consolidated statement of profit or loss and other...2 workways australia limited annual report acn...

2 Workways Australia Limited Annual Report | ACN 141 659 734

Consolidated Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 30 June 2017

Note 2017 $

2016$

Revenue and other income 3 27,385,266 23,793,449

Less: expensesDepreciation and amortisation expenses 4 (1,202,354) (979,304)Employee benefits expense 4 (14,233,902) (13,216,875)Client expenses 4 (4,347,637) (3,346,790)Other expenses 4 (7,795,345) (7,342,619)

(27,579,238) (24,885,588)

Loss for the year (193,972) (1,092,139)

Other comprehensive incomeItems that will not be reclassified to profit or loss:Gain/(loss) on revaluation of property 165,275 (70,687)Other comprehensive income for the year 165,275 (70,687)

Total comprehensive income/(loss) (28,697) (1,162,826)

The accompanying notes form part of these financial statements.

3Workways Australia Limited Annual Report | ACN 141 659 734

Consolidated Statement of Financial PositionFor the year ended 30 June 2017

Note 2017$

2016$

Current assetsCash and cash equivalents 6 3,286,282 1,856,510Receivables 7 1,984,350 2,819,878Inventories 8 1,816 -Other assets 9 466,075 525,674

Total current assets 5,738,523 5,202,062

Non-current assetsProperty, plant and equipment 10 5,215,173 4,304,039Intangible assets 11 622,094 1,005,087

Total non-current assets 5,837,267 5,309,126

Total assets 11,575,790 10,511,188

Current liabilitiesPayables 13 1,955,219 2,125,849Other liabilities 14 233,696 363,554 Borrowings 15 488,189 1,430 Provisions 16 1,342,700 1,195,665

Total current liabilities 4,019,804 3,686,498

Non-current liabilitiesBorrowings 15 826,818 - Provisions 16 100,385 167,210

Total non-current liabilities 927,203 167,210

Total liabilities 4,947,007 3,853,708

Net assets 6,628,783 6,657,480

EquityReserves 17 1,576,745 1,411,470 Retained earnings 18 5,052,038 5,246,010

Total equity 6,628,783 6,657,480



Asset revaluation

/ capital profits reserve

$

Retained earnings

$

Total equity$

ConsolidatedBalance at 1 July 2015 1,482,157 6,338,149 7,820,306Loss for the year - (1,092,139) (1,092,139)Revaluation of property - increment (70,687) - (70,687)Total comprehensive income for the year (70,687) (1,092,139) (1,162,826)

Balance at 1 July 2016 1,411,470 5,246,010 6,657,480Loss for the year - (193,972) (193,972)Revaluation of property - decrement 165,275 - 165,275Total comprehensive income for the year 165,275 (193,972) (28,697)

Balance at 30 June 2017 1,576,745 5,052,038 6,628,783


Consolidated Statement of Changes in EquityFor the year ended 30 June 2017



Note 2017$

2016$

Cash flow from operating activitiesReceipts from contributors and customers 31,064,148 22,589,050 Payments to employees and suppliers (29,436,508) (24,879,550) Interest received 37,548 34,164Net cash provided by/ (used in) operating activities 19(b) 1,665,188 (2,256,336)

Cash flow from investing activitiesProceeds from sale of property, plant and equipment 182,614 1,732,178Payment for property, plant and equipment (86,451) (677,066)Payment for intangible assets (10,949) (65,000)Cash acquired through merger with Advance Personnel (Canberra) Inc. - 743,801Payment for leased for motor vehicles (1,634,207) -Net cash provided by / (used in) investing activities (1,548,993) 1,733,913

Cash flow from financing activitiesProceeds from borrowings 1,634,207 -Repayment of borrowings (319,200) -Net cash provided by financing activities 1,315,007 -

Reconciliation of cashCash at beginning of the financial year 1,855,080 2,377,503Net increase / (decrease) in cash held 1,431,202 (522,423) Cash at end of financial year 19(a) 3,286,282 1,855,080

Consolidated Statement of Cash FlowsFor the year ended 30 June 2017


NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report is a general purpose financial report that has been prepared in accordance with the Australian Charities and Not-for-profits Commission Act 2012 and Australian Accounting Standards - Reduced Disclosure Requirements, Interpretations and other applicable authoritative pronouncements of the Australian Accounting Standards Board.

