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Financial Statements

For the period ended 30 June 2020.

Financial Performance

1. Expenses

2. Own-Source revenue

Other Information

17. Note 17: Trust accounts

Statement of Comprehensive Income

Full Year

Original

Note

2020

2019

Budget

$'000

$'000

$'000

NET COST OF SERVICES

Expenses

Employee benefits

1A

29,657

27,015

31,632

Hostel accommodation expenses

1B

4,215

4,105

3,630

Administration expenses

1C

6,898

6,888

6,813

Property operating expenses

1D

9,747

10,308

9,976

Depreciation and amortisation

1E

6,169

5,153

5,040

Grants refund to portfolio department

-

1,000

-

Write-down and impairment of assets and bad debts

1F

1,058

1,128

626

Finance and borrowing costs

1G

109

58

51

Total expenses

57,853

55,655

57,768

Own-source income

Own-source revenue

Revenue from contracts with customers

2A

17,769

18,460

19,855

Interest

2B

349

620

517

Other revenue

2C

315

17

-

Total own-source revenue

18,433

19,097

20,372

Total own-source income

18,433

19,097

20,372

Net (cost of)/contribution by services

(39,420)

(36,558)

(37,396)

Revenue from Commonwealth Government

Grant received from portfolio department

3

36,241

36,323

36,426

Total revenue from Commonwealth Government

36,241

36,323

36,426

Surplus/(Deficit) on continuing operations

(3,179)

(235)

(970)

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in land revaluation surplus

(1,406)

-

-

Changes in building revaluation surplus

1,138

-

-

Total other comprehensive income

(268)

-

-

Total other comprehensive income

(3,447)

(235)

(970)

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

Budget variances commentary – Statement of comprehensive income

Employee benefits

During 2019-20 AHL undertook a staffing restructure as part of a program of necessary efficiency measures. The actual average staffing level during the year was lower than budgeted which resulted in a reduction in employee benefits paid.

Hostel accommodation expenses

This variance was mainly due to food and cleaning materials and services being higher than budgeted in the PBS as a result of COVID-19.

Depreciation and amortisation

This variance mainly relates to the additional depreciation and amortisation of right-of-use assets established due to the application of AASB 16 Leases. At the time of preparing the PBS, the impact from the application was not known and could not be reliably estimated.

Write-down and impairment of assets and bad debts

This variance relates to impairment of Musgrave Park, Chewings Street and Karinga hostels. This was not known during the preparation of the PBS and could not be reliably estimated.

Finance and borrowing costs

This variance mainly relates to the payment of interest on lease liabilities repayment due to the application of AASB 16 Leases. At the time of preparing the PBS, the impact from the application was not known and could not be reliably estimated.

Revenue from contracts with customers

This variance relates mainly to tariff income earned being lower than what was budgeted in the PBS due to lower occupancy implications from COVID-19.

Interest

This variance mainly relates to earning less interest due to lower interest rates.

Other Revenue

This variance relates mainly to legal fee reimbursement received from Comcover. This was not known during the preparation of the PBS and could not be reliably estimated.

Changes in land and building revaluation surplus

This variance relates to both revaluation of Musgrave Park, Chewing Street and Karinga hostels and the impairment of land and buildings. This was not known during the preparation of the PBS and could not be reliably estimated.

Statement of Financial Position

Full Year

Original

Note

2020

2019

Budget

$'000

$'000

$'000

ASSETS

CURRENT ASSETS

Financial assets

Cash and cash equivalents

4

36,175

34,557

30,995

Trade and other receivables

5A

609

1,382

629

Other financial assets

6

129

248

244

Total financial assets

36,913

36,187

31,868

Non-financial assets

Assets held for sale

6A

3,202

-

-

Total current assets

40,115

36,187

31,868

NON CURRENT ASSETS

Non-financial assets1

Land

7A

33,281

37,794

37,794

Buildings

7A

81,937

79,033

79,917

Art and artefacts

7A

2,083

2,105

2,119

Plant and equipment

7A

1,578

1,324

1,166

Computer software

7A

173

28

22

Total non-financial assets

119,052

120,284

121,018

Total non current assets

119,052

120,284

121,018

Total assets

159,167

156,471

152,886

LIABILITIES

CURRENT LIABILITIES

Payables

Trade payables

8

1,247

1,196

1,827

Lease incentive payable

9

-

43

43

Minimum lease payables

10

-

20

20

Interest bearing liabilities

11

864

-

-

Other payables

12

2,277

1,990

735

Total payables

4,388

3,249

2,625

Provisions

Employee provisions

14A

2,449

1,276

2,064

Total current liabilities

6,837

4,525

4,689

NON CURRENT LIABILITIES

Lease payable

Interest bearing liabilities

11

4,680

-

-

Minimum lease payables

10

-

543

543

Unearned lease incentive payable

9

-

293

250

Total operating lease payable

4,680

836

793

Provisions

Employee provisions

14A

738

1,789

1,896

Total provisions

738

1,789

1,896

Total non current liabilities

5,418

2,625

2,689

Total liabilities

12,255

7,150

7,378

Net assets

146,912

149,321

145,508

EQUITY

Contributed equity

94,243

94,243

94,243

Reserves

53,476

53,744

53,744

Retained surplus/(Accumulated deficit)

(807)

1,334

(2,479)

Total equity

146,912

149,321

145,508

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

1

Right-of-use assets are included in Building and Plant and equipment listed under non-financial assets.

Budget variance commentary - Statement of financial position

Cash and cash equivalents

This variance mainly relates to lower than expected capital expenditure during the 2019-20 financial year, at the time of preparing the PBS, this was not anticipated and could not be reliably estimated. This resulted in a higher than expected carry forward cash balance during the opening of the current financial year.

Other financial assets

This variance is mainly due to prepayment of various ICT software licenses that was not known during the preparation of the PBS and could not be reliably estimated.

Assets held for sale

This variance relates to reflect the decision by the Board to sell Musgrave Park, Chewings Street and Karinga hostels. At the time of preparing the PBS, this was not known and could not be reliably estimated.

Land

This variance relates to the re-categorisation of the land assets relating to Musgrave Park, Chewings Street and Karinga hostels and the impairment of land assets. Neither events were known during the preparation of the PBS and could not be reliably estimated.

Plant and equipment

This variance mainly relates to the additional right-of-use assets established due to the application of AASB 16 Leases which was not estimated in the preparation of the PBS.

Computer software

This variance relates mainly due to purchases of various Microsoft software which were not known during the preparation of the PBS.

Trade payables

This variance is mainly due to a higher amount of trade payables being processed and paid in 2019-20 than anticipated in the PBS.

Unearned lease incentive payable and Lease incentive payable

This variance relates to the clearing of lease incentive payable due to the initial application of AASB 16 Leases, which was not estimated in the preparation of the PBS.

Minimum lease payables

This variance relates to the clearing of minimum lease payables due to the initial application of AASB 16 Leases which was not estimated in the preparation of the PBS.

