 2019.

1. General information

Directors

The names of the Directors in office at any time during, or since the end of, the year are : Names Position

Karen Smith-Pomeroy

Bradley Hosking

Jeff Dutton

Stephen Denaro

Michael Myers

Heather Watson

Prof William George Earl

Chairperson

Director

Director

Director

Managing Director

Director

Director

Appointed Chairperson 10 October 2019

Resigned 19 September 2019

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

Principal activities

NAHC is a not for profit charitable institution that facilitates the provision of affordable housing to people in need . It is one of Australia's largest providers under the Australian Government's National Rental Affordability Scheme [NRAS].

The principal activities are to:

• Create opportunities for further innovation and supply across the social and affordable housing system to meet community need,

• Facilitate shared equity home ownership to qualifying home purchasers using Buy Assist Australia,

• Facilitate the provision and compliance of affordable rental homes under NRAS,

• Provide or commission the provision of property management services for NRAS dwellings,

• Conduct research and act as an innovation hub to support the provision of social and affordable housing.

The Company is incorporated under the Corporations Act 2001 and is a company limited by guarantee. If the Company is wound up, the Constitution states that each member is required to contribute $10 each towards meeting any outstanding obligations of the entity.

No significant change in the nature of these activities occurred during the year.



2. Operating results and review of operations for the year

Operating result

The consolidated profit of the Company for the financial year amounted to $ 3, 176,889 (2018 : $ 402,670). The profit for the parent company NAHC was $3,459,297 (2018: $1,267,627).

Dividends paid or recommended

No dividends are payable given the charitable nature of the company.

3. Other items

Events after the reporting date

In August 2019 the wholly owned subsidiary, Home and Equity Rental Services Ltd , purchased a medium sized property management portfolio in Melbourne, Victoria. While this does not have a material impact on the group's results, it clearly illustrates the intent to expand the property management business both in size and geographical reach.

In April 2019, NAHC and HERS commenced litigation against certain parties in the Supreme Court of Queensland. The substance of the dispute concerned property management rights over a number of National Rental Affordabil ity Scheme ("NRAS') properties for which NAHC is the NRAS approved participant. In July, the parties executed a Deed of Settlement. Legal fees associated with the dispute totalled approximately $200,000.

Except for the above, no other matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in future financial years.

Environmental issues

The Group's operations are not regulated by any significant environmental regulations under a law of the Commonwealth or of a state or territory of Austral ia.

Future developments

The NAHC Group, in pursuit of it's mission to provide affordable housing, has numerous initiatives in place to increase

the number of affordable rental properties

• the number of shared equity home ownership properties where deposit assistance is supplied to qualifying home purchasers.

Currently, while there is one initiative at the contract stage, it is expected that there will be a significant level of new business in place by 30th June 2020.

2



Information on directors Karen Smith-Pomeroy

Qualifications

Experience

Bradley Hosking

Qualifications

Experience

Director and Chairperson

A. Dip (Accounting); Advanced Risk Management - Wharton College USA

Fellow Institute of Public Accountants (FIPA); Graduate Australian Institute of Company Directors (GAICD); Fellow Financial Services Institute of Australasia (FFIN); and Affiliate Governance Institute of Australia.

Director of NAHC since 2011 Karen has over 30 years' experience in the Financial Services sector within Australia. She has held a number of Non-Executive Director roles in past years, including in Government Owned Corporations and industry associations.

Karen has significant experience in risk and governance and extensive experience working with a wide range of companies across the energy, property and infrastructure sectors nationally.

Her current non-executive directorships include

Chairperson Buy Assist Australia Pty Ltd Queensland Treasury Corporation, Stanwell Corporation Limited, lnfocus Wealth Management Limited, Kina Securities Limited, lnfigen Energy Ltd.

Director

A. Dip (Accounting), A. Dip (Banking& Finance), FFin, FDIA, MAICD

Director of NAHC since 2009, Corporate Director Common Equity Housing Limited; Victoria's largest community housing association by assets. Brad brings a diverse range of experience and skills to NAHC through an extensive background in leadership, construction and development finance, property and risk management, business development, tertiary education and community housing, gathered through executive and senior roles within the Suncorp Group, ANZ Bank and Swinburne University of Technology over a 30 year period .

Bradley holds directorships for: Home Equity and Rental Services HERS Property

3



Jeff Dutton

Qualifications

Experience

Director

Master of Business Administration (Executive) Graduate Certificate in Training (Action Learning) Bachelor of Business Post Graduate Studies - Project Management Econometrics Studies Diploma in Project Management; Certificate IV in Training and Assessment.

Further Studies: Enterprise Risk Management, Workplace Health and Safety, Company Directors Course. Certified Practicing Project Manager (AIPM) RegPM Assessor (CPPM) (AIPM) Certification - GPM-b (Green Project Management) Past Project Management Achievement Award Judge (AIPM) Past Project Management Achievement Award Judge (APFPM) Past Member of the Project Excellence Awards Judging Team (IPMA)

Professional Memberships: Australian Institute of Project Management Project Management Institute Australian & New Zealand Institute of Sustainable Management Chamber of Commerce and Industry Australia Philippines Inc

NAHC Founding Director since 2008

Jeff has over 30 years' experience as a consultant and has held senior management roles in private ,public and not for profit organisations. He has been associated with Community Housing for twenty years. He designed and delivered strategic planning processes in public, private, and, community organisations . A proponent of Green Project Management in Australia and Asia Pacific, he has designed and delivered accredited and unaccredited project management and sustainable project management training for several South Eastern Queensland Universities and Victoria. A Registered Project Manager (Reg PM) and an assessor for the Australian Institute of Project Management, he has implemented program and project management systems in a number of public and private sector organisations.

He has also been involved with the development and implementation of Group Insurance programs for Community Housing (QCHC) and NAHC. He has been involved with the development of Enterprise Risk Management and the development of Governance programs for Not for Profit organisations.

Jeff holds directorships for: National Affordable Housing Consortium Sustainable Living Infrastructure Consortium Home Equity and Rental Services HERS Property GPM Global - Asia Pacific Hub Community Life Learning Centre Decisions x Design

4



Stephen Denaro

Qualifications

Experience

Heather Watson

Qualifications

Experience

Director

Bachelor of Business in Accountancy; Graduate Diploma in Applied Corporate Governance; Professional Memberships: Institute of Chartered Accountants in Australia & New Zealand; and Australian Institute of Company Directors

Director of NAHC since 201 O;

Stephen has extensive experience in mergers and acquisitions, business valuations, accountancy services, and income tax compliance gained from positions as Company Secretary and Chief Financial Officer of various public companies (including ASX listed), and with major chartered accountancy firms in Australia and the United Kingdom.

Stephen hold directorships for: National Affordable Housing Consortium Sustainable Living Infrastructure Consortium AquaHydex Pty Ltd Admedus Limited .

Director

Bachelor of Laws Graduate Certificate in Business (Philanthropy and Non-profit Studies)

Member Australian Institute of Company Directors Member, Queensland Law Society

Director of NAHC since 2014 Principal Lawyer, Watson Advisory and Consulting Ply Ltd - an incorporated legal practice.

Heather has more than 30 years' experience in legal practice and for the last 12 years this has been with a specialist focus in Charity law, governance and regulatory compliance for the non-profit sector.

