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ANNUAL REPORT2011-12

Advancing equality for ALL Victorians throughquality interpreting + translations services

2 > VITS Annual Report 2011-2012

To be recognized as a leadingprovider of high quality andrelevant language services.

our vision

our missionOur primary mission is to providelanguage services to Non Englishspeakers by:

1. Recognising the richness of cultural diversity

2. Valuing the profession andrecognising our role in working with other stakeholders to pursue its development

3. Servicing our end clients throughagencies and service providers

To provide the highest quality andrelevant language services, Australia-wide, in the most efficient and cost-competitive manner, recognising theimportance of our staff and theprofession in the delivery of our service.

VITS Annual Report 2011-2012> 3

PAGE

KEY ACHIEVEMENTS 4

CHAIRMAN’S REPORT 5

CEO REPORT 6

BOARD OF DIRECTORS 8

VITS IN PROFILE 9

ORGANISATIONAL STRUCTURE 13

OPERATIONAL PERFORMANCE 14

INVESTING IN OUR INDUSTRY AND COMMUNITY 20

FINANCIAL STATEMENTS 21

CONTENTS


KEY ACHIEVEMENTSIN 2011/12

> We report a net profit of$344,718 which represents a 29% improvement on theprevious financial year.

> Our total sales for the yearincreased 18.5%, led by a 34%increase in revenue from on-siteinterpreting sales.

> Total revenue of $9,028,914 isthe highest ever achieved by the organisation.

> Demand for our on-siteinterpreting services increasedsignificantly for the thirdconsecutive year. We achieved a 26% increase, twice theincrease achieved in the previousfinancial year

> The efficiency of our telephoneinterpreting service improvedmarkedly with the implementationof a new telephony infrastructurefrom November 2011.

> 93% of calls connected tointerpreters within 3 minutesrepresenting an improvement of17% on connected calls with theold technology.

> The total number of wordstranslated was over 3 millionagain this year. However 95% ofall translations were undertakenby NAATI Level 3 or above, animprovement on last year’s 93%.

> New and pre-existing businessrelationships with stategovernment and key governmentagencies were developed.

> We registered an additional 138 new clients with VITS.

> A staff resource dedicated tocontractor recruitment andmanagement was establishedresulting in an additional 271language professionals joining VITS.

> We undertook a re-organisationof our translations area, recruitinga new Coordinator and aligningthe structure of the area to thebroader organisation.

> We commenced payingsuperannuation payments toeligible contractors from 1 January 2012.

> We revised our pricing frameworkand business model introducinga new approach to market from 1 January 2012.

> The company successfullycompleted an upgrade of itstelephone infrastructure includingour existing on site PBX/IVRcompetencies and our telephoneinterpreting service.

> Our commitment to the industrycontinued with sponsorships andsupport for key communitybased initiatives.

> All staff participated in theperformance review processlinked to professionaldevelopment outcomes andorganisational values that are the guiding principles for the company.

2011/12 was a year of majorchange in the language services industry.

A Federal Court decision in April2011 created a great deal ofuncertainty within the languageservices sector particularly inrelation to the contractualrelationship between serviceproviders and interpreters and translators.

VITS needed to respondappropriately to these changes andmade a number of importantdecisions to ensure the companyremained competitive.

A full review of the company’sbusiness model and pricingframework was undertaken in late2011 and a new approach waslaunched in the market from 1January 2012.

A decision was made to pay eligiblecontracted interpreters andtranslators superannuation from 1January 2012. This decision was arecognition by the board of VITSthat the language services industryhad accepted the principle ofpaying the superannuation levy tolanguage professionals.

Upgrading the companytechnology remained a priority in2011/12. The implementation of afull telephony infrastructureupgrade which replaced anoutdated system enabled anumber of important efficienciesand improved service delivery toclients. The enhancements alsoallowed us to remain competitive inthe marketplace.

Despite the many challenges thecompany faced this year, and theneed for significant change, theBoard is pleased to report that sales

grew by 18.5% in 2010/11, buildingon last year’s 13.9% increase.

Also pleasing was the net profit thisyear of $344,718 which representsa 29% increase on the previousfinancial year. It is our best result infour years.

I would like to take this opportunityto thank the retiring ChairpersonAlex Andrianopoulos and his boardfor the expertise and goodgovernance they delivered inguiding VITS through a challengingand difficult year.

On behalf of the Board I thank ourCEO George Bisas and the staff atVITS who have navigated animportant year of change. I alsoextend special appreciation to ourcontracted language professionalswho deliver a critical service to theVictorian community.

I thank the Minister for MulticulturalAffairs and Citizenship, the HonNicholas Kotsiras MP for hiscontinued commitment andsupport for VITS LanguageLink.

We look forward to a veryproductive and successful year withthe new board members whojoined VITS LanguageLink in April 2012.

I commend the VITS LanguageLink2011/12 Annual Report to you.

Hon Phil Honeywood

ChairmanVITS LanguageLink


CHAIRMAN’S REPORT


I am pleased to present my report for the 2011/12financial year.

The last 12 months has seen aperiod of significant change in thelanguage services industry acrossAustralia. In early 2011 the FederalCourt of Australia brought down adecision against a nationallanguage services provider whichwas to change the way in whichagencies engage languageprofessionals particularly in Victoria.

VITS needed to respond effectivelyto this decision and the resultantchanges. The very positive salesand profit results I am able toreport, I believe, demonstrate thatthe company responded effectivelyand appropriately. The responserequired major changes in ourbusiness model and pricingframework as well asenhancements to internal businessprocesses and systems.

We undertook an extensive reviewof our pricing framework across allservices. As a result we developeda new business model and pricingarrangement which we launched inthe market on 1 January 2012.

A key component of the new modelwas a decision of the VITS Board ofDirectors at its September 2011meeting to begin to pay eligiblecontractors superannuation. Thedecision was consistent with therest of the language servicesindustry which had accepted theprinciple of paying thesuperannuation levy.

In the two and a half years that Ihave been CEO at VITS we haveexperienced many changes in thecompany and the industry. The last12 months were the mostsignificant for the company in many

years. It was heartening, however,that through the transition to a newbusiness model, we achieved asignificant increase in demand forour services resulting in animprovement in our sales figuresand profitability.

We report a net profit of $344,718a 29% increase on the previousfinancial year. This is a very pleasingresult given the significant costsincurred by the company as a resultof the major industry changes andour investment in technology.

Demand for onsite interpreting hasgrown substantially this year. Webelieve this is reflective of the workwe have done to enhance ourcustomer service and the quality ofour service delivery. We achieved a26% increase in demand for onsiteinterpreting and this significantincrease occurred despite anincrease in price imposed by VITSas part of the new business modelintroduced from 1 January 2012.

Total sales revenue grew by 18.5%in 2011/12 resulting in total revenueof $9,028,914. Our best result ever.

Demand for telephone interpretingremained steady. However, theefficiency of our telephoneinterpreting service improvedmarkedly following theimplementation of a new telephonyinfrastructure within the company.93% of all calls connected within 3 minutes which is a 17%improvement on the previous year.

The way the industry approachedtranslations continues to change. A greater reliance on technologyand tighter margins is impacting onthis area of the company. Weexperienced a decrease in totalwords translated this financial yearbut were pleased that 95% of all

CEO’S REPORT

translations were delivered by aNAATI 3 accredited languageprofessional. This is also animprovement on the previous year

We needed to ensure we had theproper resources to respond tochanging business needs. A review of our staffing structureidentified some areas that could beimproved and potentialopportunities that could bepursued. Consequently a numberof staffing changes were introducedto enhance service delivery.

We re-engineered our after hourssupport services ensuring that wemaintain quality service provision24 hours a day 7 days a week. We undertook a minor staffingrestructure in our translationsdivision recruiting an experiencednew Translation Coordinator, whichbrought this section in line with thecurrent structure of the company.

Also, for the first time, wededicated resources to therecruitment of a staff memberresponsible for the recruitment andmanagement of languagecontractors. The increase indemand for our interpreting servicerequired this attention. As a resultwe recruited 271 new languageprofessionals; one of the highestincreases VITS has achieved in anyone year.

We expect changes to continue inthe industry over the next 12months and beyond. This willprovide challenges as well asopportunities from which VITS cancontinue to grow and evolve.