Interest bearing liability

This variance relates to additional lease liabilities established due to the application of AASB 16 Leases which was not estimated in the preparation of the PBS.

Employee Provisions

The actual leave provisions for 2019-20 were lower than budgeted due to redundancies and staff resignations in prior year that were not known at the time of PBS preparation.

Other payables

This variance mainly relates to the accrual of the payroll adjustment for the underpayment of APS 1 staff and refundable tariff being higher than what was budgeted in the PBS.

Statement of Changes in Equity

Full Year

Original

Note

2020

2019

Budget

$'000

$'000

$'000

CONTRIBUTED EQUITY

Opening balance

Balance carried forward from previous period

94,243

94,243

94,243

Closing balance as at 30 June 2020

94,243

94,243

94,243

RETAINED EARNINGS

Opening balance

Balance carried forward from previous period

1,334

1,569

(1,509)

Adjustment on initial application of AASB 15

140

-

-

Adjustment on initial application of AASB 16

898

-

-

Adjusted opening balance

2,372

-

(1,509)

Comprehensive income

Surplus/(Deficit) for the period

(3,179)

(235)

(970)

Total comprehensive income

(807)

(235)

(970)

Closing balance as at 30 June 2020

(807)

1,334

(2,479)

ASSET REVALUATION RESERVE

Opening balance

Balance carried forward from previous period

53,744

53,744

53,744

Comprehensive income

Other comprehensive income

(268)

-

-

Total comprehensive income

53,476

-

-

Closing balance as at 30 June 2020

53,476

53,744

53,744

TOTAL EQUITY

Opening balance

Balance carried forward from previous period

149,321

149,556

146,478

Adjustment for changes in accounting policies

1,038

-

-

Adjusted opening balance

150,359

149,556

146,478

Comprehensive income

Surplus/(Deficit) for the period

(3,179)

(235)

(970)

Other comprehensive income

(268)

-

-

Total comprehensive income

(3,447)

(235)

(970)

Closing balance as at 30 June 2020

146,912

149,321

145,508

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

Budget Variance Commentary – Statement of Changes in Equity

Adjustment on initial application of AASB 15 and AASB 16

This variances relates to the application of AASB 15 Revenue from Contracts with Customers and AASB 16 Lease which was not estimated in the preparation of the PBS.

Surplus/(Deficit) for the period

This variance relates to the higher 2019-20 deficit which was not foreseen at the time of preparing the PBS.

Other Comprehensive income

This variance relates to both revaluation of Musgrave Park, Chewings Street and Karinga hostels and the impairment of land and buildings. Neither event was known at the time of preparation of the PBS and could not be reliably estimated.

Cash Flow Statement

Full Year

Original

Note

2020

2019

Budget

$'000

$'000

$'000

OPERATING ACTIVITIES

Cash received

Receipts from Commonwealth Government

38,124

39,435

39,138

Receipts from State and Territory Governments

2,549

3,236

2,477

Receipts from hostel accommodation customers

13,971

14,723

14,964

Interest

361

614

517

Net GST received

1,683

1,531

957

Other

315

18

-

Total cash received

57,003

59,557

58,053

Cash used

Employees

29,254

26,715

31,433

Suppliers

22,034

24,321

21,841

Grants refund to portfolio department

-

1,000

-

Interest paid - Leases

62

-

-

Other

154

-

-

Total cash used

51,504

52,036

53,274

Net cash from/(used by) operating activities

13

5,499

7,521

4,779

INVESTING ACTIVITIES

Capital cash used

Payment for property, plant and equipment

2,754

2,519

3,969

Payment for intangibles

198

11

31

Total capital cash used

2,952

2,530

4,000

Net cash from/(used by) investing activities

(2,952)

(2,530)

(4,000)

FINANCING ACTIVITIES

Financing cash used

Principal repayments - Leased assets

929

-

-

Total investing cash used

929

-

-

Net cash from/(used by) financing activities

(929)

-

-

Net increase/(decrease) in cash held

1,618

4,991

779

Cash and cash equivalents at the beginning of the reporting period

34,557

29,566

30,216

Cash and cash equivalents at the end of the reporting period

4

36,175

34,557

30,995

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

Budgetary variance commentary – Cash flow statement

Interest

The lower interest received was due to lower interest rates which was not foreseen at the time of preparing the PBS.

Operating cash net GST received

This variance is mainly due to receiving a higher GST input credits received from ATO due to budgeting a lower GST paid to suppliers in 2019-20 in the PBS.

Operating cash received other

During 2019-20, AHL received a reimbursement of legal fees from Comcover, which was paid in the 2018-19 financial year. This was not known during the preparation of the PBS and could not be reliably estimated.

Operating cash used interest paid (leases)

This variance mainly relates to the payment of interest on lease liabilities repayment due to the application of AASB 16 Leases which was not estimated in the preparation of the PBS.

Operating cash used (other)

This variance relates to the legal settlement that AHL has paid in the 2019-20 financial year in relation to an alleged incident in one of its Victorian hostels in the 1980s. The timing of the legal settlement was not known during the preparation of the PBS and could not be reliably estimated.

Investing activities cash used – payment for property, plant and equipment

During 2019-20, AHL continued a major program of repairs and maintenance work, which resulted in a lower requirement for capital purchases than anticipated in the PBS.

Investing activities cash used – payment for intangibles

This variance relates mainly due to purchases of various Microsoft software which was not known during the preparation of the PBS.

Financing activities cash used – principal repayments – Leased assets

This variance mainly relates to the principal repayment on lease liabilities due to the application of AASB 16 Leases which was not estimated in the preparation of the PBS.

Overview

Aboriginal Hostels Limited (AHL) is an Australian Government controlled entity. It is a not-for-profit entity. The objective of AHL is to provide safe, comfortable, culturally appropriate and affordable accommodation for Indigenous Australians who must live away from home to access services and labour markets.

AHL is structured to meet the outcome of improved access to education, employment, health and other services for Aboriginal and Torres Strait Islander people travelling or relocating through the operation of temporary hostel accommodation services.

The continued existence of the entity in its present form and with its present programmes is dependent on Government policy and on continuing funding by Parliament for the entity’s administration and programmes.

Entity activities contributing toward these outcomes are classified as departmental. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by the entity in its own right. AHL does not have any Administered items.

Basis of preparation

The financial report is a general purpose financial report that has been prepared in accordance with the Corporations Act 2001, the Australian Charities and Not-for-profits Commission Act 2012, and the Australian Accounting Standards (including Australian Accounting Interpretations) and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). AHL is classified for financial reporting purposes as a not-for-profit (NFP) entity under the Corporations Act 2001 and the Australian Accounting Standards.

The financial report, except for cash flow information, has been prepared on an accrual basis and on a historical cost basis modified where applicable by the measurement at fair value of selected assets and liabilities.

AHL’s financial instruments are limited to cash, trade and other receivables and trade and other payables. AHL financial instruments are not complex and therefore are not further disclosed in the notes.

The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated.

Accounting Policy Changes

The accounting policies adopted by AHL during 2019-20 are consistent with those of the previous financial year.

