2018 ANNUAL REPORT - Holmesglen · Accounting Standards. It also follows the TAFE Institute Annual...

Vocational and Higher Education

2018 ANNUAL REPORT

Lucy IrvineIndex, 2017Stainless steel cable, copper c-clamps, stainless steel pipe312 x 296 x 340 cm© Lucy Irvine

Holmesglen Institute | 3

04 Introduction

05 Our organisation

06 Our operations

06 Financial overview

08 Strategic initiatives

13 Awards and achievements

14 Our people

16 Environment

18 Governance

18 Board and committees

19 Controlled entities

19 Major commercial activities

19 Compliance reports

23 Financial management compliance attestation

24 Financial report

24 Independent Auditor’s Report - Financial Report

26 Declaration by Board Chair, CE and CFO

29 Comprehensive Operating Statement

30 Balance Sheet

31 Statement of Changes in Equity

32 Cash Flow Statement

33 Notes to Financial Statements

81 Statement of performance

85 Disclosure index

HOLMESGLENANNUAL REPORT 2018 CONTENTS

4 | Annual Report 2018

Peter LewinskyChairHolmesglen Institute21 March 2019

Mary FaraoneChief ExecutiveHolmesglen Institute21 March 2019

ON BEHALF OF HOLMESGLEN INSTITUTE AND THE BOARD, WE ARE PLEASED TO PRESENT OUR 2018 ANNUAL REPORT. The institute has prepared this report according to the Financial Management Act 1994, Standing Directions, Instructions, Financial Reporting Directions and applicable Australian Accounting Standards. It also follows the TAFE Institute Annual Report Guidelines issued by the Higher Education and Skills Group, Department of Education and Training.

This report presents the required compliance statements, financial report and statement of performance for Holmesglen Institute and its controlled entities.

It also outlines our operations and achievements for the year. We are proud of our many successes in 2018, including the following:

• The 2018 Industry Collaboration Award at the Victorian Training Awards for our partnership with Healthscope to establish Holmesglen Private Hospital.

• Gold medal in the Student Support Services category at the 2018 World Federation of Colleges and Polytechnics Awards of Excellence for our apprentice support services.

• Third consecutive gold award for Holmesglen at Eildon in the Business Event Venues category at the RACV Victorian Tourism Awards, which saw us secure a place in the Hall of Fame.

Our learners and staff also won several industry and educational awards in recognition of their talents and skills. Thank you to our directors and staff for their excellent work and commitment throughout 2018.


OUR ORGANISATION

ORGANISATIONAL CHART

Mary FaraoneChief Executive

David Saunders

Executive Director, International Education

and Business Development

Enzo Spangher

Executive Director, Infrastructure

and Asset Management

Suzanne McKinnon

Executive Director, Engagement and

Support

Joanne James

Chief Financial Officer

Board

Board committees and executive team as at 31 December 2018

Leone English

Executive Director, Education and

Applied Research

Bruce Prescott

Executive Director, Workforce,

Performance and Improvement

Holmesglen is established under the Education and Training Reform Act 2006. This Act – along with the Institute’s Constitution – defines our functions and duties.

In 2018, the Minister for Training and Skills and Minister for Higher Education was the Hon. Gayle Tierney MP.

Holmesglen provides education and training to ensure our learners are work ready, life ready and world ready. In doing so, we play an integral role in the community, supporting social inclusion and cohesion. We also work with businesses to develop the workforce of today and tomorrow.

This year, over 23,000 learners undertook our certificates, diplomas, advanced diplomas, bachelor degrees, graduate certificates and master degrees. We also provided a number of non-award programs to help learners develop foundation or specific work-related skills.

During the year we served our local communities across seven sites, promoting quality applied learning and research – and providing exceptional support services.

We also participated in offshore projects and partnerships, online programs and workplace-based delivery, which extended our reach in Australia and overseas.

Executive group

Holmesglen is structured to facilitate strategic leadership and efficient administration of our core functions.

The executive group oversees daily operations under our governance framework – which includes the rules, policies and procedures of the Holmesglen Management System.

Audit Committee

Asset and Infrastructure

Committee

People, Culture and

Remuneration Committee

Quality Committee

Teaching faculties,Applied research and

Higher education support

Finance and purchasing,Corporate accounting,

Reporting, Risk management and internal auditing

Marketing and internal communications, Learner

recruitment, administration and enrolment,

Community engagement, Learner success and

support

Human resources,Quality and compliance,Technology and media

services

International projects and partnerships,

International students, Business development

and enterprise solutions, Employment programs

and services

Campus management and leasing, Holmesglen at

Eildon, Security



OUR OPERATIONS

HOLMESGLEN INSTITUTE’S STRONG FINANCIAL PERFORMANCE AND POSITION IN 2018 SUPPORTS OUR VISION 2020 STRATEGY.

FINANCIAL PERFORMANCE

A key indicator of our success is the consolidated net result from transactions. This measures our performance before any gains or losses on the revaluation of financial and property investments have been attributed.

In 2018, Holmesglen and its controlled entities achieved a net result of $5.409 million from transactions. Although this is below our 2017 result ($11.050 million), it exceeds our 2018 budgeted target of $0.300 million.

The lower net result compared to last year was due to:• A decrease in enrolments for our VET accredited

training programs – and no capital contributions• Planned investment in our Vision 2020 strategy• Implementation of the new teachers Multi-Enterprise

Agreement

The impact on total income of the decrease in revenue for VET programs was partially offset by fee-for-service programs and higher returns from the Institute’s financial investments.

Taking other economic flows into account, we achieved a consolidated net result of $2.387 million (compared to $25.083 million in 2017).

$505M Net worth at 31 December 2018

$5.4MNet result from transactions

at 31 December 2018

FINANCIAL POSITION

Our financial position is reflected on our balance sheet. A key indicator of our position is determined by net assets (i.e. assets less liabilities), which is equal to net worth. At 31 December 2018, our net worth remained stable at $505.091 million (compared to $502.704 million in 2017).


Table 1 – Consolidated comprehensive operating statement as of 31 December 2018

2018 2017 2016 2015 2014

$’000 $’000 $’000 $’000 $’000

Government contributions – operating1 62,634 68,193 53,330 52,829 45,347

Government contributions – capital2 - 2,150 5,000 1,000 -

Sale of goods and services 80,517 80,309 80,836 88,098 92,011

Other income 14,908 13,559 14,067 13,617 12,880

Total income from transactions 158,059 164,211 153,233 155,544 150,238

Total expenses from transactions (excluding depreciation and interest expenses)

142,400 143,000 132,843 143,342 151,913

Earnings Before Interest Expense, Depreciation and Amortisation (EBITDA)

15,659 21,211 20,390 12,202 -1,675

Depreciation and amortisation 10,134 10,144 10,015 9,742 11,010

Interest expense 116 17 - 993 1,076

Net result from transactions 5,409 11,050 10,375 1,467 -13,761

Other economic flows included in net result3 -3,022 14,033 5,600 13,908 1,896

Net result 2,387 25,083 15,975 15,375 -11,865

FIVE-YEAR FINANCIAL SUMMARY

The following tables summarise our financial performance and position. This information has been extracted from our comprehensive operating statements and balance sheets for the last five years. It is presented on a consolidated basis and includes our controlled entities.

Table 2 – Consolidated balance sheet as of 31 December 2018

2018 2017 2016 2015 2014

$’000 $’000 $’000 $’000 $’000

Assets 551,969 552,638 450,069 429,554 420,282

Liabilities 46,878 49,934 46,560 43,259 52,587

Net assets 505,091 502,704 403,509 386,295 367,695

Accumulated surplus 165,871 159,968 134,885 118,910 103,535

Reserves 216,413 219,929 145,817 144,578 141,353

Contributed capital 122,807 122,807 122,807 122,807 122,807

Net worth 505,091 502,704 403,509 386,295 367,695

Notes

1. Government contributions – operating in 2018 includes state government funding for VET programs and Stronger TAFE funds. The decrease in 2018 was due to lower student demand and a lower allocation of Stronger TAFE funds.

2. Government contributions – capital for 2015 to 2017 were for the Student Hub at the Moorabbin campus. Expenditure on the Student Hub is reflected on the balance sheet over the same period.

3. Other economic flows included in net result for 2018 includes the revaluation losses on the Institute’s financial assets as a result of the first-time application of AASB9 – Financial Instruments. In previous years, any unrealised gains or losses were recorded in ‘other comprehensive income’ and, therefore, were not recorded in the net result.


STRATEGIC INITIATIVES

THIS YEAR MARKED THE BEGINNING OF OUR EXCITING STRATEGIC AGENDA, VISION 2020 – AND OUR ASPIRE VALUES.

OUR VISION

We are a leading tertiary provider of the twenty-first century, valued by local and international learners, industry and the community.

We are recognised for innovation in education and training, applied research, creativity and entrepreneurship. Our open, collaborative and quality-driven culture inspires learners and staff to excel.

OUR GOALS

In 2018, we laid down a strong foundation for our plan and are well on the way to achieving our five goals.

This section of our Annual Report outlines a range of initiatives implemented in 2018.

AMBITION SCHOLARSHIP PASSION

INTEGRITY RESPECT EXCELLENCE

OUR ASPIRE VALUES



Royal Children’s Hospital integrated practical placement program

This year, 10 of our Certificate I in Work Education learners were the inaugural cohort of a groundbreaking integrated practical placement program with the Royal Children’s Hospital.

They completed three 9-week placements across various areas of the hospital – with the support of job coaches from EPIC Assist, our Disability Employment Network partner.

Following the program, three of our learners were offered ongoing work at the hospital’s Early Learning Centre, and support and equipment sterilising services departments. All other learners secured apprenticeships, traineeships or jobs with other organisations – or remained supported by EPIC Assist to transition into work or further study.

The Faculty of Health Science, Youth and Community Studies also successfully applied to the Jobs Victoria Innovation Fund to carry out an evaluation of the program. The Faculty is now comparing the difference between job outcomes for students completing the practical placement program with those who study on campus. The result will help us form a best practice learning model.

Centre for Applied Research and Innovation

Established in 2016, our Centre for Applied Research and Innovation brings industry and not-for-profit partners together to develop creative solutions to business problems.

Designed to support economic and employment growth, our 2018 research projects have spanned a range of sectors – from health sciences and hospitality to new technologies in virtual reality, building materials and energy.

This year we also established an institutional research function within the Centre to better support our decision making and evaluation processes with robust research methodologies.

Key project partners in 2018 included:• Forest Wood Products Australia• Future Energy Skills Council• Breastscreen Victoria• Royal Children’s Hospital• Curve Tomorrow• Swinburne University• Healthscope• LaTrobe University

Holmesglen Foundation

The Holmesglen Foundation embodies our commitment to accessible education and skills development – particularly for learners who require support to undertake programs at the Institute.The Foundation set new objectives for alumni

engagement and philanthropic activities in 2017, which led to the following achievements in 2018: • Our donors and sponsors more than doubled from

21 to 50• We raised $100,065 in cash and ongoing pledges• We introduced a range of new scholarships, new

funding for innovative student programs and new ways to support learners experiencing financial hardships

For the year ending 31 December 2018, the Foundation distributed $1,083,996 to the Institute. This provided scholarships and student grants – and funding for a range of learner programs and services.

The Holmesglen Foundation is extremely grateful for the support this year. Thank you to the following donors and sponsors for enabling a new generation of learners to prepare for great careers. Your generosity affirms our commitment to accessible education for all.

• Allianz Partners• Apprenticeship Employment Network• Keri Bailey• Barry Plant Mount Waverley• Bendigo Bank – Pinewood Community Bank• Wesa Chau• Dean Cleland• Karen Corry• Chrysi Coutsourelos• Cross Yarra Partnership• Peter Darvall AO• John De Figueiredo• Joan Dealy-Burrows• Mary Faraone• Anne Fidock• Fitzpatrick & Company • Insurance Brokers• Michael Gorton AM• Healthscope• Catherine Higgins• Ipsos• Christy Karamzalis• Janet Lambert• Lankan Fest• Leishman Financial Services• Peter Lewinsky• Johna Low• Leonie Millar• Leonie Morgan AM• Mulgrave Country Club• Optus• Bruce Porter• Vincent Ramos• Rotary Club of Glen Waverley• Ryman Healthcare• ShineWing Australia• Edward Smith• Enzo Spangher• Frank Virik• Catherine Walsh• Waverley RSL• Zita Youens

1. DIFFERENTIATE HOLMESGLEN


Learners as partners

Our Engagement and Education portfolios collaborated in 2018 to create new opportunities for learners to have a say about their study experience.

They designed and implemented a range of initiatives, including:• Expanding the Learner Ambassador Program• Appointing a Manager of Learner Success and

Engagement• Piloting a feedback app called Loop• Developing an online community informed by a

learner-led design process

Looking ahead, we are prioritising the following activities:• Implementing the online community• Improving the learner feedback cycle• Ensuring learners are represented at all levels

of educational governance – and supported to participate effectively in these committees

ASPIRE Heroes

ASPIRE Heroes are everyday people at Holmesglen who achieve extraordinary things.

Nominated by their peers for demonstrating an ASPIRE value, we award Heroes a value pin to recognise their contribution to our learners, industry partners, community members or other staff.

In 2018, we received over 120 nominations and recognised 15 staff as Heroes for their commitment to Vision 2020 – and embodiment of our values.

3. INVEST IN HOLMESGLEN’S CAPABILITY AND CAPACITY

ASPIRE conference

We held our inaugural all-staff conference in August 2018 at Caulfield Racecourse. Over 900 staff attended.

Titled ‘ASPIRE Conference – Towards 2020’, the event showcased our ASPIRE values and Vision 2020. Staff heard from engaging keynote speakers and attended a range of informative presentations and specialised workshops.

Our staff conference will now be an annual feature of our professional development calendar.

ICT transformations

In 2018, we completed the build stage of our ICT Strategy. Key projects included:

• Migration to Microsoft Exchange: In June 2018, we migrated over 5 million emails and 840,000 appointments from the Institute’s email system to Microsoft Exchange – with no impact on business continuity.

• Virtual desktop environment pilot: We piloted our virtual desktop infrastructure with a group of staff and learners in the second half of 2018. Following the pilot’s excellent results, we will roll out virtual desktop to all staff and learners in 2019.

• New technology at Eildon: We installed a new fibre link to the Homestead and Conference Centre at Eildon, and linked the corporate and student accommodation to the new wireless network.

• SMART lecture theatre: We commissioned a new SMART lecture theatre at our Chadstone campus, which will be used as a blueprint for all other lecture theatres across the Institute.

• Video conferencing: We installed SMART boards and the webex solution across all campuses to enable cross-campus and external video conferencing, online meetings, screen sharing and webinars.

2. CREATE A DISTINCTIVE HOLMESGLEN EXPERIENCE (HX)

ASPIRE Heroes

ASPIRE Conference - Towards 2020


4. BUILD THE ECOSYSTEM TO CONNECT WITH INDUSTRY AND COMMUNITYConnecting with community

Ecosystems are a hot topic in education globally. The US and many European nations are encouraging tertiary institutions to build innovation networks with industry and community.

In 2018, our community engagement program entered a new phase of development, with the appointment of a dedicated coordinator.

Key activities during the year included:

• Connecting Community: More than 390 students, staff and community members attended our inaugural Connecting Community series at the Moorabbin campus. Held in conjunction with RUOK? Day, the series featured 11 events – including information sessions, workshops, masterclasses and a wellness expo.

• Run for Change: Organised by Holmesglen students and staff, this community event raises awareness and funds for the fight against family violence and bullying. The 2018 Run for Change featured ambassadors Mathew Richardson, Jarryn Geary and Chloe Molloy. With 180 registrations for our run and walk events, 120 Holmesglen student and staff volunteers participated on the day. All proceeds were donated to Emerge Women and Children’s Support Network and Windamere Child and Family Services.

• Student Showcase: This two-week event gives people the opportunity to visit our campuses, see our learners in action – and participate in free workshops. Held in October, the 2018 showcase included regional World Skills competitions for our building trades, gaming competitions in a student-designed online battle arena, code camps and a curated fashion runway.

• St Kilda Football Club partnership: In 2018, St Kilda Football Club moved back to its traditional home in Moorabbin, only a few blocks from our campus. Thanks to a new partnership, club members, staff and players are now able to access education and training opportunities with Holmesglen – and our learners will have access to placements and internships at the club. Our commercial cookery and hospitality learners will also benefit from work experience such as catering for the club’s Back 2 Business networking breakfast and the Best and Fairest Awards dinner.

MetroHub

In August 2018, we officially opened MetroHub at our St Kilda Rd campus in collaboration with the Cross Yarra Partnership (a consortium led by Lendlease, John Holland and Bouygues Construction).

MetroHub was established as the face of recruitment, training and workforce development for the tunnels and stations package of the Metro Tunnel Project.

The Metro Tunnel Project will create nearly 7,000 jobs. The tunnels and stations package will account for 5,000 of those jobs – including 500 apprentices, trainees and engineering cadets. MetroHub will support and facilitate this workforce.

In 2018, Holmesglen’s contribution to MetroHub included:

• Providing specialised employment support and engaging priority job seekers through our Skills and Job Centre

• Designing and delivering the project’s induction program

• Commencing delivery to over 130 apprentices and trainees

• Verifying the competence of site workers• Delivering industrial skills and work health and

safety training

Start-up Hub

Governments, industries and communities around the globe are increasingly investing in and supporting start-ups as the foundation of a new economic future.

Research suggests that Melbourne’s start-up ecosystem will double in value over the next few years. That’s why, in 2018, we established our own Start-up Hub at our Waverley campus.

Due to open in 2019, our Start-up Hub will give graduates a free support program to build their business plan and get ready to launch it. They will have access to mentors, professional services (such as marketing, finance and legal) and a fully-equipped shared office space.

Heating, Ventilation and Air Conditioning Centre of Excellence

In May 2018, we introduced a new centre of excellence at our Chadstone campus.

A collaboration between Holmesglen and the Air Conditioning and Mechanical Contractors’ Association, the new facility was funded by the Victorian Government’s Workplace Training Innovation Fund.

The purpose-built facility is set to upskill our existing climate control technicians and help train future mechanical services professionals. The centre is also responding to industry needs, including increased demand for greater technical training in the sector, nationally and internationally.

Run for Change participants


5. GROWING SUSTAINABLE REVENUE

International education

Holmesglen continued to extend its global reach in 2018.

We focused on our international market intelligence and analysis, moving to a regional business development model and building our international learner agent’s capability.

We also expanded our offshore partnerships and commercial work – particularly in Japan, Indonesia and China. For example:

• We continued to deliver educational programs at Japanese resort company, Kamori Kanko. We also entered discussions with other hospitality and tourism operators, as well as industry associations across the Hokkaido region and in Tokyo.

• We signed memorandums of understanding with Sapporo International University and Yokohama College of Commerce to deliver educational programs and learner and staff exchanges.