For the third year in a row VITScommitted significant resources to enhancing our technologyincluding a major upgrade of ourtelephony infrastructure

VITS successfully completed anupgrade to the telecommunicationsplatform which supports our entirebusiness operation, including ourtelephone interpreting service. Thesuccessful upgrade served twopurposes: we updated our existingon-site PBX/IVR competencies, aswell as rebuilding our telephoneinterpreting service. This was themost significant technologicalchange for the company in over a decade.

While we implemented variousinternal enhancements to ourservice, we also strengthened ourexternal relationships. For example,we continued to play an importantrole in supporting a number of keyindustry initiatives.

VITS was a sponsor of theAustralian Institute of Interpretersand Translators Annual Awardsprogram rewarding excellence inthe language services industry. Wealso participated in a number of keyindustry advisory bodies, includingthe Regional Advisory Committee ofthe national industry accreditationbody, NAATI and the ProgramAdvisory Committee of the RMITlanguage services program.

Following a year of major change Inow believe VITS LanguageLink isin a position to grow further as aleading provider of languageservices in the Australian market. A new business model andcompetitive pricing framework,together with industry leadingtechnology, will enable us tocontinue the growth we haveexperienced over the last two years.

In August of 2012 VITS will move tonew premises in Bourke Street andwill launch new branding to the

market. This will begin a new andexciting phase for the company.

In April 2012 the majority of theBoard of Directors retired from thecompany. I would like to take thisopportunity to thank the formerChairman, Alex Andrianopoulos,and the Board of Directors for theircontinued support of me and thecompany over the last two and ahalf years. Many of the retiringboard members have been involvedwith VITS for a number of years.

I look forward to a productive andexciting period ahead under thestewardship of the newChairperson the Hon PhilHoneywood and the new VITSBoard of Directors.

Many thanks to the staff of VITSwho have again assisted thecompany to move through both themajor changes outlined previouslyand in achieving excellent results.

Finally, a special thanks to the manyhundreds of language contractorswho deliver VITS’ services. Yourwork underpins the success ofVITS and remains critical inensuring that all Victorians haveequal access to important services.

George Bisas

CEOVITS LanguageLink



CHAIRPERSONHON PHIL HONEYWOODPhil Honeywood was elected to StateParliament in 1988 and retired frompolitics at the 2006 election. He servedas Minister for Tertiary Education andTraining and Minister Assisting thePremier on Multicultural Affairs from1996 to 1999. From the time MrHoneywood was a Rotary Exchangestudent for 12 months in Tokyo, Japan,he has maintained a strong interestand involvement in CALD communityissues and foreign languages. AsParliamentary Secretary forMulticultural Affairs from 1992 to 1996he was also instrumental inestablishing VITS. Phil has maintainedhis involvement in CALD communitiesthrough his current volunteer Boardmemberships of the Lord Mayor’sCharitable Foundation and theBennelong Foundation. He is alsocurrently the National ExecutiveDirector of the International EducationAssociation of Australia (IEAA), thepeak industry association forinternational education.

DEPUTY CHAIRPERSONMR JOHN WILLIAMS PSMJohn retired from the Australian PublicService in December 2008 after 44years of service in the Department ofImmigration and Citizenship. He heldsenior positions in the Department inCanberra. other parts of Australia andoverseas. John was awarded a PublicService Medal (PSM) in the QueensBirthday Honours list in 2008, for hisoutstanding contribution to thesuccessful settlement of establishedand emerging migrant communities inAustralia. Since retirement Johncontinues to be involved in working withmulticultural communities.

GEOFFREY GOUGH(B ED. GDSE. DIP T)

Geoff has extensive experience inEducation and Local Government beinga councillor at Manningham for 16years and mayor for 4 terms. He is vicepresident of the Municipal Associationof Victoria and member of the

Australian Local GovernmentAssociation Board. As a specialeducation professional he worked inareas of integration and social/emotional disorders runningintervention units and specialistservices for schools in the EasternMetropolitan Region of Melbourne. He currently runs his own educationconsultancy and professionaldevelopment business. He hasexperience on a range of communityboards and government advisorycommittees and boards.

MS KATRIN WILLSFM, BACHELOR OF BUSINESS(MANAGEMENT)

Katrin Aladjova- Wills is the co-founderand Director of All Australia Imports PtyLtd and StreetStar Cosmetics. Shecontinues in executive roles at thesecompanies and maintains businessactivities in Europe and Asia. She hasover 20 years experience ininternational trade and the retail andfashion industries.

Katrin is a former dual World Championof chess. She is also triple AustralianChampion. In 1986 she was awardedthe International title of FIDE Master bythe World Chess Federation, FIDE(Fédération Internationale des Échecs).Her passion for the game of chess isshown in her commitment as a formerHon President of Chess Victoria (CV)and continues support as anAmbassador to CV. Her achievementsin chess are also recognised around theworld. In Bulgaria she was awardedrecognition as one of the top 100 mostfamous sportspeople from Bulgaria inthe last century.

Katrin looks forward to providing theBoard her management and businessexpertise, underlined by hercommitment to Multicultural affairs.

MR ARTHUR APOSArthur is a partner of global law firmAshust, practicing corporate andcommercial law. Arthur heads Ashurst’sMelbourne and Perth corporate teamsand is a member of Ashurst’s audit &risk committee. Arthur has acted asgeneral counsel for a large mutilational,

gaining first hand insights into the broadrange of issues which confrontbusinesses. Arthur undertakesextensive pro bono legal work for arange of non for profit organizations.

VOULA MESSIMERI AMVoula is Executive Director of AustralianGreek Welfare Society (AGWS),immediate past Chair and now HonPresident of the Federation of EthnicCommunities’ Councils of Australia(FECCA). She has served in leadershippositions on a number of communitymanagement bodies and on Boardssuch as RMIT University Council andRMIT Training and is a current Boardmember on the Rockwell Foundation.She has been appointed on MinisterialState and Federal advisory structuresacross diverse areas, including health,ageing, income support, and mediaand more recently as a member on theAustralian Multicultural Advisory Council(AMAC) until 2011. Voula was inductedinto the Victorian Honour Roll ofWomen and recognised under theOrder of Australia for her contribution torefugees, migrants and women.

BOARD OF DIRECTORS

BOARD MEMBERSUNTIL 23 APRIL 2012

HON. ALEXANDRIANOPOULOS –CHAIRPERSON

MARINA WILLIAMS-WYNN(B.COM, MA, GAICD)

MIRIAM SUSS (B.A MSW)

GRAHAME LEONARD AM (B.A (HONS) LLB, CA, CPA, FAICD (DIP),AFAIM)

OZAN IBRISIM (B.COM, B.ECON)

(UNTIL 27 OCTOBER 2011)

Who Are We?

VITS LanguageLink is a VictorianGovernment owned GovernmentBusiness Enterprise, with over 30years experience as a specialistlanguage service provider.

We have a long history of providinglanguage services to culturally andlinguistically diverse (CALD)Victorians, having evolved from theVictorian Ethnic AffairsCommission, established in 1978.

We compete in an open marketwith other commercial languageservice providers for both clientsand specialist language servicepractitioners.

As a Government owned businessenterprise we are managed by aGovernment appointed Board ofDirectors that oversees thegovernance structure.

Our key business principles:

> We will continue to be aprofitable, self-fundingorganisation committed toresponsible financialmanagement and ethicalbusiness practice

> We will maintain and whereverpossible enhance existingservices and develop and marketnew products

> We will continue to grow ourbusiness by diversifying ourclient base and creating newmarkets for our whole suite ofservices

> We will continuously realign ourorganisation’s capabilities tomeet new service demands andachieve new growth targets

> We will continue to be anemployer of choice by providingfair remuneration and a safeworking environment

Employing information technologyas our key business driver is criticalfor VITS’ innovation strategy. Ouruse of IT to date has resulted in aunique range of solutions, alldesigned to assist clients deliverpremium services to CALDconsumers in an effective andefficient manner.

However our greatest resource isour people.

A measure of our disciplined focusand our commitment to maintaininghigh standards in the delivery of ourservices is that we recruit andprovide Professional level NAATIaccredited interpreters andtranslators wherever a language istested to this level – an increasinglyimportant competitive edge in agrowth industry.

An established database of almost1500 contract interpreters andtranslators across Australia (over80% based in Victoria), coveringover 140 languages, ensures thatVITS is able to meet the diverseneeds of its many clients.

Our current clients include VictorianGovernment departments andagencies, Federal Governmentdepartments and agencies, non-profit and community basedorganisations, as well as small tolarge commercial entities.


VITS IN PROFILE


Our Business

VITS’ core business is interpretingand translating.