The financial report covers Workways Australia Limited and its consolidated entities. Workways Australia Limited is a company limited by guarantee, incorporated and domiciled in Australia. Workways Australia Limited is a not-for-profit entity for the purpose of preparing the financial statements.

The financial report was approved by the directors as at the date of the directors’ report.

The following are the significant accounting policies adopted by the group in the preparation and presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(a) Basis of preparation of the financial reportHistorical Cost ConventionThe financial report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes of assets and liabilities as described in the accounting policies.

Significant accounting estimates and judgementsThe preparation of the financial report requires the use of certain estimates and judgements in applying the group’s accounting policies. Those estimates and judgements significant to the financial report are disclosed in Note 2. (b) Principles of consolidationThe consolidated financial statements are those of the consolidated entity (“the group”), comprising the financial statements of the parent entity, Workways Australia Limited, and all of the entities the parent controls. The parent controls an entity where it has the power, for which the parent has exposure or rights to variable returns from its involvement with the entity, and for which the parent has the ability to use its power over the entities to affect the amount of its returns.

The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies which may exist.

All inter-entity balances and transactions, including any unrealised profits or losses have been eliminated on consolidation. Subsidiaries are consolidated from the date on which control is transferred to the parent and are de-recognised from the date that control ceases.

The following entities form part of the consolidated group:• EnviTE Inc is a controlled entity of Workways Australia Limited. Effective from 1 May 2014, Workways Australia

Limited became the sole member of EnviTe Inc.• Advance Personnel (Canberra) Inc is a controlled entity of Workways Australia Limited. Effective from 1

October 2015, Workways Australia Limited became the sole member of Advance Personnel (Canberra) Incorporated.

• Workways Recruitment & Labour Hire Ltd, incorporated on 11 September 2015.• Workways Services Ltd, incorporated on 2 May 2016.• Workways Australia Services Pty Ltd as trustee for Workways Australia Services Fixed Trust, established on2

May 2016. (c) Business combinationsA business combination is a transaction or other event in which an acquirer obtains control of one or more businesses and results in the consolidation of the assets and liabilities acquired. Business combinations are accounted for by applying the acquisition method.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issues or liabilities incurred by the acquirer to former owners of the acquiree. Deferred consideration

Notes to the Financial StatementsFor the year ended 30 June 2017


payable is measured at its acquisition-date fair value. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. At each reporting date subsequent to the acquisition, contingent consideration payable is measured at its fair value with any changes in the fair value recognised in profit or loss unless the contingent consideration is classified as equity, in which case the contingent consideration is carried at its acquisition-date fair value.

Goodwill is recognised initially at the excess of: (a) the aggregate of the consideration transferred, the fair value of the non-controlling interest, and the acquisition date fair value of the acquirer’s previously held equity interest (in case of step acquisition); over (b) the net fair value of the identifiable assets acquired and liabilities assumed.

If the net fair value of the acquirer’s interest in the identifiable assets acquired and liabilities assumed is greater than the aggregate of the consideration transferred, the fair value of the non-controlling interest, and the acquisition date fair value of the acquirer’s previously held equity interest, the difference is immediately recognised as a gain in the profit or loss.

Acquisition related costs are expensed as incurred.

(d) RevenueRevenue from the rendering of services is recognised upon the delivery of the service to the customers.

Grant income is recognised when the entity obtained control of the grant, it is probable that the economicbenefits gained from the grant will flow to the entity and the amount of the grant can be reliably measured.

If conditions are attached to the grant which must be satisfied before it is eligible to receive the contribution, the recognition of the grant as revenue will be deferred until those conditions are satisfied.