New Accounting Standards

Adoption of New Accounting Standard Requirements

No accounting standard has been adopted earlier than the application date as stated in the standard.

The following standards were issued by the Australian Accounting Standards Board were applicable to the current reporting period and had a material effect on Aboriginal Hostels Limited’s financial statements:

AASB 1058 Income of Not-for- Profit Entities and AASB 2016-7 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities

AASB 15, AASB 2016-8 and AASB 1058 became effective 1 July 2019.

AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and Interpretation 13 Customer Loyalty Programmes. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most of the not-for-profit (NFP) provisions of AASB 1004 Contributions and applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives, and where volunteer services are received.

Application of AASB 15 Revenue from Contractors with Customers / AASB 1058 Income of Not-For-Profit- Entities

AHL adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly the comparative information presented for 2019 is not restated, that is, it presented as previously reported under the various applicable AASBs and related interpretations.

The column below shows the summarised impact on transition as at 1 July 2019.

Impact on transition

1-Jul-19

Assets

$’000

Receivables

140

Equity

Adjustment recognised in retained earnings

140

The adjustments above were attributable to the Alyerre hostel grant which was previously recognised on a cash basis as per AASB 1004, with the introduction of AASB 15 income is now recognised on an accrual basis.

Under the new income recognition model AHL shall first determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’ (to a transaction or part of the transaction), AHL applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, AHL shall consider whether AASB 1058 applies.

In relation to AASB 15, AHL elected to apply the new standard to all new and uncompleted contracts from the date of initial application.

The table in the next page sets out the amounts by which each financial statement line item is affected as at and for the year ended 30 June 2020 as a result of the adoption of AASB 15. The first column shows the amounts prepared under AASB 15 and the second column shows the amounts that would have been recognised if AASB 15 had not been adopted.

AASB 15

Previous AAS

Increase / (decrease)

Transitional Disclosure

$’000

$’000

$’000

Revenue

Revenue from contracts with customers - Alyerre Hostel

572

569

3

Total Revenue

572

569

3

Net (cost of)/contribution by services

572

569

3

Assets

Receivables

143

-

143

Cash

569

569

-

Total Assets

712

569

143

Equity

Retained earnings

140

-

140

AASB 16 Leases and AASB 2018-8 Amendments to Australian Accounting Standards – Right-of-Use Assets of Non-for-Profit Entities

AASB 16 became effective on 1 July 2019.

This new standard has replaced AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases—Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

Aboriginal Hostels Limited adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.

Aboriginal Hostels Limited elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.

AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. The Entity applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:

  • Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under AASB 136 Impairment of assets as at the date of initial application;
  • Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.
  • Use hindsight in determining the lease term if the leases contract contains options to extend of terminate the lease.

As a lessee, Aboriginal Hostels Limited previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, Aboriginal Hostels Limited recognises right-of-use assets and lease liabilities for most leases. However, Aboriginal Hostels Limited has elected not to recognise right-of-use assets and lease liabilities for some short-term leases with a lease term of 12 months or less.

On adoption of AASB 16, Aboriginal Hostels Limited recognised right-of-use assets and lease liabilities in relation to the lease of National Office in Canberra and the lease of Kirinari Sylvania hostel in Sydney and vehicles, which had all previously been classified as operating leases.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using Aboriginal Hostels Limited’s incremental borrowing rate as at 1 July 2019. Aboriginal Hostels Limited incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 1.067%.

The right-of-use assets were measured as follows:

  1. National Office: measured at an amount equal to the lease liability.
  2. All other leases: the carrying value that would have resulted from AASB 16 being applied from the commencement date of the leases, subject to the practical expedients noted above.

On transition to AASB 16, Aboriginal Hostels Limited recognised additional right-of-use assets, additional lease liabilities, original operating lease related liabilities in retained earnings. The impact on transition is summarised below:

Impact on transition

1-Jul-19

$’000

Assets

Right-of-use assets - property, plant and equipment

6,173

Liabilities

Lease Liabilities

6,173

Operating Lease Liability

-563

Lease Incentive

-336

Equity

Adjustment recognised in retained earnings

899

The below reconciles minimum lease commitments disclosed in Aboriginal Hostels Limited’s 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:

$’000

Minimum operating leases commitment as at 30 June 2019

6,976

Less:

Short-term leases not recognised under AASB 16

29

GST included in minimum operating lease commitment as at 30 June 2019

634

Plus:

Omitted lease commitments as at 30 June 2019

112

Undiscounted lease payments

6,425

Less:

Effect of discounting using incremental borrowing rate as at the date of initial application

252

Lease liabilities recognised as at 1 July 2019

6,173

All other new, revised and amending standards and interpretations that were issued prior to the signing date and all applicable to the current reporting period did not have a material effect, and are not expected to have a future material effect, on Aboriginal Hostels Limited’s financial statements.

Events after balance date

No events after balance date requiring reporting have occurred.

Notes to the Financial Statements

This section analyses the financial performance of Aboriginal Hostels Limited for the year ended 30 June 2020

Expenses

Note 1A: Employee benefits

Note 1A: Employee benefits

2020

2019

$'000

$'000

Wages and salaries

22,738

20,287

Annual leave

1,499

1,456

Long service leave

438

501

Other leave

1,294

1,202

Superannuation

3,302

3,180

Termination benefits

386

389

Total employee benefits

29,657

27,015

Accounting Policy

Accounting policies for employee related expenses is contained in note 14.

Note 1B: Hostel accommodation expenses

Note 1B: Hostel accommodation expenses

2020

2019

$'000

$'000

Food and beverages

3,297

3,434

Cleaning and hygiene

913

667

Medical sundries

5

4

Total hostel accommodation expenses

4,215

4,105

Note 1C: Administration expenses

Note 1C: Administration expenses

Note

2020

2019

$'000

$'000

Consultants and contractors

1,520

838

Information technology and communications

1,301

1,366

Workers compensation expenses

1,274

1,434

Travel and accommodation

798

1,479

Training and recruitment

321

310

Insurance

285

246

Directors' fees

14C

329

311

Audit fees

113

112

Legal expenses

157

156

Other

800

636

Total administration expenses

6,898

6,888

Note 1D: Property operating expenses

Note 1D: Property operating expenses

2020

2019

$'000

$'000

Operating lease expense1

-

761

Short-term leases

74

-

Repairs and maintenance

5,092

4,510

Minor furnishings

212

301

Fuel and power

1,898

2,183

Rates

803

848

Security services

1,179

1,304

Other

489

401

Total property operating expenses

9,747

10,308

1Aboriginal Hostels Limited has applied AASB 16 using the modified retrospective approach and therefore the comparative information have not been restated and continues to be reported under AASB 117 (for Operating leases expense).

The above lease disclosures should be read in conjunction with the accompanying notes 1G, 7B and 11.

Aboriginal Hostels Limited has zero short-term lease commitments as at 30 June 2020.

