New financials Report

The Northcott Society (A company limited by guarantee) and its controlled entity ABN 87 302 064 152

Annual Financial Report 30 June 2013

The Northcott Society and its controlled entity Directors’ report ....................................................................11. Directors ........................................................................................................................................................12. Company secretary ........................................................................................................................................33. Director’s meetings ........................................................................................................................................34. Principal activities, objectives and strategies...................................................................................................45. Operatingandfinancialreview ........................................................................................................................66. Events subsequent to reporting date ..............................................................................................................67. Likely developments .......................................................................................................................................68. Environmental regulation ................................................................................................................................69. Indemnificationandinsuranceofofficers ........................................................................................................710. Lead auditor’s independence declaration .......................................................................................................7

The Northcott Society and its controlled entity Statements of comprehensive income ................................8

The Northcott Society and its controlled entity Statements of changes in equity ..........................................9

The Northcott Society and its controlled entity Statements of financial position .........................................10

The Northcott Society and its controlled entity Statements of cash flows ...................................................11

The Northcott Society and its controlled entity Notes to the consolidated financial statements ................121. Reporting entity ............................................................................................................................................122. Basisofpreparation .....................................................................................................................................123. Significantaccountingpolicies ......................................................................................................................134. Determinationoffairvalues ..........................................................................................................................195. Expenses .....................................................................................................................................................206. Netfinancingincome ...................................................................................................................................207. Cash and cash equivalents ..........................................................................................................................208. Trade and other receivables .........................................................................................................................219. Inventories ...................................................................................................................................................2110.Otherfinancialassets ...................................................................................................................................2111. Other assets ................................................................................................................................................2112. Property, plant and equipment .....................................................................................................................2213. Intangible assets ..........................................................................................................................................2414. Investment property .....................................................................................................................................2415. Trade and other payables .............................................................................................................................2516.Employeebenefits ........................................................................................................................................2517. Other liabilities ..............................................................................................................................................3218. Capital and reserves .....................................................................................................................................3219. Operating leases ..........................................................................................................................................3320. Consolidated entities ....................................................................................................................................3421. Key management personnel disclosures ......................................................................................................3422. Segment reporting .......................................................................................................................................3423. Subsequent events ......................................................................................................................................3424.Fundraisingappealsconductedduringthefinancialyear ..............................................................................35

The Northcott Society and its controlled entity Declaration by Chief Executive Officer in respect of fundraising appeals ....................................................................................................................37

The Northcott Society and its controlled entity Directors’ declaration .........................................................38

Independent auditor’s report to the members of The Northcott Society and its controlled entity ..............39

Lead auditor’s independence declaration .......................................................................................................41

Contents

Financial Year ending 30 June 2013 1

The Northcott Society and its controlled entity Directors’ report

ThedirectorspresenttheirreporttogetherwiththefinancialreportofTheNorthcottSociety(“theSociety”)andoftheGroupbeingTheSocietyanditscontrolledentityfortheyearended30June2012andtheauditor’sreportthereon.

1. DirectorsThedirectorsoftheSocietyatanytimeduringorsincetheendofthefinancialyearare:

Name and qualifications Experience, special responsibilities and other directorships

Mr. Michael BriggsB Comm, ACA, ACIS, MBAChairman

Appointed 27 March 2003Chairman, The Northcott SocietyMember, Finance and Properties CommitteeMember, Nomination CommitteeDirector, Antec Engineering Pty LimitedDirector , Anchorage Capital Partners Pty LimitedDirector, SCECGS Redland LimitedDirector, Dick Smith Electronics Pty LtdChairman,AcrowFormworkandScaffoldingPtyLimited

Mr. Tony AbrahamsBCom(Hons)LLBMPhil(Econ)MBAMAICD

Appointed 21 September 2010Member, Nomination Committee Co-founderandCEO,AccessInnovationMediaMember,AustralianInstituteofCompanyDirectorsRhodes Scholar Young Global Leader by the World Economic Forum - 2013

Ms. Kirsten ArmstrongM.Ec,M.PH,FIAA

Appointed7January2013Co-founderandDirector,ThreeRiversFellow,InstituteofActuariesofAustraliaMemberoftheInternationalHealthEconomicsAssociation

Mr. Richard BlaiklockB Comm, MBA

Appointed 19 November 2003Chair, Nomination CommitteeChairman,BaresqueAustraliaPtyLtdGroupandaffiliatedcompanies

Mr. Nick CardnoMA(Hons)CAMAICD

Appointed 7 February 2013Chair, Finance and Properties CommitteePartner, Ernst & YoungDirector, Ernst & Young Transaction Advisory Services LtdMember,InstituteofCharteredAccountants(Scotland)Member,InstituteofCharteredAccountants(Australia)Member,AustralianInstituteofCompanyDirectors

Ms.DebraHeitmannB Admin, MBA,FCA,FTIAFCA – Financial Planning Specialist, Registered Tax Agent(Resigned25October2012)

Appointed 1 April 2009Chair, Finance and Properties CommitteeDirectorandChairFinanceCommittee,JointAccreditationSystemofAustraliaandNewZealandCEO,HadoInvestmentsPtyLimitedMember,VentureCapitalCommitteeofInnovationAustraliaBoardDirector,AyersAllianceHoldingsPtyLimitedKey Responsible Manager, Ayers Alliance Australian Financial Services Licence

Northcott Annual Financial Report 2012-2013 2

The Northcott Society and its controlled entity Directors’ report (continued)

Name and qualifications Experience, special responsibilities and other directorships

Dr.ChristopherJanssenMBBS(Sydney),MBA(IMD),FAICD

Appointed 27 November 1986Member, Finance and Properties CommitteeManagingDirector,GPCElectronicsPtyLimitedandaffiliatedcompaniesDirector,TheWarrenCentreforAdvancedEngineeringLtdMember,AdvisoryBoard,CentorHoldingsPtyLimited.Registered(non-practising)MedicalPractitionerFellowoftheAustralianInstituteofCompanyDirectors

Mr.JeyanJeevaratnamBEng(Hons1),MBA,MEngSc, MAICD

Appointed 3 May 2012Managing Director, AvanadeDirector,ofAIIA(AustralianInformationIndustryAssociation)Member, Technical Advisory Committee, Copyright AgencyMember,AustralianInstituteofCompanyDirectors

Mr.AndrewMansourBEcLLB(Hons)

Appointed 30 August 2010Partner,Energy,ResourcesandInfrastructureGroup,Allens

Ms. Debra RichardsBA(LibStudies),GraduateDiploma(Arts),MAMAICD

Appointed 1 December 2012CEO,Ausfilm(InternationalInc);Director,Communications&MediaLawAssociationDirector,InternationalInstituteofCommunicationsMember, Alcohol Beverages Advertising Code Adjudication PanelMember,AustralianInstituteofCompanyDirectors

Dr. Rob Silberstein LLB(Hons)MHLMBBSMIP GDipLegPrac, FIPTA

Appointed 1 April 2009AustralianandNewZealandIntellectualPropertyCounselforAlphapharmPtyLtdDirectorandChairman,Mobility2000(Australia)Limited

Ms. Kerry StubbsManaging Director and ChiefExecutiveOfficerBA(Hons),MA(Hons),GradCert Writing, MAICD

Appointed 27 February 2008 Member, Finance and Properties CommitteeMember, Nomination CommitteeTelstraBusinessWomen’sAwards–2007NSWIBMCommunity&GovernmentAwardWinnerDirector,NSWHealthServicesAssociationLtdDirector, SpineCare Foundation LtdDirector, Cerebral Palsy AustraliaDirector,WaterforSensitiveCitiesCRCChair,NationalAccreditationAuthorityforTranslatorsandInterpretersLtdMember,FinanceandInvestmentCommittee,UniversityofWesternSydneyBoardofTrustees

Mr.JohnSurianBA(Econ),G.DipAppFin(SecInst),FFin

Appointed 14 December 2000Member, Finance and Properties CommitteeLicenseeandPrincipal,Raine&HorneCommercialParramatta

Dr.HughTaylorMB, BS(Resigned13September2012)

Appointed 19 April 1990DirectorandFounderoftheTaylorGroupofInvestmentCompanies

In accordance with the Society’s Constitution, one third of the directors retire from the Board of directors at the forthcoming Annual General Meeting of members and being eligible, offer themselves for re-election.



2. Company secretaryMrLeeCarpenter(ACMA,GradCertBusAdmin,CPA,MBA,MAICD,CGMA)wasappointedtothepositionofcompanysecretaryinMay2008.MrCarpenteristheChiefOperatingOfficeroftheNorthcottSocietyandalsoaDirectorofSpineCareFoundation.

