financial report...alphacrucis college limited abn 13 072 747 187 directors' report for the...

Alphacrucis College LimitedABN 13 072 747 187

Financial ReportFor the Year Ended 31 December 2017


ContentsFor the Year Ended 31 December 2017

PageDirectors' Report 1Auditors Independence Declaration 6Statement of Profit or Loss and Other Comprehensive Income 7Statement of Financial Position 8Statement of Changes in Equity 9Statement of Cash Flows 10Notes to the Financial Statements 11Directors' Declaration 28Independent Audit Report 29


Directors' ReportFor the Year Ended 31 December 2017

The directors present their report on Alphacrucis College Limited for the financial year ended 31 December 2017.

General information

Directors

The names of the directors in office at any time during, or since the end of, the year are:Names Position Appointed/ResignedMichael Murphy President and ChairmanDr Stephen Fogarty Chief Executive OfficerMark BurgessAssoc Prof Stuart PigginJames MacphersonScott HaslemMeylia WylieCraig HallDr Stephen CrouchAssoc Prof Lily Arasaratnam-Smith Chair of Academic BoardDesleigh Davies

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

Principal activities

The principal activities of Alphacrucis College Limited during the financial year were:

1. Provision of religious and general education and training.

No significant changes in the nature of the Company's activity occurred during the financial year.

Short term objectives

The Company's short term objectives are to:

Increase the number of students, awards and delivery locations in line with the company's strategic plan

Implement new, and strengthen existing procedures required for the achievement of self-accrediting status as per theHigher Education Standards Framework (Threshold Standards)

1



Long term objectives

The Company's long term objectives are to:

Obtain University College Status by 2023

Strategies

To achieve these objectives, the Company has adopted the following strategies:

Our core capability of religious and general education and training is enhanced, and our core constituents are betterserved, by the further integration of Christian Worldview into the activities of the College

Increasing the number and quality of awards, and meeting self-accrediting requirements are served by Teaching andLearning, Research and Institutional Advancement committees and plans

Increasing the number of students, delivery locations and improvements to procedures are served by Communication andMarketing, Community Engagement and Resources and Finance committees and plans.

Key Performance Measures

The following measures are used within the Company to monitor performance:

Actual operating results against budget

Growth in student and enrolment numbers

Successful re-accreditation of awards

The continued positive feedback of accrediting government bodies.

Members guarantee

Alphacrucis College Limited is a company limited by guarantee incorporated under the Corporations Act 2001. In the event of, andfor the purpose of winding up of the company, the constitution states that each member is required to contribute a maximum of $ 10each towards meeting any outstanding obligations of the entity.

At 31 December 2017 the collective liability of members was $ 440 (2016: $ 440).

2



Information on directorsMichael Murphy President and ChairmanQualifications MA, Minister of ReligionExperience Senior Itinerant Minister, Executive Member - ACC NSW

Dr Stephen Fogarty Chief Executive OfficerQualifications Cert IV AWT, Dip Min, BA, MA, PHDExperienceSpecial Responsibilities Ex Officio Director

Mark BurgessQualifications Dip Quality Assurance, Dip Engineering MetrologyExperience Business Specialist / Chief Executive OfficerSpecial Responsibilities Finance and Audit Committee (Chairman)

Assoc Prof Stuart PigginQualifications BA, DipEd, PHD, AKC, BD, DLittExperience Director - Centre for History of Christian Thought and Experience (CTE) at

Macquarie University

James MacphersonQualifications AdvDipChristLeadExperience National Executive Member - Australian Christian Churches; Minister of

Religion

Scott HaslemQualifications BEcon (Hons), MEconExperience Managing Director and Chief Economist (Australasia) - UBS

Meylia WylieQualifications BComm, BCompSc, MComm, Chartered AccountantExperience Public Accountant and Registered Tax Agent

Craig HallQualifications BEcon, MA (Christian Studies)Experience Business Consultant, VETAB (TEQSA) Quality Control Consultant, Property

Development ConsultantSpecial Responsibilities Student Representative

Dr Stephen CrouchQualifications BBus, MEcon, DBA, FCAExperience Principal of Accounting Firm, Company Director, Responsible Officer AFSL

