Sl report1213 final

stellar living LTDf i n a n c i a l

r e p o r t

2 contents

About the Company ................................................................................. 4

Background ..................................................................................................... 7

Business Strategy ....................................................................................... 9

Operating Results ....................................................................................... 11

Board of Directors ...................................................................................... 15

Future Objectives ....................................................................................... 21

Legal Notes ..................................................................................................... 25

Auditor’s Independence Declaration ........................................... 28

Statement of Comprehensive Income ....................................... 33

Statement of Financial Position ........................................................ 34

Statement of Cash Flows ...................................................................... 35

Statement of Changes in Equity ...................................................... 36

Notes to the Financial Statements ................................................ 39

Director’s Declaration .............................................................................. 55

Independent Auditor’s Report ........................................................... 56

4

ABOUT THE COMPANYStellar Living is a not-for-profit Community Housing Provider, with an aim to increase access to social affordable housing in the community. We focus on providing innovative community and affordable quality housing for people who are disadvantaged, marginalised or unable to readily access housing through-out Western Australia.

As a social entrepreneur, Stellar Living aims to use innovation to improve affordability, delivering on our social investment mandate – and at the same time contributing to an improved building industry economics.

purposeproviding leadership in expanding affordable

housing opportunities through partnerships to create and sustain strong communities

6 backgroundThe Centrecare Inc. Board of Directors identified a need for a coordinatedapproach to accommodation and housing services which led to the formation of Stellar Living Ltd through assistance with Federal Government’s Nation Building Economic Stimulus Plan.

Stellar Living is a not-for-profit Community Housing Provider, with an aim to increase access to social affordable housing in the community. We focus on providing innovative community and affordable quality housing for people who are disadvantaged, margin-alised or unable to readily access housing throughout Western Australia.

As a social entrepreneur, Stellar Living aims to use innovation to improve affordability, delivering on our social investment mandate – and at the same time contributing to an improved building industry economics.

Stellar Living aims to continually grow its business. It is committed to prevent and re-dress the further loss in the community of accommodation for low to moderate income earners, caused by increased housing costs resulting indispossession and displacement of families and individuals.

To achieve this Stellar Living will work in three areas providing:

» Crisis and transitional housing services;

» Long-term secure and affordable social housing across the properties we cur-

rently manage; and

» Growing affordable housing options for people on low to moderate

incomes.

Our strategic housing plan describes the initiatives, associated risks with asset man-agement and financial management plans that build on our past growth as Centrecare Inc. and as Stellar Living continue to take us forward as a sound, ethical and well gov-erned organisation.

In assisting with the State’s devolution of management and ownership of Community Housing our growth will also be achieved by maintaining a strong reputation for sus-tainability, governance and quality including tenant services. This will allow us to build on our performance establishing an environment that supports innovative and creative agreements with the private sector and other institutions. We envisage the trialling of shared equity arrangements with lenders andgovernment and increasing partnering with non-profit, government and commercial (for profit) organisations.

visioninnovation in the

provision of sustainable affordable housing

8 OUR BUSINESS STRATEGYStellar Living Ltd focuses on providing innovative community and affordable quality housing for people who are disadvantaged, marginalised or unable to readily access housing throughout Western Australia. Stellar Living Ltd also provides housing/tenancy management services.

As outlined in Chapter 2 of Stellar Living Ltd.’s constitution, Stellar’s objects are as follows.

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1. Provide for the direct relief of poverty, suffering, destitution, misfortune, helpless-ness and distress through the provision of low-cost and affordable housing;

2. Make donations or financial contributions to any organisation which undertakes charitable or benevolent works;

3. Acquire, construct and provide low cost and affordable housing stock for people in poverty, with low income, who are homeless, socially marginalised, inade-quately housed or otherwise disadvantaged;

4. Own and manage a portfolio of housing stock for rental to people on low income and in housing need;

5. Provide property and tenancy management services for the provision of low cost rental housing;

6. Respond to changing client and community needs and maintain high quality client and housing services;

7. Develop models for the supply, management and ownership of affordable housing in conjunction with private institutions, government and community agencies;

8. Grow the accommodation and housing program by identifying new expansion opportunities in keeping with sound governance, managerial capacities and local housing needs;

9. Work in partnership with the community to ensure that tenants have access to the support services they require;

10. Achieve continual improvements in management of housing provision and service;

11. Pursue its objectives/goals within a community development framework.

we are for

western australians

201 properties strong

10 operating results

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The 2012/2013 fiscal year saw Stellar Living receive its final instalment of property title transfers from the Federal Government’s Nation Building Stimulus package which has been managed through the Western Australian Depart-ment of Housing. Stellar Living now holds title to 141 properties and head leases a further 60 plus properties from the Department of Housing. The head leases are associated with the provision of services undertaken by independent service providers of crisis accommodation for people in need, particularly for mental health, drug/alcohol and rehabilitation/reintegration programs.