3. Director’s meetingsThenumberofdirectors’meetingsandnumberofmeetingsattendedbyeachofthedirectorsofNorthcottduringthefinancialyearare:

Director Board Meetings Finance and Properties Committee Meetings

Nomination Committee Meetings

Attended Held* Attended Held* Attended Held*

Mr R Blaiklock 7 7 - - 3 3

Mr M Briggs 7 7 5 5 3 3

DrCJanssen 7 7 4 5 - -

MrJFSurian 6 7 5 5 - -

DrHECTaylor 1 1 - - - -

Mr A Abrahams 7 7 - - 3 3

Ms K Stubbs 7 7 5 5 3 3

MsDHeitmann 1 1 1 1 - -

Mr A Mansour 7 7 - - - -

Dr R Silberstein 4 7 - - - -

Ms K Armstrong 3 4 - - - -

Mr N Cardno 3 3 3 3 - -

MrJJeevaratnam 6 7 - - - -

Ms D Richards 4 5 - - - -

* Number of meetings held during the time the director held office during the period.



4. Principal activities, objectives and strategiesTheprincipalactivitiesoftheconsolidatedentityduringthecourseofthefinancialyearweretheprovisionofindividualandfamilysupport,respite,recreationandleisureprograms,dayprograms,accommodation,employment,equipmentandtechnology,specialistservicesandtherapyservicestopeoplewithdisabilitiesinNewSouthWales.

TherewerenosignificantchangesinthenatureoftheactivitiesoftheGroupduringtheyear.

The Society’s long term objective: TheSociety’slongtermobjectiveistohelpbuildaninclusivesociety.Wedothisinpartnershipwithourclientsandstakeholderstoensureweprovideservicesthatareprofessional,client-focusedanddesignedtoassistpeoplewithdisabilitiesandtheircommunitiesachievetheirgoalsandaspirations.

In order to ensure the long term objectives are being met, the Society will: � Be innovative in our service delivery, to ensure service provisionbestmeetstheneedsofourclients.

� Strivetobecomeaproviderofchoiceforbothcurrent and prospective clients.

� Growourservicesinareasofidentifiedneed,particularlyregionalNSWandwithinindigenouscommunities.

� Developmutualandlong-termpartnershipswithourstakeholders, to ensure our clients have access to thebestlevelofservicedelivery.

� Developourknowledgeandexpertiseinpersoncentredplanning,whichinvolvesidentifyingwhatisimportanttoourclientsandactinguponit,aswellaspilotingsomepersoncentredservicesinnewareas.

� Developanumberofmechanismstoencourageresearch development, including a targeted and holisticprogramwhichtranslatesresearchintopractice.Thisensurestheservicesweofferourclientsareindicativeofbestpracticeandarevalidated and measured.

� Develop a client consultation strategy, so that clientscanbemoremeaningfullyinvolvedinplanningservicesandevaluatingwhatwedo.



The Society’s short term objectives:TheSociety’sshorttermobjectivesarebasedontheorganisation’s2011-2014StrategicPlan,whichidentifiesfourkeyprioritiesforNorthcott:

1. Grow and evolve services that drive inclusion, innovation and scale

� Evaluate and improve existing services to drive and liftsocialinclusion

� Exploreanddelivernewserviceopportunities

� Explore and develop innovative services

� Strengthenourregionalfootprint

2. Lead and influence the sector and public to change for the benefit of clients and the community

� Well positioned and connected Northcott

� A credible research voice

� Profileandpresenceinthesector

3. Drive a dynamic person-centred workforce, workplace and culture

� Aworkforceenabledtodeliverpersoncentredapproaches

� Investinourworkforceandworkplaceto enhance delivery

� Aculturemorealignedwithourvalues

4. Build a sustainable organisation fit for the future

� Afuturefocussed,externallookingorganisation

� Broadenandgrowourrevenuebase

� Systemstosustainourcapacityandgrowth

� Improvetheevaluationoforganisationalperformance

� Improvedsocialresponsibilityeffort

Company performance is constantly measured against the following KPI’s: � ArangeofFinancialindicators.

� Investment returns compared to benchmarks.

� Clientactivityperformanceincludingclientnumbers, client outputs and unit costs.

� Staffingmeasuresincludingthenumberofstaff,fulltime equivalents, recruitment and retention.

� OccupationalHealthandSafetymeasuresincludingthenumberandtypeofincidentsandlosttime injuries.

� Fundraisingperformanceandcostof fundraisingratio.

� ClientSatisfactionmeasuresincluding compliments and complaints.

� Government income to cover direct cost and contribute appropriately to overheads.

� Theratioofsuccessfultendersovertendersappliedfor.

NorthcottalsoundertakesregularsurveysofClientandStaffsatisfaction.



5. Operating and financial review

Review and result of operationsTheoperationsfortheyearended30June2013resultedinaconsolidatednetsurplusof$3,243,194 (2012:$3,938,297).

Incomefromgovernmentfundingwasgreaterthanthatachievedlastyear,primarilyduetoanexpansioninAgeing,DisabilityandHomeCare(ADHC)programs.Incomefromestatesandbequestswaslowerthanlastyear,mainlyduetoasignificantsumreceivedfromoneestateintheprioryear.Investmentreturnsonmanagedfundsgeneratedapositivereturn.

Expenditureonclientprogrammeswassignificantlyhigherthanlastyearmainlyduetoanincreaseintheexpensesassociatedwithsettingupandrunningthenewprograms.Expenditureinallotherareaswasinaccordancewithexpectations.

Significant changes in the state of affairsIntheopinionofthedirectorstherewerenosignificantchangesinthestateofaffairsoftheGroupthatoccurredduringthefinancialyearunderreview.

6. Events subsequent to reporting dateTherehasnotarisenintheintervalbetweentheendofthefinancialyearandthedateofthisreportanyitem,transactionoreventofamaterialandunusualnaturelikely,intheopinionofthedirectorsoftheSociety,toaffectsignificantlytheoperationsoftheGroup,theresultsofthoseoperations,orthestateofaffairsoftheGroup,infuturefinancialyears.

7. Likely developmentsThedirectorsdonotbelievethattherewillbeanysignificantchangeintheGroup’soperationsforthenexttwelvemonths.

8. Environmental regulationTheGroup’soperationsarenotsubjecttoanysignificantenvironmentalregulationundereitherCommonwealthorStatelegislation.However,theBoardbelievesthattheGrouphasadequatesystemsinplaceforthemanagementofitsenvironmentalrequirementsandisnotawareofanysignificantbreachesofthoserequirements as they apply to the Group.



9. Indemnification and insurance of officers

IndemnificationNorthcotthasagreedtoindemnifythecurrentandformerdirectorsoftheSocietyanditscontrolledentityagainstallliabilitiestoanotherperson(otherthanNorthcottorarelatedbodycorporate)thatmayarisefromtheirpositionasdirectorsoftheSocietyanditscontrolledentityexceptwheretheliabilityarisesoutofconductinvolvingalackofgoodfaith.TheagreementstipulatesthattheSocietywillmeetthefullamountofanysuchliabilities, including costs and expenses.

Insurance premiumsSincetheendofthepreviousfinancialyeartheSocietyhaspaidinsurancepremiumsinrespectofdirectors’andofficers’liabilityandlegalexpenses’insurancecontracts,forcurrentandformerdirectorsandofficers,includingexecutiveofficersoftheSocietyanddirectorsandexecutiveofficersandsecretariesofitscontrolledentity.Theinsurancepremiumsrelateto:

� costs and expenses incurred by the relevant officersindefendingproceedings,whethercivilorcriminalandwhatevertheiroutcome;and

� otherliabilitiesthatmayarisefromtheirposition,withtheexceptionofconductinvolvingawilfulbreachofdutyorimproperuseofinformationorposition to gain a personal advantage.

Underthetermsofthecontractofinsurance,furtherdetailsoftheinsurancecoverarenotpermittedtobedisclosed.

10. Lead auditor’s independence declarationTheLeadauditor’sindependencedeclarationissetoutonpage41andformspartofthedirectors’reportforfinancialyearended30June2013.

Thisreportismadewitharesolutionofthedirectors:

__________________________

M. Briggs Director

Dated at Sydney this 19 September 2013


The Northcott Society and its controlled entity Statements of comprehensive income

In AUD Consolidated The Society

Note 2013 2012 2013 2012

Revenuefromgovernmentfunding 30,812,324 28,264,494 30,812,324 28,264,494

Revenuefromcapitalgrantincome 3,087,363 1,845,110 3,087,363 1,845,110

Revenuefromestatesandbequests 796,194 1,052,155 796,194 1,052,155

Revenuefromsaleofgoods 1,236,193 1,543,824 1,236,193 1,543,824

Revenuefromfundraisinganddonations

Monetary 1,481,738 1,177,317 1,461,388 1,155,587

Non - monetary 411,307 1,045,623 411,307 1,045,623

Revenuefromrentalandaccommodation 660,577 700,056 660,577 700,056

Revenuefromroyalties 83,185 82,055 83,185 82,055

Profitfromsaleofnon-currentassets 30,348 62,619 30,348 62,619

Other income 938,614 890,485 960,571 890,450

Total revenue 39,537,843 36,663,738 39,539,450 36,641,973

Costofsales (900,447) (908,398) (900,447) (908,398)

Client programme expenses (27,781,643) (24,635,972) (27,781,643) (24,635,972)

Fundraising expenses (915,716) (826,966) (915,716) (826,966)

Corporate support expenses (8,444,781) (7,200,869) (8,412,457) (7,081,059)

Surplusbeforefinancingincome 1,495,256 3,091,533 1,529,187 3,189,578

Financial income 6 1,747,938 846,764 1,540,957 779,553

Netfinancingincome 1,747,938 846,764 1,540,957 779,553

Surplusfortheperiod 3,243,194 3,938,297 3,070,144 3,969,131

Other comprehensive income

Definedbenefitplanactuarial(losses)/profit 16 (25,493) 8,966 (25,493) 8,966

Totalcomprehensiveincomefortheyear 3,217,701 3,947,263 3,044,651 3,978,097

The statements of comprehensive income are to be read in conjunction with the notes to the financial statements set out on pages 12 to 36.