3



Information on directors

Assoc Prof Lily Arasaratnam-Smith

Chair of Academic Board

Qualifications PhD, MA, BS(Psych), BS(Mathematics)Experience Assistant Professor, Dept. of Speech Communication, Oregon State

University (2003-06); Lecturer, Dept. of International Communication,Macquarie University (2006-07); Research and Associate Professor inCommunication, Alphacrucis College (2008 - Present)

Special Responsibilities Ex Officio Director

Desleigh DaviesQualifications Bachelor of Applied ManagementExperience Administration and HR experience across the public, private and not-for-

profit sector. Understanding of small business management.Special Responsibilities Staff Representative

Meetings of directors

During the financial year, 4 meetings of directors were held. Attendances by each director during the year were as follows:

Directors'Meetings

Numbereligible to

attendNumberattended

Michael Murphy 4 4Dr Stephen Fogarty 4 4Mark Burgess 4 2Assoc Prof Stuart Piggin 4 4James Macpherson 4 1Scott Haslem 4 4Meylia Wylie 4 4Craig Hall 4 2Dr Stephen Crouch 4 3Assoc Prof Lily

Arasaratnam-Smith 4 4Desleigh Davies 4 3

4


Auditors Independence Declaration to the Directors of Alphacrucis College Limited

I declare that, to the best of my knowledge and belief, during the year ended 31 December 2017, there have been:

(i) no contraventions of the auditor independence requirements as set out in section 60-40 of the Australian Charities and Not-for-profits Commission Act 2012 in relation to the audit; and

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

Saward Dawson

Jeffrey TulkPartner

Blackburn

Date:

620 Albert Street / PO Box 256 PRINCIPALS: Bruce Saward FCA Peter Shields FCA

Blackburn Victoria 3130 Joshua Morse CA Jeff Tulk CA

T: +61 3 9894 2500 Directors: Cathy Braun CA

F: +61 3 9894 1622 Marie Ickeringill SSA Matthew Stokes CA

[email protected] Murray Nicholls CA Vicki Adams CA CPA CFP® www.sawarddawson.com.au Liability limited by a scheme approved under Professional Standards Legislation

A member of Russell Bedford International

1 May 2018


Statement of Profit or Loss and Other Comprehensive IncomeFor the Year Ended 31 December 2017

Note2017

$2016

$Revenue 3 13,745,655 12,422,321Gain on bargain purchase 4 361,822 -Employee benefits and contractor expenses (8,556,821) (7,675,706)Property expense (1,026,193) (859,115)Travel and entertainment expense (750,612) (551,285)Advertising and promotions expense (593,760) (672,115)Depreciation and amortisation expense (435,753) (369,674)Interest expense (408,379) (448,216)Consultants and professional fees (332,846) (315,600)Office expense (298,176) (240,624)Telephone and IT expense (260,661) (221,675)Course delivery and other academic expenses (208,130) (271,603)Course accreditation and development expense (166,865) (93,417)Bad and doubtful debts (18,000) (18,000)Other expenses (777,647) (647,882)

Operating surplus for the year 273,634 37,409

Non-operating itemsWrite-off property, plant and equipment - (53,618)

Surplus for the year 273,634 (16,209)

Other comprehensive incomeItems that will not be reclassified subsequently to profit or lossNet gain on revaluation of land and buildings 5,495,824 -

Other comprehensive income for the year 5,495,824 -

Total comprehensive income for the year 5,769,458 (16,209)

The accompanying notes form part of these financial statements.7


Statement of Financial PositionAs at 31 December 2017

Note2017

$2016

$

1 January2016

$

ASSETSCURRENT ASSETSCash and cash equivalents 5 374,731 1,359,954 3,111,598Trade and other receivables 6 1,301,539 364,734 564,609Inventories 7 27,826 46,142 28,220Financial assets 8 5,263 4,042 4,042Other assets 11 533,015 553,849 307,250TOTAL CURRENT ASSETS 2,242,374 2,328,721 4,015,719NON-CURRENT ASSETSProperty, plant and equipment 9 43,367,661 32,030,021 31,104,601Intangible assets 10 392,738 - -TOTAL NON-CURRENT ASSETS 43,760,399 32,030,021 31,104,601TOTAL ASSETS 46,002,773 34,358,742 35,120,320