Heather's industry experience includes health and community services, infrastructure.affordable housing,philantropy and indigenous communities.

She is a non-executive director on a number of government and charitable entities including

Uniting in NSW ACT (Chair) Epic Good Foundation (Chair) Queensland Children's Hospital and Health Services Queensland Rail Uniting in Vic Tas Australian Regional and Remote Community Services Ltd (a subsidiary of UnitingCare Old) Community Services Reform Council (Chair) SEFA Partnerships Ltd

She is also a member of the Advisory Board to the Australian Charities and Not-for-Profits Commission.

5



Jonathan Dale

Qualifications

Experience

Michael Myers

Qualifications

Experience

Company Secretary

B.A. (English); M.A. (Anthropology); Juris Doctor (University of California - Los Angeles)

Jonathan completed his graduate degree in law (Juris Doctor) at the University of California - Los Angeles in 2010 and was admitted to practice law in December 2010. While practicing law, Jonathan advised companies (not for profit and for profit) and government agencies in regard to commercial, governance and litigation matters .

Jonathan is the Company Secretary and Legal Affairs & Quality Assurance Manager. He has been working for NAHC since March 2013. In his roles, Jonathan advises and assists NAHC's Board, Management Team and staff in regard to governance, commercial, operational, QA and strategic issues. Jonathan also serves as Company Secretary for the other companies in the NAHC Group.

Managing Director

B.A.[hons] Government & Politics: Social Policy and Administration Member of Australian Institute of Company Directors Member of Australasian Housing Institute

Director of NAHC since November 2014

Sustainable Living Infrastructure Consortium Ltd Home Equity and Rental Services Ltd HERS Property Ltd Affordable Rentals Victoria Ltd

CEO and Company Secretary of NAHC between 1st January 2009 and 12 November 2014. Director and Company Secretary of National Affordable Housing Providers Ltd Member of the Bond University Property Advisory Committee 30 years in social and affordable housing in the UK and Australia; Executive Director of Qld Community Housing Coalition 1996-2008; Member of the ATO Charities Consultative Committee 2000-2009; Member of the QUT Humanities Advisory Board 2002-2007

Director of Brisbane Housing Company and Member of the Audit Committee 2003-2008 Director of the Community Housing Federation of Australia 1998-2010 and former Chairman; Director of the Qld Council of Social Services 1998-2007 and former Vice President; Director of the Australian Council of Social Services 2000-2005 and Housing Policy Adviser; Member of the Affordable Housing Summit Group 2005-2009. UK Executive Director CHAS Housing Advice Service 1985-1996, Legal Aid Franchise 1992-6, Single Homeless Accommodation Project 1991-5 and Kirklees Bond Bank 1992-6;

Mike has a number of non-executive director roles including Director of Buy Assist Australia Director and Company Secretary National Affordable Housing Providers.

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Meetings of directors

During the financial year, 9 meetings of Directors (including committees of Directors) were held. Attendances by each director during the year were as follows:

Karen SmithPomeroy

Bradley Hosking

Jeff Dutton

Stephen Denaro

Heather Watson

Michael Myers

Prof William George Earl

Directors' Meetings

Number eligible lo Number

attend attended

9 9

9 9

9 8

9 8

9 6

9 9

g 8

Audit & Risk Investment Committee Committee

Number Number eligible to Number eligible to Number

attend attended attend attended

4 4 -- 2 2

- - -4 4 4 3 2 2

-

- 2 2

Indemnification and insurance of officers and auditors

Governance Committee

Number eligible to Number

attend attended

--3 3

3 3

3 3

-

- -

NAHC has insurance cover for Directors via insurer AIG Australia Limited (AIG) .

The company has paid premiums to insure the directors against liabilities for costs and expenses incurred by them in defending and legal proceedings arising out of their conduct while acting in the capacity of Director of the company, other than conduct involving a wilful breach of duty in relation to the company.

Proceedings on behalf of company

In April 2019, NAHC and HERS commenced litigation against certain parties in the Supreme Court of Queensland. The substance of the dispute concerned property management rights over a number of National Rental Affordability Scheme ("NRAS') properties for which NAHC is the NRAS approved participant. In July . the parties executed a Deed of Settlement. Legal fees associated with the dispute totalled approximately $200.000.

Apart from the above , no person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking respons ibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the year.

Auditor's Independence declaration

The auditor's independence declaration in accordance with section 307C of the Corporations Act 2001 for the year ended 30 June 2019 has been received and can be found on page 8 of the financial report.

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

~~\ I

Karen Smith-Pomeroy Chairperson

Dated this 28th day of November 2019

7

Level 6, Brisbane Club Tower 241 Adelaide Street Brisbane Old 4000 Australia

GPO Box 565 Brisbane Old 4001 Australia

Phone: 61 (07) 3233 0600

Fax: 61 (07) 3233 0601

Email: [email protected]

Web: www.merrotts.com.au

Accounting

Audit & Assuran - Statutory - Internal - Government

Business - Services -Audit - Restructuring

Corporate Services

Estate Planning

Forensic Accounting

Litigation Support

Recruitment - Executive - Accounting

Superannuation -Administration - Planning

Taxation

errotts Chartered Accountants & Business Advisers


Auditors Independence Declaration under Section 60-40 of the Australian Charities and Not-for-profits Commission Act 2012 to the Directors of N~tional Affordable Housing Consortium Limited and Controlled Entities

In accordance with the requirements of section 60-40 of the Australian Charities and Not-for-Profits Commission Act 2012, as lead auditor for the audit of National Affordability Housing Consortium Limited declare that, to the best of my knowledge and belief, during the year ended 30 June 2019, there have been:

(i) No contraventions of the auditor independence requirements of the Australian Charities and Not-for-Profits Commission Act 2012 in relation to the audit; and

(ii) No contraventions of any applicable code of professional conduct in relation to the audit.

Merrotts Chartered Accountants

28th November 2019

Brisbane

Liability limited by a scheme approved under Professional Standards Legislation

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Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2019

Consolidated Parent

2019 2018 2019 2018

Note $ $ $ $ NRAS income 12,965,362 13,967,405 12,965,362 13,967,405

Consortium fees 2,752,072 2,778,766 2,752,072 2,778,766

Property management fee 2,498,792 2,201,718 2,048,382 2,043,649

Government grant income 2,053,460 152,525 2,053,460 152,525

Shared equity income 1, 100,086 95,940 1,034,074 74,728

Interest received 211,610 210,611 206,034 202,351

Other income 198,561 169,307 255,561 305,807

Share of equity-accounted joint ventures 244,075 244,075

Total Income 22,024,018 19,576,272 21,559,020 19,525,231 NRAS expenses 12,814,914 13,804,157 12,814,914 13,804, 157

Employee costs - salaried staff 3,359,704 3,219,240 2,966,323 3,043,099

Consultancy fees 589,335 526,723 380,179 166,340

Depreciation and amortisation expense 84,034 104,961 65,096 67,433

Directors remuneration 203, 151 215,500 176,455 173,500

Legal fees 325,398 122,069 321,343 116,118

Rent 215,961 202,939 215,961 202,939

Shared Equity expenses 116,278 20,231 417,953 47,650

Other operating expenses 1,138,354 957,782 741,499 636,368

Total Expenses 18,847!129 19,173,602 181099!723 18,257,604

Profit before income tax 3,176,889 402,670 3,459,297 1,267,627 Income tax expense 2(b).