The Northcott Society and its controlled entity Statements of changes in equity

Consolidated In AUD

Reserves Accumulated funds

Total equity

Balanceat1July2011 26,076,222 200,170 26,276,392

Totalcomprehensiveincomefortheperiod

Surplusfortheperiod - 3,938,297 3,938,297

Actuarialgainsondefinedbenefitsuperannuationplans - 8,966 8,966

Othercomprehensiveincomefortheperiod - - -

Balanceat30June2012 26,076,222 4,147,433 30,223,655

Balanceat1July2012 26,076,222 4,147,433 30,223,655



Actuariallossesondefinedbenefitsuperannuationplans- (25,493) (25,493)

Transfertoaccumulatedfunds (26,076,222) 26,076,222 -

Balanceat30June2013 - 33,441,356 33,441,356

The Society In AUD

Balanceat1July2011 26,076,222 (2,104,994) 23,971,228



Actuarialgainsondefinedbenefitsuperannuationplans- 8,966 8,966

Othercomprehensiveincomefortheperiod - - -

Balanceat30June2012 26,076,222 1,873,103 27,949,325

Balanceat1July2012

26,076,222 1,873,103 27,949,325



Actuariallossesondefinedbenefitsuperannuationplans

- (25,493) (25,493)

Transfertoaccumulatedfunds (26,076,222) 26,076,222 -

Balanceat30June2013 - 30,993,976 30,993,976

The statements of changes in equity are to be read in conjunction with the notes to the financial statements set out on pages 12 to 36.


The Northcott Society and its controlled entity Statements of financial position


Note 2013 2012 2013 2012

Assets

Cash and cash equivalents 7 6,870,372 2,891,169 5,144,196 2,152,235

Trade and other receivables 8 1,647,990 1,338,895 1,657,081 905,488

Inventories 9 322,801 420,945 322,801 420,945

Otherfinancialassets 10 13,043,645 16,220,330 12,296,945 15,610,880

Other current assets 11 331,841 253,176 331,841 253,176

Total current assets 22,216,649 21,124,515 19,752,864 19,342,724

Trade and other receivables 8 - 21,554 - -

Otherfinancialassets 10 - 495,358 - -

Employeebenefits 16 227,644 216,841 227,644 216,841

Intangible assets 13 4,843,623 1,819,466 4,843,623 1,819,466

Investment property 14 - 850,000 - 850,000

Property, plant and equipment

12 20,304,567 19,823,150 20,304,567 19,823,150

Total non-current assets 25,375,834 23,226,369 25,375,834 22,709,457

Total assets 47,592,483 44,350,884 45,128,698 42,052,181

Liabilities

Trade and other payables 15 2,450,671 2,582,461 2,434,266 2,558,088

Employeebenefits 16 2,870,114 2,540,008 2,870,114 2,540,008

Other 17 8,588,758 8,818,490 8,588,758 8,818,490

Total current liabilities 13,909,543 13,940,959 13,893,138 13,916,586

Employeebenefits 16 241,584 186,270 241,584 186,270

Total non-current liabilities 241,584 186,270 241,584 186,270

Total liabilities 14,151,127 14,127,229 14,134,722 14,102,856

Net assets 33,441,356 30,223,655 30,993,976 27,949,325

Accumulatedfunds

Generalaccumulatedfunds 18 33,441,356 4,147,433 30,993,976 1,873,103

Reserves 18 - 26,076,222 - 26,076,222

Totalaccumulatedfunds 33,441,356 30,223,655 30,993,976 27,949,325

The statement of financial position are to be read in conjunction with the notes to the financial statements set out on pages 12 to 36.


The Northcott Society and its controlled entity Statements of cash flows


Note 2013 2012 2013 2012

Cash flows from operating activities

Cashreceiptsfromcustomers,donationsand grants

42,728,405 33,337,779 42,265,990 33,366,525

Cash paid to suppliers and employees (38,828,016) (33,624,447) (38,787,755) (33,755,377)

Cashgeneratedfrom/(usedin)operations 3,900,389 (286,668) 3,478,235 (388,852)

Managedfunddistributionreceived 1,300,518 1,176,040 1,300,518 1,176,040

Interest received 167,852 233,682 107,115 180,949

Netcashfromoperatingactivities 5,368,759 1,123,054 4,885,868 968,137

Cash flows from investing activities

Proceedsfromsaleofnon-currentassets 163,360 282,582 163,360 282,582

Proceedsfromsaleofmanagedfundinvestmentsheldfortrading

3,951,611 63,639 3,447,260 49,410

Acquisitionofproperty,plantandequipmentand intangible assets

(5,504,527) (3,688,538) (5,504,527) (3,688,538)

Netcashfrom/(usedin)investingactivities (1,389,556) (3,342,317) (1,893,907) (3,356,546)

Netincrease/(decrease)incashandcashequivalents 3,979,203 (2,219,263) 2,991,961 (2,388,409)

Cashandcashequivalentsat1July 2,891,169 5,110,432 2,152,235 4,540,644

Cashandcashequivalentsat30June 7 6,870,372 2,891,169 5,144,196 2,152,235

The statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 12 to 36.

12 Northcott Annual Financial Report 2012-2013

The Northcott Society and its controlled entity Notes to the consolidated financial statements

1. Reporting entityTheNorthcottSociety(the‘Society’or‘Company’)isanot-for-profitcompanylimitedbyguaranteeanddomiciledinAustralia.TheconsolidatedfinancialreportoftheSocietyforthefinancialyearended30June2013comprisestheSocietyanditscontrolledentity(togetherreferredtoasthe‘Group’).

2. Basis of preparation

a. Statement of complianceThefinancialreportisatier2generalpurposefinancialreportwhichhasbeenpreparedinaccordancewithAustralianAccountingStandards–ReducedDisclosureRequirements(AASBs)(includingAustralianAccountingInterpretations)adoptedbytheAustralianAccountingStandardsBoard(AASB)andtheCorporationsAct2001.

TheCompanyearlyadoptedAASB1053ApplicationofTiersofAustralianAccountingStandardsandAASB2010-2AmendmentstoAustralianStandardsarisingfromReducedDisclosureRequirementsforthefinancialyearbeginningon1July2012toprepareTier2generalpurposefinancialstatements.

Thestatementswereapprovedbytheboardofdirectorsonthe17September2013.

b. Basis of measurementThefinancialreportispresentedinAustraliandollars.

Thefinancialreportispreparedonthehistoricalcostbasisexceptforfinancialinstrumentsclassifiedasheldfortradingwhicharestatedattheirfairvalue.

c. Estimates and judgementsTheestimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognisedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiod,orintheperiodoftherevisionandfutureperiodsiftherevisionaffectsbothcurrentandfutureperiods.

ThepreparationofafinancialreportinconformitywithAustralianAccountingStandardsrequiresmanagementtomakejudgements,estimatesandassumptionsthataffecttheapplicationofpoliciesandreportedamountsofassets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experienceandvariousotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasisofmakingthejudgementsaboutcarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Actualresultsmaydifferfromtheseestimates..

13

The Northcott Society and its controlled entity Notes to the consolidated financial statements (continued)

Financial Year ending 30 June 2013

3. Significant accounting policiesTheaccountingpoliciessetoutbelowhavebeenappliedconsistentlytoallperiodspresentedinthesefinancialstatements, by the Company and its controlled entity.

a. Basis of consolidation(i) SubsidiariesSubsidiariesareentitiescontrolledbytheGroup.ControlexistswhentheGrouphasthepowertogovernthefinancialandoperatingpoliciesofanentitysoastoobtainbenefitsfromitsactivities.Inassessingcontrol,potentialvotingrightsthatcurrentlyareexercisablearetakenintoaccount.Thefinancialstatementsofsubsidiariesareincludedintheconsolidatedfinancialstatementsfromthedatethatcontrolcommencesuntilthedatethatcontrolceases.TheaccountingpoliciesofsubsidiarieshavebeenchangedwhennecessarytoalignthemwiththepoliciesadoptedbytheGroup.