LIABILITIESCURRENT LIABILITIESTrade and other payables 12 1,510,477 2,462,122 3,505,102Borrowings 13 - - 73,082Provisions 14 547,107 453,100 155,384TOTAL CURRENT LIABILITIES 2,057,584 2,915,222 3,733,568NON-CURRENT LIABILITIESTrade and other payables 12 3,457 26,907 3,457Borrowings 13 14,725,000 8,000,000 7,991,186Provisions 14 209,804 179,143 138,430TOTAL NON-CURRENT LIABILITIES 14,938,261 8,206,050 8,133,073TOTAL LIABILITIES 16,995,845 11,121,272 11,866,641NET ASSETS 29,006,928 23,237,470 23,253,679

EQUITYReserves 11,383,924 5,888,100 5,888,100Retained earnings 17,623,004 17,349,370 17,365,579TOTAL EQUITY 29,006,928 23,237,470 23,253,679



Statement of Changes in EquityFor the Year Ended 31 December 2017

2017

Note

RetainedEarnings

$

AssetRevaluation

Reserve$

Total$

Balance at 1 January 2017 17,349,370 5,888,100 23,237,470Surplus/(deficit) for the year 273,634 - 273,634Gain on revaluation of land and buildings - 5,495,824 5,495,824

Balance at 31 December 2017 17,623,004 11,383,924 29,006,928

2016

RetainedEarnings

$

AssetRevaluation

Reserve$

Total$

Balance at 1 January 2016 18,024,568 5,888,100 23,912,668Retrospective adjustment upon change in accounting policy 2 (658,989) - (658,989)Surplus/(deficit) for the year (16,209) - (16,209)

Balance at 31 December 2016 17,349,370 5,888,100 23,237,470



Statement of Cash FlowsFor the Year Ended 31 December 2017

Note2017

$2016

$

CASH FLOWS FROM OPERATING ACTIVITIES:Receipts from student fees, tenants and donors 12,153,019 11,492,839Payments to suppliers and employees (13,249,756) (11,828,830)Interest received 15,201 51,380Interest paid (408,379) (410,453)Net cash provided by (used in) operating activities 21 (1,489,915) (695,064)

CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property, plant and equipment (5,827,570) (1,043,439)Payment for intangible assets (392,738) -Net cash used by investing activities (6,220,308) (1,043,439)

CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from (repayment of) borrowings 6,725,000 (13,141)Net cash used by financing activities 6,725,000 (13,141)

Net increase (decrease) in cash and cash equivalents held (985,223) (1,751,644)Cash and cash equivalents at beginning of year 1,359,954 3,111,598Cash and cash equivalents at end of financial year 5 374,731 1,359,954



Notes to the Financial StatementsFor the Year Ended 31 December 2017

1 Summary of Significant Accounting Policies

Basis of Preparation

The financial report covers Alphacrucis College Limited as an individual entity. Alphacrucis College Limited is a not-for-profitCompany limited by guarantee, incorporated and domiciled in Australia.

In the opinion of the directors the Company is not a reporting entity since there are unlikely to exist users of the financial statementswho are not able to command the preparation of reports tailored so as to satisfy specifically all of their information needs. Thesespecial purpose financial statements have been prepared to meet the reporting requirements of the Australian Charities and Not-for-profits Commission Act 2012.

The financial statements have been prepared in accordance with the significant accounting policies disclosed below, which thedirectors have determined are appropriate to meet the requirements of the Australian Charities and Not-for-profits Commission Act2012 and the needs of the members. Such accounting policies are consistent with the previous year unless otherwise stated.

The financial statements, except for the cash flow information, have been prepared on an accruals basis and are based onhistorical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets andfinancial liabilities.

Accounting policies

(a) Revenue

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

Revenue from the rendering of a service is recognised upon delivery of the service to the customers. Student fee revenueis recognised on a straight-line basis over the semester of study to which the revenue attaches.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to financial assets.