Profit for the year 3,176,889 402,670 3,4591297 1,267,627

Other comprehensive income for the year, net of tax

Total comprehensive income attributable to members 3,176,889 402,670 3,459,297 1,267,627

The accompanying notes form part of these financial statements. 9


Statement of Financial Position 30 June 2019

Consolidated Parent

2019 2018 2019 2018

Note $ $ $ $

ASSETS CURRENT ASSETS

Cash and cash equivalents 4 9,141,762 7,917,318 8,332,541 7,673,637

Trade and other receivables 5 1,111,344 504,963 2,061,391 797,482

Other financial assets 7.(b). 769,509 5,202,845 769,509 5,202,845

Other assets 9 247,999 245,424 247,844 244 , 133

TOTAL CURRENT ASSETS 111270,614 13,870,550 1114111285 13,918,097 NON-CURRENT ASSETS

Investments in subsidiaries 22 1,250,000 1,250,000

Investment in joint ventures 23 244,075 244,075

Assets held for sale 6 12,937 716,755 12,937 716,755

Other financial assets 7.(a). 137,500 137,500 137,500 137,500

Property, plant and equipment 10 5,149,275 719,541 5,143,734 695,061

Intangible assets 8

TOTAL NON-CURRENT ASSETS 51543,787 1,5731796 6,7881246 2,799,316 TOTAL ASSETS 16,8141401 15,444,346 1811991531 16,717,413

LIABILITIES CURRENT LIABILITIES

Trade and other payables 11 645,243 433, 193 511,485 391,407

Employee benefits 13 405,338 379,595 356,546 374,343

Income in advance 12 2,842,621 4,861,249 2,794,015 4,847,475

TOTAL CURRENT LIABILITIES 318931202 5,674,037 316621046 51613,225

NON-CURRENT LIABILITIES

Employee benefits 13 59,000 85,000 59,000 85,000

TOTAL NON-CURRENT LIABILITIES 591000 85,000 591000 85,000

TOTAL LIABILITIES 319521202 5,759 ,037 317211046 51698,225

NET ASSETS 1218621199 91685,309 1414781485 11,019,188

EQUITY Retained earnings 12,862,199 9,685,309 14,478,485 11 ,019,188

TOTAL EQUITY 1218621199 9,685,309 1414781485 11 ,019,188



Statement of Changes in Equity For the Year Ended 30 June 2019

2019

Balance at 1 July 2018

Profit attributable to members of the parent entity

Balance at 30 June 2019

2018




2019




2018




Parent

Retained Earnings Total

$ $

11,019,188 11,019,188

3,459,297 3,459,297

14,478,485 14,478,485

Parent


$ $

9,751,561 9,751,561

1,267,627 1,267,627

11,01 9,188 11 ,019,188

Consolidated


$ $

9,685,309 9,685,309

3, 176,889 3, 176,889

12,862,198 12,862,198

Consolidated


$ $

9,282,639 9,282,639

402,670 402,670

9,685,309 9,685 ,309



Statement of Cash Flows For the Year Ended 30 June 2019

Consolidated Parent

2019 2018 2019 2018

Note $ $ $ $

CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers 18,939,911 23,881,936 17,788,129 24, 100,076 Payments to suppliers and employees (18,550,639) (19,094,472) (17,958,820) (18,207,679) Interest received 211,611 210,611 206,034 202,351

Net cash provided by operating activities 27 600,883 4,998,075 35,343 6,094,748

CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (4,513,593) (608,989) (4,513,593) (597,324) Payments for shares in subsidiaries (350,000) Proceeds from disposal of assets held for sale 703,818 1,029,144 703,818 1,029,144

Net cash provided by/(used in) investing activities (3,809,775) 420, 155 (3,809, 775) 81,820

CASH FLOWS FROM FINANCING ACTIVITIES: Net cash used by financing activities

Net increase/(decrease) in cash and cash equivalents held (3,208,892) 5,418,230 (3, 77 4,432) 6, 176,568 Cash and cash equivalents at beginning of year 13,120,163 7,701,933 12,876,482 6,699,914

Cash and cash equivalents at end of 4 financial year 91911 ,271 13,120,163 9,102,050 12,876,482



Notes to the Financial Statements For the Year Ended 30 June 2019

The financial report covers Nationa l Affordable Housing Consortium Limited and its control led entities ('the Group'). National Affordable Housing Consortium Limited is a not-for-profit Company, reg istered and domiciled in Australia.

Each of the entities within the Group prepare their financial statements based on the currency of the primary economic environment in which the entity operates (functional currency). The consolidated financial statements are presented in Australian dollars wh ich is the parent entity's funct ional and presentation currency.

The financial report was authorised for issue by the Directors on 28 November 2019.

Comparatives are consistent with prior years, unless otherwise stated.

1. Basis of Preparation

The financial statements are general purpose financial statements that have been prepared in accordance with the Austral ian Accounting Standards and the Australian Charities and Not-for-profits Commission Act 2012.

2. Summary of Significant Accounting Policies

(a). Joint arrangements

AASB 11 Joint Arrangements defines a joint arrangement as an arrangement of which two or more parties have joint control and class ifies these arrangements as either joint ventures or joint operations . Nationa l Affordable Housing Consortium Limited has determined that it has an interest in a joint venture operation .

Joint ventures :

Joint ventures are those joint arrangements which provide the venturer with right to the net assets of the arrangements . Interests in joint ventures are accounted for using the equity method in accordance with AASB 128 Associates and Joint Ventures. Under this method, the investment is initially recognised as cost and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss and other comprehensive income of the investee after the date of acquisition .

If the venturer's share of losses of a joint venture equals or exceeds its interest in the joint venture, the venturer discontinues recognising its share of further losses.

The venturer's share in the joint venture's gains or losses arising from transactions between a venturer and its joint venture are eliminated.

Adjustments are made to the joint venture's accounting policies where they are different from those of the venturer for the purpose of the consolidated financial statements.

(b). Income Tax

The Company is exempt from income tax under Division 50 of the Income Tax Assessment Act 1997. The controlled entities in the Group are exempt from income tax, with the exception of Buy Assist Australia Pty Ltd .

(c). Leases

Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses on a straight-line basis over the life of the lease term .

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{d). Revenue and other income

Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the Group and specific criteria relating to the type of revenue as noted below, has been satisfied.

Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates.

Interest revenue

Interest is recognised using the effective interest method.

Rendering of services

Revenue in relation to rendering of services is recognised depending on whether the outcome of the services can be estimated reliably. If the outcome can be estimated reliably then the stage of completion of the services is used to determine the appropriate level of revenue to be recognised in the period.

(e) . Goods and services tax (GST)

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).

Receivables and payable are stated inclusive of GST.

Cash flows in the statement of cash flows are included on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

(f). Property, plant and equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment.

Land and buildings

Land and buildings are measured using the cost model.

Shared Equity Investments

Equitable interests in property are measured using the cost model. NAHC has an equitable interest (ranging between 25% and 30%) in properties purchased under the Buy Assist scheme. These interests are classified as joint operations where NAHC does not have joint control over the asset. Under this arrangement, NAHC will recognise its share of the building and the interest will be accounted for under AASB 116 Property, Plant and Equipment.