However we have a diverse rangeof services that can assist ourclients to communicate effectivelywith culturally and linguisticallydiverse Australians. Our currentservices include:

ON-SITE INTERPRETINGReliable service which operates 24hours a day, 7 days a weekincluding public holidays.

PRE-RECORDEDMULTILINGUALINFORMATION SERVICESVITS’ pre-recorded informationservice allows clients to have theirown pre-recorded information inover 100 languages with directaccess to an interpreter if requiredat any point of the call. (Exclusive to VITS)

TELEPHONE INTERPRETINGSophisticated Interactive VoiceResponse technology providingtelephone interpreters in over 115 languages.

CONFERENCEINTERPRETINGSpecialist conference interpreting(simultaneous and consecutivemodes).

TRANSLATIONSCompetency in highly specialisedand technical areas includingHealth, Mental Health,Legal/Justice, Government,Education, Community & Not-For-Profit. We also provide acomprehensive service in thetranslation of personal documents.

FOCUS TESTINGFacilitator of community focustesting of content pre and posttranslation.

GRAPHIC DESIGN (DESKTOP PUBLISHING)Provision of design services in over100 languages for print or web.

TRAINING ANDCONSULTANCYDelivery of training specific to client requirements andconsultancy services.

AUDIO/VISUALExpert production of multilingualaudio and video material.


Good Governance

VITS is currently governed by a 6-member Board of Directors,appointed by the StateGovernment, which reports to theMinister for Multicultural Affairsand Citizenship as well as theTreasurer.

Two Committees support the Board:

(a) Risk Management and AuditCommittee, comprising threemembers of the Board, meetsregularly to ensure thefinancial integrity and probityof all strategic directions andkey business decisions, and

(b) Human Resources andRemuneration Committeemeets regularly to consider arange of human resourcesand staff related issues. Thecommittee also undertakes anannual review of the ChiefExecutive Officer’sperformance and makerecommendations to theBoard on appropriateremuneration.

BOARD MEETINGS COMMITTEES

Board Member Eligible Attended Eligible to attend to Attend Attended

Alex Andrianopoulos (Until 23 April 2012) 9 9 2 2

Voula Messimeri 10 9 2 2

Grahame Leonard (Until 23 April 2012) 9 8 3 3

Marina Williams-Wynn (Until 23 April 2012) 9 9 3 3

Miriam Suss (Until 23 April 2012) 9 9 2 2

Ozan Ibrisim(Until 27 October 2011) 4 3 2 2

From 24 April 2012

Phil Honeywood 1 1

John Williams 1 1

Arthur Apos 1 1

Geoff Gough 1 1

Katrin Wills 1 1

Industry in Transition

In May 2011 the Federal Court ofAustralia brought down a rulingagainst a national language serviceprovider which was to have asignificant impact on the languageservices industry Australia wide. Itwas also a decision for which VITSneeded to respond effectively andthis required a significant amount ofresources and energy during the2011/12 financial year.

As a result of the court decisionmany in the industry shifted theirposition on the payment of thesuperannuation levy for contractedlanguage professionals. The Boardof Directors of VITS LanguageLinkmade a decision at its September2011 meeting to adopt a newbusiness model where we began topay superannuation to languagecontractors. The decisionacknowledged that the languageservices industry has accepted the principle of paying thesuperannuation levy to languageprofessionals.

The decision to commence thepayment of superannuation from 1January 2012 required VITS toreview its current business model.During the last quarter of 2011 acomprehensive review of our pricingframework and business modelwas undertaken by the company.

As a result of the review a newmodel was introduced to marketfrom the beginning of 2012. VITSretained its independent contractormodel of service delivery.

Significant internal changes wererequired to implement the newbusiness model at VITS, includingsystem changes. A great deal ofwork was undertaken by thefinance division of VITS to ensurethe many hundreds of eligiblecontractors began to receivesuperannuation.

The industry continues to change.VITS is confident that it is wellplaced to respond to thosechanges and any other challenges itmay face in the next few years.


VITS Service Quality and Reliability

At VITS we aim to provide thehighest possible quality of languageservices to our clients each andevery time. Everyone has anindividual responsibility for ensuringthe quality and reliability of ourservices, so that our clients canhave confidence in our services.

To achieve this, VITS LanguageLinkis committed to:

> An effective Quality ManagementSystem which meets therequirements of ISO 9001 and iscommunicated, understood andused throughout our organisation

> Continual improvement of allaspects of our system, includingcontinual skills development andquality methods and practice

> Fully documenting our standardsand work practices

> Ensuring suitably qualified, skilledand experienced people

> Identifying, reporting andresolving all service failures orissues and taking action toprevent them recurring, and

> Regular reviews of our systemand identifying issues of strategicimportance for the ongoingconsideration of the Board ofDirectors and management.

In the 2010/11 we continued toimplement a range of initiatives toenhance our reliability and the VITSQuality System. We:

1. Enhanced our translationquality management framework

2. Introduced a translationprocess checklist

3. Restructured translation staffingunit to align with the wholeorganisation

4. Implemented a new telephonyinfrastructure leading tosignificantly enhanced system,including performancemanagement and reporting

5. Installed a new telephony IVRenabling more intelligent callrouting and significantly fasterconnection times

6. Increased user friendly clientaccess options

7. Enhanced our operationalreporting capacity

8. Maintained a Risk StrategyFramework and Register

9. We re-engineered our afterhours support processes

10. Undertook external auditing by Victorian Auditor General’s Office

Customer Complaints

We value feedback on any aspectof our services, both positive and negative.

If a complaint is made, we aim to resolve it promptly and fairly, and identify where improvement is required.

We apply a consistent andsystematic approach to complaints,based on the principles of beingclient-focussed, accessible, open,responsive, objective andaccountable. Information relating tocomplaints is kept confidential andall significant complaints arereviewed by the CEO.

Complaint handling is also a veryimportant part of any company’squality management system.

Our Customer Service Charter (seeinside cover of this report) outlineswhat customers can expect fromVITS LanguageLink in relation toservice delivery.

During the last financial year werecorded 216 complaints fromcustomers relating to a number ofaspects of our business. Thisrepresents less than 0.5% of allservice transactions.

Complaints related to theattendance and performance ofinterpreters, the responsiveness ofour internal staff and the quality ofour telephone interpreting services.

Our Client Complaint Policy aims toencourage clients to raise concernswith us. A copy of the policy isavailable to the general public.

Financial management

We report as required under theState Owned Enterprises Act andprovide ongoing reports to theCommercial Advisory ServicesGroup within Treasury. Our annualaccounts are audited by the AuditorGeneral to ensure that they complywith the relevant accountingstandards required by theprofessional accounting bodies, aswell as the Victorian Government.

As well as submitting annualcorporate and business planningdocuments, VITS also reportsregularly throughout the year toboth the Minister for MulticulturalAffairs and Citizenship and theTreasurer on progress towardsmeeting the financial andproductivity targets set in theagreed plans.


ORGANISATIONALSTRUCTURE

CEO

VITS Board of Directors

Client ServicesManager

Operations Manager

IT/Systems Manager

Finance Officer

PA/Reception

InterpretingCoordinator

ContractManagement

Officer

TranslationsCoordinator IT Officer AR/AP Clerk

Casual CSOX5

CSOX2

Permanent CSOX2

For the third year in a row wehave experienced an increase indemand for our services lead by asignificant increase in demand foron-site interpreting. We believethe increase is reflective of themany changes VITS hasundergone which have resulted ina more responsive, qualitymanaged service.

On-site interpreting has seen amarked increase in demand. Wehave experienced a 21% increasein demand for on site interpretingwhen compared to last year.While this has presented thecompany with some challengeswe are now in a better position torespond effectively.

RESULTS AT A GLANCE

On Site Interpreting> Over 92% of all requests received

were successfully serviced.

> 21% increase from the previousyear for on-site interpretingrequests.

> 63% of all interpreting requestswere self-allocated bycontractors using our PUSHdesktop messaging system. Thiscompares to 43% last year.

> 40% of all new interpretingrequests were lodged by clientsusing our Online Client Portalcompared to 36% last year.

We have seen significant increaseddemand for on-site interpreting in anumber of languages, many of themfrom new and emergingcommunities. The top ten increasesin demand have occurred in thefollowing languages;

Chin, Chin Hakka, Hazaragi,Persian, Macedonian, Oromo,Chaldean, Kurdish and Swahili.These languages experienced the

greatest increase in demand for on site interpreting during thisfinancial year.