Revenue from the sale of goods is recognised upon delivery of goods to customers.

Rental income from operating leases are recognised on a straight-line basis over the period of the lease term so as toreflect a constant periodic rate of return. Accrued income recognised to reflect income on a straight-line basis is classifiedas a current asset.

All revenue is stated net of the amount of goods and services tax (GST).

(b) Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, deposits held at call with banks, other short-term highly liquidinvestments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.

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(c) Inventories

Inventories are measured at the lower of cost and current replacement cost. Inventories acquired at no cost, or for nominalconsideration are valued at the current replacement cost as at the date of acquisition.

(d) Property, Plant and Equipment

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

Land and buildings

Land and buildings are shown at their fair value based on periodic, but at least triennial, valuations by external independentvaluers, less subsequent depreciation for buildings. In periods when land and buildings are not subject to independentvaluation, the directors conduct directors' valuations to ensure the carrying amount for the land and buildings is notmaterially different to the fair value.

Library books

Library books are recognised at fair value based on periodic directors' valuations. Such valuations may be based on thebest estimates of management, or based on valuations performed by external independent valuers as the directorsdetermine is necessary.

Increases in the carrying amount arising on revaluation of property, plant and equipment recognised at fair value arerecognised in other comprehensive income and accumulated in the asset revaluation reserve in equity. Revaluationdecreases that offset previous increases of the same class of assets shall be recognised in other comprehensive income.All other decreases are recognised in profit or loss.

Any accumulated depreciation at the date of the revaluation is eliminated against the gross carrying amount of the assetand the net amount is restated to the revalued amount of the asset.

Plant and equipment

Plant and equipment (except library books) are measured on the cost basis and are therefore carried at cost lessaccumulated depreciation and any accumulated impairment losses. In the event the carrying amount of plant andequipment is greater than its estimated recoverable amount, the carrying amount is written down immediately to itsestimated recoverable amount and impairment losses are recognised in profit or loss.

Plant and equipment that have been contributed at no cost, or for nominal cost, are valued and recognised at the fair valueof the asset at the date it is acquired.

Depreciation

The depreciable amount of all property, plant and equipment, except for freehold land is depreciated on a reducing balancemethod from the date that management determine that the asset is available for use. Assets held under a finance lease aredepreciated over the shorter of the term of the lease and the estimated useful life of the asset.

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(d) Property, Plant and Equipment

The depreciation rates used for each class of depreciable asset are shown below:Fixed asset class Depreciation rateBuildings and Improvements 1.25 - 2%Motor Vehicles 22.5%Plant and Equipment 10 - 30%

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

(e) Financial instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of theinstrument. For financial assets, this is the equivalent to the date that the Company commits itself to either the purchase orsale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transactions costs, except where the instrument is classified'at fair value through profit or loss' in which case transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest ratemethod, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, betweenknowledgeable, willing parties in an arm's length transaction. Where available, quoted prices in an active market are usedto determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

(a) the amount at which the financial asset or financial liability is measured at initial recognition;

(b) less principal repayments;

(c) plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised andthe maturity amount calculated using the effective interest method; and

(d) less any reduction for impairment.

13




The effective interest method is used to allocate interest income or interest expense over the relevant period and isequivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costsand other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term)of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected futurenet cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income orexpense in profit or loss.

The classification of financial instruments depends on the purpose for which the investments were acquired. Managementdetermines the classification of its investments at initial recognition and at the end of each reporting period for held-to-maturity assets.

The Company does not designate any interest as being subject to the requirements of accounting standards specificallyapplicable to financial instruments.

(i) Financial assets at fair value through profit or loss

Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading for the purpose ofshort-term profit taking. Such assets are subsequently measured at fair value with changes in carrying value being includedin profit or loss.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in anactive market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss throughthe amortisation period and when the financial asset is derecognised.

(iii) Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using theeffective interest rate method. Gains or losses are recognised in profit or loss through the amortisation process and whenthe financial liability is derecognised.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of theliability for at least 12 months after the reporting date.

(iv) Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied todetermine the fair value for all unlisted securities, including recent arm's length transactions, reference to similarinstruments and option pricing models.