• Our patisserie learners and hospitality staff travelled to Tokyo in March for a one-week immersion program featuring work placements and visits to world-renowned hospitality organisations.

• Our partnership with Muhammadiyah Foundation in Indonesia continued to grow. We provided two English language teacher training programs using a combination of in-country facilitation and remote video conferencing.

• We welcomed the Yunnan Urban Construction Vocational College to our network of partners in China and renewed our partnership agreement with Hunan International Economics University.

• Funded by an Endeavour Award Scholarship, our building and construction learners visited our China partner Guangzhou Technical College in Water and Engineering in June.

As a result of our strategies in 2018, we recorded a total revenue of $36.5 million from our international operations – a 1.5% increase on 2017. The majority of this revenue is from international students undertaking VET and Higher Education programs in Australia.

We measure the performance of our overseas operations through the following indicators:

• Revenue growth• International learner numbers• International learner satisfaction• Number of offshore projects and alliances

We achieved 97% of our full-year international revenue target for 2018. This minor shortfall was due to lower demand for ELICOS programs and a decrease in visa approvals for certain VET programs (which also impacted the achievement of the VET international student target).

Despite the lower demand for VET programs, the Institute achieved 110% of its international student numbers for higher education programs.

International learner satisfaction remained stable in 2018, with 84% agreeing that they were satisfied overall and would recommend their program and Holmesglen to others.

Our Rule for Risk Management and Enterprise Risk Management Plan outlines strategies for managing all of the Institute’s operational and strategic risks.

We evaluate and monitor operational and strategic risks regularly, and report to the Audit Committee and Board. If further mitigation is required, additional risk treatments are identified and implemented.

The Institute’s internal audit strategy includes a regular review of our international operations. In 2018, internal auditors assessed our:

• Compliance with the ESOS Act and international student enrolment processes

• Management of international agents and recruitment processes

• Management of international operations and commercial contracts

• Internal audit findings, recommendations and close-out actions are reported to the Board’s Audit Committee.

New campuses

Holmesglen is set to welcome two new campuses to our network in 2019. This is due to our successful acquisition of the following:

• Federation Training’s Chadstone campus • Navitas Health Skills Australia’s operations at

206 Bourke Street, Melbourne

The transition teams across all organisations worked tirelessly throughout the year to achieve all operational requirements.

The Drummond Street site will become a specialised civil construction and infrastructure training centre. This includes a new $16 million Victorian Tunnelling Training Centre, funded by the Victorian Government.

Opening in 2019, the new centre will feature a replica tunnel and immersive VR and AR simulations. We estimate that up to 5,000 learners will participate in training courses at the centre annually by 2021.

Our new Bourke Street campus will offer Victorian students more opportunities to study a Diploma of Nursing. This campus will begin operating in January 2019.


Holmesglen Gala Awards

We celebrate individual achievements across our Institute at an annual awards festival.

Now in its 21st year, the festival culminates at the gala dinner – where learners and staff are recognised for their outstanding efforts. Our 2018 award winners included:

• Michael Smith, Outstanding VCAL Student

• Alicia Doreian, Outstanding Apprentice• Sean Brisbane, Outstanding Certificate

Student• Lisa Van Der Poel, Outstanding Diploma

Student• Carol San, Outstanding International

Student• Hybee Aibinuomo, Outstanding Higher

Education Student• Annika McCaffrey, Outstanding

Individual Achievement Award• Tamara Cousins, Staff ASPIRE Award• Catherine Ryan, Nikolaos Agouridis and

Sky Tiong, Excellence in Teaching Award• Dominique Collet, Excellence in

Customer Service Award• Alexander Zaytsev, Staff Innovation and

Excellence Award• Karen King, Bruce Mackenzie Fellowship

We also recognised the following industry partners for their contribution to vocational and higher education at Holmesglen:

• Amnesty International Australia• David Glass Co.• Simplot

AWARDS AND ACHIEVEMENTS

Industry awards

The following learners were honoured with awards in 2018 in recognition of their skills and talents.

• Victorian International Training Awards: Iyiade (Hybee) Aibinuomo was presented with the International Alumnus of the Year accolade. Meanwhile, Ka Ho (Dereck) Lee received two awards – International Student of the Year (VET) and the Premier’s Award for International Student of the Year 2018.

• Master Builders of Victoria Awards: David Van Keeken was awarded Wall and Floor Tiling Apprentice of the Year, and David Williams received the same award in the stonemasonry field.

• Baking Association of Australia Awards: Our graduate Chan Khun’s creations now hold the title of Australia’s Best Pie.

• John Tiddy Memorial Award: Grant Robinson travelled to Sydney to receive the Australian Woodworking Industry Suppliers Association John Tiddy Memorial Award. This follows his previous honours while completing his cabinet making apprenticeship with Holmesglen.

• Victoria Tourism Industry Council Student Entrepreneurial Awards: Bachelor of Hospitality Management students Eric, Natalie and Tai took out a top prize, sharing $10,000 in prize money.

• Building Designers Association of Victoria Awards: Interior design student Yuanita Kuswara won the Best Interior Design by a Student for her high-end response to a design brief. Xuan On Phan’s design won him a commendation in the Drafting Excellence by a Student category at the same awards.

Holmesglen CE Mary Faraone, Hybee Aibinuomo and Dereck Lee.

2018 Gala Award Winners

2018 Academic Graduation Ceremony



OUR PEOPLE

The following tables present the required workforce data. They correctly classify employees and meet the reporting requirements and FTE calculation methodology established by the Department of Education and Training.

HOLMESGLEN IS STAFFED

BY OVER 1,000 PEOPLE

Table 3: Performance and Accountability Framework FTE Table (December 2017 – December 2018)

Full Time Part Time Casual Total

2017 Ongoing Fixed Term Ongoing Fixed Term Teacher Other

PACCT 146 133 45.26 34.8 N/A 40.7 399.8

Executive 17 0 1.7 0.0 N/A 0.0 18.7

Other 2.0 8 0.7 0.0 N/A 14.5 25.2

Teacher 156 135 46.2 35.0 272.9 N/A 645.1

Total 321 276 93.9 69.8 272.9 55.2 1088.7

2018 Ongoing Fixed Term Ongoing Fixed Term Teacher Other

PACCT 203 102 61 17.7 N/A 39.8 423.5

Executive 16 0 2.5 0.0 N/A 0 18.5

Other 2 8 1.1 0.3 N/A 16.7 28.1

Teacher 235 66 70 18.2 256.6 N/A 645.8

Total 456 176 134.6 36.2 256.6 56.5 1115.9

Table 4: Workforce Disclosures (December 2017 – December 2018)

*headcount All employees Ongoing Fixed term and casual

December 2017 Number FTE Full-time Part-time FTE Number FTE

Gender

Women Executives 11 10.9 10 1 10.9 0 0

Women (total staff) 1112 586.7 155 114 229.8 843 357.0

Men Executives 8 7.8 7 1 7.8 0 0.0

Men (total staff) 790 483.3 149 27 166.4 614 316.9

Self-described 0 0.0 0 0 0.0 0 0.0

Age

15-24 61 16.8 0 0 0.0 61 16.8

25-34 230 127.8 18 6 22.0 206 105.7

35-44 399 221.5 47 29 65.7 323 155.8

45-54 550 337.9 117 40 143.5 393 194.4

55-64 522 320.3 120 47 151.9 355 168.4

Over 64 159 64.5 19 21 31.8 119 32.7

Total employees 1921 1088.7 321 143 414.9 1457 673.9

December 2018 Number FTE Full-time Part-time FTE Number FTE

Gender

Women Executives 11 10.9 10 1 10.9 0 0

Women (total staff) 1154 611.1 229 154 330.3 771 280.8

Men Executives 8 7.6 6 2 7.6 0 0

Men (total staff) 854 486.3 211 45 241.8 598 244.5

Self-described 0 0 0 0 0 0 0.0

Age

15-24 84 23.1 1 1 1 82 22.1

25-34 242 121.9 48 13 56.8 181 65.1

35-44 401 221.2 84 44 113.7 273 107.5

45-54 582 360 156 52 190.5 374 169.5

55-64 553 324.2 149 64 193.4 340 130.8

Over 64 165 65.5 18 28 35.2 119 30.3

Total employees 2027 1115.9 456 202 590.6 1369 525.3



OUR PEOPLE

Workforce inclusion, employment and conduct

Holmesglen is committed to the principles and practices of equal employment opportunity. Our 2018 People Matter Survey results show that gender identity, disability, age, cultural background and sexual orientation are not barriers to success at Holmesglen.

We recruit and promote the most qualified, experienced and capable employees through a transparent and merit-based selection process that complies with legislative requirements. All employees are expected to conduct themselves consistent with our Rule for Code of Conduct and Professional Standards, which we review annually. The Code of Conduct is based on the Victorian Public Sector Code of Conduct and other best practice examples.

All employees participate in regular online training through our learning management system to make sure they understand compliance, regulatory and legislative requirements. This training includes modules on Occupational Health and Safety, bullying and harassment, equal employment opportunity, fraud control and information privacy.

2018 workplace initiatives

In 2018, Holmesglen gave all employees formal feedback to better align performance and role expectations with our strategic direction. To support this, we implemented a Capability Assessment project across the Institute to identify our strengths and requirements, and contribute to a more strategic professional development program.

We also continued to acknowledge the contribution of employees to our growth and success. Awards are given at 15, 20 and 30-year anniversaries to let long-standing staff know they are valued and appreciated. In 2018, over 70 staff received awards – three of which were employees who had given 30 years of service to Holmesglen.

Recognising that younger people are our future, we launched an under 35s network in 2018 which encourages employees to get to know and work with others across the organisation. In 2018, 60% of our employees participated in the annual People Matter Survey, with the following pleasing outcomes:

• We improved on all measures, including Public Sector Values• Our results were equal to or above benchmark organisations• Our employee engagement index score increased to 68• Overall job satisfaction continues to improve with a satisfaction rate of 71%

This year we also introduced campus safety initiatives to protect both employees and learners. This included additional measures to address incidents of bullying, sexual assault and sexual harassment. We also improved physical campus security with new lighting, additional cameras and bollards.

Occupational Health and Safety (OH&S)

Holmesglen is committed to fostering a safe and healthy work environment where staff, learners and visitors feel valued, safe and supported. In 2018, we successfully delivered an extensive OH&S and Health & Wellbeing program, including:

• A regular health email newsletter for staff • Sessions on superannuation, sleep, nutrition and men’s and women’s health• Annual flu vaccinations • One-on-one appointments with health insurers• Participating in RUOK? Day and the Virgin Global Challenge (which saw 247 Holmesglen staff walk 150,463

kilometres in 100 days)• First Aid, mental health, anaphylaxis, emergency warden and hazardous manual handling training

Table 5: Staff incident statistics (2016 – 2018)

2016 2017 2018Table 6: Lost Time Incidents (2016 – 2018)

2016 2017 2018

Staff hazard or injury reports 67 68 67 Number of lost time incidents 6 5 10

Staff hazard or incident reports per 100 full-time equivalent staff

6.4 6.3 6.1Lost time claims (standard) per 100 full-time equivalent staff

0.7 0.46 0.9

Table 7: Claim costs (2016 – 2018), provided by Xchanging Integrated Services 2016 2017 2018

Average estimate $22,735 $5,785 $106,028

Average paid $27,238 $4,843 $10,704

The increase in the average paid claim in 2018 compared to 2017 was due to:• One psychological claim where the worker has no capacity to return to work• Three physical injuries that have required surgery, extensive recovery and gradual return-to-work programs.


We are currently undertaking a performance-based project as part of the Efficient Government Buildings Project with a value of $5.7 million and a target of reducing CO2 emissions by 7,452 tonnes per annum. In 2018, we installed three co-generation plants at the Chadstone campus and extended the cabling from the Moorabbin Building 3 co-generation plant to Building 4.

We also implemented the following initiatives in line with government policy:

• Continued installation of T5 and LED light fittings throughout the campuses• Continued installation of separate smart metering of buildings to enable more comprehensive monitoring of

services• Continued implementation of the Building Automation System on all campuses and installation of the Alerton

Aurora package• Incorporation of rain water harvesting into toilet cisterns• Installation of new high performance plant and equipment at Chadstone, Moorabbin and Waverley campuses.

In 2018, we reduced our total consumption of energy and CO2 emissions through the following conservation measures.

Table 8: Energy savings projected by conservation measure (2018)

Energy conservation measure Electrical (kWh)

Gas (MJ)

Water (kL)

CO2 (t)

Lighting 2,057,513 - - 2,448

HVAC 407,284 387,000 - 504

BAS 1,039,689 - - 1,237

Rain water harvesting - - 1,358 -

Co-generation 3,709,585 (25,215,000) - 3,123

Hot water boiler upgrades - 1,581,000 - 81

VSD’s and motors 22,817 - - 27

Total 7,262,083 (23,246,000) 1,358 7,452

Our three most recently constructed new buildings have all achieved a GBCA 5-star design rating.

Energy usage

We have significantly expanded our facilities, which makes it difficult to quantify reduced electricity and gas consumption. However, electricity consumption reduced by 2% in 2018 from the previous year. Gas consumption increased by 26% over the same period, due to co-generation and an increase in gas stove usage in the hospitality training kitchens. Additionally, not all buildings are separately metered and all new buildings are now air-conditioned for student comfort, which increases consumption.

Table 9: Electricity consumption (2016 – 2018, kWh)

Year Chadstone Moorabbin Waverley St Kilda Rd Bulli St Total Per EFT Per m2

2016 5,643,068 2,396,116 2,354,831 1,544,136 130,643 12,068,793 11,562 77.83

2017 5,317,397 2,958,326 2,343,294 1,121,429 129,151 11,869,597 10,902 76.54

2018 5,432,934 2,569,198 2,221,209 958,800 106,038 11,288,179 10,116 72.80

Percentage of electricity purchased by green power was 0% in 2018.

Table 10: Gas consumption (2016 – 2018, MJ)

Year Chadstone Moorabbin Waverley St Kilda Rd Bulli St Total Per EFT Per m2

2016 18,824,209 7,461,009 6,013,931 1,001,931 2,316 33,303,197 31,906 214.78

2017 26,212,821 8,477,829 6,264,808 886,275 5,709 41,847,442 38,438 269.99

2018 23,628,589 8,777,844 5,593,322 824,976 41,827 38,866,559 34,830 250.66

Table 11: Water consumption (2016 – 2018, kL)

Year Chadstone Moorabbin Waverley St Kilda Rd Bulli St Total

2016 24,903 11,319 15,289 2,188 109 53,808

2017 21,776 8,407 9,175 2,092 350 41,800

2018 22,641 26,409 9,686 2,403 43 61,182

ENVIRONMENT


Transportation

Table 12: Vehicle fleet (2017 – 2018) 2017 2018

Fleet Petrol Diesel Petrol Diesel

Number of vehicles 70 26 65 25

Fuel usage (L) 84,686 32,652 94,759 30,901

Total greenhouse gas emissions from vehicle fleet (t) 222 69 218 81

Procurement

We use environmentally responsible suppliers by incorporating sustainability criteria as part of the tender evaluation process and as part of our overall procurement strategies, policies and procedures.

Paper usage

In 2018, approximately 15,000 reams of paper were used by the Institute print room services and across all local multi-functional devices. Paper usage in 2018 was lower by about 3,000 reams from the previous year, due to making resources available to learners online and increased double-sided printing,



GOVERNANCE

Asset and Infrastructure CommitteeThis committee oversees Institute capital facilities and infrastructure development – including ICT and major equipment items – and the progress of major projects.

Committee members include:• Karen Corry (Chair)• Ann Barker• Dean Cleland• Mary Faraone (ex-officio member)• Christy Karamzalis• Peter Lewinsky

Audit CommitteeOperating according to the Victorian Public Service Financial Management Compliance Framework, this committee oversees:

• Accountability, risk management and internal control

• Adequacy of our financial reporting and financial management practices

The committee also reviews annual financial statements and makes recommendations to the Board on adopting and authorising release of the statements to parliament.

Committee members include:• Bruce Porter (Chair)• Keri Bailey• Karen Corry• Peter Darvall• Peter Lewinsky

People, Culture and Remuneration CommitteeThis committee oversees all people-related activities and ensures proper governance and capabilities to deliver our strategic objectives.

Committee members include:• Catherine Walsh (Chair)• Mary Faraone (ex-officio member)• Michael Gorton• Peter Lewinsky• Leonie Morgan

Quality CommitteeThis committee oversees organisational performance against:

• Institute rules, policies and procedures• Regulatory standards• Funding contract requirements • Legislation that impacts the quality of our teaching

and learning outcomes and operations

It also monitors the adequacy of our educational compliance and quality management practices.

Committee members include:• Michael Gorton (Chair)• Keri Bailey• Peter Darvall• Mary Faraone (standing member)• Peter Lewinsky (ex-officio member)• Bruce Porter• Catherine Walsh

BOARD OF DIRECTORS

Holmesglen’s Board of Directors is responsible to the Victorian Government for the effective oversight and governance of the Institute.

The Board advances our objectives and operates in accordance with the economic and social objectives and public sector management policies established by the government.

It also assists and informs the Minister for Training and Skills and Minister for Higher Education or the Ministers’ delegates as required.

• Peter Lewinsky (Chair)• Keri Bailey• Ann Barker• Dean Cleland• Karen Corry• Peter Darvall AO• Mary Faraone• Michael Gorton AM• Christina (Christy) Karamzalis• Leonie Morgan AM• Bruce Porter• Catherine Walsh

THE BOARD IS SUPPORTED BY FOUR COMMITTEES WHICH ENABLE IT TO EXECUTE ITS GOVERNANCE RESPONSIBILITIES.

DIRECTORS IN 2018 WERE:


CONTROLLED ENTITIES

Holmesglen Foundation and Glenuc Pty Ltd

The Holmesglen Foundation is a controlled entity of Holmesglen Institute and operates through a trust deed between the Institute and Glenuc Pty Ltd.

Company Directors are responsible for ensuring the Foundation operates according to the trust deed and complies with all governance and regulatory requirements.

The Directors of Glenuc Pty Ltd in 2018 were:

• Peter Lewinsky (Chair)• Ann Barker (appointed 14 February 2018)• Wesa Chau• Mary Faraone• Michael Gorton (appointed 14 February 2018)• Bruce Porter (retired 14 February 2018)

Holmesglen International Training Services Pty Ltd

Holmesglen International Training Services Pty Ltd is a fully-owned subsidiary of Holmesglen Institute. The Directors of Holmesglen International Training Services in 2018 were:

• Mary Faraone• David Endean (retired 5 March 2018)

MAJOR COMMERCIAL ACTIVITIES

In 2018, Holmesglen undertook one major commercial activity in accordance with our Commercial Guidelines – TAFE Institutes.