(ii) Transactions eliminated on consolidationIntragroupbalancesandanyunrealisedgainsandlossesorincomeandexpensesarisingfromintragrouptransactions,areeliminatedinpreparingtheconsolidatedfinancialstatements.

b. Financial Instruments(i) Non-derivative financial instrumentsNon-derivativefinancialinstrumentscompriseinvestmentsinequityanddebtsecurities,tradeandotherreceivables,cashandcashequivalents,loansandborrowings,andtradeandotherpayables.

Non-derivativefinancialinstrumentsarerecognisedinitiallyatfairvalueplus,forinstrumentsnotatfairvaluethroughprofitorloss,anydirectlyattributabletransactioncosts.Subsequenttoinitialrecognitionnon-derivativefinancialinstrumentsaremeasuredasdescribedbelow.

Cash and cash equivalents comprise cash balances and call deposits.

Wherepaymenttermsfordisposedassetsaredeferredformorethantwelvemonths,thereceivableisdiscountedtoitspresentvalue.Theunwindingofthediscountisrecognisedasinterestincome.

Financialassetsatfairvaluethroughprofitorloss

Aninstrumentisclassifiedasatfairvaluethroughprofitorlossifitisheldfortradingorisdesignatedassuchuponinitialrecognition.FinancialinstrumentsaredesignatedatfairvaluethroughprofitorlossiftheGroupmanagessuchinvestmentsandmakespurchaseandsaledecisionsbasedontheirfairvalueinaccordancewiththeGroup’sdocumentedriskmanagementorinvestmentstrategy.Uponinitialrecognition,attributabletransactioncostsarerecognisedinprofitorlosswhenincurred.Financialinstrumentsatfairvaluethroughprofitorlossaremeasuredatfairvalue,andchangesthereinarerecognisedinprofitorloss.

OtherOthernon-derivativefinancialinstrumentsaremeasuredatamortisedcostusingtheeffectiveinterestmethod,less any impairment losses.

14


Northcott Annual Financial Report 2012-2013

c. Property, plant and equipment(i) Owned assetsItemsofproperty,plantandequipmentarestatedatcostordeemedcostlessaccumulateddepreciation(seebelow)andimpairmentlosses.Costincludesexpendituresthataredirectlyattributabletotheacquisitionoftheasset.ImpairmentofassetsisdiscussedinNote3(e).

Wherepartsofanitemofproperty,plantandequipmenthavedifferentusefullives,theyareaccountedforasseparateitemsofproperty,plantandequipment.

(ii) Leased assetsLeasesintermsofwhichtheGroupassumessubstantiallyalltherisksandrewardsofownershipareclassifiedasfinanceleases.Otherleasesareclassifiedasoperatingleases.LeasepaymentsareaccountedforasdescribedinaccountingpolicyinNote3(l).

(iii) Subsequent costsTheGrouprecognisesinthecarryingamountofanitemofproperty,plantandequipmentthecostofreplacingpartofsuchanitemwhenthatcostisincurredifitisprobablethatthefutureeconomicbenefitsembodiedwithintheitemwillflowtotheGroupandthecostoftheitemcanbemeasuredreliably.Allothercostsarerecognised in the income statement as an expense as incurred.

(iv) DepreciationWiththeexceptionoffreeholdland,depreciationischargedtotheincomestatementonastraight-linebasisovertheestimatedusefullivesofeachpartofanitemofproperty,plantandequipment.Landisnotdepreciated.

Leasedassetsaredepreciatedovertheshorteroftheleasetermandtheirusefullivesunlessitisreasonablycertainthattheentitywillobtainownershipbytheendoftheleaseterm.

Theestimatedusefullivesinthecurrentandcomparativeperiodsareasfollows:

� Buildings 40 years

� Leasehold improvements 3 years

� Plant and equipment 4 – 10 years

Theresidualvalue,theusefullifeandthedepreciationmethodappliedtoanassetarereassessedatleastannually.

d. Investment property Investmentpropertyispropertyheldeithertoearnrentalincomeorforcapitalappreciationforboth,butnotforsaleintheordinarycourseofbusiness,useintheproductionorsupplyofgoodsorservicesorforadministrativepurposes.Investmentpropertyismeasuredatcostorifdonatedatfairvalue,oninitialrecognitionandsubsequentlyatfairvaluewithanychangethereinrecognisedinprofitorloss.

Costincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheinvestmentproperty.

Anygainorlossondisposalofaninvestmentproperty(calculatedasthedifferencebetweenthenetproceedsfromdisposalandthecarryingamountoftheitem)isrecognisedinprofitandloss.

15



e. Intangible assetsIntangibleassetsthatareacquiredbytheGroupandhavefiniteusefullivesaremeasuredatcostlessaccumulated amortisation and accumulated impairment losses.

Subsequentexpenditureiscapitalisedonlywhenitincreasesthefutureeconomicbenefitsembodiedinthespecificassettowhichitrelates.Allotherexpenditure,includingexpenditureoninternallygeneratedgoodwillandbrands,isrecognisedinprofitorlossasincurred.

Intangibleassetsareamortisedonastraight-linebasisinprofitorlossovertheirestimatedusefullives,fromthedatethattheyareavailableforuse.

Theestimatedusefullivesforthecurrentandcomparativeyearsareasfollows:

� Service concessions 20 years

Amortisationmethods,usefullivesandresidualvaluesarereviewedateachfinancialyear-endandadjustedifappropriate.

f. InventoriesInventoriesofrawmaterial,parts,suppliesandworkinprogressexpendedandassembledbyNorthcottarevaluedusingtheweightedaveragecostmethodandarestatedatthelowerofcostandnetrealisablevalue.Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lesstheestimatedcostsofcompletion and selling expenses.

Cost includes direct materials, direct labour and other direct costs necessary to bring inventories to their present location and condition.

g. Impairment(i) Financial assetsAfinancialassetisassessedateachreportingdatetodeterminewhetherthereisanyobjectiveevidencethatitisimpaired.Afinancialassetisconsideredtobeimpairedifobjectiveevidenceindicatesthatoneormoreeventshavehadanegativeeffectontheestimatedfuturecashflowsofthatasset.

Animpairmentlossinrespectofafinancialassetmeasuredatamortisedcostiscalculatedasthedifferencebetweenitscarryingamount,andthepresentvalueoftheestimatedfuturecashflowsdiscountedattheoriginaleffectiveinterestrate.

Individuallysignificantfinancialassetsaretestedforimpairmentonanindividualbasis.Theremainingfinancialassets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognisedinprofitorloss.

Animpairmentlossisreversedifthereversalcanberelatedobjectivelytoaneventoccurringaftertheimpairmentlosswasrecognised.Forfinancialassetsmeasuredatamortisedcostthereversalisrecognisedinprofitorloss.

16



(ii) Non-financial assetsThecarryingamountsoftheGroup’snon-financialassets,otherthaninventories,arereviewedateachreportingdatetodeterminewhetherthereisanyindicationofimpairment.Ifanysuchindicationexiststhentheasset’srecoverable amount is estimated.

Therecoverableamountofanassetorcash-generatingunitisthegreaterofitsvalueinuseanditsfairvaluelesscoststosell.AstheGroupisanot-for-profitorganisation,valueinuseisdeterminedasbeingtheasset’sdepreciated replacement cost.

Animpairmentlossisrecognisedifthecarryingamountofanassetoritscash-generatingunitexceedsitsrecoverableamount.Impairmentlossesarerecognisedinprofitorloss.

Impairmentlossesrecognisedinpriorperiodsareassessedateachreportingdateforanyindicationsthatthelosshasdecreasedornolongerexists.Animpairmentlossisreversediftherehasbeenachangeintheestimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that theasset’scarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendetermined,netofdepreciationoramortisation,ifnoimpairmentlosshadbeenrecognised.

h. Employee benefits(i) Defined contribution plansAdefinedcontributionplanisapost-employmentbenefitplanunderwhichanentitypaysfixedcontributionsintoaseparateentityandwillhavenolegalorconstructiveobligationtopayfurtheramounts.Obligationsforcontributionstodefinedcontributionplansarerecognisedasapersonnelexpenseinprofitorlosswhentheyaredue.Prepaidcontributionsarerecognisedasanassettotheextentthatacashrefundorareductioninfuturepayments is available.

(ii) Defined benefit plansAdefinedbenefitplanisapost-employmentbenefitplanotherthanadefinedcontributionplan.TheGroup’snetobligationinrespectofdefinedbenefitplansiscalculatedseparatelyforeachplanbyestimatingtheamountoffuturebenefitthatemployeeshaveearnedinreturnfortheirserviceinthecurrentandpriorperiods;thatbenefitisdiscountedtodetermineitspresentvalue.Anyunrecognisedpastservicecostsandthefairvalueofanyplanassets are deducted.