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(f) Intangibles

Research and development

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs arecapitalised only when technical feasibility studies identify that the project will deliver future economic benefits and thesebenefits can be measured reliably. The expenditure capitalised includes the cost of materials, direct labour and overheadcosts that are directly attributable to preparing the asset for its intended use, and capitalised borrowing costs. Otherdevelopment expenditure is recognised in profit or loss as incurred.

Capitalised development costs are measured at cost less accumulated amortisation and accumulated impairment losses.Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits overthe useful life of the project.

Software

Software has a finite life and is carried at cost less any accumulated amortisation and impairment losses.

(g) Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not thelegal ownership that are transferred to the Company are classified as finance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of theleased property or the present value of the minimum lease payments, including any guaranteed residual values. Leasepayments are allocated between the reduction of the lease liability and the lease interest expense for that period.

Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the Companywill obtain ownership of the asset or over the term of the lease.

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

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

(h) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset arecapitalised as part of the cost of that asset.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

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(i) Goods and Services Tax (GST)

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

The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in thestatement of financial position.

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

(j) Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which itis probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions recognisedrepresent the best estimate of the amounts required to settle the obligation at the end of the reporting period.

(k) Critical accounting estimates and judgments

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

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

The significant estimates and judgements made have been described below.

Key estimates - impairment

The Company assesses impairment at the end of each reporting year by evaluating conditions specific to the Company thatmay be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-usecalculations which incorporate various key assumptions.

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2 Change in Accounting Policy

The company his historically capitalised a portion of its employee benefits and contractor expenses relating to ongoing coursedevelopment and accreditation, and amortised this asset in subsequent reporting periods. In the current year that directors havedetermined this accounting policy is no longer necessary given that course development and accreditation is now an ongoingoperational activity and it is becoming more difficult to attribute development costs to specific awards, particularly since the Collegehas now been authorised as a self-accrediting institution. Accordingly, the directors have assessed that these specific developmentcosts will now be expensed as incurred.

This change in accounting policy has been applied retrospectively and comparative figures have been restated accordingly. Theaggregate effect of the change in accounting policy on the annual financial statements for the year ended 31 December 2017 is asfollows:

Previouslystated

$

31 December2016

Adjustments$

Restated$

Previouslystated

$

1 January2016

Adjustments$

Restated$

Statement of Profit or Loss andOther Comprehensive Income

Course accreditation anddevelopment expense 238,034 (144,617) 93,417

Write-off of capitalised courseaccreditation costs 128,194 (128,194) -

Employee benefits and contractorexpenses 7,010,930 370,152 7,381,082

Statement of Financial PositionCourse accreditation costs (asset) 756,330 (756,330) - 658,989 (658,989) -Retained earnings 18,105,700 (756,330) 17,349,370 18,024,568 (658,989) 17,365,579

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3 Revenue2017

$2016

$

Student fee revenue- Gross student fees 12,754,056 12,455,046- Less partner college cost of services (2,101,296) (2,332,532)

10,652,760 10,122,514

Other revenue- Rental income 2,586,706 1,486,186- Donations and fundraising income 463,668 740,835- Interest income 15,201 51,380- Other sundry income 27,320 21,406

3,092,895 2,299,807

Total revenue 13,745,655 12,422,321

4 Business Combinations

On 1 December 2017, the Company acquired the assets and operations of Harvest Bible College (ABN 97 621 239 356) inaccordance with a signed agreement conferring the transfer of ownership.

In calculating the fair value of net assets acquired, the Company has applied provisional fair values in accordance with AASB 3Business Combinations, which were estimated by reference to the written-down value of the assets acquired. These values will besubsequently re-assessed during the year ended 31 December 2018.

The following table shows the assets acquired, liabilities assumed and the purchase consideration at the acquisition date.