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

Interest revenue is measured in accordance with the effective interest method. All revenue is measured net of the amount of goods and services tax (GST). (e) Property, plant and equipmentEach class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and any accumulated impairment losses.

Items purchased with a value over $1,000 are capitalised. Certain items of lesser value, which we wish to record for custodial purposes, are fully depreciated within the applicable financial year. All items below$1,000 are depreciated within 12 months.

PropertyFreehold land and buildings are shown at their fair value based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings.

In periods when the freehold land and buildings are not subject to an independent valuation, the directors conduct directors’ valuations to ensure the carrying amount for the land and buildings is not materially different to fair value.

Increases in the carrying amounts arising on revaluation of land and buildings are recognised in other comprehensive income and accumulated in equity under the heading of asset revaluation reserve. To the extent that the increase reverses a decrease of the same class of asset previously recognised in profit orloss, the increase is recognised in profit or loss. Decreases that offset previous increases of the same class of asset are recognised in other comprehensive income under the heading of asset revaluation reserve; all other decreases are charged to profit and loss.

Plant and equipmentPlant and equipment is measured at cost. Where plant and equipment was acquired at no cost or for a nominal amount, cost is deemed to be the fair value as at the acquisition date.



NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DepreciationLand is not depreciated. The depreciable amount of all property, plant and equipment is depreciated over their estimated useful lives commencing from the time the asset is held available for use, consistent with the estimated consumption of the economic benefits embodied in the asset.

Leasehold improvements are permanent fixtures at our leased sites.

(f) Assets held for saleAssets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell.

Assets are not depreciated or amortised while they are classified as held for sale.

Assets classified as held for sale are presented separately from the other assets on the balance sheet.

(g) LeasesLeases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Finance leasesLeases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to the group are classified as finance leases. Finance leases are capitalised, recording an asset and a liability equal to the fair value or, if lower, the present value of the minimum lease payments, including any guaranteed residual values. The interest expense is calculated using the interest rate implicit in the lease, if this is practicable to determine; if not, the group’s incremental borrowing rate is used. Interest expense on finance leases is included in finance costs in the statement of profit or loss. Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the group will obtain ownership of the asset, or over the term of the lease. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period in accordance with the effective interest method.

Operating leasesLease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as an expense on a straight-line basis over the term of the lease.

Lease incentives received under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

(h) Financial instrumentsClassificationThe group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, and available-for-sale financial assets. The classification depends on thenature of the item and the purpose for which the instruments are held. Initial recognition and measurementFinancial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the instrument. For financial assets, this is equivalent to the date that the entity commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Class of fixed asset Depreciation rates Depreciation basisBuildings 3% Straight lineLeasehold improvements 10%-20% Straight lineMotor vehicles 15%-20% Straight line and diminishing valueMotor vehicles under lease 33% Straight lineEquipment, furniture and fittings 10%-33% Straight line and diminishing value




(h) Financial instruments (Continued)Financial instruments are initially measured at fair value adjusted for transaction costs, except where the instrument is classified as fair value through profit or loss, in which case transaction costs are immediately recognised as expenses in profit or loss.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are subsequently measured at amortised cost using the effective interest rate method.

Financial liabilitiesFinancial liabilities include trade payables, other creditors and loans from third parties including inter-entity balances.

Non-derivative financial liabilities are subsequently measured at amortised cost, comprising original debt less principal payments and amortisation.

Financial liabilities are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.

Impairment of financial assetsFinancial assets are tested for impairment at each financial year end to establish whether there is any objective evidence for impairment as a result of one or more events (‘loss events’) having occurred and which have an impact on the estimated future cash flows of the financial assets. (i) Impairment of non-financial assetsGoodwill, intangible assets not yet ready for use and intangible assets with indefinite useful lives are not subject to amortisation and are therefore tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.