We entered into a contract with Federation Training to acquire its Chadstone site on Drummond St and the associated educational provision at the campus. The Board directed and oversaw all approvals and implemented all processes as required by the Commercial Guidelines – TAFE Institutes.

Settlement occurred on 21 December 2018.

OTHER COMPLIANCE REPORTS

Legislation

We comply with all relevant legislation and subordinate instruments including, but not limited to, the following:

• Education and Training Reform Act 2006• Constitution of the Holmesglen Institute Order 2016• Directions of the Minister for Training and Skills (or

predecessors)• TAFE Institute Commercial Guidelines• TAFE Institute Strategic Planning Guidelines• Public Administration Act 2004• Financial Management Act 1994• Freedom of Information Act 1982• Building Act 1993• Protected Disclosure Act 2012• Victorian Industry Participation Policy Act 2003

Freedom of Information Act 1982

The Freedom of Information Act 1982 allows the public a right of access to documents held by the Institute. Requests for access to records should be directed to Patricia Farnes, Freedom of Information Officer. Applicants are required by the Act to request access to documents in writing. No form of application is specified. A letter which clearly describes the documents(s) sought is sufficient. The letter should:

• Specify that the application is a request made under the Freedom of Information Act 1982 and should not form part of a letter on another subject

• Include the applicant’s name, address and telephone number where the applicant can be contacted during business hours

• Detail the documents(s) requested• Specify the form of access required, for example

copies of documents, inspection of files or other format

Charges for access to information are in accordance with the Freedom of Information (Access Charges) Regulations 2004. Holmesglen did not receive any applications for information under the Freedom of Information Act 1982 during the year ended 31 December 2018.

Building Act 1993

We hold all building related plans and documentation for building extensions and building approvals lodged for new buildings by certified building surveyors.

On completion of construction, we have obtained certificates of occupancy and practical completion certificates from the relevant architects, building surveyors and authorities. All building certificates are kept in a database and all hardcopies are located in a fire rated archive. All building consultants and builders who are engaged by us hold current registration as building practitioners and have current insurance cover.

We consider that all buildings across all campuses currently conform to the building regulations that existed at the time of construction of the respective


buildings. The Essential Safety Measures are recorded and reported by the Hendry Group Pty Ltd. We provide a copy of the current Essential Safety Measures for display within all buildings. All new buildings constructed since the promulgation of the Building Act 1993 (including subsequent amendments) comply with the relevant standards.

We have processes in place to ensure that any alterations or improvements to buildings meet the necessary standards, ensure that they are safe and fit for purpose and comply with the updated disability code. We engage the services of licenced tradespeople such electricians and plumbers who provide the required certificates of compliance, which are stored in a fire rated archive.

Table 13: Building Act 1993 compliance (2015 – 2018)

2015 2016 2017 2018

Building works

Building works certified for approval 2 4 5 3

Building works in progress subject to mandatory inspections 2 4 - -

New certificate of occupancy issued 3 - 5 3

Essential safety measures

All buildings on each campus - owned

All buildings on each campus/site - leased

Maintenance

Combination in-house and external specialist contractors

Lift contract – comprehensive/performance-based

Mechanical services contract – performance-based

Mechanical services/BAS contract – performance-based

Waste services contract – performance-based

Cleaning services contract – performance-based

Other maintenance agreements include those for heating, ventilation, air-conditioning and cooling, catering equipment, hygiene, pest control, industrial cleaning, refrigeration, vehicle fleet maintenance, backflow prevention, trade waste, electrical, plumbing, signage, car parks, gardening services and arborist.

Protected Disclosure Act 2012

The Protected Disclosure Act 2012 encourages and assists people to make disclosures of improper conduct by public officers and public bodies. The Act provides protection to people who make disclosures in accordance with the Act. It also establishes a system for the matters disclosed to be investigated and rectifying action taken.

We do not tolerate improper conduct by employees, nor the taking of reprisals against those who come forward to disclose such conduct. The Institute has policies and procedures in place which promote and facilitate the disclosure of improper conduct to the Independent Broad-based Anti-Corruption Commission (IBAC).

The Institute Rule for Protected Disclosure was updated in 2018. It maintains our system for the protection of persons who make a protected disclosure under the Act from detrimental action by officers, students, employees and contractors of Holmesglen. This is in accordance with section 58 (5) of the Act and ensures that all other requirements of the Act are met. The Rule is available on the Holmesglen Management System.

Officers, students, employees and contractors of Holmesglen, as well as members of the public, may make a disclosure of improper conduct or detrimental action under the Act to IBAC. IBAC can be contacted at:

Level 1, North Tower459 Collins Street Melbourne, VIC 3000

Our Protected Disclosure Co-ordinator cannot receive disclosures (they must be made directly to IBAC), but is responsible for coordinating responses to the Commission, the Victorian Inspectorate or the Ombudsman. They are also responsible for recording any reported detrimental action against a discloser once notice is received.

The Protected Disclosure Co-ordinator has not been advised by IBAC of any protected disclosures during 2018.


Carers Recognition Act 2012

We have reviewed the application and operation of the Carers Recognition Act 2012 and ensure that we meet the applicable obligations of the Act. Carer recognition principles are included in the relevant policies covering flexible working arrangements, part-time work opportunities and a supportive workplace environment.

Local Jobs First - Victorian Industry Participation Policy Act 2003

The Victorian Industry Participation Policy Act 2003 requires departments and public sector bodies to report on the implementation of the Victorian Industry Participation (VIPP). Departments and public sector bodies are required to apply VIPP in all procurement activities valued at:

• $3 million or more in metropolitan Melbourne• $1 million or more in regional Victoria for state-wide projects

We have complied with the Victorian Industry Participation Policy Act 2003 in respect to ongoing projects. In 2018, there were no new applicable projects that related to this Act.

National Competition Policy

We continue to comply with the principles of the National Competition Policy (and any subsequent reforms). These include:

• Competitive Neutrality: A Statement of Victorian Government Policy• Victorian Government Timetable for the Review of Legislative Restrictions on Competition

We implemented measures to ensure commercial activities and pricing of competitive tender bids for government-funded education and training complied with the policy. We fulfilled our obligations and met our wider responsibilities to the community by applying competitive neutrality in the public interest.

Victorian Public Sector Travel Principles

We have policies and procedures in place relating to domestic and international travel to ensure compliance with the Victorian Public Sector Travel Principles.

Statement on compulsory non-academic fees, subscriptions and charges (Higher Education)

We charge higher education students a services and amenities fee strictly in accordance with:

• The Higher Education Support Act 2003 (the Act)• The Administration Guidelines made under the Act

Revenue from this fee is spent strictly in accordance with the Act and for the provision of services and amenities as specified in subsection 19-38(4) of the Act.

Table 14: Statement of income and expenditure for higher education student services and amenities (as at 31 Dec 2018 and 31 Dec 2017)

Student services and amenities fees2018

($’000)2017

($’000)

Unspent / (overspent) revenue from previous period 4 33

SA-HELP revenue earned 45 42

Student services fees direct from higher education students 219 227

Total revenue expendable in period 268 302

Student services expenses during period -258 -298

Unspent / (overspent) student services revenue 10 4


Consultancies

In 2018, three consultancies had total fees payable of $10,000 or greater. Total expenditure incurred during 2018 in relation to these consultancies was $191,890. The following table constitutes compliance with the requirement to make this information publicly available.

Table 15: Details of individual consultancies valued at $10,000 or greater (2018). Note: Figures reported exclude GST

Consultant Summary of project Fee ($) Future expenditure

KPMG Advice on accounting treatment in relation to interest free loan from DEECD

11,890 Nil

The Tingle Tree Online community strategy 30,000 Nil

RXP Services Pty Ltd Data strategy report 150,000 Nil

Total 191,890 Nil

In 2018, there was no consultancy where the total fees payable to the consultant was less than $10,000. Therefore, total expenditure incurred during 2018 in relation to these consultancies was $Nil.

Information and Communication Technology expenditure

Total ICT expenditure for the 2018 reporting period was $11.2 million, with the details shown below.

Table 16: ICT expenditure (2018)

Business as Usual ICT expenditure

Non-Business as Usual ICT expenditure

Operational expenditure

Capital expenditure

$9.9 million $1.3 million - $1.3 million

Note: Total Business as Usual expenditure includes operational expenditure and capital expenditure

Government advertising expenditure

Table 17: Government advertising expenditure for campaigns with a media spend of $100,000 or greater (2018)

Name of campaign

Summary Start / end date

Advertising (media)

expenditure ($ ex GST)

Creative and campaign

development expenditure

($ ex GST)

Research and

evaluation expenditure

($ ex GST)

Print and collateral

expenditure($ ex GST)

Other campaign

expenditure($ ex GST)

Mid-year recruitment campaign

Learn More Do More recruitment campaign executed across strategic outdoor locations, transit, radio and digital channels.

May - July 2018

$236,900 $29,000 Nil (in house) $21,000 $10,000

2019 Free TAFE recruitment campaign

Free TAFE recruitment campaign executed across strategic outdoor locations, transit, radio, cinema and digital channels.

August - December

2018

$336,147 $38,665 $8,000 $28,000 $30,000

2018 Open Day campaign

Seven Open Days were held in 2018. The advertising campaign is digitally focused with radio support to drive registrations to events and showcase Holmeglen.

January - December

2018

$167,215 $22,000 Nil (in house) $6,000 $8,000


I, Mary Faraone, on behalf of the Board of Holmesglen Institute, certify that Holmesglen Institute has complied with the applicable Standing Directions of the Minister for Finance* under the Financial Management Act 1994 and Instructions.

Mary FaraoneChief Executive and DirectorDate 4/3/2019

The Audit Committee has reviewed this attestation and verified the Institute’s compliance assessment.

FINANCIAL MANAGEMENT COMPLIANCE ATTESTATION

Additional information available on request

Consistent with the requirements of the Financial Management Act 1994, and subject to the provision of the Freedom of Information Act 1982, we have prepared material on the following items (further details available on request):

• A statement that declarations of pecuniary interests have been duly completed by all relevant officers

• Details of shares held by a senior officer as nominee or held beneficially in a statutory authority or subsidiary

• Details of publications produced about the institute and how these can be obtained• Details of changes in prices, fees, charges, rates and levies charged• Details of any major external reviews• Details of major research and development activities undertaken• Details of overseas visits undertaken, including a summary of the objectives and

outcomes of each visit• Details of major promotional, public relations and marketing activities undertaken to

develop community awareness• Details of assessments and measures undertaken to improve employee occupational

health and safety• A general statement on industrial relations and details of time lost through industrial

accidents and disputes• Details of major committees sponsored by the Institute, the purposes of each

committee and the extent to which the purposes have been achieved • Details of all consultancies and contractors including:

− Consultants/contractors engaged − Services provided − Expenditure committed for each engagement

Requests to access this information should be made to:

Joanne JamesChief Finance Officer

* From 29 November 2018, the Assistant Treasurer became responsible for administration of relevant sections of the Financial Management Act 1994. In this report, any reference to the Standing Directions should be read as the Standing Directions made under the Financial Management Act 1994 and any reference to the Minister of Finance should be read as Assistant Treasurer.

24 | Annual Report 2018 Financial Report

Independent Auditor’s Report To the Board of Holmesglen Institute

Opinion I have audited the consolidated financial report of Holmesglen Institute (the institute) and its controlled entities (together the consolidated entity), which comprises the:

• consolidated entity and institute balance sheets as at 31 December 2018 • consolidated entity and institute comprehensive operating statements for the year then

ended • consolidated entity and institute statements of changes in equity for the year then ended • consolidated entity and institute cash flow statements for the year then ended • notes to the financial statements, including significant accounting policies • declaration by Board Chair, Chief Executive and Chief Finance and Accounting Officer.

In my opinion, the financial report presents fairly, in all material respects, the financial positions of the consolidated entity and the institute as at 31 December 2018 and their financial performance and cash flows for the year then ended in accordance with the financial reporting requirements of Part 7 of the Financial Management Act 1994 and applicable Australian Accounting Standards.

Basis for Opinion

I have conducted my audit in accordance with the Audit Act 1994 which incorporates the Australian Auditing Standards. I further describe my responsibilities under that Act and those standards in the Auditor’s Responsibilities for the Audit of the Financial Report section of my report.

My independence is established by the Constitution Act 1975. My staff and I are independent of the institute and the consolidated entity in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to my audit of the financial report in Victoria. My staff and I have also fulfilled our other ethical responsibilities in accordance with the Code.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Board’s responsibilities for the financial report

The Board of the institute is responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards and the Financial Management Act 1994, and for such internal control as the Board determines is necessary to enable the preparation and fair presentation of a financial report that is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the Board is responsible for assessing the institute and the consolidated entity’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 it is inappropriate to do so.


2

Auditor’s responsibilities for the audit of the financial report

As required by the Audit Act 1994, my responsibility is to express an opinion on the financial report based on the audit. My objectives for the audit 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 my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

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

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

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the institute and the consolidated entity’s internal control

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board

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

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

• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the institute and consolidated entity to express an opinion on the financial report. I remain responsible for the direction, supervision and performance of the audit of the institute and the consolidated entity. I remain solely responsible for my audit opinion.

I communicate with the Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

MELBOURNE 12 March 2019

Charlotte Jeffries as delegate for the Auditor-General of Victoria


HOLMESGLEN INSTITUTE

FINANCIAL REPORT31 December 2018

How this report is structured

Comprehensive operating statement 1Balance sheet 2Statement of changes in equity 3Cash flow statement 4

1. About this report1.1 Basis of preparation 5 & 61.2 Compliance information 6

2. How we earned our funds2.1 Government contributions 72.2 Sale of goods and services 72.3 Other income 8

3. How we expended our funds3.1 Employee benefits 93.2 Supplies and services 93.3 Other operating expenses 93.4 Depreciation and amortisation expense 10

4. The assets we invested in4.1 Investment properties 114.2 Property, plant and equipment 12 to 144.3 Intangible assets 154.4 Investments 16

5. Balances from operations5.1 Other non-financial assets 165.2 Receivables 17 & 185.3 Payables 195.4 Employee benefits provisions 20 & 21

6. How we financed our operations6.1 Cash and deposits 226.2 Borrowings 23 & 246.3 Finance lease liability 24

7. Managing risks and uncertainties7.1 Financial instruments 25 to 317.2 Contingent assets and contingent liabilities 327.3 Fair value determination 33 to 37

Holmesglen Institute has presented its audited general purpose financial statements for the financial year ended 31 December 2018 in the following structure to provide users with the information about the Institute's stewardship of resources entrusted to it.

Financial statements

Notes to the financial statements



FINANCIAL REPORT31 December 2018

How this report is structured

8. Governance8.1 Responsible persons 388.2 Remuneration of executives 398.3 Related parties 40 & 418.4 Auditors remuneration 41

9. Other disclosures9.1 Other economic flows included in net result 429.2 Equity reserves 43 & 449.3 Superannuation 459.4 Commitments 469.5 Controlled entities 479.6 Events after reporting date 479.7 Application of accounting standards issued but not yet effective 48 & 499.8 Changes in accounting policies 50

Notes to the financial statements



Comprehensive Operating Statementfor the financial year ended 31 December 2018

2018 2017 2018 2017Note $'000 $'000 $'000 $'000

Income from transactionsGovernment contributions - operating 2.1 62,634 68,193 62,192 67,731 Government contributions - capital 2.1 - 2,150 - 2,150 Sale of goods and services 2.2 80,517 80,309 80,517 80,309 Other income 2.3 14,908 13,559 16,026 20,278

Total income from transactions 158,059 164,211 158,735 170,468

Expenses from transactionsEmployee benefits 3.1 101,884 98,671 101,680 98,558 Depreciation and amortisation 3.4 10,134 10,144 10,134 10,144 Supplies and Services 3.2 30,519 31,867 30,160 31,521 Other operating expenses 3.3 10,113 12,479 10,068 12,411

Total expenses from transactions 152,650 153,161 152,042 152,634

Net result from transactions (net operating balance) 5,409 11,050 6,693 17,834

Other economic flows included in net resultNet gain/(loss) on non-financial assets 9.1(a) 238 14,091 1,233 12,366 Net gain/(loss) on financial instruments 9.1(b) (3,260) (58) (3,107) (58)

Total other economic flows included in net result (3,022) 14,033 (1,874) 12,308

Net result from continuing operations 2,387 25,083 4,819 30,142

Net result 2,387 25,083 4,819 30,142

Other economic flows – other comprehensive income

Items that will not be reclassified to net resultChanges in physical asset revaluation surplus 9.2(b) - 72,100 - 72,100

Items that may be reclassified subsequently to net resultGain/(loss) on revaluation of financial assets 9.2(c) 2,012 1,936

Total other economic flows – Other comprehensive income - 74,112 - 74,036

Comprehensive result 2,387 99,195 4,819 104,178

The above comprehensive operating statement should be read in conjunction with the notes to the financial statements.

Consolidated Institute

1



Balance Sheetas at 31 December 2018

2018 2017 2018 2017Note $'000 $'000 $'000 $'000

AssetsFinancial assets

Cash and deposits 6.1 36,398 40,488 34,313 37,012 Receivables 5.2 13,090 15,529 12,618 15,080 Investments 4.4 30,697 48,916 28,774 46,840

Total financial assets 80,185 104,933 75,705 98,932

Non-financial assetsOther non-financial assets 5.1 4,871 4,767 4,833 4,737 Property, plant and equipment 4.2 361,097 337,924 361,097 337,924 Intangible assets 4.3 571 264 571 264 Investment properties 4.1 105,245 104,750 83,585 82,095

Total non-financial assets 471,784 447,705 450,086 425,020

Total assets 551,969 552,638 525,791 523,952

LiabilitiesPayables 5.3 20,503 23,991 20,438 23,836 Borrowings 6.2 10,120 11,259 10,120 11,259 Employee benefits provision 5.4 16,255 14,684 16,239 14,682

Total liabilities 46,878 49,934 46,797 49,777

Net assets 505,091 502,704 478,994 474,175

EquityContributed capital 9.2(a) 122,807 122,807 122,807 122,807 Physical asset revaluation reserve 9.2(b) 216,413 216,413 216,413 216,413 Investment revaluation reserve 9.2(c) - 3,516 - 3,440 Accumulated surplus/(deficit) 9.2(d) 165,871 159,968 139,774 131,515

Net worth 505,091 502,704 478,994 474,175

Commitments for expenditure 9.4- - -

The above balance sheet should be read in conjunction with the notes to the financial statements.