Top ten languages requested foron-site interpreting as a total of alljobs were: Vietnamese (12% of totalonsite services), Mandarin (9%),Arabic (8%), Dari (6%), Greek (5%),Turkish (5%), Persian (4%),Cantonese (3%), Italian (3%) andMacedonian (2%).

Telephone Interpreting> 93% of all telephone interpreting

calls connected in under 3 minutes

> An additional 261 interpreterswere added to our telephoneinterpreter service

In 2011/12 VITS introduced a newtelephony infrastructure that hasgreatly enhanced the efficiency ofour telephone interpreting services.(For full details see technologysection of this report.) As a result ofthis systems enhancement 93% ofcalls connected to interpreterswithin 3 minutes. This represents asignificant improvement on last yearwhen only 76% of calls connectedto an interpreter in 3 minutes.

Total telephone interpreter calls weremarginally less than the previousfinancial year where figures wereincreased by VITS providingtelephone interpreting services forboth the State and Federal elections.However month on month we areexperiencing over 5% increase sincethe introduction of the new system inlate November 2011.

Top ten languages requested fortelephone interpreting as a total of alljobs were: Mandarin (18%),Vietnamese (17% of the totaltelephone services), Arabic (11%),Cantonese (10%), Greek (8%), Italian(4%), Russian (4%), Turkish (3%),Spanish (3%) and Korean (2%).

Translations> The total words translated in

2011/12 were 3,029,446.

> 95% of all translations wereundertaken by NAATI level 3 orabove. This compares to 93%last year.

VITS experienced a 9% increase inretail translations and a 2% increasein translations from the Departmentof Immigration and Citizenship.

Top ten languages requested fortranslations as a total of all jobswere: Persian (16% of the totaltranslation requests), Chinese(14%), Arabic (12%), Dari (10%),Vietnamese (6%), Russian (4%),Spanish (3%), Italian (3%) and Malay(3%).

During this financial year VITScontinued to deliver innovativetranslation projects to market.They included:

SYSTEMS BASED AUDIOTRANSLATION PROJECT

In April 2011, VITS embarked on alarge audio translation project for amajor State Government client.VITS was engaged to translate,independently check, audio recordand audit check post recording toensure that translated cells loadedonto client’s final networked systemmatched corresponding audio files.

The successful completion of thisproject in June 2012 has confirmedVITS’ ability to deliver on large scaleprojects involving many facets oftranslation, including audit review ofall translated material enabling VITSto provide the highest level of qualityto our client consistent with theVITS Quality Management System.


OPERATIONAL PERFORMANCEKey Performance Indicators >


Business Growth >

The company saw significantgrowth in sales during the 2011/12financial year. We achieved year onyear an 18.5% increase in revenuefrom sales. Whilst some of this canbe attributed to the decision toincrease prices from January 2012the majority of the increase hasoccurred largely as a result of anincrease in demand for on-siteinterpreting services.

Revenue from onsite interpretinghas increased by 34% whencompared to last year. VITS hasbecome the preferred supplier ofinterpreting to the Victorian healthsector while continuing to deliverquality services across all areas ofGovernment at the Federal, Stateand local levels.

Key initiatives such as theintroduction of a Client ServicesManager, the implementation of anew telephony infrastructure andproactive workforce recruitmenthas enabled us to grow thebusiness and maintain customerrelationships which hasunderpinned our strong growthperformance.

The major changes to the industryduring this financial year impactedon the way we delivered ourservices. There were also costsassociated with reorganising ourbusiness model to meet thischanged environment. We were stillable to achieve the best profitoutcome in four years despitechanges and associated costs.

A reported net profit of $344,718was an increase of 29% on theprevious financial year and is ourbest outcome since the 2007/08financial year.

In 2011/12 we registered 138 newclients. These clients were a mix ofState & Federal Governmentdepartments as well as not-for-

profit and commercial/privateclients. The greatest growth in newclients came from other StateGovernment agencies particularlyin the health sector and 18% ofnew clients came from thecommercial sector.

Our activities included:

> Extension of two majorVictorian Government servicecontracts.

> New Federal Governmenttranslation contract for irregularmaritime arrivals.

> A range of highly technicaltranslation and audio projects.

> Targeted promotions withnational industry andprofessional associations.

> Expansion within Victorianhealth sector.

A new logo and branding wasdeveloped and will be launchedwhen we move to our newpremises in late August 2012.

A particular focus for this year wasthe promotion of our retailtranslation services to key marketsin Victoria. Targeted promotionalactivities including sponsorship ofthe international student help deskat Melbourne airport contributed toan increase in sales in this area.

TRAININGDemand for training from clientscontinued in 2011/12 with requestsfor the following programs includingthe re-introduction of a trainingpackage previously delivered byVITS in relation to bi-lingual staff.

The new training course introducedis entitled the Effective Use of Bi-lingual Skills.

This training is designed to assistlanguage aides in defining their

bilingual role within theirorganisation with a cleardifferentiation between the role ofan interpreter and language aide.The program aims to assistlanguage aides in assessing theirown level of effective bilingualismand create awareness of theappropriate parameters withinwhich language aides are engaged.

The other two types of trainingprograms delivered were:

An Introduction to Working with Interpreters This training assists participants towork more effectively withinterpreters by employingappropriate skills and techniqueswhen dealing with people fromlinguistically diverse backgrounds.

An Introduction to Cross Cultural CommunicationThe training assists participants towork more effectively within a crosscultural communication setting byemploying appropriate knowledgeand various communicationstrategies for engaging with peopleor clients from culturally andlinguistically diverse backgrounds.

Sessions were provided as part ofa broader contract or wereavailable for purchase as astandalone service. All sessions aredelivered by Cert IV qualifiedworkplace trainers.


Workforce Management >

STAFFIn response to the increaseddemand for our language serviceswe actively recruited to both ourcontractor workforce and internalcustomer service teams in2011/12.

To assist with the process ofenhancing the delivery or ourtranslation services we created anew position in our operationsteam. A new position of TranslationCoordinator was created. Werecruited a person with extensiveindustry experience who hasbegun a transformation of this areaof our company.

A Client Services Manager wasappointed internally, withresponsibility for managingrelationships with existing clients—a core part of VITS’ growthstrategy. Clients now have a directcontact with who they can discussservice issues.

For the first time a dedicatedresource was committed tocontractor recruitment andmanagement. This enabled thecompany to actively recruit, inductand develop our significantcontactor workforce.

We maintained regularperformance developmentmeetings with staff as well asstructured one-on-one meetingsbetween supervisors andemployees. A major investmentcontinues to be made in staffdevelopment and training. As thelanguage services industrycontinues to grow, change anddiversify VITS needs to maintainthe appropriate skills baseinternally to respond.

CONTRACTORS

Contractor Recruitment and Management

Contractor recruitment remained acritical part of ensuring that wecontinue to service the increasingdemand for services provided byVITS. Our team of independentcontractors are an integral part ofthis business. The companyremains committed to ensuring fairand equitable conditions andremaining responsive to the needsof our large contractor base.

For the first time at VITS wededicated specific resources to therole of contractor recruitment andmanagement. This enabled us toactively seek out languageprofessionals, in particular, forlanguages for which we often havedifficulty servicing our clients.

We continued to deliver a range ofinformation sessions to contractorswhich were directed at ensuringVITS contractors are informedabout VITS, its policies, technologyand processes. The program, nowin its second year has greatlyenhanced the quality of servicedelivery to VITS’ clients.

As part of its new business modelthe company began to paysuperannuation contributions onbehalf of its eligible contractlanguage professionals for workcompleted after 1 January 2012.This decision by VITS LanguageLinkreflected our continuing commitmentto match or better engagement ratesoffered by our competitors.

The second annual contractorsurvey was distributed to allindependent contractors. We aimto use this information to improvethe nature of our products, ourcustomer service and processes onan ongoing basis.

VITS is fully committed to ensuringfair and equitable conditions andidentifying professional developmentopportunities for our independentcontractors. We believe these arecritical components to attractingand retaining appropriatecontractors to the profession. VITS,as the Government owned provider,also has a responsibility in raisingawareness of the important roleinterpreters play in the provision ofservices.

We continued to recruit newcontractors for both established andrare languages, but also placed agreat deal of emphasis on recruitingfor languages where we have beenunable to meet service demands.

In 2011/12 we recruited a total of271 new contractors where 265undertake interpreting and 94 arealso translators. They worked in 68languages. This compares to 146 inthe previous financial year. Of thenew recruits, many were rare andemerging language practitioners.