Depreciation

Property, plant and equipment, excluding freehold land, is depreciated on a straight-line basis over the assets useful life to the Group, commencing when the asset is ready for use.

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Leased assets and leasehold improvements are amortised over the shorter of either the unexpired period of the lease or their estimated useful life.

At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any revisions are accounted for prospectively as a change in estimate.

(g). Financial Instruments

Financial instruments are recognised when the Group becomes a party to the contractual provisions to the instrument. For financial assets, this is the date that the Group commits itself to either the purchase or sale of the asset (ie the trade date accounting is adopted)

Financial instruments (except for trade receivables) are initially measured at fair value through profit or loss, in which case transaction costs are expensed to profit or loss immediately. where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted .

Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant financing component or if the practical expedient as specified in AASB 15.63.

Financial liabilities

Financial instruments are subsequently measured at:

• amortised cost; or

• fair value through profit or loss

A financial liability is measured at fair value through profit or loss if the financial liability is :

• A contingent consideration of an acquirer in a business combination to which AASB 3 Business Combinations applies;

• Held for trading; or

• initially designated as at fair value through profit or loss

All other financial liabilities are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of the financial asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through the expected life of the instrument to the net carrying amount at initial recognition .

A financial liability is held for trading if it is:

• it is incurred for the purpose of repurchasing or repaying the near term;

• part of the portfolio where there is an actual pattern of short-term profit taking; or

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• a derivative financial instrument (except for a derivative that is a financial guarantee contract or a derivative that is in an effective hedging relationship).

Any gains or losses arising on changes in fair value are recognised in profit or loss to the extent that they are not a part of a designated hedging relationship .

The change in fair value of the financial liability attributable to changes in the issuer's credit risk is taken to other comprehensive income and is not subsequently reclassified to profit or loss. Instead, it is transferred to retained earnings upon derecognition of the financial liability. If taking the change in credit risk in other comprehensive income enlarges or creates an accounting mismatch , then these gains or losses should be taken to profit or loss rather than other comprehensive income.

A financial liability cannot be reclassified .

Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of the debt instrument.

Financial guarantee contracts are initially measured at fair values (if not designated as at fair value through profit or loss and do not arise from a transfer of a financial asset) and subsequently measured the higher of:

• the amount of loss allowance determined in accordance with AASB 9.3.25.3; and

• the amount initially recognised less the accumulative amount of income recognised in accordance with the revenue recognition policies.

Financial Assets

Financial assets are subsequently measured at:

• amortised cost;

• fair value through other comprehensive income; or;

• fair value through profit or loss.

Measurement is on the basis of two primary criteria:

• the contractual cash flow characteristics of the financial asset; and

• the business model for managing financial assets .

A financial asset that meets the following conditions is subsequently measured at amortised cost:

• the financial asset is managed solely to collect contractual cash flows; and

• the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates.

16



The investment in Community 21 Limited is reported at cost less any impairment charges, as its fair value cannot currently be reliably estimated.

A financial asset that meets the following conditions is subsequently measured at fair value through other comprehensive income:

• The contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates; and

• The business model for managing the financial assets comprises both contractual cash flows collection and the selling of the financial asset.

By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value through other comprehensive income are subsequently measured at fair value through profit or loss.

The Group designates a financial instrument as measured at fair value through profit or loss if:

• it eliminates or significantly reduces a measurement or recognition inconsistency (often referred to as an accounting mismatch) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases;

• It is in accordance with the documented risk management or investment strategy, and information about the groupings was documented appropriately, so that the performance of the financial liability that was part of a group of financial assets or financial liabilities can be managed on a fair value basis; and

• it is a hybrid contract that contains an embedded derivative that significantly modifies the cash flows otherwise required by the contract.

The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option on initial classification and is irrevocable until the financial asset is derecognised .

Equity instruments

At initial recognition, as long as the equity instrument is not held for trading and not a contingent consideration recognised by an acquirer in a business combination to which AASB 3 applies , the Group made an irrecoverable election to measure any subsequent changes in fair value of the equity instruments in other comprehensive income, while the dividend revenue received on underlying equity instruments investment will still be recognised in profit or loss.

Regular way purchases and sales of financial assets are recognised and derecognised at settlement date in accordance with the Group's accounting policy.

Derecognition

Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement of financial position .

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Derecognition of financial liabilities

A liability is derecognised when it is extinguished (ie when the obligation in the contract is discharged, cancelled or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of the financial liability, is treated as an extinguishment of the existing liability and recognition of a new financial liability.

The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash asset transferred or liabilities assumed, is recognised in profit or loss.

Derecognition of financial assets

A financial asset is derecognised when the holder's contractual rights to its cash flow expires, or the asset is transferred in such a way that all the risks and rewards of ownership are substantially transferred.

All of the following criteria need to be satisfied for derecognition of financial asset:

• the right to receive cash flows from the asset has expired or has been transferred;

• all risk and rewards of ownership of the asset have been substantially transferred; and

• the Group no longer controls the asset (ie the Group has no practical ability to make a unilateral decision to sell the asset to a third party).

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

On derecognition of a debt instrument classified under fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is reclassified to profit or loss.

On derecognition of an investment in equity which was elected to be classified under fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings.

Impairment

The group recognises a loss allowance for expected credit losses on :

• financial assets that are measured at amortised cost or fair value through other comprehensive income;

• lease receivables;

• contract assets (eg amounts due from customers under construction contracts);

• loan commitments that are not measured at fair value through profit or loss, and

• financial guarantee contracts that are not measured at fair value through profit or loss .

18



Loss allowance is not recognised for:

• financial assets measured at fair value through profit or loss; or

• equity instruments measured at fair value through other comprehensive income.

Expected credit losses are the probability weighted estimate of credit losses over the expected life of the financial instrument. A credit loss is the difference betweeen all contractual cash flows that are due and all cash flows that are expected to be received, all discounted at the original effective interest rate of the financial instrument.

The Group uses the following approaches to impairment, as applicable under AASB 9: Financial Instruments

• the general approach;

• the simplified approach;

• the purchased or originated credit impaired approach; and

• low credit risk operational simplification

General approach

Under the general approach, at each reporting period, the Group assess whether the financial instruments are credit-impaired, and if:

• the credit risk of the financial instrument has increased significantly since initial recognition, the Group measures the loss allowance of the financial instruments at an amount equal to the lifetime expected credit losses; or

• there is no significant increase in credit risk since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.

(h). Impairment of non-financial assets

At the end of each reporting period the Group determines whether there is an evidence of an impairment indicator for non-financial assets.

Where this indicator exists and regardless for goodwill, indefinite life intangible assets and intangible assets not yet available for use, the recoverable amount of the asset is estimated.

Where assets do not operate independently of other assets, the recoverable amount of the relevant cashgenerating unit (CGU) is estimated. The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit. Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit or loss.

Reversal indicators are considered in subsequent periods for all assets which have suffered an impairment loss, except for goodwill.

19



(i). Intangible Assets

Intangible assets are intially recognised at cost upon acquisition . The Group has property management portfolios which do not meet the recognition requirements of Accounting Standards and therefore have not been recognised in these financial statements. The Directors estimate a fair value of $6. 7m for the portfolios.

Amortisation

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

U). Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short-term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

(k). Employee benefits

Provision is made for the Group's liability for employee benefits arising from services rendered by employees to the end of the reporting period . Employee benefits that are expected to be wholly settled within one year have been measured at the amounts expected to be paid when the liability is settled.