2



Statement of Changes in Equityfor the year ended 31 December 2018

Consolidated

Physical asset

revaluation reserve

Investment revaluation

reserve

Accumulated surplus

Contributions by owner

Total

Note $'000 $'000 $'000 $'000 $'000

At 1 January 2017 9.2 144,313 1,504 134,885 122,807 403,509 Net result for the year - - 25,083 - 25,083 Changes in physical asset revaluation surplus 9.2(b) 72,100 - - - 72,100 Gain/(loss) on revaluation of financial assets 9.2(c) - 2,012 - - 2,012

Year ended 31 December 2017 9.2 216,413 3,516 159,968 122,807 502,704 Net result for the year - - 2,387 - 2,387 Adjustments on adoption of new accounting policy AASB 9

9.2 - (3,516) 3,516 - -

Year ended 31 December 2018 9.2 216,413 - 165,871 122,807 505,091

Institute

Physical asset

revaluation surplus

Investment revaluation

reserve

Accumulated surplus

Contributions by owner

Total

Note $'000 $'000 $'000 $'000 $'000

At 1 January 2017 9.2 144,313 1,504 101,373 122,807 369,997 Net result for the year - - 30,142 - 30,142 Changes in physical asset revaluation surplus 9.2(b) 72,100 - - - 72,100 Gain/(loss) on revaluation of financial assets 9.2(c) - 1,936 - - 1,936

Year ended 31 December 2017 9.2 216,413 3,440 131,515 122,807 474,175 Net result for the year - - 4,819 - 4,819 Adjustments on adoption of new accounting policy AASB 9

9.2 - (3,440) 3,440 - -

Year ended 31 December 2018 9.2 216,413 - 139,774 122,807 478,994

The statement of changes in equity should be read in conjunction with the notes to the financial statements.

3



Cash Flow Statementfor the year ended 31 December 2018

2018 2017 2018 2017Note $'000 $'000 $'000 $'000

ReceiptsGovernment contributions - operating 63,201 67,476 62,759 67,015 Government contributions - capital - 2,150 - 2,150 User fees and charges received 90,317 81,649 88,482 79,703 Goods and services tax recoverable 5,003 6,101 4,919 6,024 Interest received 580 504 548 406 Dividends received 4,004 2,876 3,864 2,861 Other receipts 8,872 8,751 11,923 17,311

Total receipts 171,977 169,507 172,495 175,470

PaymentsPayments to suppliers and employees (148,712) (146,689) (148,015) (146,071) Interest and other costs of finance paid (116) (17) (116) (17) Goods and services tax paid (7,188) (7,402) (7,012) (7,218)

Total payments (156,016) (154,108) (155,143) (153,306)

Net cash flows from/(used in) operating activities 6.1.1 15,961 15,399 17,352 22,164

Cash flows from investing activitiesPayments for managed investments - (2,000) - - Proceeds from sale of investments 15,000 18,806 15,000 18,806 Payments for non-financial assets (33,034) (12,306) (33,034) (12,306) Proceeds from sale of non-financial assets 470 354 470 354

Net cash provided by/(used in) investing activities (17,564) 4,854 (17,564) 6,854

Cash flows from financing activitiesRepayment of Finance Lease (1,672) (210) (1,672) (210) Repayment of loan (advance from Government) (815) (815) (815) (815)

Net cash provided by/(used) in financing activities (2,487) (1,025) (2,487) (1,025)

Net increase (decrease) in cash and cash equivalents (4,090) 19,228 (2,699) 27,993

Cash and cash equivalents at the beginning of the financial year

40,488 21,260 37,012 9,019

Cash and cash equivalents at the end of the financial year 6.1 36,398 40,488 34,313 37,012

The above cash flow statement should be read in conjunction with the notes to the financial statements.


4


HOLMESGLEN INSTITUTENotes to the financial statements

1. About this report

The Institute is a statutory body corporate, established pursuant to an Act made by the Victorian Government under the Education and Training Reform Act 2006 Section 3.1.12 4(a) .

Its registered office and principal address is:

Holmesglen InstituteCnr Batesford and Warrigal RoadHolmesglen, Victoria, 3148

1.1 Basis of preparation

These financial statements are presented in Australian dollars, the functional and presentation currency of the Institute and the Consolidated Group, and have been prepared in accordance with the historical cost convention unless a different measurement basis is specifically disclosed in notes associated with the item measured on that different basis. Amounts in the financial report have been rounded to the nearest thousand dollars, unless otherwise stated.

The accrual basis of accounting has been applied in the preparation of these financial statements whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

Judgements, estimates and assumptions are required to be made about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The estimates and associated assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and also in future periods that are affected by the revision.

Judgements made by management in the application of Australian Accounting Standards (AAS) that have significant effects on the financial statements and estimates relate to:• the fair value of land, buildings, infrastructure, plant and equipment (refer to note 4.2);• actuarial assumptions for employee benefit provisions based on likely tenure of existing staff, patterns of leave claims, future salary movements and future discount rates (refer to note 5.4).

These financial statements cover the Institute and its controlled entities as an individual reporting entity and include all the controlled activities of the Institute.

Transactions and balancesForeign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Foreign currency translation differences are recognised in Comprehensive Operating Statement, in the period in which they arise.

Goods and Services Tax (GST)Income, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.

5



1. About this report

1.1 Basis of preparation (continued)

Basis of consolidationIn accordance with AASB 10 Consolidated Financial Statements , control exists when an entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of entities are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

In preparing consolidated financial statements for the Institute, all material transactions and balances between consolidated entities are eliminated.

Funding riskFunding risk is the risk of over reliance on a particular funding source to the extent that a change in that funding source could impact on the operating results of the current year and future years.

The Institute has substantial economic dependency on Government operating contributions.

The Institute manages funding risk by continuing to diversify and increase income from commercial activities, both domestically and offshore.

There has been no significant change in the Institute’s exposure, or its objectives, policies and processes for managing funding risk or the methods used to measure this risk from the previous reporting period.

1.2 Compliance information

These general purpose financial statements have been prepared in accordance with the Financial Management Act 1994 (FMA) and applicable Australia Accounting Standards (AAS) which include Interpretations, issued by the Australian Accounting Standards Board (AASB). In particular, they are presented in a manner consistent with the requirements of the AASB 1049 Whole of Government and General Government Sector Financial Reporting .

For the purposes of preparing financial statements, the Institute is classed as a not-for-profit entity. Where appropriate, those AAS paragraphs applicable to not-for-profit entities have been applied.

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. Accounting policies applied are disclosed in sections where the related accounting balance or financial statement matter is disclosed.

6



2. HOW WE EARNED OUR FUNDS

2018 2017 2018 2017Note $'000 $'000 $'000 $'000

2.1 Government contributionsState government - contestable and fee concessions 46,091 49,423 46,091 49,423 Other contributions by Commonwealth Government 2,166 1,997 2,166 1,997 Other contributions 661 534 219 72 Other contributions by State Government 13,716 16,239 13,716 16,239 Total government contributions - operating 62,634 68,193 62,192 67,731

Government contributions - capital State-capital - 2,150 - 2,150 Total government contributions - capital - 2,150 - 2,150

Total government contributions 62,634 70,343 62,192 69,881

• the Institute obtains control of the contributions • the right to receive contributions• the economic benefit comprising the contribution will flow to the Institute; and• the amount of the contribution can be measured reliably.

2.2 Sale of goods and servicesStudent fees and charges 10,902 11,537 10,902 11,537 Student fees and charges (Fee Help) 8,382 9,312 8,382 9,312 Fee for service - Government 4,879 2,093 4,879 2,093 Fee for service - International operations - onshore 33,826 33,331 33,826 33,331 Fee for service - International operations - offshore 2,678 2,667 2,678 2,667 Fee for service - Training programs 16,674 17,546 16,674 17,546 Total fees and charges 77,341 76,486 77,341 76,486

Other non-course fees and chargesSale of goods and services 3,176 3,823 3,176 3,823 Total non-course fees 3,176 3,823 3,176 3,823

Total fees and charges 80,517 80,309 80,517 80,309


Student fees and chargesStudent fees and charges revenue is recognised by reference to the percentage completion of education and training services provided. Where student fees and charges revenue has been clearly received in respect of courses or programs to be delivered in the following year, any non-refundable portion of the fees are treated as revenue in the year of receipt and the balance as revenue in advance.

Fee for serviceFee for service revenue is recognised by reference to the percentage completion of each contract, i.e. in the reporting period in which the services are rendered. Where fee for service revenue of a reciprocal nature has been clearly received in respect of programs or services to be delivered in the following year, such amounts are disclosed as revenue in advance.

Government contributions are recognised as revenue in the period when the following conditions are met:

Revenue from sale of goodsRevenue from sale of goods is recognised by the Institute when:• the significant risks and rewards of ownership of the goods have been transferred to the buyer;• the Institute retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;• the amount of revenue and the costs incurred and to be incurred in respect of the transactions can be reliably measured; and• it is probable that the economic benefits associated with the transaction will flow to the Institute.

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2. HOW WE EARNED OUR FUNDS

2018 2017 2018 2017Note $'000 $'000 $'000 $'000


2.3 Other incomeDividends/Distributions 3,706 2,779 3,560 2,753 Interest on bank and other cash deposits 801 521 771 434 Rental income - Investment properties 5,490 5,486 3,765 3,740 Rental income - other 2,019 2,119 2,588 2,719 Donations, bequests and contributions 82 78 1,433 7,078 Other (car parking fees, management fees etc) 2,322 2,576 3,421 3,554 Fair value of assets received free of charge 488 - 488 -

Total other income 14,908 13,559 16,026 20,278

Dividends/Distributions are recognised when the Institute's right to receive payment is established.

Fair value of assets received free of charge are recognised at their fair value when the transfee obtains control over them.

Donations, bequests and contributions are recognised when received and the amount can be measured reliably.

Rental income is recognised on a time proportional basis and is brought to account when the Institute's right to receive therental is established.

Interest income includes interest received on the Institute's operating bank account and at call and term deposits with Treasury Corporation of Victoria. Interest income is recognised using the effective interest method which allocates the interest over the relevant period.

8



3. HOW WE EXPENDED OUR FUNDS

2018 2017 2018 2017Note $'000 $'000 $'000 $'000

3.1 Employee benefitsSalaries, wages, overtime and allowances 86,341 83,943 86,172 83,848 Superannuation 7,611 7,649 7,595 7,640 Payroll tax 4,408 4,212 4,399 4,207 Long service leave 2,835 1,703 2,827 1,701 Termination benefits 27 517 27 517 Other 662 647 660 645

Total employee benefits 101,884 98,671 101,680 98,558

3.2 Supplies and servicesPurchase of supplies and consumables 5,133 4,776 5,133 4,776 Communication expenses 814 863 812 860 Utilities 2,912 3,013 2,641 2,758 Minor equipment 1,324 1,846 1,323 1,846 Fees and charges 5,187 5,341 5,168 5,301 Contract and other services 11,752 11,586 11,721 11,561 Building repairs and maintenance 3,164 4,188 3,129 4,165 Cost of goods sold/distributed (ancillary trading) 233 254 233 254

Total supplies and services 30,519 31,867 30,160 31,521

3.3 Other operating expensesInterest on finance leases 116 17 116 17 Marketing and promotional expenses 2,657 2,432 2,655 2,432 Audit fees and services 8.4 165 210 143 189 Bad and impaired credit losses from transactions 151 2,161 151 2,161 Staff development 1,056 773 1,056 773 Travel and motor vehicle expenses 880 1,077 879 1,077 Lease expense 2,538 2,960 2,537 2,960 Other expenses 2,550 2,849 2,531 2,802

Total other operating expenses 10,113 12,479 10,068 12,411

Other operating expenses are recognised in the reporting period in which they are incurred.

Supplies and services are recognised as an expense in the reporting period in which they are incurred. The carrying amountsof any inventories held for distribution are expensed when the inventories are distributed.


Employee expenses include all costs related to employment, including wages and salaries, superannuation, payroll tax,fringe benefits tax, leave entitlements, termination payments and WorkCover premiums. Superannuation disclosed aboveare employer contributions that are paid or payable during the reporting period.

Termination benefits are payable when employment is terminated before the normal retirement date, or when anemployee accepts voluntary redundancy in exchange for these benefits. The Institute recognises termination benefits whenit is demonstrably committed to either terminating the employment of current employees according to a detailed formalplan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntaryredundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value.

9



3. HOW WE EXPENDED OUR FUNDS

2018 2017 2018 2017Note $'000 $'000 $'000 $'000


3.4 Depreciation and amortisation expenseBuildings 6,402 7,932 6,402 7,932 Leasehold improvement 5 164 5 164 Plant and equipment 750 509 750 509 Cultural assets 6 5 6 5 Motor vehicles 536 464 536 464 Library collections 70 271 70 271 Computer equipment 2,254 629 2,254 629 Total depreciation 10,023 9,974 10,023 9,974

Amortisation Software 111 170 111 170 Total amortisation 111 170 111 170

Total depreciation and amortisation 10,134 10,144 10,134 10,144

10



4. THE ASSETS WE INVESTED IN

2018 2017 2018 2017Note $'000 $'000 $'000 $'000

4.1 Investment propertiesAt Fair value

Opening balance at 1 January 104,750 90,890 82,095 69,960 Net gain/ (loss) from fair value adjustments 495 13,860 1,490 12,135

Closing balance at 31 December 105,245 104,750 83,585 82,095

The fair values of the Consolidated entity's investment properties at 31 December 2018 have been arrived at on the basis of an independent valuation carried out by independent valuers. The valuation was determined by reference to market evidence of transaction prices for similar properties with no significant unobservable adjustments, in the same location and condition and subject to similar leases and other contracts.


Investment properties represent properties held to earn rentals or for capital appreciation or both. Investment properties exclude properties held to meet service delivery objectives of the Institute.

Investment properties are initially recognised at cost. Costs incurred subsequent to initial acquisition are capitalised when it is probable that future economic benefits in excess of the originally assessed performance of the asset will flow to the Institute.

Subsequent to initial recognition at cost, investment properties are re-valued to fair value with changes in the fair value recognised as other economic flows in the comprehensive operating statement in the period in which they arise. Fair values are determined based on a market comparable approach that reflects recent transaction prices for similar properties. These properties are neither depreciated nor tested for impairment.

11




4.2 Property, plant and equipment

Consolidated Land

Build

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Leas

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Plan

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Equi

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Cultu

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Mot

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Libr

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Com

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Tota

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$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

At 1 January 2017- Cost - 29 - 5,640 4,364 - 2,895 1,893 3,716 18,537 - Valuation 57,043 214,211 2,204 - 2,735 435 - - 3,367 279,995

Accumulated depreciation - (28,000) (2,040) - (4,354) - (1,585) (1,552) (5,319) (42,850) Net book amount 57,043 186,240 164 5,640 2,745 435 1,310 341 1,764 255,682

Year ended 31 December 2017Opening net book amount 57,043 186,240 164 5,640 2,745 435 1,310 341 1,764 255,682 Additions 16 4,635 - 11,708 923 85 1,055 - 1,388 19,810 Disposals - - - - (2) - (132) - (3) (137) Net revaluation increments/(decrements) 59,046 11,914 - - 1,353 - - - 217 72,530 Net gain/(loss) on non-financial assets - - - - - 13 - - - 13 Depreciation expense - (7,932) (164) - (509) (5) (464) (271) (629) (9,974) Transfer from Investment Properties - - - - - - - - - - Transfer from assets under construction - 5,594 - (5,640) 46 - - - - - Closing net book amount 116,105 200,451 - 11,708 4,556 528 1,769 70 2,737 337,924

At 31 December 2017- Cost - - 2,205 11,708 275 85 3,097 1,893 596 19,859 - Valuation 116,105 200,451 - - 4,286 443 - - 2,152 323,437

Accumulated depreciation - - (2,205) - (5) - (1,328) (1,823) (11) (5,372) Net book amount 116,105 200,451 - 11,708 4,556 528 1,769 70 2,737 337,924

Year ended 31 December 2018Opening net book amount 116,105 200,451 - 11,708 4,556 528 1,769 70 2,737 337,924 Additions 16,900 11,594 167 620 1,527 - 1,016 - 2,319 34,143 Disposals - - - - (92) - (216) - (425) (733) Net revaluation increments/(decrements) - - - - - 7 - - - 7 Net gain/(loss) on non-financial assets - - - - - - - - - - Depreciation expense - (6,402) (5) - (750) (6) (536) (70) (2,254) (10,023) Transfer to intangible assets (note 4.3) - - - (221) - - - - - (221) Transfer from assets under construction - 174 - (11,487) - - - - 11,313 - Closing net book amount 133,005 205,817 162 620 5,241 529 2,033 - 13,690 361,097

At 31 December 2018- Cost 16,900 8,184 2,372 620 1,803 - 3,147 1,894 14,228 49,148 - Valuation 116,105 204,035 - - 4,168 529 - - 1,709 326,546

Accumulated depreciation - (6,402) (2,210) - (730) - (1,114) (1,894) (2,247) (14,597) Net book value at the end of the financial year

133,005 205,817 162 620 5,241 529 2,033 - 13,690 361,097

The consolidated figures in the above table for property, plant and equipment are the same as the Institute as an individual entity.

12




4.2 Property, plant and equipment (continued)

Initial recognition

Subsequent measurement

Items of property, plant and equipment, are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment. Where an asset is received for no or nominal consideration, the cost is the asset’s fair value at the date of acquisition.

The cost of constructed non-financial physical assets includes the cost of all materials used in construction, direct labour on the project and an appropriate proportion of variable and fixed overheads.

The cost of a leasehold improvements is capitalised and depreciated over the shorter of the remaining term of the lease or their estimated useful lives.

The initial cost for non-financial physical assets under a finance lease is measured at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease.

Property, plant and equipment are subsequently measured at fair value less accumulated depreciation and impairment. Fair value is determined with regard to the asset’s highest and best use (considering legal or physical restrictions imposed on the asset, public announcements or commitments made in relation to the intended use of the asset) and is summarised by asset category.

Non-specialised land, non-specialised buildings and artworks are valued using the market approach, whereby assets are compared to recent comparable sales or sales of comparable assets that are considered to have nominal value.

Specialised land and specialised buildings: The market approach is used for specialised land, and this is then adjusted for the community service obligation (CSO) to reflect the specialised nature of the land being valued.

The CSO adjustment is a reflection of the valuer’s assessment of the impact of restrictions associated with an asset to the extent that is also equally applicable to market participants.

For the majority of the Institute’s specialised buildings, the depreciated replacement cost method is used, adjusting for the associated depreciation.

The fair value of plant, equipment and vehicles, is normally determined by reference to the asset’s depreciated replacement cost.

Non-current physical assets measured at fair value are revalued in accordance with Financial Reporting Directions (FRDs) issued by the Minister for Finance.

Refer to Note 7.3 for additional information on the fair value determination of property, plant and equipment.

Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land.

Depreciation is generally calculated on a straight-line basis, at rates that allocate the asset’s value, less any estimated residual value, over its estimated useful life. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight-line method.