For impairment assessment purposes, assets are generally grouped at the lowest levels for which there are largely independent cash flows (‘cash generating units’). Accordingly, most assets are tested for impairment at the cash-generating unit level. Because it does not generate cash flows independently of other assets or groups of assets, goodwill is allocated to the cash generating unit or units that are expected to benefit from the synergies arising from the business combination that gave rise to the goodwill.

Assets other than goodwill, intangible assets not yet ready for use and intangible assets with finite useful lives are assessed for impairment whenever events or circumstances arise that indicate the asset may be impaired.

An impairment loss is recognised when the carrying amount of an asset or cash generating unit exceeds the asset’s or cash generating unit’s recoverable amount. The recoverable amount of an asset or cash generating unit is defined as the higher of its fair value less costs to sell and value in use.

Impairment losses in respect of individual assets are recognised immediately in profit or loss unless the asset is carried at a revalued amount such as property, plant and equipment, in which case the impairment loss is treated as a revaluation decrease in accordance with the applicable Standard. Impairment losses in respect of cash generating units are allocated first against the carrying amount of any goodwill attributed to the cash generating unit with any remaining impairment loss allocated on a pro rata basis to the other assets comprising the relevant cash generating unit.

The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to present values in determining recoverable amounts.

(j) Employee benefits(i) Short-term employee benefit obligationsLiabilities arising in respect of wages and salaries, annual leave and any other employee benefits (other than termination benefits) expected to be settled wholly before twelve months after the end of the annual reporting




(j) Employee benefits (Continued)period are measured at the (undiscounted) amounts based on remuneration rates which are expected to be paid when the liability is settled. The expected cost of short-term employee benefits in the form of compensated absences such as annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables in the consolidated statement of financial position.

Contributions are made by the entity to an employee superannuation fund and are charged as expenses when incurred. (ii) Long-term employee benefit obligationsThe provision for other long-term employee benefits, including obligations for long service leave and annual leave, which are not expected to be settled wholly before twelve months after the end of the reporting period, are measured at the present value of the estimated future cash outflow to be made in respect of the services provided by employees up to the reporting date. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee turnover, and are discounted at rates determined by reference to market yields at the end of the reporting period on high quality corporate bonds that have maturity dates that approximate the terms of the obligations. Any re-measurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profit or loss in the periods in which the change occurs.

(k) Goods and services tax (GST)Revenues, expenses and purchased assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the consolidated statement of financial position are shown inclusive of GST.

(l) Income taxThe parent is a registered charity and classified as a public benevolent institution under section 30-45 of theIncome Tax Assessment Act 1997 (Cth) (ITAA97). It holds the following tax concessions:

• Endorsement as a deductible gift recipient;• Endorsement as an income tax exempt charity; and• Exemption from fringe benefits tax under section 57A(5) of the Fringe Benefits Tax Assessment Act 1986 (Cth).

(m) ProvisionsProvisions are recognised when the group has a legal 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. (n) IntangiblesGoodwillGoodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identifiable or separately recognised.

Goodwill is not amortised, but is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less any accumulated impairment losses.

Other intangiblesOther intangibles acquired in a business combination are initially recognised at fair value at the acquisition date. Such intangibles are amortised over their estimated useful lives and are carried at cost less accumulated amortisation and any impairment losses.

Other intangible assets other than those acquired in a business combination are initially recorded at cost. Other intangible assets are amortised over their estimated useful lives. The balances are reviewed annually and amounts are written off to the extent the realisable future benefits are considered to be no longer probable.

(o) Economic dependenceWorkways has a significant economic dependency on the Department of Employment and Department of Social Services as it currently has two major programs jobactive which is funded through to 2020 and Disability



Employment Services (DES) which, under the current funding arrangement, is funded through to30 June 2018. Workways will continue to deliver DES program services under the new grant agreement that commences from 1 July 2018 to 30 June 2023 across the majority of our existing DES sites.

Workways continues to expand and diversify the number of programs including Commonwealth and State Government funded programs such as ParentsNext, Gippsland East Mentoring and Jobs Victoria Employment Network.