Employee benefits expected to be settled more than one year after the end of the reporting period have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Cashflows are discounted using market yields on high quality corporate bond rates incorporating bonds rated AM or AA by credit agencies, with terms to maturity that match the expected timing of cashflows. Changes in the measurement of the liability are recognised in profit or loss.

(I). Provisions

Provisions are recognised when the Group has a legat or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(m). Adoption of new and revised accounting standards

The Group has adopted all standards which became effective for the first time at 30 June 2019, the adoption of these standards has not caused any material adjustments to the reported financial position, performance or cash flow of the Group.

The Group elected to early adopt MSB 15 Revenue from Contracts with Customers and AASB 1058 Income of not-for-Profit Entities from the year beginning 1 July 2017 and as a result, government grants have been received in advance and the revenue will be recognised over time as the grant conditions are performed.

(n). New Accounting Standards and Interpretations

The MSB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods. The Group has decided not to early adopt these Standards. The following table summarises those future requirements, and their impact on the Group where the standard is relevant:

20



Standard Name

AASB 16 Leases

Effective date for entity

1 July 2019

Requirements

Revisions to accounting for operating leases on balance sheet by lessees of property and high value equipment. However, exemptions for short-term leases and leases of low value assets will reduce the impact.

Impact

The entity will be required to recognise a right-of-use asset and lease liability for its operating leases of the office premises . The standard is not expected to have a material impact.

3. Critical Accounting Estimates and Judgments

4.

The directors make estimates and judgements during the preparation of these financial statements regarding assumptions about current and future events affecting transactions and balances .

These estimates and judgements are based on the best information available at the time of preparing the financial statements, however as additional information is known then the actual results may differ from the estimates.

The significant estimates and judgements made have been described below.

Key estimates - receivables

The receivables at reporting date have been reviewed to determine whether there is any objective evidence that any of the receivables are impaired. An impairment provision is included for any receivable where the entire balance is not considered collectible based on the expected lifetime credit losses approach.

Key estimates - provisions

As described in the accounting policies, provisions are measured at management's best estimate of the expenditure required to settle the obligation at the end of the reporting period. These estimates are made taking into account a range of possible outcomes and will vary as further information is obtained.

Key estimates - impairment of property, plant and equipment (including shared equity interests)

The Group assesses impairment at the end of each reporting period by evaluating conditions specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.

Cash and Cash Equivalents Consolidated Parent

2019 2018 2019 2018

$ $ $ $ Cash at bank and in hand 9,141,762 7,917,318 8,332,541 7,673 ,637 Fixed interest securities 769,509 5,202,845 769,509 5,202,845

91911 1271 13,120,163 911021050 12,876,482

21



5. Trade and Other Receivables

Trade receivables

Provision for impairment

Related party receivables

Interest receivable

Other receivables

Total current trade and other receivables

(a). Impairment of receivables

(a) .

Consolidated

2019 2018

$ $

304,273 24,375

(1,609) (1,609)

3021664 22,766 183,796

15,403 26 ,913

609,481 455,284

11111 1344 504,963

Reconciliation of changes in the provision for impairment of receivables is as follows:

Balance at beginning of the year

Additional impairment loss recognised

Balance at end of the year

(1,609)

(1,609)

(1,609)

(1 ,609)

Parent

2019 2018

$ $

244,569 18,875 (1,609) (1 ,609)

2421960 17,266 1,282,950 345,927

15,403 26,913

520,078 407,376

210611391 797.482

(1,609) (1,609)

(11609) (1 ,609)

The carrying value of trade receivables is considered a reasonable approximation of fair value due to the short-term nature of the balances.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable in the financial statements.

6. Assets and liabilities held for sale

Non-current assets held for sale Property, plant and equipment 12,937 716,755 12,937 716,755

22



7. Other financial assets

Consolidated

2019

$

2018

$

(a). Financial assets at fair value through profit or loss

Shares in other corporations 137,500 137,500

137,500 137,500

2019

$

Parent

137,500

137,500

2018

$

137,500

137,500

The company subscribed to the investment with the shares issued on 10 April 2015. The directors have assessed the carrying value of the shares in Community 21 Limited and have determined that the investment is appropriately valued as at 30 June 2019.

(b). Held-to-maturity investments

CURRENT Fixed interest securities

8. Intangible Assets

Intellectual property ('Shared Equity Home Ownership') Cost

Accumulated amortisation and impairment

Net carrying value

Other intangible assets Cost

Accumulated amortisation and impairment

Total Intangibles

769,509

769,509

25,000

(25,000)

54,275

(54,275)

5,202,845 769,509 5,202,845

5,202,845 769,509 5,202,845

25,000 25,000 25,000

(25,000) (25,000) (25,000)

54,275

(54,275)

Intangible assets are initially recognised at cost upon acquisition. The Group has property management portfolios which do not meet the recognition requirements of Accounting Standards and therefore have not been recognised in these financial statements . The Directors estimate a fair value of $6.7m for the portfolios.

9. Other Assets

CURRENT Prepayments

Deposits

37,525

210,474

247,999

21,609

223,815

245,424

37,370

210,474

247,844

20,318

223,815

244, 133

23



Consolidated Parent

2019 2018 2019 2018

$ $ $ $

10. Property, plant and equipment

Land & Buildings - shared equity investments At cost 4,915,484 570,050 4,915,484 570,050

Total land & buildings - shared equity investments 4,915!484 570,050 4,915,484 570,050

PLANT AND EQUIPMENT

Motor vehicles At cost 131,662 79,415 131,662 79,415

Accumulated depreciation (38,580) (54,462) (38,580) (54,462)

Total motor vehicles 931082 24,953 93,082 24,953

Office equipment At cost 97,146 88,889 95,033 86,775


Total office equipment 37,474 38,953 36 555 37,233

Computer equipment At cost 180,408 159,023 178,207 156,822


Total computer equipment 34,215 36 ,520 33,959 35,454

Computer software At cost 117,225 117,225 75,389 75,389


Total computer software 4 366 22,546 852

Leasehold Improvements At cost 104,048 43,763 104,048 43,763

Accumulated amortisation (39,394) (17,244) (39,394) (17,244)

Total leasehold improvements 64,654 26,519 641654 26,519

Total plant and equipment 233,791 149,491 228,250 125,011

Total property, plant and equipment 51149,275 719 ,541 5,143,734 695 ,061

24



(a). Movements in carrying amounts of property, plant and equipment

Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year:

Motor Office Computer Computer Buildings Vehicles Equipment Equipment Software Improvements Total

Parent $ $ $ $ $ $ $

Year ended 30 June 2019 Balance at the beginning of year 570,050 24,953 37,233 35,454 852 26,519 695,061

Additions 4,345,434 85, 114 8,258 21 ,385 60,284 4,520,475

Disposals

Disposals - written down value (6,707) (6,707)

Depreciation expense (10,278) (8,936) (22,880) (~52) (22,149) (65,095)

Balance at the end of the year 4,915,484 93,082 36,555 33,959 64,654 5,143,734


Parent $ $ $ $ $ $ $

Yearended30June2018 Balance at the beginning of year 33,271 37,976 39,940 18,712 35,271 165,170