13




4.2 Property, plant and equipment (continued)

Depreciation methods and rates used for each class of depreciable assets are:

Class of assets Rates 2018 Rates 2017

Buildings 1.79% to 11.11% 1.67% to 14.29%Computer equipment 14.2% to 50% 9.86% to 50%Cultural assets 1% to 1.10% 1% to 1.19%Motor Vehicles 20% 8% to 20%Library collections 14.28% 14.28%Plant and equipment 6.33% to 50% 3.33% to 44.99%

Impairment

The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period, and adjustments made where appropriate.

Leasehold improvements are depreciated over the shorter of the lease term and their useful lives.

Non-financial assets, including items of property, plant and equipment, are tested for impairment whenever there is an indication that the asset may be impaired.

The assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written off as an ‘other economic flow’, except to the extent that it can be debited to an asset revaluation surplus amount applicable to that class of asset.

If there is an indication that there has been a reversal in impairment, the carrying amount is increased to its recoverable amount. However this reversal can not increase the asset’s carrying amount above what would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised in prior years.

The recoverable amount for most assets is measured at the higher of depreciated replacement cost and fair value less costs to sell. Recoverable amount for assets held primarily to generate net cash inflows is measured at the higher of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell.

14




2018 2017 2018 2017Note $'000 $'000 $'000 $'000

4.3 Intangible assetsGross carrying amount

Opening balance 1,291 1,720 1,291 1,720 Net revaluation increments/(decrements) - (429) - (429) Additions 197 - 197 -

Transfer from assets under construction 221 - 221 - Closing balance 1,709 1,291 1,709 1,291

Accumulated amortisation and impairment

Opening balance (1,027) (857) (1,027) (857) Amortisation charge (111) (170) (111) (170) Net revaluation increments/(decrements) - - - - Disposal - - - -

Closing balance (1,138) (1,027) (1,138) (1,027)

Net carrying amount at end of the year 571 264 571 264


ImpairmentIntangible assets with finite useful lives are tested for impairment whenever an indication of impairment is identified.

If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their possible recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written off by a charge to the Comprehensive Operating Statement.

Initial recognitionPurchased intangible assets are initially recognised at cost. When the recognition criteria of AASB 138 Intangible Assets are met, internally generated intangible assets are recognised at cost. Subsequently, intangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation begins when the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following are demonstrated:• the technical feasibility of completing the intangible asset so that it will be available for use or sale;• the intention to complete the intangible asset and use or sell it;• the ability to use or sell the asset;• the intangible asset will generate probable future economic benefits;• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and• the ability to measure reliably the expenditure attributable to the intangible asset during its development.

Subsequent measurementIntangible assets with finite lives are amortised on a straight basis over their useful lives. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at the end of each annual reporting period.

15




2018 2017 2018 2017Note $'000 $'000 $'000 $'000

4.4 Investments

Current investmentsFinancial assets at fair value through profit and loss:

Victorian Funds Management Corporation - managed investments 30,697 48,916 28,774 46,840

Total current investments 30,697 48,916 28,774 46,840

5. BALANCES FROM OPERATIONS

2018 2017 2018 2017Note $'000 $'000 $'000 $'000

5.1 Other non-financial assetsCurrent

Inventories - supplies and consumables at cost 58 58 58 58 Prepayments 4,813 4,709 4,775 4,679

Total current other non-financial assets 4,871 4,767 4,833 4,737

Inventories held for distribution are measured at cost.



Prepayments represent payments in advance of receipt of goods and services or that part of expenditure made in one accounting period covering a term extending beyond that period.

16




2018 2017 2018 2017Note $'000 $'000 $'000 $'000

5.2 ReceivablesContractual

Sale of goods and services 1,884 4,022 1,884 3,588 Other receivables 4 10 4 10 Revenue receivable 12,188 13,607 11,695 13,592 Allowance for credit losses (1,140) (2,555) (1,140) (2,555)

12,936 15,084 12,443 14,635

StatutoryGST input tax credit recoverable 154 445 175 445

Total receivables 13,090 15,529 12,618 15,080

Represented byCurrent receivables 13,090 15,529 12,618 15,080 Non-current receivables - - - -

13,090 15,529 12,618 15,080

Movement in the allowance for credit losses

Balance at the beginning of the year 2,555 668 2,555 668 Increase /(decrease) in provision recognised in net result (1,415) 1,887 (1,415) 1,887

Balance at the end of the year 1,140 2,555 1,140 2,555


Receivables consist of:• statutory receivables, which predominantly include amounts owing from the Victorian Government and GST input tax credits recoverable; and• contractual receivables, which include debtors in relation to goods and services, loans to third parties, accrued investment income, and finance lease receivables.

Receivables are stated inclusive of the amount of GST receivable. Receivables that are contractual are classified as financial instruments. Statutory receivables are not classified as financial instruments.

Receivables are recognised initially at fair value and subsequently measured at amortised cost, using the effective interest method, less an allowance for impairment.

ImpairmentThe Institute measures loss allowances at an amount equal to life time expected credit losses (ECLs). Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. ECLs are a probability-weighted estimate of credit-losses. Credit losses are measured as the present value of all cash shortfalls.

The movement in the allowance for impairment in respect of trade receivables during the year is shown below. Comparative amounts for 2017 respresent the allowance amount for impairment losses under AASB 139. The Institute has determined that the application of AASB 9's impairment requirements at 1 January 2018 did not result in any additional allowance for impairment.

17




5.2 Receivables (continued)Ageing analysis of contractual receivables

Carrying amount

Not past due and not

impaired

Less than 1 month

1-3 months3 months - 1

year1-5 years

Consolidated $’000 $’000 $’000 $’000 $’000 $’000

2018

Trade receivables 1,884 - 823 1,009 37 15 Other receivables 4 4 - - - - Revenue receivables 12,188 12,188 - - - -

Total 14,076 12,192 823 1,009 37 15

2017Trade receivables 4,022 - 1,081 104 1,530 1,307 Other receivables 10 10 - - - - Revenue receivables 13,607 13,607 - - - -

Total 17,639 13,617 1,081 104 1,530 1,307

Institute2018

Trade receivables 1,884 - 823 1,009 37 15 Other receivables 4 4 - - - - Revenue receivables 11,695 11,695 - - - -

Total 13,583 11,699 823 1,009 37 15

2017Trade receivables 3,588 - 647 104 1,530 1,307 Other receivables 10 10 - - - - Revenue receivables 13,592 13,592 - - - -

Total 17,190 13,602 647 104 1,530 1,307

Note: The disclosures above excludes statutory receivables (e.g., amounts owing from Victorian Government and GST taxes payable).

The average credit period on sales of goods is 30 days. No interest is charged on receivables.

There are no financial assets that have their terms renegotiated so as to prevent them from being past due or impaired, and theyare stated at the carrying amounts as indicated.

Past due but not impaired

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2018 2017 2018 2017Note $'000 $'000 $'000 $'000

5.3 PayablesContractual

Supplies and services 7,725 9,380 7,686 9,311 Revenue in advance 12,778 14,611 12,752 14,525

StatutoryGST payable to the ATO - - - -

Total current payables 20,503 23,991 20,438 23,836

Maturity Analysis of contractual payables

Carrying amount

Nominal amount

Less than 1 month

1-3 months3 months -

1 year1-5 years 5+ years

Consolidated $’000 $’000 $’000 $’000 $’000 $’000 $’000

2018

Supplies and services 7,725 7,725 7,725 - - - - Total 7,725 7,725 7,725 - - - -

2017Supplies and services 9,380 9,380 9,380 - - - -

Total 9,380 9,380 9,380 - - - -

Institute2018

Supplies and services 7,686 7,686 7,686 - - - - Total 7,686 7,686 7,686 - - - -

2017Supplies and services 9,311 9,311 9,311 - - - -

Total 9,311 9,311 9,311 - - - -

Note: The disclosures above excludes statutory payables (e.g., amounts owing to the Victorian Government and GST taxes payable).

The average credit period is 30 days. No interest is charged on the other payables. Terms and conditions of amounts payable toother government agencies vary according to a particular agreement with that agency.

Institute

Payables consist of:• contractual payables, such as accounts payable, and unearned income. Accounts payable represent liabilities for goods andservices provided to the Institute prior to the end of the financial year that are unpaid, and arise when the Institute becomesobliged to make future payments in respect of the purchase of those goods and services; and• statutory payables, such as goods and services tax and fringe benefits tax payables.

Contractual payables are classified as financial instruments and categorised as financial liabilities at amortised cost. Statutory payables are recognised and measured similarly to contractual payables, but are not classified as financial instrumentsand not included in the category of financial liabilities at amortised cost, because they do not arise from a contract.

Consolidated

Revenue in advance Any fees received by the Institute during the current financial year in respect of services to be provided in the following year are classified as a liability and recognised as revenue in advance.

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2018 2017 2018 2017Note $'000 $'000 $'000 $'000

5.4 Employee benefits provisionCurrent ProvisionsEmployee benefits Annual leave

Unconditional and expected to wholly settle within 12 months 2,387 2,308 2,380 2,308 Long service leave

Unconditional and expected to wholly settle within 12 months 702 715 702 715 Unconditional and expected to wholly settle after 12 months 9,092 8,229 9,085 8,229

Sub total 12,181 11,252 12,167 11,252

Provision for on costs Annual leave

Unconditional and expected to wholly settle within 12 months 487 445 486 445 Long service leave

Unconditional and expected to wholly settle within 12 months 110 112 110 112 1,423 1,289 1,423 1,289

Total current provisions 14,201 13,098 14,186 13,098

Non-current ProvisionsLong service leave

1,776 1,372 1,775 1,370 Long service leave - on costs

278 214 278 214

Total non-current provisions 2,054 1,586 2,053 1,584

Total provisions 16,255 14,684 16,239 14,682


Unconditional and expected to wholly settle after 12 months

Conditional and expected to wholly settle after 12 months

Conditional and expected to wholly settle after 12 months

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5.4 Employee benefits provision (continued)

Provisions are made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave for services rendered to the reporting date.

Wages, salaries and annual leaveLiabilities for wages and salaries, including non-monetary benefits annual leave are all recognised in the provision for employee benefits as ‘current liabilities’, because the Institute does not have an unconditional right to defer settlements of these liabilities.

Depending on the expectation of the timing of settlement, liabilities for wages and salaries, annual leave and sick leave are measured at:• undiscounted value – if the Institute expects to wholly settle within 12 months; or• present value – if the Institute does not expect to wholly settle within 12 months.

Unconditional LSL is disclosed as a current liability, even where the Institute does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months.The components of the current LSL liability are measured at:• nominal value (undiscounted value) – component that is expected to be wholly settled within 12 months; and• present value (discounted value) – component that is not expected to be wholly settled within 12 months.

Conditional LSL is disclosed as a non-current liability. There is a conditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This non-current LSL liability is measured at present value. Any gain or loss following revaluation of the present value of non-current LSL liability is recognised as a transaction, except to the extent that a gain or loss arises due to changes in the bond interest rate for which it is then recognised as an other economic flow. The discount rate applied is as advised by the Minister of Finance.

Provision for on-costs such as payroll tax, workers compensation and superannuation are recognised separately from the provision of employee benefits.

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6. HOW WE FINANCED OUR OPERATIONS

2018 2017 2018 2017Note $'000 $'000 $'000 $'000

6.1 Cash and depositsCash at bank and on hand 1,198 2,388 813 2,012 Term Deposit - Treasury Corporation Victoria 30,000 - 30,000 - Deposits at call - Treasury Corporation of Victoria 5,200 38,100 3,500 35,000

Total cash and deposits 36,398 40,488 34,313 37,012

6.1.1 Reconciliation of operating result to net cash flows from operating activities

Net result for the year 2,387 25,083 4,819 30,142

Non cash movements:Depreciation and amortisation of non-current assets 10,134 10,144 10,134 10,144 Net (gain) / loss on sale of non-current assets 264 (218) 264 (218) Net (gain) / loss on disposal of financial investments 3,219 (206) 3,066 (206) Fair value gains on other non- financial assets (502) (13,873) (1,497) (12,148) Net (gain)/loss on financial liabilities at amortised cost 41 264 41 264

Total non-cash flows in operating result 13,156 (3,889) 12,008 (2,164)

Movements in operating assets and liabilitiesDecrease / (increase) in trade receivables 2,439 (354) 2,462 (283) Decrease / (increase) in inventories - 8 - 8 Decrease / (increase) in other assets (104) (2,080) (96) (2,086) Increase / (decrease) in payables (3,488) (4,327) (3,398) (4,409) Increase / (decrease) in employee benefits 1,571 958 1,557 956

Total movement in operating assets and liabilities 418 (5,795) 525 (5,814)

Net cash flow from/(used in) operating activities 15,961 15,399 17,352 22,164


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

Cash and deposits, including cash equivalents, comprise cash on hand and cash at bank, deposits at call, and term deposits with an original maturity of three months or less, which are held for the purpose of meeting short term cash commitments rather than for investment purposes, and which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

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2018 2017 2018 2017Note $'000 $'000 $'000 $'000

6.2 BorrowingsCurrent

Advances from Government 815 815 815 815 Finance lease liabilities 6.3 1,769 1,465 1,769 1,465

Non-CurrentAdvances from Government 3,088 3,903 3,088 3,903 Impact of revaluing at fair value (712) (753) (712) (753) Finance lease liabilities 6.3 5,160 5,829 5,160 5,829

Total borrowings 10,120 11,259 10,120 11,259

Maturity Analysis of borrowingsCarrying amount

Nominal amount

Less than 1 month 1-3 months

3 months -1 year 1-5 years +5 years

Consolidated $’000 $’000 $’000 $’000 $’000 $’000 $’000

2018Advances from Government 3,191 3,903 - - 815 3,088 - Finance lease liabilities 6,929 7,139 155 310 1,398 5,276 Total 10,120 11,042 155 310 2,213 8,364 -

2017Advances from Government 3,965 4,718 - - 815 3,260 643 Finance lease liabilities 7,294 7,573 131 261 1,175 6,006 - Total 11,259 12,291 131 261 1,990 9,266 643

Institute2018Advances from Government 3,191 3,903 - - 815 3,088 - Finance lease liabilities 6,929 7,139 155 310 1,398 5,276 - Total 10,120 11,042 155 310 2,213 8,364 -

2017Advances from Government 3,965 4,718 - - 815 3,260 643 Finance lease liabilities 7,294 7,573 131 261 1,175 6,006 - Total 11,259 12,291 131 261 1,990 9,266 643


Advances from GovernmentAdvances from Government are initially measured at fair value, net of transaction costs. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds net of transaction costs and their redemption amount is recognised in the Comprehensive Operating Statement over the period of borrowings using the effective interest rate method.

Finance lease liabilitiesAt the commencement of the lease term, finances leases are initially recognised as assets and liabilities at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payment, each determined at the inception of the lease. The leased asset is accounted for as a non-financial physical asset and depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Minimum finance lease payments are apportioned between the reduction of the outstanding lease liability and the periodic finance expenses which is calculated using the interest rate implicit in the lease and charged directly to the comprehensive operating statement. Refer to note 6.3 for comparison minimum future lease payment and minimum nominal future lease payment.

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2018 2017 2018 2017Note $'000 $'000 $'000 $'000


6.2 Borrowings (continued)

Interest expenseInterest on finance leases 116 17 116 17

Total interest expenses 116 17 116 17

6.3 Finance lease liability

Finance lease liability payableNot longer than one year 1,863 1,567 1,769 1,465 Longer than one year but not longer than five years 5,276 6,006 5,160 5,829 Longer than five years - - - -

Minimum future lease payments 7,139 7,573 6,929 7,294 Less future finance charges (210) (279) - -

Present value of minimum lease payments 6,929 7,294 6,929 7,294

Included in the financial statements as:Current finance lease liability - - 1,769 1,465 Non-current finance lease liability - - 5,160 5,829

Total - - 6,929 7,294

Contingent rentals associated with finance leases are recognised as an expense in the period in which they are incurred.

Minimum future lease payments

Present value of minimum future lease

payments

Interest expense includes costs incurred in connection with the borrowing of funds and includes interest on bank overdrafts andshort term and long term borrowings, amortisation of discounts or premiums relating to borrowings, interest component offinance leases repayments, and the increase in financial liabilities and non-employee provisions due to the unwinding of discountsto reflect the passage of time.

Interest expense is recognised in the period in which it is incurred.

At the commencement of the lease term, finance leases are initially recognised as assets and liabilities at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payment, each determined at the inception of the lease. The leased asset is accounted for as a non-financial physical asset and depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Minimum finance lease payments are apportioned between the reduction of the outstanding lease liability and the periodic finance expense which is calculated using the interest rate implicit in the lease and charged directly to the consolidated comprehensive operating statement.

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7. MANAGING RISKS AND UNCERTAINTIES

2018 2017 2018 2017Note $'000 $'000 $'000 $'000

7.1 Financial instruments

Categories of financial instruments

Financial assets

Financial assets measured at amortised costCash and deposits 36,398 40,488 34,313 37,012 Trade receivables 1,888 4,032 1,888 3,598 Revenue receivable 11,048 11,052 10,555 11,037

Financial assets measured at fair value through profit and lossManaged investments 30,697 48,916 28,774 46,840

Total financial assets 80,031 104,488 75,530 98,487

Financial liabilities

Financial liabilities measured at amortised costSupplies and services 7,725 9,380 7,686 9,311 Advances from Government 3,191 3,965 3,191 3,965 Finance lease liability 6,929 7,294 6,929 7,294

Total financial liabilities 17,845 20,639 17,806 20,570

Categories of financial instruments

Financial assets measured at amortised cost

Financial assets measured at fair value through profit and lossAll financial assets not measured at amortised costs or fair value through other comprehensive income are measured at fair value through profit and loss.

On initial recognition of an equity instrument, the Institute may irrevocably elect to present subsequent changes in the investment's fair value in other comprehensive income. This election is made on an investment-by-investment basis. The Institute has not elected to presented changes in the fair value of its investments in other comprehensive income. As such, they are measured at fair value through profit and loss.


Financial assets measured at amortised cost are financial instruments which meet both of the following criteria and are not designated at fair value through profit or loss:• it is held within a business model whose objective is to hold assets to collect contractual cashflows: and• its contractual terms give rise on specified dates to cashflows that are solely principal and interest on the principal amount outstanding.

The Institute recognises the following financial assets in this category:• cash and deposits• receivables (excluding statutory receivables); and• term deposits.

Financial liabilities at fair value through profit and loss are categorised as such at trade date, or if they are classified as held for trading or designated as such upon initial recognition.

Financial instruments at fair value through net result are initially measure at fair value; attributable transaction costs are expensed as incurred. Subsequently, any changes in fair value are recognised in the net result as other economic flows.

Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

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7.1 Financial instruments (continued)

Derecognition of financial liabilities: A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised as an ‘other economic flow’ in the comprehensive operating statement.

Where the Institute has neither transferred nor retained substantially all the risks and rewards or transferred control, the asset is recognised to the extent of the Institute’s continuing involvement in the asset.