Fair value$

Purchase consideration:Cash 2,000,000

Total purchase consideration 2,000,000

Assets or liabilities acquired:Property, plant and equipment 2,450,000Provisions (88,178)

Total net identifiable assets 2,361,822

Goodwill/(gain on bargain purchase) (361,822)

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5 Cash and cash equivalents

Note2017

$2016

$Cash on hand 8,330 7,180Cash at bank 366,401 1,352,774

374,731 1,359,954

6 Trade and other receivablesCURRENTTrade receivables 463,127 280,958Provision for impairment (a) (61,800) (43,800)

401,327 237,158

Operating lease receivables 654,572 -Fee HELP receivable 159,389 -Sundry debtors 86,251 127,576

1,301,539 364,734

(a) Impairment of receivables

Reconciliation of changes in the provision for impairment of receivables is as follows:2017

$Balance at beginning of the year 43,800Additional impairment loss recognised 18,000

Balance at end of the year 61,800

7 Inventories2017

$2016

$

CURRENTAt cost:Finished goods 27,826 46,142

27,826 46,142

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8 Financial Assets

Note2017

$2016

$CURRENTFinancial assets at fair value through profit or loss 5,263 4,042

5,263 4,042

9 Property, plant and equipmentLAND AND BUILDINGSFreehold landAt directors' valuation (a) 27,159,239 20,613,415

BuildingsAt directors' valuation (a) 14,139,522 10,143,995Accumulated depreciation (56,156) (142,069)

Total buildings 14,083,366 10,001,926Total land and buildings 41,242,605 30,615,341

PLANT AND EQUIPMENTPlant and equipmentAt cost 973,291 621,139Accumulated depreciation (416,640) (343,956)

Total plant and equipment 556,651 277,183

Motor vehiclesAt cost 14,408 14,408Accumulated depreciation (13,936) (13,799)

Total motor vehicles 472 609

Computer equipmentAt cost 484,031 331,675Accumulated depreciation (191,267) (105,279)

Total computer equipment 292,764 226,396

Library BooksAt directors' valuation (a) 1,509,457 1,047,941Accumulated depreciation (234,288) (137,449)

Total Library Books 1,275,169 910,492Total plant and equipment 2,125,056 1,414,680

Total property, plant and equipment 43,367,661 32,030,021

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9 Property, plant and equipment

(a) Revaluation of property, plant and equipment

Land and buildings

Land and buildings were valued by an independent valuer as at 31 December 2017. The critical assumptions adopted indetermining the valuation included the location of the land and buildings, the current strong demand for land and buildingsin the area and recent sales data for similar properties. The directors have reviewed the key assumptions adopted by thevaluers and have adopted a directors' valuation within the valuation range of the independent valuation. The directorstherefore believe the carrying amount of the land and buildings correctly reflects the fair value as at 31 December 2017.

Library Books

In 2014 the directors obtained an independent valuer to perform a valuation of library collection. The directors adopted thereplacement cost of the library in the independent valuation as the basis for the directors' valuation. The valuation of thelibrary reflects the current replacement cost of the library less estimated depreciable value consumed. The criticalassumptions adopted in determining the depreciated replacement cost included the current, age condition and futureeconomic value of the collection. The directors have reviewed the assumptions adopted in 2014 and do not believe therehas been a significant change in these assumptions. The directors therefore believe the carrying amount of the librarybooks correctly reflects the fair value as at 31 December 2017.

(b) Movements in Carrying Amounts

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

Land$

Buildings$

Plant andEquipment

$

MotorVehicles

$

ComputerEquipment

$

LibraryBooks

$Total

$

Balance at the beginning ofyear 20,613,415 10,001,926 277,183 609 226,396 910,492 32,030,021

Additions - 3,461,545 152,152 - 152,356 61,516 3,827,569Additions through acquisition

of entity 1,050,000 800,000 200,000 - - 400,000 2,450,000Depreciation expense - (180,105) (72,684) (137) (85,988) (96,839) (435,753)Revaluation increase

recognised in equity 5,495,824 - - - - - 5,495,824

Balance at the end of theyear 27,159,239 14,083,366 556,651 472 292,764 1,275,169 43,367,661

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10 Intangible Assets2017

$2016

$

Intangible assets under developmentAt cost 392,738 -

Total Intangibles 392,738 -

(a) Movements in carrying amounts of intangible assetsIntangible

assets underdevelopment

$Total

$Balance at the beginning of the year - -Additions 392,738 392,738

Balance at the end of the year 392,738 392,738

11 Other assets2017

$2016

$

CURRENTPrepayments 515,683 288,849Deposits 17,332 265,000

533,015 553,849

12 Trade and other payablesCURRENTUnsecured liabilitiesTrade payables 385,840 284,959Sundry payables and accrued expenses 494,437 362,187Income in advance 630,200 1,257,942Fee HELP payable - 557,034