Stellar Living also provides property management services to other organisa-tions that have their own properties.

During the year Stellar Living achieved the status of Preferred Provider of Community Housing and is in the top 5 Community Housing Providers throughout Western Australia.

The company had placed an offer to purchase land in Mandurah which was settled on 6 September 2013 and have also commenced negotiations with a builder to construct 22 dwellings on the land. Current negotiations between Stellar and the builder would see construction commence in October 2013.

The financial results for the year were pleasing and saw a surplus of $11.84m being generated. After removing the value received of $11.96m from property titles transferred (Note 5.1) and donations (Note 2), together with adding back depreciation our ‘operational surplus –EBITDA’ was $0.51m, a significant improvement against our budget for the year.

During the past year we have been rationalising our business cost structures and ensuring that our risk management planning appropriately reflects our respon-sibilities in meeting the health and welfare of our employees while providing the best service possible to our tenants and others we serve.

During the year Stellar Living was successful in applying for a funding grant from Lotterywest. The grant was used to assist our move into new premises and in purchasing technology and furniture, enhancing our operations. Lotterywest are great supporters of emerging social enterprises. Stellar Living also applied for and was successful in gaining National Rental Affordability Scheme (NRAS) enti-tlements to its Mandurah project.

$36.5MNET ASSET

POSITION

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forming solid partnerships with the government, private sector and

not for profit’s whilst assisting with consolidation of the

Community Housing Sector

partnerships

The Financial Position now reflects a net asset position of $36.5m which is being leveraged against our Strategic Plan over the next 10 years in developing more affordable living spaces for disadvantaged people and those on low to moderate incomes.

Under Australian Accounting Standards, Stellar Living Ltd has been required to bring to account in its Statement of Comprehensive Income the value of the properties transferred to it in title, amounting to $11.58m (Note 5.1) as well as a donation received from Centrecare Inc (Note 2) in the form of cash reserves totaling $384,522 carried forward in the transfer of property leases from Centrecare Inc to Stellar Living for the continuation of meeting costs in the management of these properties.

The major activity Stellar Living undertook during the financial year ended 30 June 2013 was in property management of over 200 properties managed through either ownership or head lease with the Department of Housing. Stellar Living is yet to undertake any property development activities.

DividendsBeing a company limited by guarantee, Stellar Living Ltd does not pay divi-dends. The Board members of Stellar are not paid any remuneration for their role as directors of Stellar Living Ltd other than for reimbursement of expenses or by agreement for specific services rendered.

...CONTINUED

14 BOARD OF DIRECTORSThe names and particulars of the Directors of the Company in office during or since the end of the year and until the date of this report are as follows. Directors have been in office since the start of the financial period and to the date of this report unless otherwise stated.

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Stuart DuplockChairman

Stuart has a broad range of experience in the property industry in Australia spanning the commercial, retail, industrial, tourism and residential sectors. He is currently the State Manager of Cedar Woods Properties Ltd, an ASX listed property development company. Prior experience includes corporate advisory roles with international chartered accounting firms in Australia and the UK. Stuart was appointed Chair of Stellar Living Ltd in April 2012.

Qualifications, Memberships and Awards

» Bachelor of Business (Major in Accounting)

» Fellow Chartered Accountant

» Fellow Australian Institute of Company Directors

» Fellow Financial Services Institute of Australasia

» Licensed Real Estate Agent

Steve WalkerCEO

Steve is a fully qualified accountant with post graduate qualifications and over 35 years’ business experience in Tax, Insolvency, Finance and Adminis-tration including senior level operational management experience in Human Resources, Information Technology and Organisational Strategic Devel-opment. Over the years Steve has held and continues to hold a number of senior corporate, financial, advisory and board positions in medium to large organisations.

Steve Walker (CEO) on the left, and Stuart Duplock

(Chariman) on the right, are presented with a

checque for $55,837 as a grant from Lotterywest

to help with the purchase of equipment for our new

office from Minister of Community Services Tony

Simpson.

receiving a lottery

west grant of

$55,837

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» Bachelor of Business (Accounting)

» Fellow Certified Practicing Accountant

» Fellow Australian Institute of Company Directors

Luigi (Lou) D’AlessandroDirector

Lou has over 30 years’ experience in the Land Development, Construction and Architectural fields. Lou is a Registered Architect, Registered Builder and Fellow of the Royal Australian Institute of Architects. He has held senior executive positions in both the public and private sectors. Lou has been involved in land development, urban renewal, joint ventures, acquisitions, master planning, pier reviews, construction and design of major metropolitan and regional develop-ments and projects.