Accounting policy

Short-term leases

Aboriginal Hostels Limited has elected not to recognise right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less. Aboriginal Hostels Limited recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Note 1E: Depreciation and amortisation

Note 1E: Depreciation and amortisation

2020

2019

$'000

$'000

Depreciation:

Buildings

5,274

4,386

Plant and equipment

699

560

Art and artefacts

22

22

Total depreciation

5,995

4,968

Amortisation:

Leasehold improvements

121

164

Intangibles

53

21

Total amortisation

174

185

Total depreciation and amortisation

6,169

5,153

Note 1F: Write-down and impairment of assets and bad debts

Note 1F: Write-down and impairment of assets and bad debts

2020

2019

$'000

$'000

Building

292

1,040

Plant and equipment

5

46

Non-current assets held for sale

722

-

Total write-down and impairment of assets

1,019

1,086

Bad debts write off and provision for bad debts

39

42

Total write-down and impairment of assets and bad debts

1,058

1,128

Note 1G: Finance and borrowing costs

Note 1G: Finance and borrowing costs

2020

2019

$'000

$'000

Bank charges

47

58

Interest on lease liabilities

62

-

Total finance and borrowing costs

109

58

The above lease disclosures should be read in conjunction with the accompanying notes 1D, 7B and 11.

Accounting Policy

Accounting policies for depreciation expenses are located after Note 7B.

Expense recognition

Resources provided free of charge

Resources provided free of charge by AHL are recognised as expenses when and only when the ‘fair value’ can be reliably determined and the services would have been sold if they had not been donated. Resources provided free of charge are recorded as either an expense or a loss depending on their nature.

AHL utilises two hostels under a trust deed, the properties are Durungaling Hostel and Biala Hostel in NSW.

Income tax

No provision for income tax has been raised as AHL is exempt from income tax under Division 50 of the Income Tax Assessment Act 1997.

Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, except where the GST incurred is not recoverable from the Australian Taxation Office. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable or payable to the Australian Taxation Office is included with other receivables and payables in the statement of financial position. Cash flows are presented on a gross basis. The GST component of cash flows arising from investing or financing activities which are recoverable from, or payable to the Australian Taxation Office are presented as operating cash flows.

Own-Source revenue

Note 2A: Revenue from contracts with customers

Note 2A: Revenue from contracts with customers

2020

2019

$'000

$'000

Funding for operation of hostels

4,004

3,725

Hostel accomodation revenue

13,765

14,735

Total revenue from contracts with customers

17,769

18,460

Funding received for operation of hostels

National Indigenous Australians Agency (NIAA)

Wadeye Secondary Education Boarding Facility

1,712

829

Northern Territory Housing

Akangkentye Hostel

-

889

Apmere Mwerre Visitor Park

1,470

1,452

Wangkana Kari Hostel

250

-

Northern Territory Department of Health

Alyerre Hostel

572

555

Total funding received for operation of hostels

4,004

3,725

Hostel accommodation revenue

Tariff collected from non-government entities

12,197

13,802

Tariff collected from State and Territory Governments

1,568

933

Total hostel accommodation revenue

13,765

14,735

Accounting policy

Revenue recognition

Revenue is recognised to the extent it is probable that the economic benefits will flow to AHL and the revenue can be reliably measured. The following specific recognition criteria must be met before revenue is recognised.

Rendering of services

Revenue received for the provision of hostel accommodation is recognised at the point in time of delivery of the service to customers, with all outstanding hostel tariff revenue accounted for as trade receivables and revenue payable by State and Territory organisations. The transaction price is the total amount of consideration which AHL expects to be entitled in exchange for hostel accommodation services which comprise fixed amounts.

Contributions

A contribution occurs when AHL receives an asset or cash without returning approximately equal value to the parties that provided the cash or asset for example property donations, grant funding to deliver administered programs. Contributions covered by enforceable agreements with sufficiently specific performance obligations are recognised as revenue when the performance obligations are satisfied as described in rendering of services above. Other contributions are recognised as income when AHL is entitled to the contribution.

Resources received free of charge

Resources received free of charge by AHL are recognised as revenue when the ‘fair value’ can be reliably determined and the services would have been purchased if they had not been donated. AHL does not include an estimate of the value of hostels provided to AHL free of charge to operate in its financial statements as these arrangements always result in nil impact to the financial position of AHL. AHL would not have purchased these resources if they were not provided free of charge. No value has been recognised in AHL's current or prior year financial statements for resources received free of charge.

Note 2B: Interest income

Note 2B: Interest income

2020

2019

$'000

$'000

Interest income

349

620

Total interest income

349

620

Note 2C: Other income Rent received

Note 2C: Other income

2,020

2,019

$'000

$'000

Rent received

1

6

Other revenue and gains

314

11

Total other income

315

17

Note 3: Revenue from Commonwealth Government

Note 3: Revenue from Commonwealth Government

2020

2019

$'000

$'000

Department of Prime Minister and Cabinet (PM&C)

Grant received from portfolio department

36,241

36,323

Total Grant received from Commonwealth Government

36,241

36,323

Accounting Policy

Interest revenue

Interest revenue is recognised using the effective interest method.

Other income

Other income is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to AHL and the income can be reliably measured.

Sale of assets

Gain from disposal of assets are recognised when control of the assets has passed to the buyer.

Revenue from Government

Funding received or receivable from non-corporate Commonwealth entities (appropriated to the Department of Prime Minister and Cabinet for payment to corporate entities) is recognised as Revenue from Government by AHL unless the funding is in the nature of an equity injection or a loan.

Financial Position

This section analyses Aboriginal Hostels Limited's assets used to conduct its operations and the operating liabilities incurred as a result. Employee related information is disclosed in the people and relationships section.

Note 4: Cash and cash equivalents

Note 4: Cash and cash equivalents

2020

2019

$'000

$'000

Cash at bank

36,007

34,389

Donation account

168

168

Total cash and cash equivalent

36,175

34,557

Note 5A: Trade and other receivables

Note 5A: Trade and other receivables

2020

2019

$'000

$'000

Trade receivables

297

642

Less: Provision for impairment

(59)

(104)

Total trade receivables

238

538

GST receivable

149

270

Other receivables

222

574

Total other receivable

371

844

Total trade and other receivables

609

1,382

Accounting Policy

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

  1. cash on hand;
  2. deposits held at call at bank; and
  3. other short-term deposits.
Note 5B: Provision for impairment of receivables

A review is undertaken at 30 June each year of all outstanding trade receivables to identify impaired and uncollectable debts. Individual debts deemed uncollectable are written off at year end and a provision for impairment (doubtful debts) is recognised.

Total trade and other receivables are expected to be recovered no more than 12 months from the reporting date.

Accounting policy

Trade and other receivables

Receivables for goods or services are recognised at the nominal amounts due, less any allowances for impairment. The collectability of debts is reviewed at year end. An allowance is recognised when the collectability of the debt is no longer probable and reported as a provision for impairment. The 'No Pay No Stay' policy is in place to reduce the level of irrecoverable debts from residents and hostel accommodation tariff payable by institutional debtors (e.g. State and Territory government agencies). Debts are either paid upfront or due within 60 days of the accommodation being provided to residents.