Impairment of financial assetsAASB 9 replaces the 'incurred loss' model in AASB 139 with an 'expected credit loss' (ECL) model. The new impairment model applies to financial assets measured at amortised cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. Under AASB 9, credit losses are recognised earlier than under AASB 139. The financial assets at amortised cost consist of trade receivables, cash and cash equivalents, revenue receivable and term deposits.

Under AASB 9, loss allowances are measure on either of the following basis;• 12-month ECLs: these are ECLs that result from possible default events within the 12 months after the reporting date; and• lifetime ECLs: these ECLs that result from all possible default events over the expected life of a financial instrument.

The Institute measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured as 12-month ECLs:• debt securities that are determined to have low credit risk at the reporting date; and• other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Reclassification of financial instruments: Subsequent to initial recognition and under rare circumstances, non-derivative financial instruments assets that have not been designated at fair value through the comprehensive operating statement upon recognition, may be reclassified out of the fair value through the comprehensive operating statement, if they are no longer held for the purpose of selling or repurchasing in the near term.

Financial instrument assets that meet the definition of loans and receivables may be reclassified out of the fair value through the comprehensive operating statement category into the loans and receivables category, where they would have met the definition of loans and receivables had they not been required to be classified as fair value through the comprehensive operating statement. In these cases, the financial instrument assets may be reclassified out of the fair value through the comprehensive operating statement, if there is the intention and ability to hold them for the foreseeable future or until maturity.

Available-for-sale financial instrument assets that meet the definition of loans and receivables may be reclassified into the loans and receivables category if there is the intention and ability to hold them for the foreseeable future or until maturity.

Derecognition of financial assetsA financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:• the rights to receive cash flows from the asset have expired; or• the Institute retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass through’ arrangement; or• the Institute has transferred its rights to receive cash flows from the asset and either:(a) has transferred substantially all the risks and rewards of the asset, or(b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Financial liabilities at amortised cost are initially recognised on the date they are originated. They are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest bearing liability, using the effective interest rate method. The Institute recognises the following liabilities in this category:• payables (excluding statutory payables); and• borrowings (including finance lease liabilities).

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Derecognition of financial liabilities: A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised as an ‘other economic flow’ in the comprehensive operating statement.

Where the Institute has neither transferred nor retained substantially all the risks and rewards or transferred control, the asset is recognised to the extent of the Institute’s continuing involvement in the asset.

Impairment of financial assetsAASB 9 replaces the 'incurred loss' model in AASB 139 with an 'expected credit loss' (ECL) model. The new impairment model applies to financial assets measured at amortised cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. Under AASB 9, credit losses are recognised earlier than under AASB 139. The financial assets at amortised cost consist of trade receivables, cash and cash equivalents, revenue receivable and term deposits.

Under AASB 9, loss allowances are measure on either of the following basis;• 12-month ECLs: these are ECLs that result from possible default events within the 12 months after the reporting date; and• lifetime ECLs: these ECLs that result from all possible default events over the expected life of a financial instrument.

The Institute measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured as 12-month ECLs:• debt securities that are determined to have low credit risk at the reporting date; and• other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Reclassification of financial instruments: Subsequent to initial recognition and under rare circumstances, non-derivative financial instruments assets that have not been designated at fair value through the comprehensive operating statement upon recognition, may be reclassified out of the fair value through the comprehensive operating statement, if they are no longer held for the purpose of selling or repurchasing in the near term.

Financial instrument assets that meet the definition of loans and receivables may be reclassified out of the fair value through the comprehensive operating statement category into the loans and receivables category, where they would have met the definition of loans and receivables had they not been required to be classified as fair value through the comprehensive operating statement. In these cases, the financial instrument assets may be reclassified out of the fair value through the comprehensive operating statement, if there is the intention and ability to hold them for the foreseeable future or until maturity.

Available-for-sale financial instrument assets that meet the definition of loans and receivables may be reclassified into the loans and receivables category if there is the intention and ability to hold them for the foreseeable future or until maturity.

Derecognition of financial assetsA financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:• the rights to receive cash flows from the asset have expired; or• the Institute retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass through’ arrangement; or• the Institute has transferred its rights to receive cash flows from the asset and either:(a) has transferred substantially all the risks and rewards of the asset, or(b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Financial liabilities at amortised cost are initially recognised on the date they are originated. They are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest bearing liability, using the effective interest rate method. The Institute recognises the following liabilities in this category:• payables (excluding statutory payables); and• borrowings (including finance lease liabilities).

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7.1.1 Net holding gain/(loss) on financial instrument by category

Net holding gain/(loss) on financial instrument by category

2018 2017 2018 2017 2018 2017 2018 2017Consolidated $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assets measured at amortised cost - - 801 521 - - 801 521 Financial assets measured at fair value through profit and loss

(3,260) 1,954 - - 3,706 2,779 446 4,733

Total financial assets (3,260) 1,954 801 521 3,706 2,779 1,247 5,254

Financial liabilities at amortised cost (41) (264) - - - - (41) (264)

Total financial liabilities (41) (264) - - - - (41) (264)

InstituteFinancial assets measured at amortised cost - - 771 434 - - 771 434 Financial assets measured at fair value through profit and loss

(3,107) 1,878 - - 3,560 2,753 453 4,631

Total financial assets (3,107) 1,878 771 434 3,560 2,753 1,224 5,065

Financial liabilities at amortised cost (41) (264) - - - - (41) (264)

Total financial liabilities (41) (264) - - - - (41) (264)

Net holding gain/(loss)

Total interest income/(expense)

Fee income/(expense)

Total

Net gain/ (loss) on financial instruments includes realised and unrealised gains and losses from the revaluations of financial instruments that are designated at fair value through profit or loss or held-for-trading, impairment and reversal of impairment for financial instruments at amortised cost, and disposals of financial assets.

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7.1.2 Financial risk management objectives and policies

Credit quality of contractual financial assets that are neither past due nor impairedFinancial

Institutions (AA- rating)

Government agencies

(AAA rating)

Other counter-

partyTotal

Consolidated $’000 $’000 $’000 $’000

2018Cash and deposits 1,198 35,200 - 36,398 Receivables 1 - - 12,936 12,936 Investments and other financial assets - 30,697 - 30,697

Total contractual financial assets 1,198 65,897 12,936 80,031 2017

Cash and deposits 2,388 38,100 - 40,488 Receivables 1 - - 15,084 15,084 Investments and other financial assets - 48,916 - 48,916

Total contractual financial assets 2,388 87,016 15,084 104,488

Financial Institutions (AA- rating)

Government agencies

(AAA rating)

Other counter-

partyTotal

Institute $’000 $’000 $’000 $’000

2018Cash and deposits 813 33,500 - 34,313 Receivables 1 - - 12,443 12,443 Investments and other financial assets - 28,774 - 28,774

Total contractual financial assets 813 62,274 12,443 75,530 2017

Cash and deposits 2,012 35,000 - 37,012 Receivables 1 - - 14,635 14,635 Investments and other financial assets - 46,840 - 46,840

Total contractual financial assets 2,012 81,840 14,635 98,487 Notes:1. The total amounts disclosed here exclude statutory amounts (e.g. amounts owing to/from Victorian Government, GST input tax credit recoverable and taxes payable).

The Institute is exposed to a variety of financial risks, including credit risk, liquidity risk, foreign currency risk, treasury operations risks, equity price risk, and interest rate risk.

Credit risk

The carrying amount of contractual financial assets recorded in the financial statements, net of any allowances for losses, represents the Institute's maximum exposure to credit risk without taking account of the value of any collateral obtained.

Credit risk is the risk that a counter party to a financial investment transaction will be unable or unwilling to fulfil its contractual obligations. Counterparty risk is managed by ensuring that the Institute's investments are transacted with a financial institution that is a State owned entity, or has a credit rating assigned by the same agency to the State of Victoria.

Estimated exposure to credit risk and ECLs for trade and other receivables at 1 January 2018The Institute reviewed and assessed the existing financial assets on 1 January 2018. The assessment was done to test the impairment of these financial assets using reasonable and supportable information that is available to determine the credit risk of the respective items at the date that they were initially recognised. The assessment was compared to the credit risk at 1 January 2017 and 1 January 2018. The assessment did not result in any additional allowance for impairment.

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7.1.2 Financial risk management objectives and policies (continued)

Liquidity risk

Foreign currency risk

Treasury operations risks

Equity price risk

Interest rate risk

Liquidity risk is the risk that the Institute will not be able to meet its financial obligations as they fall due. Liquidity risk is managed though regular monitoring of the Institute's current and projected cash flow requirements and ensuring that funds held for operational liquidity requirements are invested in cash or cash equivalents investments.

The carrying amounts of financial assets and financial liabilities that are exposed to interest rates and the Institute's sensitivity to interest rate risk are set out on the following table.

Equity price risk is the risk that the investments' value will change due to changes in market prices caused by factors specific to the investment or its issuers, or factors affecting similar investments traded on relevant markets. This risk is managed by the Victorian Funds Management Corporation (VFMC) for funds held on behalf of the Institute and its controlled entities.

Interest rate risk is the risk that the investments' value will change due to a material change in the level of interest rates. Interest rate risk is managed by ensuring diversification across investment asset classes, monitoring of market conditions, and investing in a mixture of short and longer term investments.

The Institute has minimal exposure to foreign currency risk.

Treasury operations risks are managed in accordance with the Board's governance framework, the Board's Rule for Financial Management, Rule for Risk Management and the Institute's investment allocation strategy and related investment procedures.

There have been no significant change in the Institute's exposure, or its objectives, policies and processes for managing foreign currency risk or the methods used to measure this risk from the previous reporting period.

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Interest rate exposure of financial instruments

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017Consolidated % % $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000Financial assets

Cash and deposits 1,198 2,388 - 1,198 2,388 Deposits at call (TCV) 1.45 1.44 5,200 38,100 5,200 38,100 Term deposit (TCV) 1.93 30,000 - 30,000 - Receivables

Trade receivables 1,888 4,032 - - - - 1,888 4,032 Revenue receivable 11,048 11,052 - - - - 11,048 11,052

Managed investments 30,697 48,916 - - - - 30,697 48,916 Total financial assets 80,031 104,488 5,200 38,100 30,000 - 44,831 66,388

Financial liabilitiesPayables

Supplies and services 7,725 9,380 - - - - 7,725 9,380 Borrowings

Finance leases 6,929 7,294 - - 6,929 7,294 - - Advances from Government 3,191 3,965 - - - - 3,191 3,965

Total contractual financial liabilities 17,845 20,639 - - 6,929 7,294 10,916 13,345

InstituteFinancial assets

Cash and deposits 813 2,012 813 2,012 Deposits at call (TCV) 1.45 1.44 3,500 35,000 3,500 35,000 Term deposit (TCV) 1.93 30,000 - 30,000 Receivables

Trade receivables 1,888 3,598 - - - - 1,888 3,598 Revenue receivable 10,555 11,037 - - - - 11,695 13,592

Managed investments 28,774 46,840 - - - 28,774 46,840 Total financial assets 75,530 98,487 3,500 35,000 30,000 - 43,170 66,042

Financial liabilitiesPayables

Supplies and services 7,686 9,311 - - - - 7,686 9,311 Borrowings

Finance leases 6,929 7,294 - - 6,929 7,294 - - Advances from Government 3,191 3,965 - - - - 3,191 3,965

Total contractual financial liabilities 17,806 20,570 - - 6,929 7,294 10,877 13,276

Fixed interest rate Non-interest

bearing Weighted average

effective rateTotal carrying amount

per balance sheetFloating interest

rate

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Interest rate risk sensitivity

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017Consolidated $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Term deposit 30,000 - (300) - (300) - 300 - 300 - Deposits at call 5,200 38,100 (52) (381) (52) (381) 52 381 52 381 Total impact 35,200 38,100 (352) (381) (352) (381) 352 381 352 381

Institute

Term deposit 30,000 - (300) - (300) - 300 - 300 - Deposits at call 3,500 35,000 (35) (350) (35) (350) 35 350 35 350 Total impact 33,500 35,000 (335) (350) (335) (350) 335 350 335 350

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017Consolidated $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Managed investments 30,697 48,916 (3,070) (4,892) (3,070) (4,892) 3,070 4,892 3,070 4,892 Total impact 30,697 48,916 (3,070) (4,892) (3,070) (4,892) 3,070 4,892 3,070 4,892

Institute

Managed investments 28,774 46,840 (2,877) (4,684) (2,877) (4,684) 2,877 4,684 2,877 4,684 Total impact 28,774 46,840 (2,877) (4,684) (2,877) (4,684) 2,877 4,684 2,877 4,684

Carrying amount Result Equity Result-10%

Equity price risk

A possible change of 10% (2017: 10% ) in equity price risk at the reporting date would have increased (decreased) equity and results by the amount shown below. This analysis assumes that all other variables remain constant.

A possible change of 1% (2017: 1% ) in interest rates at the reporting date would have increased (decreased) equity and results by the amount shown below. This analysis assumes that all other variables remain constant.

-1% ⁺1%Carrying amount Result Equity

Equity⁺10%

Result Equity

Interest rate risk

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7.2 Contingent assets and contingent liabilities

Contingent assets and contingent liabilities are not recognised in the balance sheet but are disclosed and, if quantifiable, are measured at nominal value.

Contingent assets and liabilities are presented inclusive of GST receivable or payable respectively.

Contingent assets

Contingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.These are classified as either quantifiable, where the potential economic benefit is known, or non-quantifiable.

The Institute has no contingent assets at 31 December 2018 (2017: Nil)

Contingent liabilities

Contingent liabilities are:• possible obligations that arise from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or• present obligations that arise from past events but are not recognised because:- it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligations; or- the amount of the obligations cannot be measured with sufficient reliability.

Contingent liabilities are also classified as either quantifiable or non-quantifiable.

The Institute has no contingent liabilities at 31 December 2018 (2017: Nil)

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7.3 Fair value determination

Fair value estimation

Financial assets Financial liabilities

Cash and deposits Payables:Receivables: • Supplies and services• Sales of goods and services Borrowings:• Revenue receivable • Advance from government

• Finance leases

The fair value of financial instruments is the same as the carrying amount.

(a) Fair value determination of financial assets and liabilities

The Institute currently holds a range of financial instruments that are recorded in the financial statements where the carrying amounts are areasonable approximation of fair value, either due to their short-term nature or with the expectation that they will be paid in full by the endof the 2018 reporting period.

This section sets out information on how the Institute determined fair value for financial reporting purposes. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The following assets and liabilities are carried at fair value:• financial assets and liabilities at fair value through profit and loss;• land, buildings, plant and equipment, vehicles, lease hold improvements; and• investment properties.

In addition, the fair values of other assets and liabilities that are carried at amortised cost, also need to be determined for disclosure purposes.

The Institute determines the policies and procedures for determining fair values for both financial and non-financial assets and liabilities as required.

In determining fair values a number of inputs are used. To increase consistency and comparability in the financial statements, these inputs are categorised into three levels, also known as the fair value hierarchy. The levels are as follows:

• Level 1 – quoted (unadjusted) market prices in active markets for identical assets or liabilities;• Level 2 – valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and• Level 3 – valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

The Institute determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

These financial instruments include:

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7.3 Fair value determination (continued)

Below is the fair value hierarchy information of financial assets measured at fair value.

Level 1 Level 2 Level 3 Level 1 Level 2 Level 32018 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assetsInvestments and other financial assets

Managed investments 30,697 30,697 - - 28,774 28,774 - - Total financial assets 30,697 30,697 - - 28,774 28,774 - -

2017Financial assetsInvestments and other financial assets

Managed investments 48,916 48,916 - - 46,840 46,840 - - Total financial assets 48,916 48,916 - - 46,840 46,840 - -


Carrying amount at 31

December

Fair value measurement at end of reporting period using: Carrying

amount at 31 December

Fair value measurement at end of reporting period using:

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(b) Fair value determination of non-financial assets

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Quoted prices

Observable price inputs

Unobservable inputs

Quoted prices

Observable price inputs

Unobservable inputs

2018 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Specialised land 133,005 - - 133,005 133,005 - - 133,005

Total land at fair value 133,005 - - 133,005 133,005 - - 133,005

Specialised buildings 205,817 - - 205,817 205,817 - - 205,817

Total buildings at fair value 205,817 - - 205,817 205,817 - - 205,817

Plant and equipment 5,241 - - 5,241 5,241 - - 5,241 Cultural assets 529 - 529 - 529 - 529 - Vehicles 2,033 - - 2,033 2,033 - - 2,033 Library - - - - - - - - Computer equipment 13,690 - - 13,690 13,690 - - 13,690 Leasehold improvements 162 - - 162 162 - - 162

Total other assets at fair value 21,655 - 529 21,126 21,655 - 529 21,126

2017Specialised land 116,105 - - 116,105 116,105 - - 116,105

Total land at fair value 116,105 - - 116,105 116,105 - - 116,105

Specialised buildings 200,451 - - 200,451 200,451 - - 200,451 Total buildings at fair value 200,451 - - 200,451 200,451 - - 200,451

Plant and equipment 4,556 - - 4,556 4,556 - - 4,556 Cultural assets 528 - 528 - 528 - 528 - Vehicles 1,769 - - 1,769 1,769 - - 1,769 Library 70 - - 70 70 - - 70 Computer equipment 2,737 - - 2,737 2,737 - - 2,737 Leasehold improvements - - - - - - - -

Total other assets at fair value 9,660 - 528 9,132 9,660 - 528 9,132

2018Investment properties 105,245 - 105,245 - 83,585 - 83,585 -

Total investment properties 105,245 - 105,245 - 83,585 - 83,585 -

2017Investment properties 104,750 - 104,750 - 82,095 - 82,095 -

Total investment properties 104,750 - 104,750 - 82,095 - 82,095 -

The Institute holds property, plant and equipment for which fair values are determined. Below are the relevant fair value information relating to those assets.

Fair value measurement hierarchy of investment properties

Consolidated InstituteCarrying

amount at 31 December

Carrying amount at 31

December

Fair value measurement hierarchy of property, plant and equipment

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Valuations of property, plant and equipment

Fair value assessments have been performed at 31 December 2018 for all classes of assets. This assessment demonstrated that fair value was materially similar to carrying value, and therefore a full revaluation was not required this year. The next scheduled full revaluation for the Insitute will be conducted in 2022.

Specialised land and specialised buildings - The market approach is used for specialised land, although is adjusted for the community service obligation (CSO) to reflect the specialised nature of the land being valued.

The CSO adjustment is a reflection of the valuer’s assessment of the impact of restrictions associated with an asset to the extent that is also equally applicable to market participants. This approach is in light of the highest and best use consideration required for fair value measurement, and takes into account the use of the asset that is physically possible, legally permissible, and financially feasible. As adjustments of CSO are considered as significant unobservable inputs, specialised land would be classified as Level 3 assets.