The discount rate is the yield at the reporting date on AA credit-rated or government bonds that have maturity datesapproximatingthetermsoftheGroup’sobligationsandthataredenominatedinthesamecurrencyinwhichthebenefitsareexpectedtobepaid.Thecalculationisperformedannuallybyaqualifiedactuaryusingtheprojectedunitcreditmethod.WhenthecalculationresultsinabenefittotheGroup,therecognisedassetislimitedtothetotalofanyunrecognisedpastservicecostsandthepresentvalueofeconomicbenefitsavailableintheformofanyfuturerefundsfromtheplanorreductionsinfuturecontributionstotheplan.AneconomicbenefitisavailabletotheGroupifitisrealisableduringthelifeoftheplan,oronsettlementoftheplanliabilities.

Whenthebenefitsofaplanareimproved,theportionoftheincreasedbenefitrelatingtopastservicebyemployeesisrecognisedinprofitorlossonastraight-linebasisovertheaverageperioduntilthebenefitsbecomevested.Totheextentthatthebenefitsvestimmediately,theexpenseisrecognisedimmediatelyinprofitorloss.TheGrouprecognisesallactuarialgainsandlossesarisingfromdefinedbenefitplansdirectlyinequityimmediately.

17



(iii) Other long term employee benefitsTheGroup’snetobligationinrespectoflong-termemployeebenefitsotherthandefinedbenefitplansistheamountoffuturebenefitthatemployeeshaveearnedinreturnfortheirserviceinthecurrentandpriorperiodsplus related on-costs.

(iv) Short term benefitsShort-termemployeebenefitobligationsaremeasuredonanundiscountedbasisandareexpensedastherelated service is provided.

Aliabilityisrecognisedfortheamountexpectedtobepaidundershort-termcashbonusorprofit-sharingplansiftheGrouphasapresentlegalorconstructiveobligationtopaythisamountasaresultofpastserviceprovidedby the employee and the obligation can be estimated reliably.

(v) Termination benefitsTerminationbenefitsarerecognisedasanexpensewhentheGroupisdemonstrablycommitted,withoutrealisticpossibilityofwithdrawal,toaformaldetailedplantoeitherterminateemploymentbeforethenormalretirementdate,ortoprovideterminationbenefitsasaresultofanoffermadetoencouragevoluntaryredundancy.

i. ProvisionsAprovisionisrecognisedinthebalancesheetwhentheGrouphasapresentlegalorconstructiveobligationasaresultofapastevent,anditisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation.Provisionsaredeterminedbydiscountingtheexpectedfuturecashflowsatapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyand,whereappropriate,therisksspecifictotheliability.

j. RevenueRevenuesarerecognisedatfairvalueoftheconsiderationreceivednetoftheamountofgoodsandservicestax(GST)payabletothetaxationauthority.

(i) Sale of goodsRevenuefromthesaleofgoodsisrecognisedintheincomestatementwhenthesignificantrisksandrewardsofownershiphavebeentransferredtothebuyer.Revenuefromservicesrenderedisrecognisedintheincomestatementinproportiontothestageofcompletionofthetransactionatthebalancesheetdate.

(ii) Goods sold and services renderedThestageofcompletionisassessedbyreferencetoestimatesofworkperformed.Norevenueisrecognisediftherearesignificantuncertaintiesregardingrecoveryoftheconsiderationdue,thecostsincurredortobeincurredcannotbemeasuredreliably,thereisariskofreturnofgoodsorthereiscontinuingmanagementinvolvementwiththegoods.

(iii) Rental and accommodationRevenuefromrentalandaccommodationisrecognisedintheincomestatementonastraightlinebasisoverthetermofthelease.Leaseincentivesgrantedarerecognisedasanintegralpartofthetotalrentalincome.

18



(iv) Government fundingGovernmentfundingcomprisesgrantsforongoingfundingandspecificpurposes.Thesearerecognisedasincomeintheincomestatementintheperiodtowhichthefundingrelatestotheextentthatexpenditurehasbeenincurredinaccordancewiththetermsandconditionsattachingtoindividualgovernmentgrants.

Wherefundinginaperiodexceedsrelatedexpenditure,unspentamountsareeither:

� Deferredandrecognisedasunearned income in the balance sheetiftheyarerepayabletorelated government bodies under the terms and conditions ofthefunding;

� Deferredandrecognisedasunearned income in the balance sheetifamountsarenotrepayable but related expenditure has not yet been incurred in accordancewiththetermsandconditionsofthefunding;or

� Recognisedasincomeiftheamounts are not repayable and no obligation exists to incur expenditureinaccordancewithspecifiedtermsandconditions.

Amountsdeferredarepresentedwithin“Currentliabilities–Other”.

Grantsreceivedontheconditionthatspecifiedservicesaredelivered,orconditionsarefulfilled,areconsideredreciprocal.Suchgrantsareinitiallyrecognisedasaliabilityandrevenueisrecognisedasservicesareperformedorconditionsfulfilled.Revenuefromnon-reciprocalgrantsisrecognisedwhenthecompanyobtainscontrolofthefunds.

(v) Disposal of non-current assetsThenetgainondisposalofnon-currentassetsisrecognisedasrevenueatthedatecontroloftheassetpassestothebuyer,usuallywhenanunconditionalcontractofsaleissigned.

Thegainorlossondisposaliscalculatedasthedifferencebetweenthecarryingamountoftheassetatthetimeofdisposalandthenetproceedsondisposal(includingincidentalcosts).

(vi) DonationsDonationsarerecognisedastheyarereceivedor,wherespecialtermsandconditionsareattachedtothese,inaccordancewiththosetermsandconditions.

(vii) Contribution of assetsContributionofassetsandcontributionstoassistintheacquisitionofassets,beingnon-reciprocaltransfers,arerecognisedasrevenueatthefairvalueoftheassetreceivedwhentheGroupgainscontrolofthecontribution.

(viii) Estates and bequestsEstatesandbequestsreceivedarerecognisedasincomebytheGroupinaccordancewiththetermsandconditionsofthebequests.Wherenospecifictermsandconditionsexist,thesearerecognisedasincomeasfollows:

� Cashdistributionsfromestatesatthetimeofreceipt;and

� Shares,realpropertyandothersecuritiesattheestimatedmarketvaluewhentherisksandbenefitspasstothe Society.

(ix) DividendsManagedfundincomedistributionsarerecognisedintheperiodinwhichtheyarereceivable.

19



k. Finance income and expenseFinanceincomecomprisesinterestincomeonfundsinvested,managedfundincomedistributionsandchangesinthefairvalueoffinancialassetsatfairvaluethroughprofitorloss.Interestincomeisrecognisedasitaccruesinprofitorloss,usingtheeffectiveinterestmethod.

Financeexpenseschangesinthefairvalueoffinancialassetsatfairvaluethroughprofitorloss,andimpairmentlossesrecognisedonfinancialassets.

l. Expenses(i) Operating lease paymentsPayments made under operating leases are recognised in the income statement on a straight-line basis over the termofthelease.Leaseincentivesreceivedarerecognisedintheincomestatementasanintegralpartofthetotal lease expense and spread over the lease term.

m. Income taxTheGroupisexemptfromincometaxundertheIncomeTaxAssessmentAct,1997,asamended.

n. Segment reportingAsegmentisadistinguishablecomponentoftheGroupthatisengagedineitherprovidinggoodsorservices(businesssegment)orinprovidinggoodsandserviceswithinaparticulareconomicenvironment(geographicalsegment),whichissubjecttoriskandrewardsthataredifferentfromthoseofothersegments.

o. Goods and services taxRevenue,expensesandassetsarerecognisednetoftheamountofgoodsandservicestax(GST),exceptwheretheamountofGSTincurredisnotrecoverablefromthetaxationauthority.Inthesecircumstances,theGSTisrecognisedaspartofthecostofacquisitionoftheassetoraspartoftheexpense.

ReceivablesandpayablesarestatedwiththeamountofGSTincluded.ThenetamountofGSTrecoverablefrom,orpayableto,theATOisincludedasacurrentassetorliabilityinthebalancesheet.

Cashflowsareincludedinthestatementofcashflowsonagrossbasis.TheGSTcomponentsofcashflowsarisingfrominvestingactivitieswhicharerecoverablefrom,orpayableto,theATOareclassifiedasoperatingcashflows.

4. Determination of fair valuesAnumberoftheGroup’saccountingpoliciesanddisclosuresrequirethedeterminationoffairvalue,forbothfinancialandnon-financialassetsandliabilities.Fairvalueshavebeendeterminedformeasurementand/ordisclosurepurposesbasedonthefollowingmethods.Whereapplicable,furtherinformationabouttheassumptionsmadeindeterminingfairvaluesisdisclosedinthenotesspecifictothatassetorliability.

(i) Investment in equity securitiesThefairvalueoffinancialinstrumentsclassifiedasheldfortradingistheirquotedbidpriceatthebalancesheetdate.