Reconciliation of the impairment allowance for trade receivables are noted below:

Note 5B: Movement in relation to 2020

2020

$'000

As at 1 July 2019

(104)

Amount written off

84

Increase/(Decrease) recognised in net cost of service

(39)

Closing balance provision for impairment as at 30 June 2020

(59)

Note 5B: Movement in relation to 2019

2019

$'000

As at 1 July 2018

(104)

Amount written off

42

Increase/(Decrease) recognised in net cost of service

(42)

Closing balance of provision for impairment as at 30 June 2019

(104)

Note 6: Other financial assets

Note 6: Other financial assets

2020

2019

$'000

$'000

Prepayments

129

248

Total other financial assets

129

248

Note 6A: Assets held for sale

2020

$'000

2019

$'000

Assets held for sale1

3,202

-

Total assets held for sale

3,202

-

1Musgrave Park Hostel, Karinga Hostel and Chewings St were held for sale as at 30 June 2020. Karinga Hostel was revalued upwards by $216k, Musgrave Park Hostel and Chewings St were revalued downwards by $500k and $30k respectively.

Note 7A: Schedule of property, plant and equipment and intangible assets

Note 7A: Schedule of property, plant and equipment and intangible assets

2020

$'000

2019

$'000

Land and buildings

Land at fair value

33,281

37,794

Total land

33,281

37,794

Buildings at fair value

75,731

82,201

Add: Work in progress at historic cost

323

130

Less: Accumulated depreciation

(16)

(4,369)

Total buildings at fair value

76,038

77,962

ROU Assets building

ROU buildings

5,724

-

Less: Accumulated depreciation

(825)

-

Total ROU buildings at fair value

4,899

-

Leasehold improvements at historic cost

1,874

1,824

Less: Accumulated depreciation

(874)

(753)

Total leasehold improvements

1,000

1,071

Total land and buildings

115,218

116,827

Plant and equipment

Plant and equipment at historic cost

3,852

3,743

Less: Accumulated depreciation

(2,819)

(2,419)

Total plant and equipment at historic cost

1,033

1,324

ROU Plant and equipment

748

-

Less: Accumulated depreciation

(203)

-

Total ROU plant and equipment at historic cost

545

-

Total plant and equipment at historic cost

1,578

1,324

Art and artefacts

Art and artefacts at fair value

2,127

2,127

Less: Accumulated depreciation

(44)

(22)

Total art and artefacts

2,083

2,105

Software

Software at historic cost

691

511

Add: Work in progress at historic cost

14

-

Less: Accumulated depreciation

(532)

(483)

Total software

173

28

Total property, plant and equipment

119,052

120,284

Note 7B: Reconciliation of the opening and closing balances of property, plant and equipment and intangibles 2020

Land

Buildings

Buildings Work In Progress

Leasehold Improvements

Total Land and Buildings

Total Plant and Equipment

Total Art and Artefacts

Computer Software

Software Work In Progress

Total Computer Software

Total

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

As at 30 June 2019

Closing gross book value

37,794

82,194

130

1,830

121,948

3,743

2,127

511

-

511

128,329

Closing accumulated depreciation

-

(4,369)

-

(752)

(5,121)

(2,419)

(22)

(483)

-

(483)

(8,045)

Closing net book value at 30 June 2019

37,794

77,825

130

1,078

116,827

1,324

2,105

28

-

28

120,284

Recognition of right of use assets on initial application of AASB 16

-

5,724

-

-

5,724

449

-

-

-

6,173

Adjusted total as at 1 July 2019

37,794

83,549

130

1,078

122,551

1,773

2,105

28

-

28

126,457

Additions:

By acquisition

-

-

2,930

-

2,930

-

-

-

14

14

2,944

Right-of-use assets

-

-

-

-

-

243

-

-

-

243

Capitalised from work in progress

-

2,302

(2,737)

43

(392)

208

-

184

-

184

-

Disposal of assets

-

(302)

-

-

(302)

(4)

-

-

-

-

(306)

Revaluations and impairments recognised in other comprehensive income2

(1,406)

1,138

-

-

(268)

-

-

-

-

-

(268)

Assets held for sale or in a disposal group held for sale1

(3,107)

(798)

-

-

(3,905)

-

-

-

-

(3,905)

Depreciation expense

-

(4,449)

-

(121)

(4,570)

(496)

(22)

(53)

-

(53)

(5,141)

Depreciation expense on right-of-use assets

-

(825)

-

-

(825)

(203)

-

-

-

-

(1,028)

Other movements of right-of-use assets

-

-

-

-

-

56

-

-

-

-

56

Closing net book value as 30 June 2020

33,281

80,615

323

1,000

115,219

1,577

2,083

159

14

173

119,052

Net book value as at 30 June 2020 represented by

Closing gross book value

33,281

75,731

323

1,874

111,209

3,852

2,127

691

14

705

117,893

Closing accumulated depreciation

-

(16)

-

(874)

(890)

(2,819)

(44)

(532)

-

(532)

(4,285)

Closing net book value as 30 June 2020

33,281

75,715

323

1,000

110,319

1,033

2,083

159

14

173

113,608

Carrying amount of right-of-use assets

-

4,899

-

-

4,899

545

-

-

-

-

5,444

1In 2019-20 AHL held Musgrave Park Hostel, Karinga Hostel and Chewings St in Assets held for sale category.

2In 2019-20 AHL had an independent desktop valuation of Land and Building assets for impairment. The impact to the revaluation reserve on desktop valuation was a decrease of $560k. Musgrave Park Hostel, Karinga Hostel and Chewings St were held for sale as at 30 Jun 2020. Land value of Karinga Hostel was remeasured to increase by $457k. Buildings of Musgrave Park Hostel and Chewings St was remeasured to decrease by $165k. The net impact to the remeasure of assets held for sale was $293k.

The above lease disclosures should be read in conjunction with the accompanying notes 1D, 1G and 11.

Accounting policy

Property, plant and equipment (includes fit out in leased properties, art and artefacts)

Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total) or they are art and artefacts, where AHL has no capitalisation threshold.

Art, artefacts, land and buildings are carried at ‘fair value’ less depreciation, whereas leasehold improvements, plant and equipment are carried at historic cost less accumulated depreciation and less any identified impairment losses. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount. A formal assessment of recoverable amount is made when impairment indicators are present.

Independent valuations

The last independent valuation of land and buildings was undertaken by Jones Lang LaSalle (JLL) as at 30 June 2018.

These independent valuations were undertaken by AHL to: obtain the current values of land and buildings for accounting and insurance purposes, identify potential impairment to historical values, and ensure AHL’s assets are not carried at amounts greater than ‘fair value’ as required by accounting standard AASB 136, Impairment of Assets.

AHL undertakes revaluations of its land, buildings, art and artefacts, every three years and reflect these valuations and remaining useful lives in AHL’s asset register and accounts.