For the Institute’s majority of specialised buildings, the depreciated replacement cost method is used, adjusting for the associated depreciations. As depreciation adjustments are considered as significant, unobservable inputs in nature, specialised buildings are classified as Level 3 fair value measurements.

Motor vehicles are valued using the depreciated replacement cost method. The Institute acquires new vehicles and at times disposes of them before the end of their economic life. The process of acquisition, use and disposal in the market is managed by fleet managers in the Institute who set relevant depreciation rates during use to reflect the utilisation of the vehicles.

Plant and equipment is held at fair value. When plant and equipment is specialised in use, such that it is rarely sold other than as part of a going concern, fair value is determined using the depreciated replacement cost method.

Leasehold improvements are held at fair value being depreciated cost. As there is no evidence of a reliable market-based fair value (or other relevant fair value indicators) for leasehold improvements, depreciated cost is the fair value for these types of assets. The valuation of leasehold improvements is based on significant unobservable inputs and accordingly is classified as Level 3 assets.

36





Reconciliation of level 3 fair value movements

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Consolidated

Opening balance 116,105 57,043 200,451 186,240 4,556 2,745 1,769 1,310 70 341 2,737 1,764 - 164 Additions 16,900 16 11,594 4,635 1,527 923 1,016 1,055 - - 2,319 1,388 167 - Transfers in / (out) of Level 3 - - 174 5,594 (92) 44 (216) (132) - - 10,888 (3) - - Depreciation - - (6,402) (7,932) (750) (509) (536) (464) (70) (271) (2,254) (629) (5) (164) Revaluation - 59,046 - 11,914 - 1,353 - - - - - 217 - -

Closing Balance 133,005 116,105 205,817 200,451 5,241 4,556 2,033 1,769 - 70 13,690 2,737 162 -

Institute

Opening balance 116,105 57,043 200,451 186,240 4,556 2,745 1,769 1,310 70 341 2,737 1,764 - 164 Additions 16,900 16 11,594 4,635 1,527 923 1,016 1,055 - - 2,319 1,388 167 - Transfers in/ (out) of Level 3 - - 174 5,594 (92) 44 (216) (132) - - 10,888 (3) - - Depreciation - - (6,402) (7,932) (750) (509) (536) (464) (70) (271) (2,254) (629) (5) (164) Revaluation - 59,046 - 11,914 - 1,353 - - - - - 217 - -

Closing Balance 133,005 116,105 205,817 200,451 5,241 4,556 2,033 1,769 - 70 13,690 2,737 162 -

Description of significant unobservable inputs to Level 3 valuations

2018 and 2017 Valuation technique Significant unobservable inputs

Specialised land Market approach Community service obligation (CSO) adjustment

Specialised buildings Depreciated replacement cost Useful life of buildings

Plant and equipment Depreciated replacement cost Useful life of plant and equipment

Motor Vehicles Depreciated replacement cost Useful life of vehicles

Library Depreciated replacement cost Useful life

Computer equipment Depreciated replacement cost Useful life of computer equipment

Leasehold improvements Depreciated replacement cost Useful life

Mot

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ehic

les

Libr

ary

There were no changes in valuation techniques throughout the period to 31 December 2018.

For all assets measured at fair value, the current use is considered the highest and best use.

Spec

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Spec

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Plan

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37



8. GOVERNANCE

8.1 Responsible persons

Responsible persons

Minister

Accountable Officer

M. Faraone (Chief Executive)

Remuneration

Members of the Board of Holmesglen Institute

P. Lewinsky, Chair B. Porter M. Faraone, Chief Executive D. Cleland A. Barker C. Karamzalis Emeritus Professor P. Darvall AO C. Walsh K. Corry K. BaileyL. Morgan AM M. Gorton AM

Responsible Persons' Remuneration

2018 2017No No

Income range0 - 9,999 - 2

20,000 - 29,999 - 1 30,000 - 39,999 7 1 40,000 - 49,999 3 7 70,000 - 79,999 - 1 80,000 - 89,999 1 - 360,000 - 369,999 - 1 380,000 - 389,999 1 -

Total number 12 13

$'000 $'000

Total remuneration received or due and receivable by the responsible persons from the reporting entity. 863 810

In accordance with the directions of the Minister for Finance under the Financial Management Act 1994 , the following disclosures are made regarding responsible persons and executive officers for the reporting period.

The relevant Minister for the year was the Minister for Training and Skills and Minister for Higher Education, The Hon. Gayle Tierney MP.

Remuneration of the Minister for Training and Skills and Minister for Higher Education is disclosed in the financial report of the Department of Parliamentary Services. Other relevant interests are declared in the Register of Members interests which is completed by each member of the Parliament.

Remuneration received or receivable by the Accountable Officer in connection with the management of the Institute during the reporting period was in the range: $380,000 - $389,999 ($360,000 - $369,999 in 2017).

The number of responsible persons are shown in their income bands:

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8. GOVERNANCE

8.2 Remuneration of executives

2018 2017 2018 2017$'000 $'000 $'000 $'000

RemunerationShort-term benefits 3,081 3,161 3,081 3,161 Post-employment benefits 276 281 276 281 Other long-term benefits 37 52 37 52 Terminations benefits 74 - 74 -

Total remuneration 3,468 3,494 3,468 3,494

Total number of executive officers 18 17 18 17Total annualised employee equivalent (AEE) 16.1 16.7 16.1 16.7

Annualised employee equivalent is based on paid working hours of 38 ordinary hours per week over the 52 weeks for a reporting period.

The remuneration of executive officers, other than ministers and accountable officers are shown in the table below. Total annualised employee equivalents provides a measure of full time equivalent executive officers over the reporting period.

Remuneration comprises employee benefits in all forms of consideration paid, payable or provided by the Institute, or on behalf of the Institute, in exchange for services rendered, and is disclosed in the following categories:


• Short-term employee benefits include amounts such as wages, salaries, annual leave or sick leave that are usually paid or payable on a regular basis, as well as non-monetary benefits such as allowances and free or subsidised goods or services.

• Post-employment benefits include employer superannuation contributions.

• Other long-term benefits include long service leave, other long service benefits or deferred compensation.

• Termination benefits include termination of employment payments, such as severance packages.

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8. GOVERNANCE

8.3 Related parties

Significant transactions with government related entities:-2018 2017

The Institute received funding from the Victorian Government as follows:- $'000 $'000

State Government - contestable 46,091 49,423 State Capital - 2,150 Other 13,716 16,239

Total 59,807 67,812

Related party transactions

2018 2017 2018 2017$'000 $'000 $'000 $'000

Donation from subsidiary to the InstituteHolmesglen International Training Services Pty. Ltd. 1,400 7,000 - -

Distribution from the Holmesglen Foundation to the InstituteHolmesglen Foundation 1,084 1,005 - -

Rent paid by Holmesglen Foundation to the Institute 600 600 - - Management fee paid by Holmesglen Foundation to the Institute 97 97 - -

Total 3,181 8,702 - -

• J. James, Chief Financial Officer• L. English, Executive Director, Education and Applied Research• S. McKinnon, Executive Director, Engagement and Support• B. Prescott, Executive Director, Workforce, Performance and Development (retired 31/12/18)• D. Saunders, Excutive Director, International Education and Business Development• E. Spangher, Excutive Director, Infrastructure and Asset Management (retired 31/12/18)• P. Culpan, Excutive Director, Corporate and Commercial Services (commenced 12/11/18)

Related parties of the Institute and its consolidated group include:• all key management personnel and their close family members and personal business interests (controlled entities, joint ventures and

entities they have significant influence over); • all cabinet ministers and their close family members; • all entities that are controlled and consolidated into the Institute's consolidated financial statements; and• all departments and public sector entities that are controlled and consolidated into the whole of the state consolidated financial

statements.

All related party transactions have been entered into on an arm’s length basis.The following entities have been consolidated into the Institute’s financial statements in accordance with AASB 10:

• Holmesglen International Training Services Pty. Ltd.; • Glenuc Pty. Ltd; and • Holmesglen Foundation

Transaction values for year ended 31 December

Balances outstanding as at 31 December

Key management personnel of the Institute includes the Minister of Training and Skills and Minister for Higher Education, the Hon. Gayle Tierney MP and the Members of the Holmesglen Institute Board, the Accountable Officer and the Institute's Senior Executive Team, which includes:-

40



8. GOVERNANCE

8.3 Related parties (continued)

Entity Position title

Holmesglen International Training Services Pty. Ltd. M. Faraone Director

D. Endean Director (resigned 5/3/18)

Glenuc Pty. Ltd. M. Faraone DirectorP. Lewinsky DirectorW. Chau DirectorM. Gorton Director (appointed 14/2/18)A. Barker Director (appointed 14/2/18)

Compensation of Key management personnel

2018 2017 2018 2017Total remuneration $'000 $'000 $'000 $'000

Short-term employee benefits 2,111 2,063 2,101 2,058 Post-employment benefits 182 175 182 175 Other long-term benefits 19 29 19 29 Termination benefits 33 - 33 -

Total remuneration 2,345 2,267 2,335 2,262

Transactions and balances with key management personnel and other related parties

2018 2017 2018 2017$'000 $'000 $'000 $'000

8.4 Auditors remunerationRemuneration of Victorian Auditor General's Office for:

Audit of the financial statements 98 95 98 95 Audit of the financial statements of subsidiaries 17 21 - -

Total remuneration of Victorian Auditor-General's Office 115 116 98 95

Remuneration of other auditors :Other Assurance Services 50 94 45 94

Total remuneration of other auditors 50 94 45 94

Total Remuneration of Auditors 165 210 143 189


Other related transactions and loans requiring disclosure under the Directions of the Minister for Finance have been considered and there are no matters to report.

Key management personnel of the entities consolidated pursuant to section 53(1)(b) of the FMA into the Institute’s financial statements include:


Key management personnel

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9. OTHER DISCLOSURES

2018 2017 2018 2017Note $'000 $'000 $'000 $'000

9.1 Other economic flows included in net result

(a) Net gain/(loss) on non-financial assetsRevaluation of investment properties 495 13,860 1,490 12,135 Revaluation of cultural assets 7 13 7 13 Net gain/(loss) on disposal of physical assets (264) 218 (264) 218

Total net gain/(loss) on non-financial assets and liabilities 238 14,091 1,233 12,366

(b) Net gain/(loss) on financial instrumentsNet gain/(loss) realised on revaluation of financial investments (2,637) - (2,484) -

Net gain/(loss) realised on disposal of financial investments (582) 206 (582) 206

Subtotal net gain/(loss) on financial investments (3,219) 206 (3,066) 206 Net gain/(loss) on financial liabilities at amortised cost (41) (264) (41) (264)

Total net gain/(loss) on financial instruments (3,260) (58) (3,107) (58)


‘Other economic flows’ are changes arising from market remeasurements. They include:• gains and losses from revaluations of investments properties and cultural assets• gains and losses from disposal of physical assets• gains and losses from disposal of financial investments; and• gains and losses on financial liabilities at amortised cost

42




2018 2017 2018 2017Note $'000 $'000 $'000 $'000

9.2 Equity reserves

(a) Contributed CapitalBalance at 1 January 122,807 122,807 122,807 122,807 Capital contributions - - - -

Balance at 31 December 122,807 122,807 122,807 122,807

(b) ReservesComposition of ReservesPhysical asset revaluation surplus

Land 118,058 118,058 118,058 118,058 Buildings 96,013 96,013 96,013 96,013 Plant and Equipment 2,342 2,342 2,342 2,342


Movements in ReservesBalance at 1 January 216,413 144,313 216,413 144,313 Revaluation increment on non-current assets - 72,100 - 72,100


LandBalance at 1 January 118,058 59,012 118,058 59,012 Revaluation increment on non-current assets - 59,046 - 59,046


BuildingsBalance at 1 January 96,013 84,099 96,013 84,099 Revaluation decrement on non-current assets - 11,914 - 11,914


Plant and EquipmentBalance at 1 January 2,342 1,202 2,342 1,202 Revaluation increment on non-current assets - 1,140 - 1,140


The asset revaluation reserve for plant and equipment comprises increments/(decrements) arising from revaluations every 5 years. The last valuation was 31/12/17.


The asset revaluation reserve for land comprises increments/(decrements) arising from revaluations every 5 years. The last valuation was 31/12/17.

The asset revaluation reserve for buildings comprises increments/(decrements) arising from revaluations every 5 years. The last valuation was 31/12/17.

43




2018 2017 2018 2017Note $'000 $'000 $'000 $'000


9.2 Equity reserves (continued)

(c) Investment revaluation reserve*Balance at 1 January 3,516 1,504 3,440 1,504

Balance at beginning of financial year 3,516 1,504 3,440 1,504 Gain/(loss) on revaluation of Victorian Funds Management Corporation investments - 2,012 - 1,936

Adjustments on adoption of new accounting policy AASB 9 (3,516) (3,440)

Balance at 31 December - 3,516 - 3,440

(d) Accumulated surplus / (deficit)Balance at 1 January 159,968 134,885 131,515 101,373 Adjustments on adoption of new accounting policy AASB 9 3,516 - 3,440 - Net operating result for the year 2,387 25,083 4,819 30,142


Total equity 505,091 502,704 478,994 474,175

* The Investment revaluation reserve has been transferred to Accumulated Surplus on the adoption of AASB 9 with effect from 1st January 2018.

44




2018 2017 2018 2017$'000 $'000 $'000 $'000

9.3 Superannuation

Paid Contributions for the YearDefined benefit plans:

State Superannuation Fund – revised and new 245 285 245 285 Total defined benefit plans 245 285 245 285

Defined contribution plans:VicSuper 3,972 5,281 3,972 5,281 Other 3,466 4,167 3,451 4,159

Total defined contributions plans 7,438 9,448 7,423 9,440

Total paid contribution for the year 7,683 9,733 7,668 9,725

Contribution Outstanding at Year EndVarious Funds 612 583 611 582

Total 612 583 611 582


Contributions to defined contribution plans are expensed when they become payable.

Defined benefit plans

The expenses recognised represents the contributions made by the Institute to the superannuation plan in respect of current services of current Institute staff which are based on the relevant rules of each plan.

Defined contribution plans

Employees of the Institute are entitled to receive superannuation benefits and the Institute contributes to both defined benefit and defined contribution plans. The defined benefit plan(s) provides benefits based on years of service and final average salary.

The Institute does not recognise any defined benefit liability in respect of the plan(s) because it has no legal or constructive obligation to pay future benefits relating to its employees; its only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance recognises and discloses the State’s defined benefit liabilities in its financial statements.

Superannuation contributions paid or payable for the reporting period are included as part of employee benefits in the Comprehensive Operating Statement of the Institute.

The name and details of the major employee superannuation funds and contributions made by the Institute are as follows:

45




2018 2017 2018 2017Note $'000 $'000 $'000 $'000

9.4 Commitments

9.4.1 Expenditure commitments

(a) Capital expenditure commitments payableCapital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:

Property, Plant and EquipmentPayable:

- Within one year 1,110 1,983 1,110 1,983 - Later than one year but not later than five years - - - -

Total Property, Plant and Equipment 1,110 1,983 1,110 1,983 GST reclaimable on the above (101) (180) (101) (180)

Net Commitments Property, Plant and Equipment 1,009 1,803 1,009 1,803

(b) Non-cancellable operating lease commitments payable

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

- Within one year 3,275 2,332 3,275 2,332 - Later than one year but not later than five years 6,539 6,985 6,539 6,985

Total minimum lease payments in relation to non-cancellable operating leases

9,814 9,317 9,814 9,317

GST reclaimable on the above (892) (847) (892) (847) Net commitments non-cancellable operating leases 8,922 8,470 8,922 8,470

(c) Other expenditure commitments

Payable:- Within one year 7,072 7,053 7,072 7,053 - Later than one year but not later than five years 368 4,146 368 4,146

Total other expenditure commitments 7,440 11,199 7,440 11,199 GST reclaimable on the above (676) (1,018) (676) (1,018)

Net commitments other expenditure commitments 6,764 10,181 6,764 10,181

9.4.2 Receivable commitments

Operating lease receivables- Within one year 4,624 5,543 4,077 4,346 - Later than one year but not later than five years 17,991 21,026 17,758 17,328 - Within one year 69,136 73,496 69,568 73,996

Net operating lease receivables 91,751 100,065 91,403 95,670

Commitments for contracts relating to property service agreements (e.g. cleaning, waste management and security services) and licence agreements in existence at the reporting date but not recognised as liabilities,


The Institute leases certain land, buildings and equipment. These leases range in length with the shortest lease terminating eighteen months from the 31 December 2018 and the longest lease terminating 4 years from the 31 December 2018.

46




9.5 Controlled entities

Class of sharesCountry of

incorporationEquity holding Equity holding

Name of entity 2018 2017

Holmesglen International Training Services Pty Ltd. Ordinary Australia 100% 100%Glenuc Pty. Ltd. Ordinary Australia 100% 100%Holmesglen Foundation N/A

9.6 Events after reporting date

The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities:

No matter or circumstance has occurred subsequent to period end that has significantly affected, or may significantly affect, the operations of the Institute and the Consolidated group, the results of those operations or the state of affairs of the Institute and the Consolidated group in subsequent financial years.

The policy in connection with recognising subsequent events is that when events occur between the end of the reporting period and the date when the financial statements are authorised for issue: • adjustments are made to amounts recognised in the financial statements where those events provide information about conditions which existed at the reporting date; and/or• disclosure is made where the events relate to conditions which arose after the end of the reporting period that are considered to be of material interest.

Assets, liabilities, income or expenses arise from past transactions or other past events. Where the transactions result from an agreement between the Institute and other parties, the transactions are only recognised when the agreement is irrevocable at or before balance date. Adjustments are made to amounts recognised in the financial statements for events which occur after the reporting date and before the date the statements are authorised for issue, where those events provide information about conditions which existed at the reporting date. Note disclosure is made about events between the reporting date and the date the statements are authorised for issue where the events relate to conditions which arose after the reporting date and are considered to be of material interest.

47




9.7 Application of standards issued but not yet effective

Standard/Interpretation

Summary Applicable for annual reporting periods beginning on

Impact on public sector entity financial statements

AASB 15 Revenue from Contracts with Customers

The core principle of AASB 15 requires an entity to recognise revenue when the entity satisfies a performance obligation by transferring a promised good or service to a customer.

1-Jan-19 The changes in revenue recognition requirements in AASB 15 may result in changes to the timing and amount of revenue recorded in the financial statements. The Standard will also require additional disclosures on service revenue and contract modifications. The assessment has indicated that there will be no significant impact for the Institute.

AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15

Amends the measurement of trade receivables and the recognition of dividends.Trade receivables, that do not have a significant financing component, are to be measured at their transaction price, at initial recognition. Dividends are recognised in the profit and loss only when:• the entity’s right to receive payment of the dividend is established; • it is probable that the economic benefits associated with the dividend will flow to the entity; and • the amount can be measured reliably.