20



5. Expenses


2013 2012 2013 2012

Depreciation 1,925,910 1,981,211 1,925,910 1,981,211

Impairmentloss(reversal)ontradereceivables 4,485 - 4,485 -

Operating lease rental expense 666,587 453,948 666,587 453,948

Personnel expenses

Wages and salaries 21,380,241 19,430,753 21,380,241 19,430,753

(Decrease)inassetfordefinedbenefitsuperannuation plans

(36,295) (31,575) (36,295) (31,575)

Contributionstodefinedcontributionsuperannuation plans

1,860,321 1,735,996 1,860,321 1,735,996

Increaseinliabilityforannualleave 182,294 33,704 182,294 33,704

Increaseinliabilityforlongserviceleave 187,003 89,902 187,003 89,902

23,573,564 21,258,780 23,573,564 21,258,780

6. Net financing income

Interest income – other parties 167,852 233,682 107,115 180,949

Managedfundincomedistribution 1,300,518 1,176,040 1,300,518 1,176,040

Gainfrommanagedfundinvestments 279,568 (562,958) 133,324 (577,436)

Financial income 1,747,938 846,764 1,540,957 779,553

Netfinancingincome 1,747,938 846,764 1,540,957 779,553

7. Cash and cash equivalents

Current

Cash on hand 17,970 16,770 17,970 16,770

Cash at bank 6,852,402 2,374,399 5,126,226 2,135,465

Short term deposits - 500,000 - -

Cashandcashequivalentsinthestatementsofcashflows

6,870,372 2,891,169 5,144,196 2,152,235

21



8. Trade and other receivables


Current 2013 2012 2013 2012

Trade receivables 657,446 912,980 667,254 482,166

Less:Impairmentlosses (13,981) (9,496) (13,981) (9,496)

643,465 903,484 653,273 472,670

Other receivables 1,004,525 435,411 1,003,808 432,818

1,647,990 1,338,895 1,657,081 905,488

Non-current

Other receivables - 21,554 - -

- 21,554 - -

Non-current receivables have been discounted in the prior year to their present value using a discount rate of 5.0%.

9. Inventories

Rawmaterials,suppliesandparts–atcost 189,979 331,857 189,979 331,857

Less:Provisionforinventoryobsolescence (17,239) (73,655) (17,239) (73,655)

Work in progress 150,061 162,743 150,061 162,743

322,801 420,945 322,801 420,945

10. Other financial assets

Current

Financialassetsdesignatedatfairvaluethroughprofitorloss

13,043,645 16,220,330 12,296,945 15,610,880

Non-current

Financialassetsdesignatedatfairvaluethroughprofitorloss

- 495,358 - -

The financial assets designated at fair value through profit or loss are equity securities that otherwise would have been classified as available for sale.

11. Other assets

Current

Prepayments 331,841 253,176 331,841 253,176

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12. Property, plant and equipment

In AUD Consolidated

Freehold

Land

Buildings Leasehold

Improvements

Capital Work

in Progress

Plant and

Equipment

Total

Cost

Balanceat1July2011 2,137,193 16,566,418 359,353 423,942 8,349,771 27,836,677

Acquisitions - 551,073 - - 1,312,205 1,863,278

Disposals - - - - (440,323) (440,323)

Transfer - 38,144 - (38,144) - -

Balanceat30June2012 2,137,193 17,155,635 359,353 385,798 9,221,653 29,259,632

Balanceat1July2012 2,137,193 17,155,635 359,353 385,798 9,221,653 29,259,632

Acquisitions - 1,410,831 118,482 261,664 622,568 2,413,546

Disposals - - - - (241,836) (241,836)

Balanceat30June2013 2,137,193 18,566,466 477,835 647,462 9,602,385 31,431,342

Depreciation

Balanceat1July2011 - 3,425,410 196,324 - 4,059,691 7,681,425

Depreciationchargefortheyear- 415,406 93,193 - 1,466,818 1,975,417

Disposals - - - - (220,360) (220,360)

Balanceat30June2012 - 3,840,816 289,517 - 5,306,149 9,436,482

Balanceat1July2012 - 3,840,816 289,517 - 5,306,149 9,436,482


Disposals - (39,434) - - (129,390) (168,824)

Balanceat30June2013 - 4,299,090 373,731 - 6,453,953 11,126,744

Carrying amounts

At1July2011 2,137,193 13,141,008 163,029 423,942 4,290,080 20,155,252

At30June2012 2,137,193 13,314,819 69,836 385,798 3,915,504 19,823,150

At1July2012 2,137,193 13,314,819 69,836 385,798 3,915,504 19,823,150

At30June2013 2,137,193 14,267,376 104,104 647,462 3,148,432 20,304,567

23



In AUD The Society

Freehold

Land

Buildings Leasehold

Improvements

Capital Work

in Progress

Plant and

Equipment

Total

Cost

Balanceat1July2011 2,137,193 16,566,418 359,353 423,942 8,349,771 27,836,677

Acquisitions - 551,073 - - 1,312,205 1,863,278

Disposals - - - - (440,323) (440,323)

Transfer - 38,144 - (38,144) - -

Balanceat30June2012 2,137,193 17,155,635 359,353 385,798 9,221,653 29,259,632

Balanceat1July2012 2,137,193 17,155,635 359,353 385,798 9,221,653 29,259,632

Acquisitions - 1,410,831 118,482 261,664 622,568 2,413,546

Disposals - - - - (241,836) (241,836)

Balanceat30June2013 2,137,193 18,566,466 477,835 647,462 9,602,385 31,431,342

Depreciation

Balanceat1July2011 - 3,425,410 196,324 - 4,059,691 7,681,425


Disposals - - - - (220,360) (220,360)

Balanceat30June2012 - 3,840,816 289,517 - 5,306,149 9,436,482

Balanceat1July2012 - 3,840,816 289,517 - 5,306,149 9,436,482


Disposals - (39,434) - - (129,390) (168,824)

Balanceat30June2013 - 4,299,090 373,731 - 6,453,953 11,126,744

Carrying amounts

At1July2011 2,137,193 13,141,008 163,029 423,942 4,290,080 20,155,252

At30June2012 2,137,193 13,314,819 69,836 385,798 3,915,504 19,823,150

At1July2012 2,137,193 13,314,819 69,836 385,798 3,915,504 19,823,150

At30June2013 2,137,193 14,267,376 104,104 647,462 3,148,432 20,304,567

In June 2011, the company obtained independent valuations of land and buildings that were carried out on the basis of open market values. The valuations provided valuations in excess of the carrying costs reflected in these financial statements.

24



13. Intangible assets


Cost 2013 2012 2013 2012

Balanceat1July2012 1,825,260 - 1,825,260 -

Acquisitions 3,090,981 1,825,260 3,090,981 1,825,260

Balanceat30June2013 4,916,241 1,825,260 4,916,241 1,825,260

Amortisation

Balanceat1July2012 5,794 - 5,794 -

Amortisationfortheyear 66,824 5,794 66,824 5,794

Balanceat30June2013 72,618 5,794 72,618 5,794

Carrying amounts

Balanceat1July2012 1,819,466 - 1,819,466 -

Balanceat30June2013 4,843,623 1,819,466 4,843,623 1,819,466

The company has completed two building projects, one at Wagga Wagga in the previous year and another at Mount Hutton during the year. The building projects are to be utilised for disability housing. The company was awarded grants from the NSW government in the total amount of $4,493,900 to enable construction. Under the agreement, the company has a right to continued use of the properties for their intended purpose until such time as the company believes it is unable to continue to provide those services. The terms of the agreement establish that at such time, when either the property is sold or no longer used for its intended purpose, the government has a caveat that provides a 100% equitable interest. Accordingly the government has the right to take title of the land and the proceeds associated with the sale at this time. During the year, the Society recognised $2,881,900 (2012: $1,612,000) of capital grants income which was previously held as unearned income and recognised as an intangible asset of $3,090,982 (2012: $1,825,260) representing the cost of the project.

14. Investment property

Cost

Balanceat1July2012 850,000 - 850,000 -

Acquisitions - 850,000 - 850,000

Disposals (850,000) - (850,000) -

Balanceat30June2013 - 850,000 - 850,000

A property was donated to Northcott in the prior year. The fair value model was applied to all investment property. The property was sold on 9 March 2013 and was settled on 8 July 2013.

25



15. Trade and other payables


Current 2013 2012 2013 2012

Trade payables 1,135,645 1,629,337 1,135,645 1,623,652

Other Payables 1,315,026 953,124 1,298,621 934,436

2,450,671 2,582,461 2,434,266 2,558,088

16. Employee benefits

Current

Otherwages 84,767 68,644 84,767 68,644

Liabilityforlongserviceleave 1,010,937 879,248 1,010,937 879,248

Liabilityforannualleave 1,774,410 1,592,116 1,774,410 1,592,116

Totalliabilityforemployeebenefits 2,870,114 2,540,008 2,870,114 2,540,008

Non-current

Liabilityforlong-serviceleave 241,584 186,270 241,584 186,270

Totalliabilityforemployeebenefits 241,584 186,270 241,584 186,270

Recognisedassetfordefinedbenefitobligations (227,644) (216,841) (227,644) (216,841)

26



a. Liability/(asset) for defined benefit obligationTheGroupmakescontributionstotwodefinedbenefitsuperannuationplansthatprovidedefinedbenefitamountsforemployeesuponretirement.