During the 2019-20 financial year, AHL engaged in an independent desktop valuation on all land and building components to identify any evidence of impairment. This valuation was in addition to the independent valuation conducted every three years as mentioned above.

Valuation policy for art and artefacts

AHL adopted a revaluation model in 2012-13 as a policy for subsequent measurement of its art and artefacts. Accordingly, in 2017-18 AHL engaged an independent valuer to revalue its art and artefacts as at 30 June 2018 on the basis of ‘fair value’. Any art and artefacts received as a gift or donation or that were identified for the first time during the 2014-15 stocktake were assigned a minimum management valuation of $50. All valuation increases have been recognised in the ‘Art and Artefacts Revaluation Reserve’. All art and artefacts continue to be depreciated over 100 years. Although all care is taken by AHL to protect its art and artefacts, AHL does not have a formal ‘preservation plan’ in place to protect these assets indefinitely. Consequently, these assets cannot be classified as heritage assets and have not been assigned unlimited useful lives.

Valuation policy for land and buildings

AHL adopted a revaluation model in 2012-13 as a policy for subsequent measurement of its land, buildings and building improvements. Accordingly, in 2017-18 AHL engaged an independent valuer to revalue its land and buildings as at 30 June 2018. The remaining useful lives of all buildings and building improvements in 2017-18 were also reviewed and updated. AHL will depreciate all building and building improvements over the revised remaining useful lives of the assets until the next revaluation to be conducted in 2020-21. The net valuation increases were recognised in AHL’s Land and Buildings Revaluation Reserves.

Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets did not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depended upon the volatility of movements in market values for the relevant assets.

In 2014-15 AHL updated its accounting policy to include other plant and equipment that are permanently fitted to the building and form an integral part of the building achieving its expected economic benefit.

New acquisitions are initially valued at ‘historic cost’ and subsequently revalued to ‘fair value’ as part of the next scheduled independent tri-annual revaluation process.

Accounting policy (continued) - Property, plant and equipment

Disclosure of leasehold improvements

AHL records the cost of office fit outs and capital improvements over $2,000 undertaken by AHL in leased properties at ‘historic cost’ and depreciates the cost over the life of each lease.

AHL reviews its leasehold makegood liabilities with respect to each leasehold improvement agreement. For 2019-20, there was no evidence, past or present, of any damage to the leasehold premises that would require a provision for makegood to be accounted for.

Depreciation of property, plant and equipment

Depreciable property, plant and equipment with the exception of leasehold improvement assets are written off to their estimated residual values over their estimated useful lives using the straight line method of depreciation commencing from the time the asset is available for use. Leasehold improvements are depreciated on a straight line basis over the estimated useful life of the improvements.

Depreciation rates (useful lives) at the end of each reporting period together with necessary adjustments are recognised in the current and future reporting periods as appropriate. Depreciation rates applying to each class of depreciable asset are based on the following average useful lives:

Asset category

2020

2019

Buildings – infrastructure

Buildings – structure

32 Years

53 Years

32 Years

53 Years

Buildings – plant and equipment

17 Years

17 Years

Buildings – fit out

24 Years

24 Years

Buildings – health and safety equipment

20 Years

20 Years

Art and artefacts

100 Years

100 Years

Leasehold improvements*

5-15 Years

5-15 Years

Furniture and fittings

5 Years

5 Years

Computer equipment

3 Years

3 Years

Office machinery

5 Years

5 Years

Electrical equipment

5 Years

5 Years

Notes:

*Leasehold improvements include fit out of AHL’s National Office and other leased hostels

The aggregate amounts of depreciation and amortisation expenses allocated for each class of asset during the reporting period are disclosed in notes 1E and 7A.

Gains and losses on disposal

Gains and losses on disposals are determined by comparing proceeds from sale of assets with the carrying value of each asset. These gains or losses are included in the statement of comprehensive income.

Work in progress – Property, plant and equipment

The full cost of construction work undertaken on AHL owned projects is capitalised in work in progress (WIP) at historical cost. Once completed, these assets are transferred from WIP to the respective asset classes within property, plant and equipment. However, where AHL receives funding to construct hostels or maintain hostels on behalf of other agencies, the full cost is immediately expensed and not capitalised. These hostels are capitalised by the respective owners upon completion and handover by AHL.

Lease Right of Use (ROU) Assets

Lease liabilities are initially recognised at the present value of future lease payments over the lease term. The lease term includes any extension or renewal options that AHL is reasonably certain to exercise.

Future lease payments comprise:

  • fixed payments (including in-substance fixed payments), less any lease incentives receivable
  • variable lease payments that depend on an index or rate, initially measured using the index or rate as at the commencement date
  • the exercise price of a purchase option that AHL is reasonably certain to exercise
  • payments for termination penalties, if the lease term reflects the early termination

The discount rate used is the interest rate implicit in the lease, or AHL’s incremental borrowing rate if the implicit rate cannot be readily determined. Subsequently, the lease liabilities are increased by the interest charge and reduced by the amount of lease payments. Lease liabilities are also remeasured in certain situations such as a change in variable lease payments that depend on an index or rate (e.g. a market rent review), or a change in the lease term.

Right-of-use assets are recognised at the commencement date of the lease and comprise of the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received. These assets are accounted for as separate asset classes to corresponding assets owned outright, but included in the same column as where the corresponding underlying assets would be presented if they were owned. They are amortised over their term and are subject to impairment.

On initial adoption of AASB 16, AHL has adjusted the ROU assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial application, an impairment review is undertaken for any right of use lease asset that shows indicators of impairment and an impairment loss is recognised against any right of use lease asset that is impaired. Lease ROU assets continue to be measured at cost after initial recognition in Aboriginal Hostels Limited’s financial statements.

Intangibles

Software

AHL's intangibles comprise purchased software which is carried at cost less accumulated amortisation and less any impairment losses. Software is amortised on a straight line basis over its anticipated useful life commencing when the software is installed ready for use.

AHL’s software is estimated at five years and the value is assessed annually for impairment. AHL’s capitalisation threshold for software is $2,000.

Work in progress – software

The full cost of purchasing IT software and customising it for AHL’s business operations is capitalised in WIP at historical cost until the IT systems are installed ready for use. The full cost of purchasing and developing the completed software is then transferred from WIP to the appropriate software category in the asset register and amortised over the estimated useful life of the software.

Any software development costs not directly related to the development of the final installed software is expensed. Software licence fees are capitalised separately from the software and amortised over the life of each licence.

Impairment of assets

At the end of each reporting period, AHL reviews the carrying values of its assets to determine whether there is any indication that those assets have been impaired. If such an indication exists because the recoverable amount of the asset, (i.e. Fair value less selling costs) is lower than the asset’s carrying value, the difference is recognised as an expense.

AHL believes that all property, plant, equipment and software are accurately valued and reflect the current condition of these assets.