(p) ComparativesWhere necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures. NOTE 2: SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information, Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Key Estimates and Judgements - Impairment (general)The land and buildings were independently valued at 30 June 2017 by Lee Property Valuers & Advisers. The valuation was based on a capitalisation of market net income. The land and buildings are categorised within the fair value hierarchy at Level 3, which relates to valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. The directors believe the carrying amount of the land and buildings materially reflects their current fair value at 30 June 2017.

The directors have performed an assessment for impairment at year end of intangible assets with a finite useful life and have determined in their judgement that there are not any facts and circumstances that have arisen that indicate these intangible assets are impaired. Accordingly, the directors believe the carrying amount of intangible assets does not exceed their recoverable amount at 30 June 2017.



Note 2017$

2016$

NOTE 3: REVENUE AND OTHER INCOMEJSA Revenue 3,027,356 3,520,966Youth Services 2,539,940 924,065Envite Inc. 3,763,835 3,782,946 Jobactive 9,050,239 7,865,474Disability Employment Services 7,431,443 6,196,130Workways Recruitment - labour hire revenue 1,329,109 698,551

27,141,922 22,988,132

Other revenueInterest income 37,548 34,164Gain on bargain purchase - business combination 20 - 559,143Other 205,796 212,010

243,344 805,317

27,385,266 23,793,449

NOTE 4: OPERATING PROFITLoss has been determined after:Depreciation expense- buildings 10 56,667 56,665- leasehold improvements 10 81,902 45,631- motor vehicles 10 149,099 276,659- equipment, furniture and fittings 10 177,861 171,006

465,529 549,961

Amortisation expense- leased assets 10 342,883 -- Government contracts 11 291,052 312,937- Employee and client lists 11 23,530 16,250- Computer software 11 79,360 100,156

736,825 429,343

Employee benefits:- Staff remuneration and benefits 12,509,955 11,772,707- Superannuation 1,441,358 1,177,844- WorkCover and others 282,589 266,324

14,233,902 13,216,875



2017$

2016$

NOTE 4: OPERATING PROFIT (CONT’D)Client Expenses- Client expenses 4,347,637 3,346,790

Other Expenses- Advertising and marketing 70,850 83,813- Committee expenses 214,036 178,706- Consultancy fees 516,530 527,657- Office administration - including consumables 345,536 383,350- Insurance 146,156 201,165- Postage and delivery 44,503 29,824- Property costs 1,767,604 2,108,583- Telephone 1,381,266 894,441- Motor vehicle expenses 477,076 526,766- (Profit)/Loss on disposal of non-current assets (71,211) 7,874- Job Futures and CoAct fees 1,215,483 1,088,251Other expenses 1,687,516 1,312,189

7,795,345 7,342,619

NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATIONCompensation received by key management personnel of the group- total compensation 1,259,508 1,064,854

1,259,508 1,064,854

NOTE 6: CASH AND CASH EQUIVALENTSCash on hand 87,377 29,124Cash at bank 3,198,905 1,827,386

3,286,282 1,856,510

NOTE 7: RECEIVABLESCURRENTTrade debtors 241,179 512,942Impairment loss provision (2,788) (2,788)

238,391 510,154Other receivablesAccrued revenue 1,153,951 1,093,175Other receivables 592,008 1,216,549

1,745,959 2,309,7241,984,350 2,891,878



2017$

2016$

NOTE 8: INVENTORIESCURRENTAt costSpares 1,816 -

NOTE 9: OTHER ASSETSCURRENTPrepayments 163,563 172,484Other current assets 302,512 353,190

466,075 525,674

NOTE 10: PROPERTY, PLANT AND EQUIPMENTLand

At fair value 1,030,415 1,335,000

Buildings

At fair value 1,999,585 1,700,000Accumulated depreciation - (113,608)

1,999,585 1,586,392

Leasehold Improvements

At cost 1,171,978 1,164,685Accumulated depreciation (983,062) (901,159)