Additions 570,050 8,494 18,780 597,324

Disposals

Depreciation expense (8,317) (9,237) (23,266) (17,860) (8,753) (67,433)

Balance at the end of the year 570 050 24 954 37 233 35,454 852 26 518 695 061


Consolidated $ $ $ $ $ $ $

Year ended 30 June 2019 Balance at the beginning of year 570,050 24,953 38,953 36,520 22,546 26,519 719,541

Additions 4,345,434 85,114 8,258 21,385 60,284 4,520,475

Disposals

Disposals - written down value (6,707) (6,707)

Depreciation expense (10,278) (9,737) (23,690) (18,180) (22, 149) (84,034)

Balance at the end of the year 4,915,484 93,082 37,474 34,215 4,366 64,654 5,149,275

25



Buildings

Consolidated $

Year ended 30 June 2018 Balance at the beginning of year

Additions 570,050

Depreciation expense

Balance at the end of the year 570 050

11. Trade and Other Payables

Current

Trade payables

GST payable

Sundry payables and accrued expenses

PAYG Witholding payable

Superannuation payable

Motor Vehicles

$

33,271

(8,318)

24,953

Office Computer Computer Equipment Equipment Software Improvements

$ $ $ $

39,076 39,940 48,758 35,271

9,507 20,982 8,450

(9,630) (24,402) (34,662) (8,752)

38,953 36 520 22 546 26 519

Consolidated Parent

2019 2018 2019

$ $ $

510,711 308,871 393,140

58, 161 50,971 46,673

2,100

44,734 49,212 44,734

29,537 24, 139 26,938

645,243 433,193 511 ,485

Total

$

196,316

608,989

(85,764)

719 541

2018

$

251,421

68,472

49,212

22,302

391,407

Trade and other payables are unsecured, non-interest bearing and are normally settled within 30 days. The carrying value of trade and other payables is considered a reasonable approximation of fair value due to the short-term nature of the balances .

12. Income in advance Government grants received in advance 2,794,015 4,847,475 2,794,015 4,847,475

Shared equity income in advance 48,606 13,774

2,842,621 4,861 ,249 2,794,015 4,847,475

13. Employee Benefits

Current liabilities Annual leave provision 262,534 265,056 229,742 259,804

Staff bonus provision 85,804 114,539 85,804 '114,539

405,338 379,595 3561546 374,343

Non-current liabilities Long service leave 59,000 85,000 59,000 85,000

591000 85,000 59,000 85,000

26



14. NRAS Income

NRAS income received

NRAS amounts paid to owners

Consolidated

2019

$

12,965,362

(12,814,914)

150,448

2018

$

13,967,405

(13,804,157)

163,248

2019

$

Parent

12,965,362

(12,814,914)

150,448

2018

$

13,967,405

(13,804,157)

163,248

The Group is party to 1,4 78 (2018: 1, 102) agreements each with an initial term of ten years and an average remaining term of five years.

15. NRAS Incentives

(a). State Government NRAS Incentives

Opening incentives payable

Incentives received

Incentives paid

Closing incentives payable

7,926

9,385,106

(9,383,653)

9 379

10,643

9,593,702

(9,596,419)

7 926

7,926

9,385,106

(9,383,653)

9 379

10,643

9,593,702

(9 ,596,419)

7 926

The State Government Incentives must, by law, flow through to the owners of the NRAS dwellings by following the NRAS Derived Rent. As such NAHC - even as the Approved Participant - does not have an entitlement to the State NRAS payment as it does not receive the NRAS Derived Rent, which is the owners. Accordingly NAHC do not include the State Government Incentive payments in the Group's consolidated statement of profit or loss and other comprehensive income.

The Federal Government refundable tax offset applies only to NRAS dwellings and the offset must follow the NRAS Derived Rent, which is to the owner. The offset is not a 'right' or 'property' and is not tradeable, it is an entitlement to a tax concessions. Accordingly, NAHC do not include the tax offsets in the Group's consolidated statement of profit and loss and other comprehensive income.

16. Property Administration Bank Accounts

The entity administers a number of bank accounts pertaining to the properties which are managed by external partners and the properties which are managed by internal property managers . Although not subject to the statutory requirements of the Agents Financial Administration Regulation 2014, the entity effectively administers these accounts as trust accounts. The balance held in these accounts is shown below. Account Name

Anglicare Housing Limited

Fraser Coast Housing

Church of Christ (Care)

Mangrove Housing

HERS (VIC)

Whitsundays

QAHC PMC

Connect

HERS

Regional Housing Limited

165,711

2,194

311,127

173,040

86,325

940

972,301

111,777

436,752

13,205

42,852

28,963

32, 106

27,698

1,017

10,147

832

165,711

2,194

311,127

173,040

86,325

940

972,301

111,777

436,752

13,205

42,852

28,963

32, 106

27,698

1,017

10,147

832

27



17. AFR disclosure note

(a) . Statement of ~rofi t or loss and other com~rehensive income Non- Non-

Registered registered Registered registered Charities Charities Elimination Consolidation Charities Charities

2019 2019 2019 2019 2018 2018

$ $ $ $ $ $

Revenue Consortium fees 2,752,072 2,752,072 2,778,766

Interest received 211,208 402 211,610 204,146 6,465

Property management fees 2,894,792 (396,000) 2,498,792 2,513,718

Other income 270,561 (72,000) 198,561 313,307

Share of Joint Venture 244,075 244,075

Shared equity income 1,034,074 483,965 (417,953) 1, 100,086 60,953 82,637

Government grants 2,053,460 2,053,460 152,525

Lease income 12,965,362 12,965,362 13,967,405

Total Income 22,425,604 484,367 (885,953) 22,024,018 19,990,820 89,102 Employee costs 3,077,085 282,619 3,359,704 3,145,278 73,962

Depreciation, amortisation 65,096 18,938 84,034 67,433 37,528

Rent 215,961 215,961 202,939

Consultancy fees 430,390 158,945 589,335 189,840 336,883

Legal fees 199, 189 126,209 325,398 116, 167 5,901

Directors remuneration 176,455 26,696 203, 151 173,500 42,000

Lease expenses 12,814,914 12,814,914 13,804, 157

Shared equity expenses 417,953 116,278 (417,953) 116,278 47,650 20,231

Other operating expenses 1,739,144 132,790 (468,000) 1, 138,354 1,015,946 397,836

Total expenses 1911 36! 187) (8621475) 8851953 (1 81847,1 29) 181762,910) j9141341)

Net ProfiU(loss) 312891417 (3781108) 311761889 1,2271910 (825,239)

Elimination Consolidation

2018 2018

$ $

2,778,766

210,611

(312,000) 2,201,718

(144,000) 169,307

(47,650) 95,940

152,525

13,967,405

(503,650) 19,576,272

3,219,240

104,961

202,939

526,723

122,069

215,500

13,804, 157

(47,650) 20,231

(456,000) 957,782

5031650 (19,1731602)

4021670

28



(b). Statement of financial ~osition

Non· Registered registered Charities Charities

2019 2019

$ $

Total current assets 11,462, 198 41, 138

Total non current assets 6,788,246 5,541

Total assets 18,250,444 46,679 Total current liabilities (3,816,373) (309,551)

Total non current liabilities (59,000)

Total liabilities (3,8751373) (3091551)

Net assets 1413751071 (2621872)

Share capital . 1,250,000

Retained earnings 43,375,071) 1,512,872

Total equity 43,375,071 (262,872)

18. Financial Risk Management

Non-Registered registered

Elimination Consolidation Charities Charities

2019 2019 2018 2018

$ $ $ $

(232,722) 11,270,614 14,066,424 150,053

(1,250,000) 5,543,787 2,799,317 24,479

(1,482, 722) 16,814,401 16,865, 741 174,532

(232,722) (3,893,202) (5,960,668) (59,296)

(59,000) (85,000)

(2321722) (3!9521202) !6,0451668) (591296)

(1,715,444) 121862,199 10,820,073 115,236

(1,250,000) • (1,250,000)

12,862, 199 10,820,073 (1,134,764)

(1,250,000) (12,862, 199) 10,820,073) (115,236)

The Group is exposed to a variety of financial risks through its use of financial instruments.