» Bachelor of Architecture

» Registered Architect (Reg no. 993)

» Registered Builder (Reg no. 6212)

» Associate Institute of Arbitrators of Australia

» Fellow Royal Australian Institute of Architects

Gerard Michael (David) PiresDirector

David has over 30 years’ experience in property management, with the majority of this time in retail Shopping Centre management. David is currently the Asset Manager for the Hawaiian Group, a privately owned Commercial & Retail Property investment company based in Perth. David currently oversees the management of two retail centres in the Perth CBD and was involved with the Claremont Quarter Shopping Centre redevelopment in Claremont. David spent a short time in China returning in 2005 to take up his current position in Perth. David is also on the Board of Centrecare Inc. and is their current Chairman.

Bronwen ParsonDirector

Bronwen Parsons was General Manager of the Addwealth Group of Companies. Bronwen has a passion for excellence and a list of accomplishments including success as an elite netballer, a skilled student and a recognised business-woman. In 2006, Bronwen was named the Western Australian Telstra Young Business Woman of the Year and was once again recognised in 2009 when she was named as a recipient of the prestigious WA Business News 40 fewer than 40 Awards. Bronwen has a strong involvement in the community including being a committee member of the Centenary Trust for Women, a founding member of the Business Women for Women Committee and is a representa-tive of the Cottesloe Safety and Crime Prevention Committee. Bronwen has previously served as a Director on the boards of Meridian Global Foundation and Procott Incorporated.


» WA Telstra Business Award – Social Responsibility

» WA Business News 40 Under 40 Award Winner

» WA Telstra Young Business Woman of the year

» Diploma of Financial Services (Financial Planning)

» Linguistic Programming (Lifestyle Coaching)

» Franchise Council of Australia – Certificate of Attainment in Franchising

» AHRI – Foundations of Human Resources

» Bachelor of Economics

Anthony (Tony) Peitropiccolo AMDirector

Tony is the Director of Centrecare Inc, which provides a large range of social services, including social housing, to the WA community and has been involved in community activities and the social service sector in both paid and volun-tary positions for nearly 40 years. Tony has sat on numerous committees and commissions at both state and national levels and is currently a member of the Community Sector Roundtable, Board Member of Family Relationship Services Australia, Co-chair of Community Employers WA, Chair of Canning Coalition, Committee Member of the WA Council Member on Homelessness, Alliance for Children at Risk, Ministerial Advisory Council on Child Protection, and National Child Protection Framework Implementation Group.

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In 2001, Tony was invited by the Government of WA to Chair a Taskforce to examine and make recommendations on the issue of homelessness – the resulting Homelessness Strategy remains a guiding document among others in helping to integrate and further develop services to homeless people with a view to substantially reducing homelessness.

Tony was appointed in the 2012 Queen’s Birthday Honours as a Member of the Order of Australia in the General Division (AM):

“Mr Anthony PIETROPICCOLO, WA, for service to the community as the director of Centrecare through the generation of programs supporting individ-uals and families, including affordable housing and the welfare of indigenous Australians and refugees.”


» B.A. (Social Science)

» Graduate Diploma of Psychology and Registered with the Psychologists Board of WA

Anothny (Tony) Bevan (appointed 24 July 2013)Director

Tony is a Chartered Accountant with a diverse background in commerce and public practice.

For the past five years he has worked in commerce as a CFO and Company Secretary to a number of ASX listed companies, mainly in the construction and mining sectors. Prior to that he worked in the audit and corporate finance area and was a partner/executive director of accounting firms including BDO and Ernst & Young. Tony served on the State Council of the Institute of Chartered Accountants Australia from 2003 to 2009 and was State Chairman in 2009.


» Bachelor of Commerce (Accounting)

» Graduate Diploma of Applied Finance & Investment

» Certificate of Forensic Studies

» Fellow Chartered Accountant

Jacqueline (Jaqui) StewartCompany Secretary

Jacqui is a highly experienced, corporate governance, risk and compliance professional. Over the last 20 years she has worked with SMEs and corporates predominantly in the financial services industry in the design, implementation and maintenance of their governance, risk and compliance frameworks. Her focus is ensuring that businesses meet their strategic and commercial objec-tives whilst also addressing their legal and compliance responsibilities. Jacqui has extensive experience in the development of commercial enterprises from start-up and re-structure. She is well versed in managing change and identi-fying system and resource needs and implementation.