188,916 263,526

Plant and Equipment

Motor vehicles at cost 914,457 1,659,435Accumulated depreciation (762,632) (1,192,124)

151,825 467,311

Motor vehicles under lease 1,634,207 -Accumulated depreciation (342,883) -

1,291,324 -

Equipment, Furniture and Fittings 2,754,693 2,675,980Accumulated depreciation (2,201,585) (2,024,170)

533,108 651,810Total property, plant and equipment 5,215,173 4,304,039



NOTE 10: PROPERTY, PLANT AND EQUIPMENT (CONT’D) (a) ValuationsFreehold land and buildings are shown at their fair value based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings.

In periods when the freehold land and buildings are not subject to an independent valuation, the directors conduct directors’ valuations to ensure the carrying amount for the land and buildings is not materially different to fair value.

The land and buildings were independently valued at 30 June 2017 by Lee Property Valuers & Advisers. The valuation was based on a capitalisation of market net income. The land and buildings are categorised within the fair value hierarchy at Level 3, which relates to valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. The directors believe the carrying amount of the land and buildings materially reflects their current fair value at 30 June 2017.

(b) ReconciliationsReconciliation of the carrying amounts of property, plant and equipment at the beginning and end of the current financial year.


2017$

2016$

Freehold land

Opening carrying amount 1,335,000 785,000Net amount of revaluation decrements (304,585) -Transferred from / (to) assets classified as held for sale - 550,000Closing carrying amount 1,030,415 1,335,000

Buildings

Opening carrying amount 1,586,392 1,179,197Net amount of revaluation increments 469,860 -Depreciation expense (56,667) (56,665)Transferred from / (to) assets classified as held for sale - 463,860Closing carrying amount 1,999,585 1,586,392

Leasehold improvements

Opening carrying amount 263,526 27,389Additions 7,292 281,768Depreciation expense (81,902) (45,631)Closing carrying amount 188,916 263,526

Leasehold motor vehicles

Opening carrying amount - -Additions 1,634,207 -Amortisation expense (342,883) -Closing carrying amount 1,291,324 -



2017$

2016$

NOTE 10: PROPERTY, PLANT AND EQUIPMENT (CONT’D)(b) Reconciliations (cont’d)

Motor vehicles

Opening carrying amount 467,311 808,138Additions - 44,930Disposals (166,387) (140,324)Additions through acquisition of entities - 31,226Depreciation expense (149,099) (276,659)Closing carrying amount 151,825 467,311

Equipment, Furniture and Fittings

Opening carrying amount 651,810 490,388Additions 79,159 350,368Disposals - (17,940)Depreciation expense (177,861) (171,006)Closing carrying amount 553,108 651,810

NOTE 11: INTANGIBLE ASSETSGovernment contracts 1,361,076 1,353,321Accumulated amortisation (786,536) (495,484)

574,540 857,837

Computer software 500,778 500,778Accumulated amortisation (481,638) (402,278)

19,140 98,500

Employee and client lists 68,194 65,000Accumulated amortisation (39,780) (16,250)

28,414 48,750Total intangible assets 622,094 1,005,087


On 30 September 2015, the group acquired the employee and client lists of Gab Consulting Pty Ltd. This has been assessed to have a finite life of 3 years from acquisition as this represents the length of time through which the benefit from access to the employee and client lists is expected to be received.

(a) ReconciliationsReconciliation of the carrying amounts of property, plant and equipment at the beginning and end of the current financial year.


2017$

2016$

NOTE 11: INTANGIBLE ASSETS (CONT’D)Government contracts at costOpening balance 857,837 1,170,774Additions 7,755 -Amortisation expense (291,052) (312,937)Closing balance 574,540 857,837

Computer software at costOpening balance 98,500 198,656Amortisation expense (76,360) (100,156)Closing balance 19,140 98,500

Employee and client lists at costOpening balance 48,750 -Additions 3,194 65,000Amortisation expense (23,530) (16,250)Closing balance 28,414 48,750

NOTE 12: ASSETS CLASSIFIED AS HELD FOR SALE

The Directors in the 2015 financial year committed to the sale of the company’s properties located at Bairnsdale (Riverine Street), Bega, Merimbula, Moe, Sale and Wodonga as they were no longer required as site offices.