The following languages weretargeted for recruitment:

Acholi, Albanian, Amharic, Arabic,Assyrian, Auslan. Bari. Bengali,Bosnian, Bulgarian, Burmese,Cambodian, Cantonese, Chaldean,Chin, Chin Hakka, Chinese,Croatian, Czech, Dari, Dinka,Dutch, Falam, French, German,Greek, Hazaragi, Hindi, Indonesian,Italian, Japanese, Juba Arabic,Kannada, Karen, Kinyarwanda,Kirundi, Korean, Kurdish,Macedonian, Mandarin, Marathi,Mizo, Moldavian, Nepali, Nuer,Pashto, Persian, Polish,Portuguese, Punjabi, Romanian,Russian, Samoan, Serbian,Shanghainese, Sinhalese, Spanish,Sudanese, Swahili, Tamil, Tedim,Teocheow, Thai, Tigrigna, Turkish,Urdu, Vietnamese and Zomi.


We recruit contractors through arange of channels which include(but are not limited to):

> Partnership arrangements withvocational and tertiaryinstitutions

> Referrals and leads

> Contact with industryassociations including NAATIand AUSIT

> Media advertising

The recruitment of languageprofessionals from older,established languages continues tobe a challenge for VITS. Feweryounger Victorians from thesebackgrounds are opting to enterthe profession.

VITS continues to work withtraining institutions and governmentbodies to increase awareness andrecruitment towards establishedlanguages.

our valuesAt VITS we:

> are proud to deliver a proactive and quality service

> embrace and drive change

> create an enjoyable workplace and celebrate success

> are adventurous, creative, and open-minded

> support each other and pursue growth and learning

> build open and honest relationships withcommunication

> build a professional, positive team

> treat our clients, colleagues and contractorsat all times fairly, and with respect and dignity.

> are passionate, committed and determined

> reward and recognise achievement


Technology in Business >

For the third year in a row aconsiderable amount of the pastyear was spent developing andinvesting in technology.

The most important step in thisprocess occurred in the last 12months. VITS successfullycompleted an upgrade to thetelecommunications platformwhich supports our entire businessoperation, including our telephoneinterpreting service. Thesuccessful upgrade served twopurposes: we updated our existingon-site PBX/IVR competencies, aswell as rebuilding our telephoneinterpreting service.

Updating our existing on-sitePBX/IVR competencies enabledVITS to offer better tailoredcustomer service to its clients andcontractors by more sophisticatedcall management, includingintelligent routing and overflowmanagement, as well asmanagement reporting.

The implementation of the newtelephony infrastructure hasalready begun to bring benefits toVITS. It has immediatelyaddressed the limitations of ourold system and has enabled us tosignificantly improve the telephoneservices we provide to existingclients and offer an innovativeapproach to future new business.

Connections times have improveddramatically since the installationof the new system in late 2011.Prior to the upgrade we wereconnecting 76% of telephoneinterpreting calls within 3 minutes.Since the installation of the newtechnology this figure hasimproved to 93% of callsconnected within 3 minutes andover 98% within 5 minutes.


Other benefits of the new systeminclude:

> Fully automated but withaccess to a live operator

> Unlimited user functionality

> Improved reporting andinvoicing capability

> Extensive data collection facility

> Highly adaptable system thatgrows with our business

> Fully flexible and compatiblewith other systems

Other important businesstechnology enhancements in the2011/12 financial year were:

a) Significant upgrades to theNetwork Server environment,including:

– Installation of a new hostvirtual server, replacingoutdated servers

– New email server andupgrade to software, enabling greater emailcapacity and reliability

– New database server andupgrade to software, enablinggreater capacity, reliabilityand processing speed for theBooking System.

– New UPS (UninterruptablePower Supply), enablingorderly shutdown of bothbusiness systems andtelephony systems in a power outage.

– Upgrade to network switchesand firewalls, providing higherlevels of security and routingcapabilities.

b) Testing and Implementation ofthe new Telephony systems inparticular:

– Telephone and fax systems

– Telephone Interpreting

– Multilingual information lines

c) Inclusion of TelephoneInterpreting data intoconsolidated Client andContractor reporting

d) The synchronisation ofdatabases for Booking systemand Telephone Interpreting forease of maintenance and data accuracy.

e) Upgrades to financemanagement systems which included:

– Implementation of enhancedenquiry and reporting facilities

– Further technical changeshave been identified to enablethe booking and financialmanagement systems toidentify and processcontractor superannuationpayments.

We saw the finalization of aBusiness Technology reviewspanning the entire business andall operational/managerialfunctions. The result was thedevelopment of a TechnologyRoadmap which outlines thesuggested technologies to beimplemented by the companywhich are closely aligned to thebusiness strategy of VITS.

The Roadmap also relates closelyto the major trends in the languageservices industry through theincreased adaption of IT solutions.

The final recommendations of theroadmap involve the selection,procurement and implementationof a number of key technologies tosupport VITS’ continued growthover the next few years:

> Implement a Web ContentManagement System

> Select and Implement ERP(Enterprise resource planning)which integrates internal andexternal managementinformation across the entireorganization.

> Implement HRM systemincluding considering thefeasibility of an employee selfservice approach

> Implement an Electronicdocument and Recordsmanagement system


INVESTING IN OUR INDUSTRY & THE COMMUNITY

In 2011/12 VITS maintained itscommitment to investing in thebroader language service industry.We believe our support, bothfinancial and non-financial, not onlypositively promotes our culturallyand linguistically diverse communitybut also ultimately enhances thedelivery of language servicesin Victoria.

Our CEO continued his importantinvolvement in the RMIT ProgramAdvisory Committee that providesadvice and guidance on thedevelopment of Language Servicesprograms at RMIT.

Staff from VITS continued to presentregularly at both Monash and RMITlanguage services professionaldevelopment programs increasingawareness among students ofissues in the industry as well asfuture employment opportunities.

VITS continued to support the peakindustry body, the AustralianInstitute of Interpreters andTranslators (AUSIT), and we were a sponsor of their Annual Awards night in Canberra inNovember 2011.

We also provided financial supportfor a professional developmentretreat organized by the AustralianSign Language Interpreters’Association’s (ASLIA). Australiansign language remains a serviceregularly demanded of VITS.

We were proud to sponsor,exclusively, a national policeinterpreting conference organisedby RMIT also in November 2011.The head of translating andinterpreting at RMIT welcoming thesponsorship provided by VITS andpointed out that “interpreters playan increasingly vital role in nationaland global security settings”.

New Orleans 2012

In May the CEO of VITSLanguageLink attended theAssociation of LanguageCompanies (ALC) annualconference in New Orleans. ALC isa US based national tradeassociation representingbusinesses that provide translation,interpreting, localization, andlanguage training services.

The Association was founded forthe purpose of delivering timelyinformation and tools to membersto ensure that every companydelivers the highest qualitytranslation and interpretationservices as well as generates moresales and maximises profits.

Australia does not yet have anindustry association representingthe views of businesses operatingin this area.

The theme of the conference was“Growing Strategies for Success”and offered insights into bestpractice and current trends ininterpreting and translation servicedelivery across the United States. Italso offered VITS the opportunity tolink with many overseas providers.

There were 146 language servicecompanies represented at theconference, the majority fromacross the USA. Other companiesfrom Europe, Asia and the MiddleEast were also represented.

Common Sense Advisory

During this financial year VITScommenced a very productiverelationship with Common SenseAdvisory. They are an independentUS-based market researchcompany which specialises in thelanguage services industry. Theyaim to help companies profitablygrow their international businessesand gain access to new marketsand new customers. Their focus ison assisting their clients tooperationalize, benchmark,optimize, and innovate industrybest practices in translation andinterpreting.

We hope to work collaboratively onan important initiative in the nextfinancial year.

The Federal Race DiscriminationCommissioner sought the views ofVITS in relation to thedevelopment of their anti-racismcampaign. The availability ofquality language servicescontinues to be an issue raised atmany of the consultation sessionsconducted by the AustralianHuman Rights Commission.

Once again, VITS was proud to bea key supporter of the VictorianMulticultural Commission’s CulturalDiversity Week and remains amember of the NationalAccreditation Authority forTranslators and Interpreters (NAATI)Regional Advisory Committee. Weparticipated in the consultationsundertaken as a part of a review ofthe NAATI accreditation system.