Elimination Consolidation

2018 2018

$ $

(345,927) 13,870,550

(1,250,000) 1,573,796

(1,595,927) 15,444,346

345,927 (5,674,037)

(85,000)

3451927 (5,759,037)

(1,250,000) 9,685,309

1,250,000

9,685,309

1,250,000 (9,685,309)

The Group's overall risk management plan seeks to minimise potential adverse effects due to the unpredictability of financial markets.

The most significant financial risks to which the Group is exposed to are described below:

Specific risks

• Liquidity risk

• Credit risk

• Market risk • currency risk, interest rate risk and price risk

Financial instruments used

The principal categories of financial instrument used by the Group are:

• Trade receivables

• Cash at bank

29



• Trade and other payables

Liquidity risk

Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities as and when they fall due. The Group mainta ins cash and marketable securities to meet its liquidity requirements for up to 30-day periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets.

The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash-outflows due in day-to-day business.

Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection . Long-term liquidity needs for a 180-day and a 360-day period are identified monthly.

At the reporting date, these reports indicate that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances and will not need to draw down any of the financing facilities .

Financial guarantee liabilities are treated as payable on demand since the Group has no control over the timing of any potential settlement of the liabil ities.

The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management's expectations that banking facilities will be rolled forward. The amounts disclosed in the table are the undiscounted contracted cash flows and therefore the balances in the table may not equal the balances in the statement of financial position due to the effect of discounting.

Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractua l obligations resulting in a financial loss to the Group.

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposure to wholesale and retail customers, including outstanding receivables and committed transactions.

The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The utilisation of credit limits by customers is regularly monitored by line management. Customers who subsequently fail to meet their credit terms are required to make purchases on a prepayment basis until creditworthiness can be re-established.

Trade receivables consist of a large number of customers , spread across diverse industries and geographical areas . Ongoing credit evaluation is performed on the financial condition of accounts receivable .

30



Credit Risk

The Board of Management receives monthly reports summarising the turnover, trade receivables balance and aging profile of each of the key customers individually and the Group's other customers analysed by industry sector as well as a list of customers currently transacting on a prepayment basis or who have balances in excess of their credit limits.

Management considers that all the financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due.

The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties .

The following table details the Group's trade and other receivables exposure to credit risk (prior to collateral and other credit enhancements) with ageing analysis and impairment provided for thereon . Amounts are considered as 'past due' when the debt has not been settled, within the terms and conditions agreed between the Group and the customer or counter party to the transaction . Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there is objective evidence indicating that the debt may not be fully repaid to the Group.

The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be of high credit quality.

Past due but not impaired

{days overdue)

Within Past due initial

Gross and trade amount impaired < 30 31-60 61-90 > 90 terms

$ $ $ $ $ $ $

Consolidated

2019 Trade receivables 304,273 1,609 121,649 139 13,898 124,441 42,537

Other receivables 808,681 - 808,681

Total 1,112,954 1,609 121,649 139 13,898 124,441 851,218

2018 Trade receivables 24,375 1,609 422 4,846 6,454 11,044

Other receivables 482, 197 - 482,197

Total 506 572 1,609 422 4 846 6,454 493,241

31



Parent

2019 Trade receivables

Past due Gross and

amount impaired < 30

$ $ $

Past due but not impaired

(days overdue}

31-60 61-90

$ $

> 90

$

244,569 1,609 121,649 139 13,898 107,274

Within initial trade terms

$

Other receivables 1,816,823 • 1 ,816,823

Total 2,061,392 1,609 121,649 139 13,898 107,274 1 ,816,823

2018 Trade receivables 18,875 1,609 422 2,656 455 13,733

Other receivables 780,216 780,216

Total 799 091 1 609 422 2,656 455 793,949

Neither the Group nor parent entity holds any financial assets with terms that have been renegotiated, but which would otherwise be past due or impaired.

(a). Interest rate risk

{i) Interest rate risk

The Group is exposed to interest rate risk as funds are borrowed at floating and fixed rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.

The Group's policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At the reporting date, the Group is exposed to changes in market interest rates through its bank borrowings, which are subject to variable interest rates.

Consolidated Parent

2019 2018 2019 2018

$ $ $ $ Held-to-maturity financial assets 769,509 5,202,845 769,509 5,202,845

Financial assets at fair value through profit or loss 137,500 137,500 137,500 137,500

9071009 5,340 ,345 9071009 5,340 ,345

32



Objectives, policies and processes

The Board of Management has overall responsibility for the establishment of the Group's financial risk management framework. This includes the development of policies covering specific areas such as foreign exchange risk , interest rate risk, credit risk and the use of derivatives. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.

The day-to-day risk management is carried out by the Group's finance function under policies and objectives which have been approved by the Board. The Chief Financial Officer has been delegated the authority for designing and implementing processes wh ich fo llow the objectives and policies. This includes monitoring the levels of exposure to interest ra te and foreign exchange rate risk and assessment of market forecasts for interest rate and foreign exchange movements. The Board of Management receives monthly reports which provide details of the effectiveness of the processes and policies in place.

19. Members' Guarantee

The Company is incorporated under the Corporations Act 2001 and is a Company limited by guarantee. If the Company is wound up, the constitution states that each member is required to contribute a maximum of $ 10 each towards meeting any outstandings and obligations of the Company. At 30 June 2019 the number of members was 2 (2018: 2).

20. Key Management Personnel Disclosures

21 .

Key management personnel remuneration included within employee expenses for the year is shown below:

Remuneration and benefits

Post-employment benefits

Consolidated

2019 2018

$ $ 537,699

29,660

567,359

538,838

29,162

568,000

The above remuneration includes remuneration and benefits of $104,070 (2018: $103,580) paid to Professor William George Earl in his capacity as Chief Executive Officer of Sustainable Living Infrastructure Consortium Ltd .

Auditors' Remuneration Consolidated Parent

2019 2018 2019 2018

$ $ $ $ Remuneration of the auditor of the parent entity, Merrotts Chartered Accountants, for:

- auditing or reviewing the financial statements 21,600 21,500 21,600 21,500 - other services 3,600 2,800 3,600 2,800

Total 25,200 24 ,300 25,200 24,300

33



22. Interests in Subsidiaries

(a). Composition of the Group Principal place of business I Country of Incorporation

Percentage Owned(%)*

Percentage Owned(%)*

Subsidiaries: Home Equity and Rental Services Ltd

Sustainable Living Infrastructure Consortium Ltd

Buy Assist Australia Pty Ltd

Australia

Australia

Australia

2019

100

100

100

2018

*The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries .

23. Interests in Joint Arrangements

(a). Material joint ventures

The following information is provided for joint ventures and is the amount per the Joint Venture financial statements. The Group has an interest in a joint venture entity, Affordable Rentals Victoria Ltd (ARV Ltd) with Common Equity Housing Limited .

2019

Name of Joint Venture

Summarised statement of financial position Cash and cash equivalents

Other current assets

Non-current assets

Current financial liabilities (excluding trade and other payables and provisions)

Other current liabilities

Net assets

Summarised statement of profit or loss and other comprehensive income

Revenue Housing Scheme revenue

General Expenses

Income tax expense I (income)

Profit I (loss) from continuing operations

Total comprehensive income

ARV Ltd

63,160

947,989

7,074,000

(6,858, 107)

(738,892)

488, 150

682,444

(192,080)

488,150

488,150

100 100 100

34



(b). Aggregate information for joint ventures

The Group accounts for a 50 per cent interest in the joint venture entity. The table below summarises the Group's share of the net assets of the joint venture entity.

Carrying amount of investments in joint ventures

Share of those joint ventures:

Profit or loss from continuing operations

Other comprehensive income

Total comprehensive income

24. Contingencies

2019 2018

$ $ 244,075

244,075

244 075

In the opinion of the Directors, the Company did not have any contingencies at 30 June 2019 (30 June 201 B:None).

25. Related Parties

(a). The Group's main related parties are as follows:

Key management personnel - refer to Note 20 ..

Joint arrangements - refer to Note 23 ..

Subsidiaries - refer to Note 22.

(b). Transactions with related parties

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

26. Fair Value Measurement

The Group measures the following assets and liabilities at fair value on a recurring basis:

• Financial assets

Unlisted Shares

35



Fair value hierarchy

AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a level in the fair value hierarchy as follows: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can

access at the measurement date.

Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 Unobservable inputs for the asset or liability.

The table below shows the assigned level for each asset and liability held at fair value by the Group:

Consolidated

30 June 2019

Financial assets Unlisted Shares

Consolidated

30 June 2018

Financial assets Unlisted Shares

Parent

30 June 2019

Unlisted Shares

Parent

30 June 2018

Unlisted Shares

Level 3 measurements

Level 1

$

Level 1

$

Level 1

$

Level 1

$

Level2

$

Level2

$

Level2

$

Level2

$

Level 3

$

137,500

Level 3

$

137,500

Level3

$ 137,500

Level 3

$ 137,500

Total

$

137,500

Total

$

137,500

Total

$ 137,500

Total

$

137,500

A reconciliation of the movements in recurring fair value measurements allocated to Level 3 of the hierarchy is provided below: Balance at beginning of year 137,500 137,500 137 ,500 137,500

Total gains or losses for the year Recognised in profit or loss - other income I other expenses - unrealised

Balance at end of year 137,500 137,500 137,500 137,500

The Board assess fair value of the Investment by comparing to the net tangible asset position of the investment entity.

36



27. Cash Flow Information

(a). Reconciliation of result for the year to cashflows from operating activities

Reconciliation of net income to net cash provided by operating activities:

Consolidated

2019 2018

$ $ Profit for the year 3,176,889 402,670

Cash flows excluded from profit attributable to operating activities

Non-cash flows in profit:

- amortisation 19, 196

- depreciation 84,034 85,764

- net loss on disposal of property, plant and equipment 1,153

- (gain)/loss on disposal of held for sale assets (1,329) (8,724)

Share of net profits of equity accounted joint ventures (244,075)

Changes in assets and liabilities:

- (increase)/decrease in trade and other receivables (606,381) (336,789)

- (increase)/decrease in prepayments (2,574) (181,932)

- increase/(decrease) in income in advance (2,018,628) 4,861,249

- increase/(decrease) in trade and other payables 211,513 92,646

- increase/(decrease) in employee benefits 281 63,995

Cashflows from operations 6001883 4 ,998 ,075

Parent

2019 2018

$ $ 3,459,297 1,267,627

65,096 67,433

1,153

(1,329) (8,724)

(244,075)

(1,263,909) (61,555)

(3,711) (180,969)

(2,053,460) 4,847,475

120,078 104,718

(43,797) 58,743

351343 6,094,748

37



28. Events after the end of the Reporting Period

The financial report was authorised for issue on 28 November 2019 by the Board of Directors.

In April 2019, NAHC and HERS commenced litigation against certain parties in the Supreme Court of Queensland. The substance of the dispute concerned property management rights over a number of National Rental Affo rdability Scheme ("NRAS') properties for which NAHC is the NRAS approved participant. In July 2019, the parties executed a Deed of Settlement. Legal fees associated with the dispute totalled approximately $200,000.

Except for the above, no other matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in future financial years.

29. Company Details

The registered office and principal place of business of the company is:

National Affordable Housing Consortium Limited

Suite 1 D, level 1, K1 - Kings Row Office Park

40-52 McDougall Street MIL TON OLD 4064

38


Responsible Persons' Declaration

The responsible persons declare that in the responsible persons' opinion:

• there are reasonable grounds to believe that the registered entity is able to pay all of its debts, as and when they become due and payable; and

the financial statements and notes satisfy the requirements of the Australian Charities and Not-for-profits Commission Act 2012.

Signed on behalf of all Responsible Persons in accordance with subsection 60.15(2) of the Australian Charities and Not-forprofits Commission Regulation 2013.

~~\ I

Responsible person ... .... .. ............................................... ......... .. ...... .. ........ ... ............... ... .... ..... ............ ..... ............ .. Karen Smith-Pomeroy

Dated this 28th day of November 2019

39

Level 6, Brisbane Club Tower 241 Adelaide Street Brisbane Qld 4000 Australia

GPO Box 565 Brisbane Qld 4001 Australia

Phone: 61 (07) 3233 0600

Fax: 61 (07) 3233 0601

Email: [email protected]

Web: www.merrotts.com. au

Accounting

Audit & Assurance - Statutory - Internal - Government

Business - Services -Audit - Restructuring

Corporate Services

Estate Planning

Forensic Accounting

Litigation Support

Recruitment - Executive - Accounting

Superannuation - Administration - Planning

Taxation

errotts Chartered Accountants & Business Advisers

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF NATIONAL AFFORDABLE HOUSING CONSORTIUM LIMITED

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of National Affordable Housing Consortium Limited (the Company) and its controlled entities (the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated 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 Group is in accordance with Division 60 of the Australian Charities and Not-for-profits Commission Act 2012, including:

(a) giving a true and fair view of the Group's financial position as at 30 June 2019 and of its

financial performance and cashflows for the year then ended; and

(b) complying with Australian Accounting Standards and Division 60 of the Australian Charities

and Not-for-profits Commission Regulation 2013.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group 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 11Q 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 have given to the directors of the Company a written Auditors Independence Declaration required by the Australian Charities and Not-for-profits Commission Act 2012, a copy of which is attached to the Directors' Report.

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

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 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 Group 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 Group or to cease operations, or have no realistic alternative but to do so.

40

Liability limited by a scheme approved under Professional Standards Legislation

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 files/ar1 .pdf . This description forms part of our Auditor's Report.

Merrotts Chartered Accountants

Partner

Brisbane, 28th November 2019

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