During the 2016 financial year, the company sold the properties in Bega, Merimbula, Sale and Wodonga. Properties located at Bairnsdale (Riverine Street) and Moe were not sold. The Directors then determined that these two properties were no longer to be held for sale, and were therefore reclassified as land and buildings within property, plant and equipment.

(a) ReconciliationOpening balance - 3,454,081Assets disposed of during the year - (2,440,221)Transferred from / (to) property, plant and equipment - (1,013,860)Closing balance - -


2017$

2016$

NOTE 13: PAYABLESCURRENTUnsecured liabilitiesTrade creditors 214,432 495,172Sundry creditors and accruals 1,740,787 1,630,677

1,955,219 2,125,849

NOTE 14: OTHER LIABILITIESCURRENTDeferred income 233,696 363,554

NOTE 15: BORROWINGSCURRENTSecured liabilitiesBank overdraft - 1,430Finance lease liability 545,828 -Future leasing finance charges (57,639) -

488,189 1,430

NON-CURRENTSecured liabilitiesFinance lease liability 869,200 -Future leasing finance charges (42,382) -

826,818 -

NOTE 16: PROVISIONSCURRENTEmployee benefits (a) 1,342,700 1,195,665

NON-CURRENTEmployee benefits (a) 100,385 137,133Other provisions - 30,077

100,385 167,210

(a) Aggregate employee benefits liability 1,443,085 1,332,798

NOTE 17: RESERVESAsset revaluation / capital profits reserve 1,576,745 1,411,470

1,576,745 1,411,470


The reserve records unrealised increments in the valuation of land and buildings arising from periodic revaluations of the properties. The reserve also records the realised capital profits of properties that have been disposed of.


2017$

2016$

NOTE 18: RETAINED EARNINGSRetained earnings at beginning of year 5,246,010 6,338,149Net loss (193,972) (1,092,139)

5,052,038 5,246,010

NOTE 19: CASH FLOW INFORMATION(a) Reconciliation of cashCash at the end of the financial year as shown in the consolidated statement of cash flows is reconciled to the related items in the consolidated statement of financial position is as follows:

Cash on hand 87,377 29,124Cash at bank 3,198,905 1,827,386Bank overdraft - (1,430)

3,286,282 1,855,080

(b) Reconciliation of cash flow from operations with profit

Loss from ordinary activities (193,972) (1,092,139)

Adjustments and non-cash itemsDepreciation and amortisation 1,202,354 979,304Charges to provision for impairment - 2,788Net (gain) / loss on disposal of property, plant and equipment (16,227) 7,874Impairment loss on other receivables - 58,000Gain on bargain purchase - (559,143)

Changes in operating assets and liabilities(Increase) / decrease in receivables 835,528 (913,919)(Increase) / decrease in other assets 59,599 -(Increase) / decrease in inventories (1,816) -(Increase) / decrease in financial assets - (30,371)Increase / (decrease) in payables (170,630) (711,847)Increase / (decrease) in other liabilities (129,858) -Increase / (decrease) in provisions 80,210 3,117Cash flows from operating activities 1,665,188 (2,256,336)

(c) Credit standby arrangements with banks

Credit facility 213,805 1,183,805Amount utilised (174,766) (145,796)Unused credit facility 39,039 1,038,009


The major facilities are summarised as follows:- Credit card facility with NAB of $70,000.- The company has a bank guarantee facility with the NAB of $167,455 in relation to guarantees provided in relation to the company’s operating property leases. At 30 June 2017 this facility was completely used.- In the prior financial year, the company had an overdraft facility with ANZ of $1,000,000. This facility was closed in 2017.