1,510,477 2,462,122

NON-CURRENTUnsecured liabilitiesIncome in advance 3,457 26,907

3,457 26,907

22



13 Borrowings

Note2017

$2016

$

NON-CURRENTSecured liabilities:Bank loans (a), (b) 14,725,000 8,000,000

Total non-current borrowings 14,725,000 8,000,000

(a) The carrying amounts of non-current assets pledged as security for bank loans are:First Mortgage:

- freehold land and buildings 37,850,000 30,615,341

Floating charge: - assets other than land and buildings 8,152,773 4,504,979

46,002,773 35,120,320

The loan facility with the Commonwealth Bank of Australia is secured by a Registered Mortgage over the company's property at 30Cowper Street, Parramatta NSW. It is also secured by a First Registered Company Charge over the whole of assets andundertakings of the company.

The company also acquired property at 1 Keith Campbell Court, Scoresby VIC from Harvest Bible College during the year. Theproperty was sold under the Ministry Agreement which took effect on 1 December 2017. However, as settlement and transfer oftitle of the property did not simultaneously take place, the title to the property was still registered to Harvest Bible College as at 31December 2017. Accordingly, a first registered mortgage to Westpac Banking Corporation in respect of a loan facility held byHarvest Bible College (and not assumed by Alphacrucis College) continued to be registered as at 31 December 2017.

(b) Bank loan facilityLoan facility 15,560,000 8,300,000Amount utilised (14,725,000) (8,000,000)

Undrawn (overdrawn) facility 835,000 300,000

As at 31 December 2017, Alphacrucis College Limited had total borrowing facilities (including bank overdrafts) with theCommonwealth Bank of Australia approved to an amount of $15,560,000.

The bank loan facility includes a market rate loan facility that is interest-only, and is repayable in full on the maturity date, which hasbeen extended to March 2020. The balance of the market rate loan is $14,325,000 at 31 December 2017.

A further $400,000 of a Better Business Loan is drawn down at 31 December 2017. While this facility has an initial maturity of 12months from draw-down date, the intention of the both the College and the bank at the end of this facility are to renew the balancefor a commercially appropriate term. It has been classified as a non-current liability as the bank is not expecting repayment of thisfacility in the next 12 months.

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14 Provisions2017

$2016

$

CURRENTEmployee benefits 547,107 453,100

547,107 453,100

NON-CURRENTEmployee benefits 209,804 179,143

209,804 179,143

15 Reserves

Asset revaluation reserve

The asset revaluation reserve records realised gains on revaluation of property, plant and equipment recorded at fair value.

16 Capital and Leasing Commitments

Operating LeasesMinimum lease payments under non-cancellable operating leases:- not later than one year 174,400 105,080- between one year and five years 543,326 411,562

717,726 516,642

17 Key Management Personnel Disclosures

The total remuneration paid to key management personnel of the Company was $ 693,801 (2016: $ 571,148).

18 Auditors' RemunerationRemuneration of the auditor, for:- auditing or reviewing the financial statements 19,750 18,000- preparation of financial statements 3,000 3,000

Total 22,750 21,000

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19 Fair Value Measurement

The Company has the following assets, as set out in table below, that are measured at fair value on a recurring basis after theirinitial recognition. The company does not subsequently measure any liabilities at fair value on a recurring basis and has no assetsor liabilities that are measured at fair value on a non-recurring basis.

Recurring fair value measurements2017

$2016

$

Financial assets- listed shares (i) 5,263 4,042

Property, plant and equipment- freehold land (ii) 27,159,239 20,613,415- freehold buildings (ii) 14,139,522 10,143,995- library books (iii) 1,509,457 1,047,941

Total 42,813,481 31,809,393

(i) For investments in listed shares, the fair values have been determined based on closing quoted bid prices at the end of thereporting period.