In 2011/12 VITS sponsored for thefirst time the International StudentWelcome Desk at Melbourneairport. An important initiative of theCity of Melbourne the program in2012 aims to distributeapproximately 15,000 welcomepacks, and provide assistance to3000 international students arrivingat the airport. Access to qualitydocument translation services is animportant need for many studentsarriving to study in our city.

The Department of Industry andInnovation invited our CEO to be apart of the Victorian SkilledMigration Program and assist inevaluating state-sponsorshipapplications for residence.

VITS DEVELOPSINTERNATIONAL LINKSTwo important initiatives saw VITSLanguageLink reach out to theinternational language servicescommunity during this financial year.


AUDITEDFINANCIALSTATEMENT

VITS LanguageLink FINANCIAL STATEMENT 2011/2012

FOR THE YEAR ENDED 30 JUNE 2012

PAGE

Comprehensive Operating Statement for the year ended 30 June 2012 22

Balance sheet as at 30 June 2012 23

Statement of changes in equity for the year ended 30 June 2012 24

Cash flow statement for the year ended 30 June 2012 24

Notes to the financial report for the year ended 30 June 2012 25

Note 1 Summary of significant accounting policies

Note 2 Sale of services

Note 3 Employee expenses

Note 4 Other operating expenses

Note 5 Receivables

Note 6 Plant, equipment & intangible assets

Note 7 Payables

Note 8 Borrowings

Note 9 Provisions

Note 10 Superannuation

Note 11 Notes to the statement of cash flows

Note 12 Responsible Persons

Note 13 Commitments for expenditure

Note 14 Remuneration of auditors

Note 15 Contingent assets & contingent liabilities

Note 16 Financial instruments

Statement by Directors and Management 33


VITS LanguageLink COMPREHENSIVE OPERATING STATEMENT


Note(s) 2012 2011$ $

INCOME FROM TRANSACTIONS

Sale of services 2 9,006,292 7,599,889

Interest 22,621 26,983

Total income from transactions 9,028,914 7,626,871

EXPENSES FROM TRANSACTIONS

Cost of services 6,614,083 5,535,796

Employee expenses 3 1,167,815 1,045,456

Supplies and services 768,759 697,701

Depreciation and amortisation 6 95,014 60,093

Interest expense 12,570 654

Other operating expenses 4 26,095 23,184

Total Expenses from transactions 8,684,336 7,362,884

Net result from transaction (net operating balance) 344,578 263,987

OTHER ECONOMIC FLOWS INCLUDED IN NET RESULT

Net gain/(loss) on non-financial asset 140 580

Total other economic flows included in net result 140 580

Net result 344,718 264,567

COMPREHENSIVE RESULT 344,718 264,567

The comprehensive operating statement should be read in conjunction with the accompanying notes.


VITS LanguageLink BALANCE SHEET

AS AT 30 JUNE 2012

Note(s) 2012 2011$ $

ASSETS

Financial assets

Cash 543,656 648,486

Receivables 5 1,671,245 1,276,081

Total financial assets 2,214,901 1,924,567

NON-FINANCIAL ASSETS

Prepayments 40,043 22,223

Plant, equipment & intangible assets 6 751,126 408,749

Total non-financial assets 791,169 430,972

Total assets 3,006,070 2,355,539

LIABILITIES

Payables 7 586,113 419,033

Unearned Income 51,870 65,992

Provisions 9 166,873 152,008

Borrowings 8 307,361 90,000

Total liabilities 1,112,216 727,033

Net Assets 1,893,854 1,628,506

EQUITY

Contributed capital 400,000 400,000

Accumulated surplus 1,493,854 1,228,506

Net worth 1,893,854 1,628,506

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


VITS LanguageLink STATEMENT OF CHANGES IN EQUITY


Accumulated Surplus Contributions by Owner Total

Balance at 1 July 2010 963,939 400,000 1,363,939

Net result for the year 263,987 - 263,987

Other comprehensive income for the year 580 - 580

Balance at 30 June 2011 1,228,506 400,000 1,628,506

Net result for the year 344,578 - 344,578

Other comprehensive income for the year 140 - 140

Dividend paid (79,370) - (79,370)

Balance at 30 June 2012 1,493,854 400,000 1,893,854

VITS LanguageLink CASH FLOW STATEMENT


Note(s) 2012 2011$ $

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers 8,597,147 7,621,478

Payments to suppliers & employees (7,761,640) (6,771,332)

GST paid to the ATO (650,988) (564,652)

Interest received 22,621 26,983

Interest paid (12,570) (654)

Net cash inflow from operating activities 11 194,570 311,823

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for Infrastructure (93,933) -

Payments for Telecommunication/IVR System (293,796) (79,133)

Payments for Booking System (45,136) (36,511)

Payments for Office equipment and Furniture (4,527) (5,377)

Net cash used in investing activities (437,391) (121,020)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from TCV Loan 217,361 90,000

Dividend paid (79,370) -

Net cash used in financing activities 137,991 90,000

Net (decrease)/increase in cash held (104,830) 280,803

Cash at the beginning of financial year 648,486 367,683

Cash at the end of financial year 543,656 648,486

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

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


VITS LanguageLink NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Statement of complianceThese financial statements have been prepared inaccordance with the Financial Management Act 1994 andapplicable Australian Accounting Standards (AASs) whichincludes interpretations issued by the Australian AccountingStandards Board (AASB).

b) Basis of Accounting preparation and measurementThe accrual basis of accounting has been applied in thepreparation of these financial statements whereby assets,liabilities, equity, income and expenses are recognised in thereporting period to which they relate, regardless of when cashis received or paid. These financial statements are presentedin Australian dollars, the functional and presentation currencyof the organisation.

The report has been prepared on a historical cost basis.Historical cost is the fair value of the consideration given inexchange for assets.

Accounting policies are selected and applied in a mannerwhich ensures that the resulting financial information satisfiesthe concepts of relevance and reliability, thereby ensuring thatthe substance of the underlying transactions or other eventsis reported.

The accounting policies set out have been applied inpreparing the financial statements for the year ended 30 June2012 and the comparative information presented for the yearended 30 June 2011.

c) Reporting entityThe financial statements cover VITS Languagelink as anindividual reporting entity. Its principle address is:

VITS LanguageLinkLevel 1, 371 Spencer Street Melbourne VIC 3000

d) Scope and presentation of financial statements

Comprehensive operating statementIncome and expenses in the comprehensive operatingstatement are classified according to whether or not theyarise from “transactions” or “other economic flows”. Thisclassification is consistent with the whole of governmentreporting format and is allowed under AASB 101 Presentationof financial statements.

‘Transactions’ are those economic flows that are consideredto arise as a result of policy decisions, usually transactionsbetween two entities by mutual agreement.

‘Other economic flows’ are changes arising from market re-measurements. They include gain or loss from disposal ofnon current physical and intangible assets.

Balance sheetAssets and liabilities are presented in liquidity order with assetsaggregated into financial assets and non-financial assets.

Current and non-current assets and liabilities (non currentbeing those expected to be recovered or settled beyond 12months) are disclosed in the notes, where relevant.

Statement of changes in equityThe statement of changes in equity presents reconciliations ofeach non-owner equity opening balance at the beginning ofthe reporting period to the closing balance at the end of thereporting period. It also shows separately changes due to theamount recognised in the net result and the amountrecognised in other comprehensive income related to othernon-owner changes in equity.

Cash flow statementCash flows are classified according to whether or not theyarise from operating activities, investing activities, or financingactivities. This classification is consistent with requirementsunder AASB 107 Statement of cash flows.

e) Income from transactions

Sales of servicesIncome from the provision of services is recognised when theservice has been provided.

f) Expenses from transactionsExpenses are recognised as they are incurred and reported inthe financial year to which they relate.

Employee expensesEmployee expenses include wages and salary,superannuation expenses, annual leave and long serviceleave payments, fringe benefit tax and termination expenseswhich are reported separately.

Depreciation and AmortisationAll fixed assets (office equipment, furniture and fittings, andintangible assets) that have a limited useful life are depreciatedor amortised. Depreciation and amortisation are calculated ona straight line basis, at rates that allocate the asset’s value,less any estimated residual value, over its estimated useful life.Estimated useful lives applicable for the years ended 30 June2012 and 30 June 2011 were as follows:

Asset class Useful life

Office equipment 5-7 yearsFurniture and fitting 5 yearsIntangible assets 10 years

Interest expenseInterest expenses are recognised in the period in which theyare incurred.

Supplies and servicesSupplies and services expenses are recognised in thereporting period in which they are incurred.