Fair value measurement

AHL engaged the services of Jones Lang LaSalle (JLL) to conduct a comprehensive revaluation for all land, building and artwork non-financial assets as at 30 June 2018. An annual assessment is undertaken to determine whether the carrying amount of the assets is materially different from the fair value. Comprehensive valuations are carried out at least once every three years with the previous valuation conducted as at 30 June 2018. JLL has provided written assurance to AHL that the valuation models developed are in compliance with AASB 13.

The methods utilised to determine and substantiate the unobservable inputs are derived and evaluated as follows:

Physical depreciation and obsolescence - assets that do not transact with enough frequency or transparency to develop objective opinions of value from observable market evidence have been measured utilising the depreciated replacement cost approach. Under the depreciated replacement cost approach the estimated cost to replace the asset is calculated and then adjusted to take into account physical depreciation and obsolescence. Physical depreciation and obsolescence has been determined based on professional judgement regarding physical, economic and external obsolescence factors relevant to the asset under consideration. For all leasehold improvement assets, the consumed economic benefit / asset obsolescence deduction is determined based on the term of the associated lease.

AHL's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

Note 8: Trade payables

Note 8: Trade payables

2020

2019

$'000

$'000

Trade payables

Trade payables

1,247

1,196

Total trade payables

1,247

1,196

Suppliers expected to be settled

No more than 12 months

1,247

1,196

Total trade payables

1,247

1,196

Note 9: Unearned lease incentive payable

Note 9: Unearned lease incentive payable1

2020

2019

$'000

$'000

Unearned lease incentive payable

-

336

Total Unearned lease incentive payable

-

336

Unearned lease incentive payable expected to be settled

No more than 12 months

-

43

More than 12 months

-

293

Total Unearned lease incentive payable

-

336

1Aboriginal Hostels Limited has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 17.

Note 10: Minimum lease payables

Note 10: Minimum lease payables1

2020

2019

$'000

$'000

Minimum lease payables

-

563

Total Minimum lease payable

-

563

Minimum lease payable expected to be settled

No more than 12 months

20

More than 12 months

-

543

Total minimum lease payables

-

563

1Aboriginal Hostels Limited has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 17.

Note 11: Interest bearing liabilities

Note 11: Interest bearing liabilities

2020

2019

$'000

$'000

Buildings lease liability

4,997

-

Plant and equipment lease liability

547

-

Total lease liability

5,544

-

Lease liability expected to be settled

No more than 12 months

864

-

More than 12 months

4,680

-

Total lease liability

5,544

-

Note 12: Other payables

Note 12: Other payables

2020

2019

$'000

$'000

Employee payables

1,526

1,172

Revenue received in advance

751

818

Total other payables

2,277

1,990

Other payable expected to be settled

No more than 12 months

2,277

1,990

Total Other payables

2,277

1,990

Credit terms for goods and services were within 30 days (2018: 30 days). AHL has not made loans to any entity.

Accounting policy

Trade payables

Trade creditors represent the liability outstanding at the end of the financial year for goods and services received by AHL before year end which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.

Provisions

Provisions are recognised when AHL has a legal or constructive obligation as a result of past events, where it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions record AHL’s best estimate of the amounts required to settle the obligations at the end of the financial year.

Interest Bearing Liabilities – ROU Leases

Aboriginal Hostels Limited has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

Total cash outflow for leases for the year ended 30 June 2020 was $1,138k

Maturity analysis – contractual undiscounted cash flows

Within 1 year – $918k

Between 1 to 5 years – $4,194k More than 5 years – $626k

Disclosure notes for significant leasing arrangements and all significant leasing arrangements with below market terms.

Aboriginal Hostels Limited has the following significant leasing arrangements:

National office lease at 2-6 Shea Street, Phillip, ACT with lease expiry at 31st March 2027

Kirinari Sylvania at 340 Box Road, Sylvania Heights, NSW with lease expired as at 30th June 2020 where AHL is running Secondary Education hostel operations.

Aboriginal Hostels have the following significant leasing arrangement with below market terms:

Kirinari Newcastle at 15 Myall Road, Newcastle, NSW – AHL is running secondary education hostel operations on site, the lease is currently month to month, where $1 payment annually if demanded.

Gudang Dalba at Bambatj Road, Darwin, NT- AHL is running medical hostel operations on site, the lease expiring in July 2024, where $1 payment annually if demanded.

Broome Hostel at 52 Forrest Street, Broome, WA – AHL is running medical hostel operations on site, the lease is currently month to month, where $1 payment if demanded plus any surplus tariff income is payable.

Apmere Mwerre Visitor Park at 15 Len Kittle Drive, Alice Springs, NT – AHL is running multipurpose hostel operations on site, the lease is currently month to month, where $1 payment annually if demanded.

The above lease disclosures should be read in conjunction with the accompanying notes 1D, 1G and 7B.

Note 13: Cash flow reconciliation

Note 13: Cash flow reconciliation

Note

2020

2019

$'000

$'000

Reconciliation of cash and cash equivalents as per statement of financial position and cash flow statement

Cash flow statement

36,175

34,557

Statement of financial position

4

36,175

34,557

Discrepancy

-

-

Reconciliation of net cost of services to net cash from/(used by) operating activities

Net(cost of)/contribution by services

(39,420)

(36,558)

Revenue from Government

36,241

36,323

Adjustments for non-cash items

Depreciation/amortisation

6,169

5,153

Net write down and impairment of non-financial assets

1,019

1,086

Movement in assets and liabilities

Assets

(Increase)/Decrease in net receivables

197

1,617

(Increase)/Decrease in prepayments

119

(5)

Liabilities

Increase/(Decrease) in unearned lease incentive payable

(43)

Increase/(Decrease) in employee provisions

121

(284)

Increase/(Decrease) in suppliers payables

185

(641)

Increase/(Decrease) in other payables

600

873

Liabilities

(Increase)/Decrease Accumulated Gains and Losses

140

Net cash from/(used by) operating activities

5,371

7,521

People and relationships

This section describes a range of employment and post employment benefits provided to our people and our relationships with other key people.

Note 14A: Provision for employee benefits

Note 14A: Provision for employee benefits

2020

2019

$'000

$'000

Provision for annual leave

1,503

1,447

Provision for long service leave

1,684

1,618

Total employee benefits

3,187

3,065

Employee benefits expected to be settled

No more than 12 months

1,843

1,276

More than 12 months

1,344

1,789

Total employee benefits

3,187

3,065

Accounting policy

Employee benefits

Leave provisions

A provision is made for AHL’s liability for employee entitlements arising from services rendered by employees at the reporting date to the extent that they have not been settled. These benefits include wages and salaries, annual leave and long service leave.

Liabilities for short-term employee benefits (as defined in AASB 119 Employee Benefits) arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled.

Other employee entitlements payable later than twelve months have been measured at the present value of the estimated future cash outflows to be made for those entitlements.

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave, as it is non-vesting and the average sick leave taken in future years by employees of AHL is estimated to be less than the annual entitlement for sick leave.

Superannuation

Staff at AHL are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or of each employee’s chosen superannuation fund.