(ii) For freehold land and buildings, the fair values are based on a directors' valuation taking into account an external independentvaluation performed, which used comparable market data for similar properties.

(iii) For library books, the fair values are based on directors' valuation taking into account the current replacement cost of the librarybased on an external independent valuation performed in a previous year, less estimated depreciable value consumed(depreciated replacement cost).

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20 Financial Risk Management

The main risks Alphacrucis College Limited is exposed to through its financial instruments are credit risk, liquidity risk and marketrisk consisting of interest rate risk, foreign currency risk and equity price risk. The Company's financial instruments consist mainly ofdeposits with banks, accounts receivable and payable, bank loans and overdrafts. The totals for each category of financialinstruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are asfollows:

2017$

2016$

Financial AssetsCash and cash equivalents 374,731 1,359,954Financial assets at fair value through profit or loss

- listed shares 5,263 4,042Loans and receivables 1,301,539 364,733

Total financial assets 1,681,533 1,728,729

Financial LiabilitiesFinancial liabilities at amortised cost

- Trade and other payables 880,276 647,146 - Borrowings 14,725,000 8,000,000

Total financial liabilities 15,605,276 8,647,146

21 Cash Flow Information

Reconciliation of result for the year to cashflows from operating activitiesSurplus for the year 273,634 (16,209)Non-cash flows in surplus: - depreciation 435,753 369,674 - net (gain)/loss on disposal of property, plant and equipment - 53,618 - gain on bargain purchase (361,822) - - gain on donation of library books - (356,401) - unrealised (gain)/loss on investments (1,221) -Changes in assets and liabilities: - (increase)/decrease in trade and other receivables (936,804) 237,639 - (increase)/decrease in inventories 18,316 (17,922) - (increase)/decrease in other assets 20,834 (284,362) - increase/(decrease) in income in advance (1,208,226) (1,088,990) - increase/(decrease) in trade and other payables 233,131 69,460 - increase/(decrease) in provisions 36,490 338,429Cashflow from operations (1,489,915) (695,064)

26



22 Events Occurring After the Reporting Date

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affectthe operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

23 Company Details

The registered office of and principal place of business of the company is:Alphacrucis College Limited30 Cowper StreetParramatta NSW 2150

27


Independent Audit Report to the members of Alphacrucis College Limited

Opinion

We have audited the accompanying financial report, being a special purpose financial report of Alphacrucis College Limited (theCompany), which comprises the statement of financial position as at 31 December 2017, the statement of profit or loss and othercomprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to thefinancial statements, including a summary of significant accounting policies, and the directors' declaration.

In our opinion, the accompanying financial report of the Company is in accordance with the Australian Charities and Not-for-profitsCommission Act 2012, including:

(i) giving a true and fair view of the Company's financial position as at 31 December 2017 and of its financial performance for the yearended; and

(ii) complying with Australian Accounting Standards to the extent described in Note 1, and Division 60 of the Australian Charities andNot-for-profits Commission Regulation 2013.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Companyin accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics forProfessional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our otherethical 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.

Emphasis of Matter - Basis of Accounting

We draw attention to Note 1 to the financial report, which describes the basis of accounting. The financial report has been prepared forthe purpose of fulfilling the directors' financial reporting responsibilities under the Australian Charities and Not-for-profits Commission Act2012. As a result, the financial report may not be suitable for another purpose. Our opinion is not modified in respect of this matter.

Responsibilities of Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view and havedetermined that the basis of preparation described in Note 1 to the financial report is appropriate to meet the requirements of theAustralian Charities and Not-for-profits Commission Act 2012 and is appropriate to meet the needs of the members. The directors'responsibility also includes such internal control as the directors determine necessary to enable the preparation of a financial report thatgives a true and fair view and is free from material misstatement, whether due to fraud or error.









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

Auditor's Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement,whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a materialmisstatement 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 the financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professionalscepticism 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 performaudit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraudmay 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 thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by the directors.

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

Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether thefinancial 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 auditfindings, including any significant deficiencies in internal control that we identify during our audit.

Saward Dawson

Jeffrey TulkPartner

Blackburn

Date:







1 May 2018

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