Operating lease expensesOperating lease expenses relate to three year computerleases and are recognised as expenses in the reportingperiod in which they are incurred.

Provision for Doubtful debtsThe write off of bad debts is assessed at the end of eachfinancial year and any uncollectible debts are recognised andclassified as a transaction expense.

Cost of services providedCost of services provided are costs related to the incomereceived as sales of services and are recognised in the sameperiod as income.


g) Other economic flows included in the net resultOther economic flows measure the change in volume or valueof assets or liabilities that do not result from transactions: This includes:

Net gain/(loss) on non-financial assetsNet gain/(loss) on non-financial asset and liabilities includesrealised and unrealised gains and losses.

Disposal of non-financial assetsAny gain or loss on the sale of non-financial assets isrecognised on the date that control of the asset is passed tothe buyer and is determined after deducting from theproceeds the carrying value of the assets at that time.

h) Financial assets

Cash Cash includes cash on hand and cash in bank.

ReceivablesReceivables consists predominantly of amounts owing fromour debtors in relation to the service we have provided.

i) Non-financial assets

PrepaymentsPrepayments represent payments in advance of receipt ofservices.

Plant and equipmentAll non-current physical assets are measured initially at costand subsequently recognised at fair value less accumulateddepreciation and impairment.

The fair value of plant and equipment is normally determinedby reference to the assets depreciated replacement cost. Forplant and equipment, existing depreciated historical cost isgenerally a reasonable proxy for depreciated replacement costbecause of the short lives of the assets concerned.

Intangible assetsIntangible assets are initially recognised at cost. Subsequently,intangible assets with finite useful lives are carried at cost lessaccumulated amortisation and accumulated impairmentlosses. Costs incurred subsequent to initial acquisition arecapitalised when it is expected that additional future economicbenefits will flow to the company.

j) Liabilities

PayablesPayables consist predominantly of accounts payable andother sundry liabilities. Accounts payable represent liabilitiesfor services provided to the company prior to the end of thefinancial year that are unpaid, and arise when the companybecomes obliged to make future payments in respect of thepurchase of services.

Other liabilities included in payables consist of goods andservices tax and payroll tax payable.

BorrowingsBorrowings are initially measured at fair value, being the costof the borrowings, net of transaction costs.

Unearned IncomeUnearned Income is revenue received in advance for servicesthat have not been fully provided.

ProvisionsProvisions are recognised when the company has a presentobligation, the future sacrifice of economic benefits is probable,and the amount of the provision can be measured reliably.

The amount recognised as a provision is the best estimate ofthe consideration required to settle the present obligation atthe end of the reporting period, taking into account the risksand uncertainties surrounding the obligation. Where aprovision is measured using the cashflows estimated to settlethe present obligation, its carrying amount is the present valueof those cashflows.

Current provisionAll annual leave and unconditional vested long service leaverepresenting seven or more years of continuous service is:

(a) disclosed as a current liability as the company does nothave the unconditional right to defer the settlement of theentitlement should the employee take leave within 12months; and

(b) measured at:

(i) nominal value under AASB 119 where a component ofthis current liability is expected to fall due within 12months after the end of the period; and

(ii) present value under AASB 119 where the companydoes not expect to settle a component of this currentliability within 12 months.

Non-current provisionLong service leave representing less than seven years ofcontinuous service is:

(a) disclosed in accordance with AASB 101 as non-currentliability; and

(b) measured at present value under AASB 119 as thecompany does not expect to settle this non-current liabilitywithin 12 months.

k) Equity

Contribution by ownersAdditions to net assets which have been designated ascontributions by owners are recognised as contributed capital.

l) State Business CorporationOn the 17th December 1998 VITS LanguageLink (formerlyknown as Victorian Interpreting & Translating Service) wasdeclared to be a State Business Corporation.

On the 14th January, 1999 the Treasurer formerly announcedunder Section 46 of the State Owned Enterprises Act 1992that initial capital of VITS LanguageLink was to be the sum of$400,000.

On the 1st December 2001 under Order in Council VictorianInterpreting & Translating Service was granted a change ofname to VITS LanguageLink.

m) Australian Accounting Standards (AASs) issued but not yet effective.

Certain new AASs have been published that are notmandatory for the 30 June 2012 reporting period.

VITS has not early adopted these standards and is currentlyassessing their impact.

VITS LanguageLink NOTES TO THE FINANCIAL STATEMENT (continued)FOR THE YEAR ENDED 30 JUNE 2012


NOTE: 2012 2011$ $

2 SALE OF SERVICESInterpreting services 7,920,029 6,283,848

Translation services 1,077,155 1,291,796

Others 9,109 24,245

9,006,292 7,599,8893 EMPLOYEE EXPENSES

Salary, wages, annual leave and long service leave 1,093,096 978,842

Employer superannuation contribution 74,719 66,613

Total employee expenses 1,167,815 1,045,456

4 OTHER OPERATING EXPENSESOperating lease expense 21,095 18,042

Bad debt written off 5,000 5,142

26,095 23,1845 RECEIVABLES

Receivables 1,434,002 1,038,035

Accrued revenue 237,242 238,046

1,671,245 1,276,0816 PLANT, EQUIPMENT & INTANGIBLE ASSETS

Furniture and fittings (at fair value) 137,072 136,130

Accumulated depreciation (133,415) (132,348)

3,657 3,782

Office equipment (at fair value) 191,311 187,727

Accumulated depreciation (157,432) (134,701)

33,880 53,025

Intangible Assets (at cost):

Booking system 397,100 351,964

Accumulated amortisation (119,073) (79,155)

278,027 272,809

Telecommunication/IVR system * 372,928 79,133

Accumulated amortisation (24,414) -

348,514 79,133

Infrastructure 93,933 -

Accumulated amortisation (6,886) -

87,047 -

Total Plant, Equipment & Intangible Assets 751,126 408,749

* Note: Telecommunication/IVR System for the year ended 30 June 2011 was under work in progress.

Intangible Furniture & Office TotalAsset Fittings Equipment

30 June 2011Balance at 1 July 2010 272,097 5,278 70,446 347,821

Additions 115,645 - 5,377 121,022

Depreciation & amortisation (35,799) (1,496) (22,798) (60,093)

Balance at 30 June 2011 351,943 3,782 53,025 408,749

30 June 2012Balance at 1 July 2011 351,943 3,782 53,025 408,749

Additions 432,864 942 3,585 437,391

Depreciation & amortisation (71,217) (1,067) (22,730) (95,014)

Balance at 30 June 2012 713,590 3,657 33,879 751,126



NOTE: 2012 2011$ $

7 PAYABLES (CURRENT)ContractualSupplies and services 214,936 208,768

Accrued expenses 154,888 38,962

369,825 247,730StatutoryTaxes payable 216,288 171,304Total current payables 586,113 419,033

8 BORROWINGS (NON CURRENT)Loan from TCV 307,361 90,000

Total borrowings non current 307,361 90,000

9 PROVISIONSCurrentAnnual Leave 79,048 72,646

Long Service Leave 72,569 66,853

151,617 139,499Non-CurrentLong service leave 15,255 12,509

15,255 12,509Total provisions 166,873 152,008

Movement in ProvisonsAnnual leave LSL

2012Opening balance 72,646 79,361

Leave taken/paid (80,204) (3,360)

Additional provision provided 86,606 11,823

Closing balance 79,048 87,824

2011Opening balance 49,638 78,108

Leave taken/paid (50,223) (9,519)

Additional provision provided 73,231 10,772

72,646 79,361

10 SUPERANNUATIONThe name and details of the major employee superannuation funds and contributions made thereto are as follows:

Contributions made

Fund No of employees No of employees Contributions Contributions2012 2011 2012 2011

Vic Super 16 13 43,171 48,519

MLC 3 1 7,256 4,205

Rest Super 2 1 1,618 -

Australia Super 2 0 627 -

Agest Super 1 1 691 743

Telstra Super 1 1 3,892 3,654

Health Super 1 1 2,893 1,102

ESS Super 1 0 4,233 -

ANZ Super 1 0 1,083 -

AMP Super 1 0 1,305 -

Uni Super 1 0 1,764 -

Hesta 1 0 568 -

Care Super 1 1 5,618 8,390

74,719 66,613There were no contributions outstanding as at 30th June 2012 (2011 nil)



NOTE:

11 NOTES TO THE STATEMENT OF CASH FLOWSReconciliation of net result of the period 2012 2011Surplus (deficit) for the period 344,718 264,567