1 Jan 2017, except amendments to AASB 9 (Dec 2009) and AASB 9 (Dec 2010) apply from 1 Jan 2018

The assessment has indicated that there will be no significant impact for the Institute.

AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15

This Standard defers the mandatory effective date of AASB 15 from 1 January 2017 to 1 January 2018.

1-Jan-18 This amending standard will defer the application period of AASB 15 for not-for-profit entities to the 2018-19 reporting period in accordance with the transition requirements.

AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications to AASB 15

This Standard amends AASB 15 to clarify the requirements on identifying performance obligations, principal versus agent considerations and the timing of recognising revenue from granting a licence. The amendments require: • A promise to transfer to a customer a good or service that is ‘distinct’ to be recognised as a separate performance obligation; • For items purchased online, the entity is a principal if it obtains control of the good or service prior to transferring to the customer; and • For licences identified as being distinct from other goods or services in a contract, entities need to determine whether the licence transfers to the customer over time (right to use) or at a point in time (right to access).

1-Jan-18 The assessment has indicated that there will be no significant impact for the Institute, other than the impact identified for AASB 15 above.

AASB 2016-7 Amendments to Australian Accounting Standards – Deferral of AASB 15 for Not-for-Profit Entities

This Standard defers the mandatory effective date of AASB 15 for not-for-profit entities from 1 January 2018 to 1 January 2019.

1-Jan-19 This amending standard will defer the application period of AASB 15 for not-for-profit entities to the 2019-20 reporting period.

48




9.7 Application of standards issued but not yet effective (continued)

AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities

This Standard amends AASB 9 and AASB 15 to include requirements to assist not-for-profit entities in applying the respective standards to particular transactions and events. The amendments: • require non-contractual receivables arising from statutory requirements (i.e. taxes, rates and fines) to be initially measured and recognised in accordance with AASB 9 as if those receivables are financial instruments; and • clarifies circumstances when a contract with a customer is within the scope of AASB 15.

1-Jan-19 The assessment has indicated that there will be no significant impact for the Institute, other than the impacts identified for AASB 15 above.

Standard/Interpretation

Summary Applicable for annual reporting periods beginning on

Impact on public sector entity financial statements

AASB 16 Leases The key changes introduced by AASB 16 include the recognition of most operating leases (which are currently not recognised) on the balance sheet.

1-Jan-19 The assessment has indicated that the impact on the balance sheet will be the recognition of a right to use asset of $9 million and a corresponding liability of $9 million with no significant impact expected on the compresensive operating statement/net result.

In addition to the new standards and amendments above, the AASB has issued a list of other amending standards that are not effective for the 2018 reporting period (as listed below). In general, these amending standards include editorial and references changes that are expected to have insignificant impacts on public sector reporting.

• AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurements of Share-based Payment Transactions• AASB 2016-6 Amendments to Australian Accounting Standards – Applying AASB 9 Financial Instruments with AASB 4 Insurance Contracts• AASB 2017-1 Amendments to Australian Accounting Standards – Transfers of Investment Property, Annual Improvements 2014-16 Cycle and Other Amendments • AASB 2017-3 Amendments to Australian Accountant Standards - Clarifications to AASB 4• AASB 2017-4 Amendments to Australian Accounting Standards - Uncertainty over Income Tax Treatments• AASB 2017-5 Amendments to Australian Accounting Standards - Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections• AASB 2017-6 Amendments to Australian Accounting Standards - Prepayment Features with Negative Compensation• AASB 2017-7 Amendments to Australian Accounting Standards - Long-term Interests in Associates and Joint Ventures• AASB 2018-1 Amendments to Australian Accounting Standards - Annual Improvements 2015 - 2017 Cycle• AASB 2018-2 Amendments to Australian Accounting Standards - Plan Amendments, Curtailment or Settlement

AASB 1058 Income of Not-for-Profit Entities

This standard replaces AASB 1004 Contributions and establishes revenue recognition principles for transactions where the consideration to acquire an asset is significantly less than fair value to enable to not-for-profit entity to further its objectives.

1-Jan-19 The assessment has indicated that revenue from capital grants that are provided under an enforceable agreement that have sufficiently specific obligations, will now be deferred and recognised as performance obligations are satisfied. As a result, the timing recognition of revenue will change.

49




9.8 Changes in acounting policies

Classification and measurement of financial assets:

AASB 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces AASB 139 financial instruments : Recognition and Measurement.

On 1 January 2018 (the date of initial application of AASB 9) the Institute's management has assessed the business models which apply to its financial assets and has classified the financial instruments into the appropriate AASB 9 categories.

Financial assets that have been reclassified include investments in managed unit trusts ($48.9 million at 1 January 2018) that were measured as available for sale have been reclassified to 'financial assets at fair value through profit or loss" (FVTPL) under AASB 9. These investments do not meet the AASB 9 criteria for classification at amortised cost as their cash flows do not represent solely payments of principal and interest. Related fair value gains ($3.516 million at 1 January 2018) have been transferred from the available-for-sale revaluation reserve to accumulated surplus on 1 January 2018.

Changes in accounting policies resulting from the adoption of AASB 9 have generally been applied retrospectively, except that the Institute will take advantage of the exemption allowing it not to restate comparative information for prior periods with respect to classification and measurement (including impairment) change

Impairment - Financial assets and contract assets:

AASB 9 replaces the "incurred loss" model in AASB 139 with a forward looking "expected credit loss" (ECL) model. The new impairment model applies to financial assets measured at amortised cost. Under AASB 9 credit losses are recognised earlier than under AASB 139. The Institute has determined that the application of AASB 9's impairment requirements at 1 January 2018 did not result in any additional allowance for impairment.

Classification - Financial liabilities:

The Institute has not designated any financial liabilities at FVTPL and has no current intention to do so. The Institute's assessment did not indicate any material impact regarding the classification of financial liabilities at 1 January 2018.

Transition:

50


STATEMENT OF PERFORMANCE AND DISCLOSURE INDEX


80 | Annual Report 201880 | Annual Report 2018


Independent Auditor’s Report To the Board of Holmesglen Institute

Opinion I have audited the accompanying statement of performance of Holmesglen Institute (the institute) which comprises the:

• statement of performance for the year ended 31 December 2018 and

• declaration by Board Chair, Chief Executive and Chief Finance and Accounting Officer.

In my opinion, the statement of performance of Holmesglen Institute in respect of the year ended 31 December 2018 presents fairly, in all material respects.

Basis for Opinion I have conducted my audit in accordance with the Audit Act 1994 which incorporates the Australian Standards on Assurance Engagements. I further describe my responsibilities under that Act and those standards in the Auditor’s Responsibilities for the Audit of the statement of performance section of my report.

My independence is established by the Constitution Act 1975. I and my staff are independent of the institute in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to my audit of the statement of performance in Victoria and have also fulfilled our other ethical responsibilities in accordance with the Code.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Board's responsibilities for the statement of performance

The Board is responsible for the preparation and fair presentation of the statement of performance and for such internal control as the Board determines is necessary to enable the preparation and fair presentation of the statement of performance that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibilities for the audit of the statement of performance

As required by the Audit Act 1994, my responsibility is to express an opinion on the statement of performance based on the audit. My objectives for the audit are to obtain reasonable assurance about whether the statement of performance as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Standards on Assurance Engagements will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to


2

influence the decisions of users taken on the basis of this statement of performance.

As part of an audit in accordance with the Australian Standards on Assurance Engagements, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

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

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

• evaluate the overall presentation, structure and content of the statement of performance, including the disclosures, and whether statement of performance represents the underlying events and results in a manner that achieves fair presentation.

I communicate with the Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

MELBOURNE 12 March 2019

Charlotte Jeffries as delegate for the Auditor-General of Victoria


STATEMENT OF PERFORMANCE

Indicator title Description and methodology Measure 2018 Target 2018 ActualExplanation of variances

Prior year result

Training revenue diversity *

Breakdown of training revenue by

• Government funded

• Fee for service*

• Student fees and charges*

%

41.2%

42.6%

16.2%

38.4%

46.3%

15.3%

The government funded and student fees and charges targets were not achieved due to a reduction in demand for government funded programs. This in turn has resulted in an increase in Fee for Service as a percentage of total training revenue, resulting in achievement of the FFS target.

40.2%

43.5%

16.3%

Employment costs as a proportion of training revenue

Employment and third party training delivery costs as a proportion of training revenue(Employment costs – Workforce reduction expenses + 3rd party training delivery costs) / Training revenue

% 80.0% 81.0% Target marginally exceeded due to the lower government funded training revenue and the impact of the new teacher’s Multi Enterprise Agreement on employment costs.

76.7%

Training revenue per teaching FTE

Training revenue (excl. revenue delivered by third parties) per Teaching FTETraining revenue (excl. revenue delivered by 3rd parties) / Teaching FTEs*

$ >$203,000 $194,824 Target not achieved due to lower government funded training delivery.

$198,385

Operating margin percentage

Operating margin % EBIT (excl. capital contributions) / Total revenue (excl. capital contributions)

% >0% 3.5% Target achieved. 5.5%

Statement of performance for year ending 31 December 2018

* Prior year result has been restated for fee for service training revenue diversity to separately identify student fees and charges, as required by the Department of Education and Training.


DISCLOSURE INDEX

Item No.

Source SUMMARY OF REPORTING REQUIREMENT Page

number

REPORT OF OPERATIONS

CHARTER AND PURPOSE

1. FRD 22H Manner of establishment and the relevant Minister 5

2. FRD 22H Purpose, functions, powers and duties linked to a summary of activities, programs and achievements 5-18

3. FRD 22H Nature and range of services provided including communities served 5, 9-12

MANAGEMENT AND STRUCTURE

4. FRD 22HOrganisational structure and chart, detailing members of the governing board, Audit Committee, CEO, senior officers and their responsibilities

5, 18

FINANCIAL AND OTHER INFORMATION

5. FRD 03A Accounting for Dividends 36

6. FRD 07B Early adoption of authoritative accounting pronouncements NA

7. FRD 10A Disclosure Index 85-86

8. FRD 17B Long Service leave and annual leave for employees 48-49

9. FRD 20A Accounting for State motor vehicle lease arrangements prior to 1 February 2004 NA

10. FRD 22H Operational and budgetary objectives, performance against objectives and achievements 6-7, 84

11. FRD 22H Occupational health and safety statement including performance indicators, performance against those indicators. 15

12. FRD 22H Workforce data for current and previous reporting period including a statement on the application of employment and conduct principles and that employees have been correctly classified in the workforce data collections

14-15

13. FRD 22H Summary of the financial results, with comparative information for the preceding four reporting periods 6-7

14. FRD 22H Summary of significant changes in financial position 6-7

15. FRD 22H Key initiatives and projects, including significant changes in key initiatives and projects from previous years and expectations for the future 9-13

16. FRD 22H Post-balance sheet date events likely to significantly affect subsequent reporting periods 75, 77

17. FRD 22H Summary of application and operation of the Freedom of Information Act 1982 19

18. FRD 22HThe report of operations shall provide a discussion and analysis of the entity’s operating results and financial position and include details about significant factors that affect the entity’s performance

6-7

19. FRD 22H TAFE workforce inclusion policy (where a TAFE has one), including a measurable target and report on the progress towards the target NA

20. FRD 22H Schedule of any government advertising campaign in excess of $100,000 or greater (exclusive of GST). 22

21. FRD 22H Statement, where applicable, on the implementation and compliance with the National Competition Policy, including compliance with the requirements of Victoria’s Competitive Neutrality Policy and any subsequent reform

21

22. FRD 22HStatement, to the extent applicable, on the application and operation of the Carers Recognition Act 2012 (Carers Act), and the actions that were taken during the year to comply with the Carers Act

21

23. FRD 22H Summary of application and operation of the Protected Disclosure Act 2012 including disclosures required by the Act 20

24.FRD 22H & FRD

24D Summary of Environmental Performance. 16-17

25. FRD 22H

Consultants: Report of Operations must include a statement disclosing each of the following: 1. Total number of consultancies of $10,000 or more (excluding GST) 2. Location (e.g. website) of where the schedule with the below details of the consultancies over $10,000 has been made

publicly available • Consultant engaged • Brief summary of project • Total project fees approved (excluding GST) • Expenditure for reporting period (excluding GST) • Any future expenditure committed to the consultant for the project

3. Total number of consultancies individually valued at less than $10,000 and the total expenditure for the reporting period

22

26. FRD 22H List of other information available on request from the Accountable Officer, and which must be retained by the Accountable Officer 23

27. FRD 22H

An entity shall disclose the following in the report of operations: a) Total entity ICT Business As Usual (BAU) expenditure for the full 12 month reporting period; and b) Total entity ICT Non-Business As Usual expenditure for the full 12 month reporting period; and provide a breakdown for: (i) Operational expenditure (OPEX); and (ii) Capital expenditure (CAPEX).

22

28. FRD 25C Victorian Industry Participation Policy Disclosures 21

29. FRD 26B Accounting for VicFleet motor vehicle lease arrangements on or after 1 February 2004 NA

30. SD 5.1.4 Financial management compliance attestation.The Responsible Body must attest to compliance with applicable requirements in the FMA, the Standing Directions of the Minister for Finance and the Instructions, and disclose all Material Compliance Deficiencies.

23

31. FRD 119A Transfers through contributed capital NA

32. SD 5.2.1(a) The Accountable Officer must implement and maintain a process to ensure the Agency’s Annual Report is prepared in accordance with the FMA, the Standing Directions, the Instructions, applicable Australian Accounting Standards and Financial Reporting Directions.

26


Item No.

Source SUMMARY OF REPORTING REQUIREMENT Page

number

33. SD 5.2.3 The report of operations must be signed and dated by the Responsible Body or a member of the Responsible Body. 4

34.CG 10 (clause

27) Summary of Major Commercial Activities 19

35.CG 12 (clause

33) TAFE Institute Controlled Entities.

19, 33, 75

FINANCIAL REPORT

FINANCIAL STATEMENTS REQUIRED UNDER PART 7 OF THE FINANCIAL MANAGEMENT ACT 1984

36. SD 5.2.2(b)

The declaration required under Direction 5.2.2(a) must state that in the joint opinion of the signing persons: the financial statements present fairly the financial transactions during the reporting period and the financial position at the end of that period; and the financial statements have been prepared in accordance with applicable requirements in the FMA, the Directions, the Financial Reporting Directions and Australian Accounting Standards.

26

OTHER REQUIREMENTS UNDER STANDING DIRECTION / FINANCIAL MANAGEMENT ACT 1994

37.SD 5.2.2(a) and

FMA s49

An Agency’s financial statements must include a signed and dated declaration by: • the Accountable Officer;• subject to Direction 5.2.2(c), the CFO; and• for Agencies with a statutory board or equivalent governing body established by or under statute, a member of the Responsible Body.

26

38. FRD 30D Rounding of amounts 33

39. SD 3.2.1.1(c) The Responsible Body must establish an Audit Committee to: • review annual financial statements and make a recommendation to the Responsible Body as to whether to authorise the

statements before they are released to Parliament by the Responsible Minister18

OTHER REQUIREMENTS AS PER FINANCIAL REPORTING DIRECTIONS IN NOTES TO THE FINANCIAL STATEMENTS

40. FRD 11A Disclosure of ex-gratia payments NA

41. FRD 21C Disclosures of Responsible Persons, Executive Officer and Other Personnel (contractors with significant management responsibilities) in the Financial Report

66-69

42. FRD 102A Inventories 44

43. FRD 103G Non-financial physical assets 30,

40-42

44. FRD 105B Borrowing costs 51-52

45. FRD 106B Impairment of assets 42-43, 45, 54

46. FRD 107B Investment properties 39

47. FRD 109A Intangible assets 43

48. FRD 110A Cash flow statements 32, 50

49. FRD 112D Defined benefit superannuation obligations 73

50. FRD 113A Investment in subsidiaries, jointly controlled entities and associates 75

51. FRD 114B Financial instruments – general government entities and public non-financial corporations 53-59

52. FRD 120L Accounting and reporting pronouncements applicable to the reporting period 76-78

COMPLIANCE WITH OTHER LEGISLATION, SUBORDINATE INSTRUMENTS AND POLICIES

53. Legislation

The TAFE institute Annual Report must contain a statement that it complies with all relevant legislation, and subordinate instruments, including, but not limited to, the following: • Education and Training Reform Act 2006 (ETRA)• TAFE institute constitution • Directions of the Minister for Training and Skills (or predecessors) • TAFE institute Commercial Guidelines • TAFE institute Strategic Planning Guidelines • Public Administration Act 2004 • Financial Management Act 1994 • Freedom of Information Act 1982 • Building Act 1993 • Protected Disclosure Act 2012 • Victorian Industry Participation Policy Act 2003

19

54. ETRA s3.2.8 Statement about compulsory non-academic fees, subscriptions and charges payable in 2018 21

55. Policy Statement that the TAFE institute complies with the Victorian Public Sector Travel Policy 21

56.Key Performance

Indicators

Institutes to report against: • Employment costs as a proportion of training revenue; • Training revenue per teaching FTE; • Operating margin percentage; • Training revenue diversity.

84

OVERSEAS OPERATIONS OF VICTORIAN TAFE INSTITUTES

57.

PAEC and VAGO (June 2003

Special Review -

Recommendation 11)

• Financial and other information on initiatives taken or strategies relating to the institute’s overseas operations • Nature of strategic and operational risks for overseas operations • Strategies established to manage such risks of overseas operations • Performance measures and targets formulated for overseas operations • The extent to which expected outcomes for overseas operations have been achieved.

12

DISCLOSURE INDEX


Requests for further information under the provisions of the Freedom of Information Act should be directed to:

Freedom of Information OfficerHolmesglenPO Box 42Holmesglen VIC 3148

Further copies of the annual report and other corporate publications can be obtained from:

Holmesglen Marketing DepartmentPO Box 42Holmesglen VIC 3148

Copyright © Holmesglen Institute, March 2019Holmesglen is the trading name of Holmesglen InstituteCRICOS Provider Code: 00012G. RTO: 0416.

Bourke Street campusLevel 3, 206 Bourke StreetMelbourne, VIC 3000

Chadstone campusCorner Batesford and Warrigal Roads,Chadstone, VIC, 3148 Drummond Street campus41 Drummond Street,Chadstone, VIC, 3148

Holmesglen at Eildon92 Moore Road,Eildon, VIC, 3148

North Melbourne - Futuretech200 Arden Street,North Melbourne, VIC, 3051 Moorabbin campus488 South RoadMoorabbin, VIC, 3189 St Kilda Road campus332 St Kilda Road,Southbank, VIC, 3006

Waverley campus595 Waverley Road,Glen Waverley, VIC 3150 Mailing AddressPO Box 42, Holmesglen 3148 T: 1300 639 888E: [email protected]: holmesglen.edu.au

2018 ANNUAL REPORT - Holmesglen · Accounting Standards. It also follows the TAFE Institute Annual...

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