The CSS and PSS are defined benefit schemes of the Australian Government. The PSSap is a defined contribution scheme. From 1 July 2005, new employees are eligible to join the PSSap scheme. Where staff do not indicate a preference, PSSap is the default superannuation fund.

Contributions are made by AHL to the above schemes at the rates determined by an actuary to be sufficient to meet the costs to the Commonwealth Government of the superannuation entitlements of AHL’s employees. AHL recognises contributions as expenses when incurred.

Accounting Judgements and Estimates

In 2014-15 AHL adopted the Shorthand method as per PGPA rule 2015.24(b).(iii) as the calculation methodology for employee entitlements. Each year AHL updates the calculation parameters as published in the Standard Parameters table by the Department of Finance as at reporting date.

In 2017-18 AHL reviewed its employee profile for the purposes of determining the parameters for on-cost factor application and to estimate the pattern of the employees likely to access their long term entitlements whilst in service and on termination of their contract with AHL. AHL will continue to review its employee profile with a sufficient regularity to ensure the parameters applied do not differ materially against the employee profile of the reporting period. In 2019-20 AHL had estimated its 10 year salary growth as 2% for the purposes of employee provision discounting.

Note 14B: Name of directors and key management personnel in office at any time year are:

Directors

Position

Term

Dr Susan Gordon AM

Chair, non-executive director

11/09/2015 to 10/09/2020

Mr David Evans

Deputy Chair, non-executive director

24/06/2013 to 23/09/2019

Prof. MaryAnn Bin-Sallik AO

Non-executive director

02/03/2016 to 03/06/2022

Mr Mike Allen

Non-executive director

02/03/2016 to 03/06/2022

Ms Jennifer Ullungura Clancy

Non-executive director

10/05/2017 to 09/08/2020

Mr Daniel Bourchier

Non-executive director

02/06/2019 to 01/12/2019

Mr Anthony Ashby

Deputy Chair, non-executive director

24/09/2019 to 23/12/2022

Dr Valerie Cooms

Non-executive director

02/09/2019 to 01/12/2022

Mr Paul Allen

Non-executive director

06/05/2020 to 05/05/2023

Mr Simon McGrath

Non-executive director

06/05/2020 to 05/05/2023

Key management personnel

Position

Term

Mr Tony Usher

Chief Executive Officer

Ceased 11/03/2020

Ms Michelle Deavin

Deputy CEO, Company Secretary and CFO

Ceased 15/04/2020

Mr Dave Chalmers

Chief Executive Officer

Commenced 11/03/2020

Vacant

CFO

Mr Robert Harvey

General Manager Operations

Commenced

Note 14C: Key management personnel remuneration

Note 14C: Key management personnel remuneration

2020

2019

$

$

Senior executive remuneration

Short-term employee benefits

Salary

544,885

449,009

Motor vehicle and other allowances1

149,698

141,774

Total short-term employee benefits

694,583

590,783

Post-employment benefits

Superannuation

77,616

71,677

Total post-employment benefits

77,616

71,677

Other long-term employee benefits2

Annual leave

15,541

40,958

Long-service leave

2,242

14,624

Total other long-tem employee benefits

17,783

55,582

Termination benefits

Payment upon termination

262,338

-

Total termination benefits

262,338

-

Total senior executive remuneration3

1,052,320

718,042

Directors remuneration4

Short-term benfits

Directors fees5

301,338

284,367

Total directors fees

301,338

284,367

Post-employment benefits

Superannuation

28,279

27,015

Total Superannuation

28,279

27,015

Total directors' remuneration

329,617

311,382

Total key management personnel remuneration

1,381,937

1,029,424

1The amount includes payment of $18,296 to Mr Dave Chalmers for providing management consulting services prior to commencing as the CEO on 10 March 2020. The services included executive support and advice to the CEO on hostel and company operations.

2. The comparative for key management personnel's leave benefits have been updated to represent the change of the calculation methodology from a cash to accrual basis.

3. The total number of senior management personnel that are included in the above table are 4 for 2019-20, which includes part year positons of two senior management personnel and 2 for 2018-19.

4. The above Directors' fee calculation includes 10 members including the Chairperson of the Board in 2019-20 and 7 members in 2018-19. A revised Remuneration Tribunal Determination for Board members serving on committee became effective 10 June 2020. Board members serving on the Audit, Risk and Finance Committee will receive $8,160 per annuam and $4,080 per annum for the Asset Management Committee members. The Chair of Audit, Risk and Finance Committee will receive $16,320 per annuam and the Chair of the Asset Management Committee $8,160 per annum. A member of the AHL Board is only eligible to receive additional fees for participation on one committee.

5. The amount includes an additional $ 5,590 made in respect of two directors who participated in nine extra Board Committee meetings each during the 2019-20 and $10,224 in 2018-19

Note 14D: Related party disclosures

AHL paid legal representation fees of $246,344 for the former CEO Tony Usher in 2018-19 and 2019-20. The amount was reimbursed by AHL’s insurer, Comcover. An employee of the legal firm who represented Mr Usher, a long standing personal legal representative of Mr Usher, is a family member of the former Chairperson Dr Sue Gordon.

Note 15: Economic dependency

AHL currently receives the majority of its funding from the Commonwealth, State and Territory Governments and is therefore financially dependent on them.

Note 16: Contingent assets and liabilities

AHL is a respondent in an alleged breach of contract matter with one of our ICT service providers. It is currently not possible to quantify the impact, if any, of this action. Additionally AHL is a joint party in relation to alleged historic incidents in two hostels in Victoria and Queensland (now closed) in the 1980s and 1990s. As at 30 June 2020, it is currently not possible to quantify the impact, if any, of these actions.

Accounting policy

Contingent assets and liabilities are not recognised in the statement of financial position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

Note 17: Trust accounts

AHL administers the following two trust accounts in accordance with the individual bequests. As these trust accounts are not AHL monies, they have not been incorporated into AHL's financial statements but have been instead reported separately in this note.

Note 17A: May Ames bequest account

During 1981-82 $46,980 was received by AHL from the estate of the late May Ames to be used for the benefit of secondary school children. The funds have been invested by AHL in the following Commonwealth Bank of Australia bank accounts:

2020

2019

$

$

CAPITAL ACCOUNT

Opening balance

75,563

75,563

Closing balance of capital account

75,563

75,563

OPERATING ACCOUNT

Opening balance

11,460

11,460

Closing balance of operating account

11,460

11,460

Closing balance of May Ames bequest account

87,023

87,023

Note 17B: Ashley Cooper bequest account

During 2006-07 $137,189 was received by AHL from the estate of the late Ashley Cooper to be used for the benefit of secondary school children in South Australia and Northern Territory. The funds have been invested by AHL in the following Commonwealth Bank of Australia bank accounts:

2020

2019

$

$

CAPITAL ACCOUNT

Opening balance

125,000

125,000

Closing balance capital account

125,000

125,000

OPERATING ACCOUNT

Opening balance

20,148

20,148

Closing balance of operating account

20,148

20,148

Closing balance of Ashley Cooper bequest account

145,148

145,148