Defined benefit superannuation plans 2013 2012 2013 2012

Presentvalueoffundedobligations 766,432 718,867 766,432 718,867

Fairvalueofplanassets-funded (1,240,141) (1,043,470) (1,240,141) (1,043,470)

Surplusinexcessofrecoveryavailablefromplans 246,065 107,762 246,065 107,762

Recognisednetassetfordefinedbenefitobligations (227,644) (216,841) (227,644) (216,841)

Amounts in the balance sheet:

Assets 227,644 216,841 227,644 216,841

Liabilities - - - -

Net asset 227,644 216,841 227,644 216,841

Movements in the net asset for defined benefit obligations recognised in the balance sheet

Netassetfordefinedbenefitobligationsat1July (216,841) (176,300) (216,841) (176,300)

Expense recognised in the income statement (36,296) (31,575) (36,296) (31,575)

(Benefit)/expenserecognisedinequity 25,493 (8,966) 25,493 (8,966)

Netassetfordefinedbenefitobligationsat30June (227,644) (216,841) (227,644) (216,841)

Amounts for the current and previous periods are as follows:

Definedbenefitobligation 766,432 718,867 766,432 718,867

Plan assets (1,240,141) (1,043,470) (1,240,141) (1,043,470)

Plan net surplus 473,709 324,603 473,709 324,603

Experience adjustments on plan liabilities (14,378) 74,720 (14,378) 74,720

Experience adjustments on plan assets (98,431) 72,881 (98,431) 72,881

27




Changes in the present value of the defined benefit obligation are as follows:

2013 2012 2013 2012

Openingdefinedbenefitobligation 718,867 596,252 718,867 596,252

Service cost 30,682 25,624 30,682 25,624

Interest cost 21,576 30,704 21,576 30,704

Actuarial(gains)/losses (14,378) 74,720 (14,378) 74,720

Contributions by plan participants 12,797 11,012 12,797 11,012

Benefitspaid (3,112) (19,445) (3,112) (19,445)

Closingdefinedbenefitobligation 766,432 718,867 766,432 718,867

Changes in the fair value of plan assets are as follows:

Openingfairvalueofplanassets 1,043,470 1,036,880 1,043,470 1,036,880

Expected return 88,554 87,904 88,554 87,904

Actuarialgains/(losses) 98,431 (72,881) 98,431 (72,881)

Contributions by plan participants 12,797 11,012 12,797 11,012

Benefitspaid (3,112) (19,445) (3,112) (19,445)

1,240,140 1,043,470 1,240,140 1,043,470

Surplusonexcessofrecoveryavailablefromplans (246,065) (107,762) (246,065) (107,762)

994,075 935,708 994,075 935,708.

28




The major categories of plan assets as a percentage of total plan assets are as follows:

2013 2012 2013 2012

Australian equities 30% 28% 30% 28%

Overseas equities 26% 24% 26% 24%

Australianfixedinterestsecurities 7% 5% 7% 5%

Overseasfixedinterestsecurities 2% 3% 2% 3%

Property 8% 9% 8% 9%

Cash 13% 18% 13% 18%

Other 13% 13% 13% 13%

TheSociety’sdefinedbenefitsuperannuationplansformpartofwidermulti-employerStateGovernmentplans.Assuch,theGroup’sinvestmentpoliciesandstrategiesforthedefinedbenefitsuperannuationplansaredeterminedbyStateGovernmentappointedfundmanagers,actuariesandadministratorsanddonotusetargetallocationsfortheindividualassetcategories.Theplans’investmentgoalsaretomaximizereturnssubjecttospecificriskmanagementpolicies.Thefundsaddressdiversificationbytheuseofunderlyinginvestmentsindomesticandinternationalfixedincomesecurities,domesticandinternationalequitysecurities,property and cash.

Expense recognised in the income statement

Current service costs 30,682 25,624 30,682 25,624

Interest on obligation 21,576 30,704 21,576 30,704

Expected return on plan assets (88,554) (87,903) (88,554) (87,903)

Surplusinexcessofrecoveryavailablefromshares - - - -

(36,296) (31,575) (36,296) (31,575)

29




The expense is recognised in the following line items in the income statement:

2013 2012 2013 2012

Client programme expenses (36,296) (31,575) (36,296) (31,575)

Amounts recognised in equity:

Actuariallosses/(gains) 25,493 (8,966) 25,493 (8,966)

Principal actuarial assumptions at the balance sheet date:

Discountrateat30June 3.8% 3.0% 3.8% 3.0%

Expected return on plan assets backing current pension liabilitiesat30June

8.3% 8.3% 8.3% 8.3%

Expected return on plan assets backing other liabilities at 30June

7.3% 7.3% 7.3% 7.3%

Future salary increases *4.0% 4.0% *4.0% 4.0%

ExpectedrateofCPIincreases 2.5% 2.5% 2.5% 2.5%

Proportionofemployeesoptingforearlyretirement Nil% Nil% Nil% Nil%

The overall expected long-term rate of return on assets is 8.3%. The expected long-term rate of return is determined by weighting the expected long-term return for each asset class by the target allocation of assets to each class. The returns used for each class are net of investment tax and investment fees.

*Future salary increases assumption is 2.7% p.a. for 6 years then 4.0% p.a.

30



b. Surplus/(deficit) for each defined benefit superannuation plan on a funding basis - Group and The Society

In AUD 2013

Fund assets

(ii)

Accrued benefit

(iv)

Plan excess/ (deficit)

Contribution recommendations

(per year) (iii)

PlanssponsoredbytheGroup: State Authorities Superannuation Scheme

968,172 640,524 327,648 0%

State Authorities Non-contributory Superannuation Scheme

271,969 125,908 146,061 0%

Total for plans sponsored by the Group 1,240,141 766,432 473,709

In AUD 2012

Fund assets

(i)

Accrued benefit

(iv)

Plan excess/ (deficit)

Contribution recommendations

(per year) (iii)

PlanssponsoredbytheGroup: State Authorities Superannuation Scheme

820,903 593,141 227,762 0%

State Authorities Non-contributory Superannuation Scheme

222,567 125,726 96,842 0%

TotalforplanssponsoredbytheGroup 1,043,470 718,867 324,604

31



(i) Fundassetsatnetmarketvalue,andaccruedbenefitshavebeencalculatedat30June2012,beingthedateofthemostrecentfinancialstatementsofthefunds.

(ii) Fundassetsatnetmarketvalueandaccruedbenefitswerecalculatedat30June2013,beingthedateofthemostrecentfinancialstatementsofthefunds.

(iii) Contributionrecommendationsarebasedonafundingmethodologythatwillresultinadequatefundingforpaymentsexpectedtobemadetoexistingmembers.Thelevelsofthecontributionstotheplansarereassessed annually.

(iv) Accruedbenefitsarebenefitswhichtheplansarepresentlyobligedtopayatsomefuturedate,asaresultofmembershipoftheplansandcalculatedinaccordancewithAASB25.Accordingly,theexcess/(deficit)doesnotalwaysequalthedefinedbenefitobligation.

The Group has a legal liability to make up a deficit in the funds and to benefit from any surplus in the funds, in the form of a reduction in the required contribution rate, depending on the advice of the plan’s actuaries.

Consolidated The Society

The principal economic assumptions used in making these recommendations include:

2013 2012 2013 2012

Expected return on plan assets backing current pension liabilities 8.3% 8.3% 8.3% 8.3%

Expected return on plan assets backing other liabilities 7.3% 7.3% 7.3% 7.3%

Future salary increases 4.0% 4.0% 4.0% 4.0%

ExpectedrateofCPIincrease 2.5% 2.5% 2.5% 2.5%* Future salary increases assumption is 2.7% p.a. for 6 years then 4.0% p.a.

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17. Other liabilities


Current 2013 2012 2013 2012

Unearned income – government grants 8,176,793 8,481,569 8,176,793 8,481,569

Unearned income – other sources 411,965 336,921 411,965 336,921

8,588,758 8,818,490 8,588,758 8,818,490

18. Capital and reserves

In AUD Reconciliation of movement in capital and reserves

Allocated capital funds

Services development

fund

Estates and bequests reserve

General Accumulated

funds

Research and Innovation

reserve

Total equity

Consolidated

Balanceat1July2012 17,122,994 5,350,000 3,459,159 4,147,433 144,069 30,223,655

Total recognised income and expense

- - - 3,217,701 - 3,217,701

Transfers (17,122,994) (5,350,000) (3,459,159) 26,076,222 (144,069) -

Balanceat30June2013 - - - 33,441,356 - 33,441,356

The Society

Balanceat1July2012 17,122,994 5,350,000 3,459,159 1,873,103 144,069 27,949,325

Total recognised income and expense

- - - 3,044,651 - 3,044,651

Transfers (17,122,994) (5,350,000) (3,459,159) 26,076,222 (144,069) -

Balanceat30June2013 - - - 30,993,976 - 30,993,976

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Allocated capital fundsTheBoard,inprioryears,setasidefromgeneralaccumulatedfundsareservetoprovideforthereplacementofproperty,plantandequipment.TheBoardresolvedtotransferthereservebackintogeneralaccumulatedfundsduring the year.