2017$

2016$

Payable- not later than one year 545,828 -- later than one year and not later than five years 869,200 -Minimum lease payments 1,415,028 -Less future finance charges (100,021) -Total finance lease liability 1,315,007 -

Represented by:Current liability 488,189 -Non-current liability 826,818 -

1,315,007 -


NOTE 20: BUSINESS COMBINATIONS

On 1 October 2015, the group merged with Advance Personnel (Canberra) Incorporated.

Assets and liabilities acquiredAssets and liabilities acquired as a result of the merger were:

Recognised on acquisition at fair value

$

Assets and liabilities held at acquisition date:- Trade receivables 105,605- Property, plant and equipment 31,226- Other assets 21,795- Trade creditors (110,855)- Provisions (232,429)- Cash and cash equivalents 743,801Net identifiable assets and liabilities acquired 559,143Total purchase consideration 559,143

NOTE 21: RELATED PARTY TRANSACTIONS

(a) Transactions with related partiesNo related party transactions other than with group entities which are eliminated on consolidation were entered into during the year ended 30 June 2017 and year ended 30 June 2016.

NOTE 22: CAPITAL AND LEASING COMMITMENTS(a) Finance leasing commitments


2017$

2016$

Payable- not later than one year 1,682,859 1,558,871- later than one year and not later than five years 938,377 1,846,075

2,621,236 3,404,946

NOTE 22: CAPITAL AND LEASING COMMITMENTS (cont’d)(b) Operating lease commitmentsNon-cancellable operating leases contracted for but not capitalised in the financial statements:

The lease commitments are non-cancellable operating leases contracted and not recognised in the financial statements with various lease terms. Increase in lease commitments may occur in line with the Consumer Price Index (CPI). The lease commitments are predominantly for properties used by the group.

NOTE 23: EVENTS SUBSEQUENT TO REPORTING DATEThere has been no matter or circumstance, which has arisen since 30 June 2017 that has significantly affected or may significantly affect:(a) the operations, in financial years subsequent to 30 June 2017, of the group, or(b) the results of those operations, or(c) the state of affairs, in financial years subsequent to 30 June 2017, of the group.

NOTE 24: MEMBERS’ GUARANTEEThe parent 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 to a maximum of$10 each towards meeting any outstandings and obligations of the company. At 30 June 2017 the number of members was 130 (2016: 136). The combined total amount that members of the parent are liable to contribute if the company is wound up is $1,300 (2016: $1,360).

DIRECTORS’ DECLARATIONThe directors declare that:1. 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; and2. the financial statements and notes satisfy the requirements of the Australian Charities and Not-for-profits

Commission Act 2012.

Signed in accordance with subsection 60.15(2) of the Australian Charities and Not-for-profit CommissionRegulation 2013.

Director:

Dated this 26th day of October 2017

Thelma Hutchison (Chairperson)


Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Workways Australia Limited ‘’the company’’ and its subsidiaries, “the Group”, which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and 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 theAustralian 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 2017 and of its financial performance for the year then ended; and

(b) complying with Australian Accounting Standards - Reduced Disclosure Requirements 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 Australian Charities and Not-for-profits Commission Act 2012 “ACNC Act” and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants “the Code” that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and our auditor’s report thereon.

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

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

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

Responsibilities of Management and Those Charged with Governance for the Financial Report

Management is responsible for the preparation and fair presentation of the financial report in accordance with the financial reporting requirements of the ACNC Act and for such internal control as management determines is necessary to enable the preparation and fair presentation of a financial report that is free from material misstatement, whether due to fraud or error.

In preparing the financial report, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic

Independent Auditor’s ReportTo the members of Workways Australia Limited


Responsibilities of Management and Those Charged with Governance for the Financial Report (continued)

alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

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.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Independent Auditor’s ReportTo the members of Workways Australia Limited


Auditor’s Independence DeclarationTo the members of Workways Australia Limited

consolidated statement of profit or loss and other...2 workways australia limited annual report acn...

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