Add:

Depreciation 95,014 60,093

Increase/(Decrease) annual leave and long service leave 14,865 24,262

Increase/(Decrease) in payables 152,958 (104,984)

(Increase)/Decrease in receivables and prepayments (412,984) 67,885

Net cash provided by operating activities 194,570 311,823

12 RESPONSIBLE PERSONS

The names of persons who were Responsible persons during the financial year are:

Responsible Ministers Hon. Nicholas Kotsiras

Hon. Kim Wells

Governing Board of Directors Mr. Alex Andrianopoulos - Chair (01/07/2011-23/04/2012) *

Hon. Phil Honeywood - Chair

Mr. John Williams - Deputy Chair

Ms. Marina Williams-Wynn (01/07/2011-23/04/2012) *

Ms. Miriam Suss (01/07/2011-23/04/2012) *

Mr. Grahame Leonard (01/07/2011-23/04/2012) *

Mr. Ozan Ibrisim (01/07/2011-27/10/11)

Ms. Voula Messimeri

Ms. Katrin Wills

Mr. Arthur Apos

Cr. Geoff Gough

Accountable Officer Mr. George Bisas

* Board members’ appointment have expired

REMUNERATION OF RESPONSIBLE PERSONS (BOARD OF DIRECTORS & ACCOUNTABLE OFFICER)

Remuneration received or receivable by the responsible persons during the reporting period are shown below:

Total Base Total Base2012 2012 2011 2011

Income of$ 0 TO $ 9,999 10 10 6 6

$10,000 TO $19,999 1 1 1 1

$70,000 TO $79,999 0 0 0 0

$80,000 TO $89,999 0 0 0 0

Total remuneration 58,972 58,972 68,582 68,582

Ministerial renumeration is disclosed in the annual report of the Department of Premier and Cabinet.

Remuneration of Accountable Officer Remuneration received or receivable by the accountable officer in connection

with the management of VITS Languagelink during the reporting period was in the range $160,000 - $169,999 and

$150,000 - $159,999 in 2011.

Other Transactions of Responsible persons and related parties Other related transactions and loans requiring

disclosure under the Directions of the Minister of Finance have been considered and there are no matters to report.

13 COMMITMENTS FOR EXPENDITUREOperating lease commitmentsCommitments for minimum lease payments in relation to non-cancellable operating leases, not recognised as

liabilities, are payable as follows:

2012 2011$ $

Within one year 102,736 158,108

Later than one year and not longer than 5 years 637,038 42,834

739,774 200,942



NOTE:

14 REMUNERATION OF AUDITORS 2012 2011Victorian Auditor-General’s Office

Audit of the financial statement 14,200 13,700

15 CONTINGENT ASSETS & CONTINGENT LIABILITIES

There are no contingent assets and contingent liabilities for VITS Languagelink at 30 June 2012.

16 FINANCIAL INSTRUMENTSa) Cash on hand and at bank is valued at face value.Receivables are carried at nominal amounts due less any provision for doubtful debts. A provision for doubtful debts is

recognised when collection of the full nominal amount is no longer probable. Payables and accruals are recognised for

amounts to be paid in the future. Payables are normally settled on 30 day terms. Loan from Treasury Corporation

Victoria (TCV) is initially measured at fair value, being the cost of the borrowings, net of transaction costs.

b) Interest Rate RiskVITS LanguageLink exposure to interest rate risk and the effective weighted average interest rate for classes of

financial assets and financial liabilities is set out in the following table:

2012 Weighted average Carrying Fixed Variable Non Interest effective interest rate Amount Interest Interest Bearing Total

% $ $ $Financial Assets

Cash and cash equivalents 2.93 543,656 - 543,506 150 543,656

Trade and other receivables 1,671,245 - - 1,671,245 1,671,245

Total financial assets 2,214,901 - 543,506 1,671,395 2,214,901

Financial Liabilities

Trade and other payables 369,825 - - 369,825 369,825

Borrowings 4.15 307,361 - 307,361 - 307,361

Total financial liabilities 677,186 - 307,361 369,825 677,186

2011 Weighted average Carrying Fixed Variable Non Interest effective interest rate Amount Interest Interest Bearing Total

% $ $ $Financial Assets

Cash and cash equivalents 4.17 648,486 - 648,336 150 648,486

Trade and other receivables 1,276,081 - - 1,276,081 1,276,081

Total financial assets 1,924,567 - 648,336 1,276,231 1,924,567

Financial Liabilities

Trade and other payables 247,730 - - 247,730 247,730

Borrowings 4.92 90,000 - 90,000 - 90,000

Total financial liabilities 337,730 - 90,000 247,730 337,730

Taking into account past performance, future expectations, economic forecasts, and management’s knowledge and

experience of the financial markets, we believe the following movements are ‘reasonably possible’ over the next 12

months (Base rates are sourced from Reserve Bank of Australia):

- A parallel shift of -1% and +1% in market interest rates (AUD) from year-end rates of 2.93%.

The table on the next page discloses the impact on net operating result and equity for each category of financial

instruments held by the company at year-end, if the above movements were to occur.



c) Credit riskCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to

VITS. VITS has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral

where appropriate, as a means of mitigating the risk of financial loss from defaults.

Credit risk arising from trade receivables is managed on an individual customer basis through a stringent credit

assessment process. Further assessments with mercantile agencies are instigated when monthly reviews of ageing

analysis of receivables require additional intervention. Customers exceeding their capacity and credit limits are

placed on a cash on delivery basis.

VITS does not have any significant credit risk exposure to any single counterparty or any group of counterparties

having similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with

high credit ratings assigned by international credit-rating agencies.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses,

represents VITS’s maximum exposures to credit risk without taking into account the value of any collateral obtained.

d) Liquidity RiskLiquidity risk is the risk that the company will be unable to meet its financial obligations as and when they fall due.

The company manages its liquidity risk by:

a) close monitoring of its short-term and long-tem borrowings, including monthly reviews on current and future

borrowing levels and requirements;

b) careful maturity planning of our financial obligations based on forecasts of future cash flows; and

c) maintaining an adequate level of uncommited funds that can be drawn at short notice to meet our short term obligations.

Maturity dates2012 Carrying Nominal Less than 1 1-5 years 5+ Years

Amount Amount yearPayablesSupplies and services 369,825 369,825 369,825 - -

BorrowingsLoan from TCV 307,361 307,361 - 307,361 -

Total 677,185 677,185 369,825 307,361 - 2011PayablesSupplies and services 247,730 247,730 247,730 - -

BorrowingsLoan from TCV 90,000 90,000 - 90,000 -

Total 337,730 337,730 247,730 90,000 -

NOTE:

16 FINANCIAL INSTRUMENTS (CONTINUED)

INTEREST RATE RISK

-1 % +1%

-100 basis points +100 basis points2012 Profit Equity Profit Equity

Financial assets:Cash and cash equivalents 543,656 (5,437) (5,437) 5,437 5,437

Trade and other receivables 1,671,245 - - - -

Financial liabilities:Trade and other payables 369,825 - - - -

Loan from TCV 307,361 (3,074) (3,074) 3,074 3,074



e) Net Fair ValueManagement consider that the carrying amount of financial assets and the financial liabilities recorded in the

financial statements approximates their fair values.

The fair values and net fair values of financial assets and financial liabilities are determined as follows:

- the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active

liquid markets are determined with reference to quoted market prices; and

- the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted

pricing models based on discounted cash flow analysis.

Transaction costs are included in the determination of net fair value.

2012 2011Note Carrying Amount Net Fair Value Carrying Amount Net Fair Value

Financial assetsCash and cash equivalents 543,656 543,656 648,486 648,486

Trade and other receivables 5 1,671,245 1,671,245 1,276,081 1,276,081

Total financial assets 2,214,901 2,214,901 1,924,567 1,924,567

Financial liabilitiesTrade and other payables 7 369,825 369,825 247,730 247,730

Loan from TCV 307,361 307,361 90,000 90,000

Total financial liabilities 677,185 677,185 337,730 337,730

NOTE:

16 FINANCIAL INSTRUMENTS (CONTINUED)



STATEMENT BY DIRECTORS AND MANAGEMENT

We have moved to: VITS LANGUAGELINKLevel 7, 620 Bourke StreetMelbourne, Victoria 3000Tel: 03 9280 1941www.vits.com.au

A Victorian Government Business Enterprise

annual report - parliament of victoria · vits needed to respond appropriately to these changes and...

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