Services development fundTheBoard,inprioryears,setasidefromgeneralaccumulatedfundsaspecialreservetoprovidefundingfortheacquisitionanddevelopmentoffacilitiestoenhanceservicestopersonswithdisabilities.TheBoardresolvedtotransferthereservebackintogeneralaccumulatedfundsduringtheyear.

Estates and bequests reserveTheBoard,inprioryears,setasidefromgeneralaccumulatedfundsaspecialreservetoprovideafundtoequalisetheeffectofmajorvariationsinthelevelofincomefromestatesandbequests.TheBoardresolvedtotransferthereservebackintogeneralaccumulatedfundsduringtheyear.

Research & Innovation reserveTheBoard,inprioryears,setasidefromgeneralaccumulatedfundsaspecialreservetoprovidefundingforNorthcott’sresearchandinnovationprogram.ThisreservewasestablishedwiththeproceedsofNorthcott’s80thAnniversaryGalaBallin2009,thissumhassubsequentlybeensupplementedbyspecificdonations.TheBoardresolvedtotransferthereservebackintogeneralaccumulatedfundsduringtheyear.

19. Operating leases


Leases as lessee 2013 2012 2013 2012

Non-cancellable operating lease rentals are payable as follows:

Less than one year 479,935 264,846 479,935 264,846

Betweenoneandfiveyears 465,679 226,806 465,679 226,806

945,614 491,652 945,614 491,652

The Group leases property under non-cancellable operating leases expiring from one to five years. Leases generally provide the Group with a right of renewal at which time all terms are renegotiated.

During the financial year ended 30 June 2013, $666,587 was recognised as an expense in the income statement in respect of operating leases (2012: $453,948).

Leases as lessor

The Group leases out part of its property under an operating lease. The future minimum lease payments under non-cancellable leases are as follows:

Less than one year 276,994 233,755 276,994 233,755

Betweenoneandfiveyears 379,477 442,551 379,477 442,551

Morethanfiveyears - -

656,471 676,306 656,471 676,306

During the financial year ended 30 June 2013, $280,974 was recognised as rental income in the income statement (2012: $353,074).

34



20. Consolidated entities

Ownership interest

2013 2012

Parent entity

The Northcott Society

Subsidiary

Spinecare Foundation 100% 100%

21. Key management personnel disclosures

Transactions with key management personnelInadditiontotheirsalaries,theGroupalsocontributestopost-employmentdefinedcontributionfundsonbehalfofkeymanagementpersonnel.

Key management personnel compensationThekeymanagementpersonnelcompensationincludedinpersonnelexpensesareasfollows:


2013 2012 2013 2012

Short-termemployeebenefits 1,025,471 905,436 1,025,471 905,436

Otherlongtermbenefits - - - -

1,025,471 905,436 1,025,471 905,436

Other related party transactionsFromtimetotimedirectorsofNorthcott,ortheirdirectorrelatedentities,maypurchasefromorsupplygoodsand services to Northcott. These dealings are on the same terms and conditions as those entered into by other Northcott employees, customers and suppliers.

DuringtheyeartherewerenotransactionswithdirectorsofNorthcottortheirdirectorrelatedentities.

22. Segment reportingTheGroupisengagedintheprovisionofgoodsandservicestopersonswithdisabilitiesandoperateswhollywithinNewSouthWales.

23. Subsequent eventsTherehasnotarisenintheintervalbetweentheendofthefinancialyearandthedateofthisreportanyitem,transactionoreventofamaterialandunusualnaturelikely,intheopinionofthedirectorsoftheSociety,toaffectsignificantlytheoperationsoftheGroup,theresultsofthoseoperations,orthestateofaffairsoftheGroup,infuturefinancialyears.

35



24. Fundraising appeals conducted during the financial year

Fundraisingappealsconductedduringthefinancialyearincludedvariousfundraisingprojectsandgeneralreceivingofindirectlysoliciteddonations.


2013 2012 2013 2012

(i) Results of fundraising appeals

Grossproceedsfromfundraising 1,893,045 2,222,940 1,872,695 2,201,210

Less:Directcostsoffundraisingappeals (915,716) (826,996) (915,716) (826,966)

Netsurplusobtainedfromfundraisingappeals977,329 1,395,974 956,979 1,374,244

(ii) Application of net surplus obtained from fundraising appeals

Distributions(expenditureondirectservices) 27,781,643 24,635,972 27,781,643 24,635,972

Recurrent administration expenses 8,444,781 7,200,869 8,412,457 7,081,059

36,226,424 31,836,841 36,194,100 31,717,031

(iii) Application of net surplus obtained from fundraising appeals Theshortfallbetweenthenetsurplusavailablefromfundraisingappealsandtotalexpenditurewasprovidedfromthefollowingsources:

Government grants 33,899,687 30,109,604 33,899,687 30,109,604

Financial income 1,747,938 846,764 1,540,957 779,553

Gainfromsaleofgoods 335,746 635,426 335,746 635,426

Other income 2,555,153 2,787,370 2,577,110 2,787,335

Transferfrom/(to)generalaccumulatedfunds (3,289,429) (3,938,297) (3,116,379) (3,969,131)

35,249,095 30,440,867 35,237,121 30,342,787

36



Consolidated The Society

2012 2012

$ % $ % $ % $ %

(iv) Comparisons of certain monetary figures and percentages

Totalcostoffundraising/ 915,716 48 826,966 37 915,716 49 826,966 38

Grossincomefromfundraising 1,893,045 2,222,940 1,872,695 2,201,210

Netsurplusfromfundraising/ 977,329 52 1,395,974 63 956,979 51 1,610,746 62

Grossincomefromfundraising 1,893,045 2,222,940 1,872,695 2,201,210

Totalcostofservices/ 27,781,643 73 24,635,972 73 27,781,643 73 24,635,972 74

Total expenditure 38,042,587 33,572,205 38,010,263 33,452,395

Totalcostofservices/ 27,781,643 70 24,635,972 67 27,781,643 70 24,635,972 67

Totalincomereceivedfromoperating activities

39,553,731 36,601,119 39,555,338 36,579,354

37Financial Year ending 30 June 2013

The Northcott Society and its controlled entity Declaration by Chief Executive Officer in respect of fundraising appeals

I,KerryStubbs,ChiefExecutiveOfficerofTheNorthcottSociety,declarethatinmyopinion:

a. ThefinancialreportgivesatrueandfairviewofallincomeandexpenditureoftheGroupwithrespecttofundraisingappealactivitiesforthefinancialyearended30June2013;

b. ThebalancesheetgivesatrueandfairviewofthestateofaffairsoftheGroupwithrespecttofundraisingappealactivitiesasat30June2013;

c. TheprovisionsoftheCharitableFundraising(NSW)Act1991andRegulationsundertheActandtheconditionsattachedtotheauthorityhavebeencompliedwithduringtheyearended30June2013;and

d. TheinternalcontrolsexercisedbytheGroupareappropriateandeffectiveinaccountingforallincomereceivedandappliedbytheGroupfromanyofitsfundraisingappeals.

Dated at Sydney this 19 September 2013.

Signedinaccordancewitharesolutionofthedirectors:

_______________________

Kerry Stubbs

ChiefExecutiveOfficer


The Northcott Society and its controlled entity Directors’ declaration

IntheopinionofthedirectorsofTheNorthcottSociety(“theSociety”):

a. thefinancialstatementsandnotessetoutonpages8to36areinaccordancewiththeCorporationsAct2001,including:

i. givingatrueandfairviewofthefinancialpositionoftheSocietyandtheGroupasat30June2013andoftheirperformance,asrepresentedbytheresultsoftheiroperationsandtheircashflowsforthefinancialyearendedonthatdate;and

ii. complyingwiththeAustralianAccountingStandards–ReducedDisclosureRequirements(includingtheAustralianAccountingInterpretations)andtheCorporationsRegulations2001;and

b. therearereasonablegroundstobelievethattheSocietywillbeabletopayitsdebtsasandwhentheyfalldue.

Dated at Sydney this 19 September 2013.

Signedinaccordancewitharesolutionofthedirectors:

_______________________

M Briggs

Director

39



40 Northcott Annual Financial Report 2012-2013

41



1800 818 286

www.northcott.com.au

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