» Masters in Commercial Law

» Graduate Australian Institute of Company Directors

» Directors Online Gradschool.com in conjunction with University of Newcastle

» Graduate Diploma in Applied Corporate Governance-Chartered Secretary

» Graduate Certificate in Corporate Management

» Diploma in Financial Planning

» Certificate in Financial Markets

» Certificate Compliance Professional

Jennie VartanDirector

Jennie is a Chartered Surveyor with nearly 30 years’ experience as a property professional in the UK and Australia, encompassing both the commercial and residential sectors. Her experience includes the valuation, acquisition, develop-ment, and sale of large residential property portfolios.

Jennie has extensive experience in the not-for-profit residential sector as a consultant, a Board member (Poplar HARCA and Stort Valley Housing Associa-tions in the UK), and as Development Director of Hereward Housing in the UK.

Jennie moved to Australia in 2006 and from 2006 to 2011 she held the position of General Manager of Retirement Living & Property at Amana Living. In October 2011 she joined Foundation Housing as Chief Operations Officer and she is currently Acting Chief Executive of Foundation Housing.

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future objectivesEconomy & Housing MarketThe outlook over the next few years for any Australian Not-For-Profit entity will be challenging in retaining talent and competing for funding amidst higher levels of compliance costs and reform work required within the sector. Even more challenging will it be for Community Housing Providers dealing in politi-cally charged landscapes that have ‘failed to make significant or sustainable inroads to either supply based concerns, vacancy rates, or first-home buyer percentages’ .

Waitlists are increasing and our aging society is falling into retirement with little savings and modest superannuation nest eggs. There is a rental crisis with the housing market failing to appropriately address and to provide for a more sustainable housing system for low to moderate income earners.

Homelessness adds a further burden to the current rental crisis as people’s ability to afford shelter continues to erode. There have been significant cost increases in water, fuel and energy against pressure to maintain current wage levels with unemployment rate, rising and competition increasing in labour markets. While some of these increases may be offset against lower interest rates, of those people who rent, rents have increased a staggering 20% in the last year. Western Australia’s, population growth in recent times has almost doubled that of the other States.

From various sources estimates of WA housing supply shortages range from 22,000 to 38,000 and regardless of which figure is correct, it is at an unaccept-able level. Housing and employment rank in the highest concerns across our population and not having one or both of these causes many issues for people and families. “The lack of affordable housing impacts on people experiencing family violence and mental health problems. It exacerbates health problems, reduces children’s ability to learn and is felt across all age brackets” .

In dealing with such challenges Stellar Living will work with Governments and the sector to ensure our voice is heard. We will also be seeking expressions of interest with lending institutions in assisting and ultimately partnering with Stellar Living in developing its growth plans in the provision of social and affordable housing.

20%INCREASE IN

RENTAL COSTSOf those people who rent, rents have increased a

staggering 20% in the last year. Western Australian

housing supply shortages range from 22,000 to

38,000.

22

Short Term Objectives: The immediate short-term objectives for Stellar Living are to:

a) Execute a Funding Agreement with the Department of Housing that will allow Stellar Living to commence the development of 22 social and affordable dwellings in Erskine Mandurah.

b) Leverage relationships with developers, funders, religious institutions and bankers to help fund and partner Stellar Living with future developments

c) Continue to research and seek innovators and innovation in building designs & materials for their application and affordability in social housing

d) Commence roll-out of 10 year plan

e) Achieve budget for the 2013/2014 financial year

f) Meet Department of Housing’s Performance criteria and ensure contrac tual compliance, and

g) Maintain good corporate governance policy and practice with continued development of ‘best practice’ administrative and management practices and procedures

Longer Term Objectives: The longer term objectives for Stellar Living are to:

a) Complete the Erskine Project by December 2014

b) Leverage surpluses and sale proceeds into furthering its objectives in conjunction with the Department of Housing and other stakeholders.

c) Continue to grow housing stock rentals by seeking out organisations that wish to transfer management of properties that are not core business to their operations

d) Raise funds for new stages of our 10 year strategic plan

e) Research areas of greatest need for affordable housing for low to middle income earners

f) Identify opportunities with Department of Housing for land development

Performance Measures The Company measures its performance against specific criteria as decreed by the Housing Authority through the Community Housing Agreement aligned to its Performance Agreement with the Company. The Company is held accountable to the Housing Authority for agreed outcomes.

Stellar Living Ltd continues to measure its performance producing rolling finan-cial scenarios (using quantitative and qualitative data); including cash flow fore-casts and budgets out by 10 years from its current financial (operational) year. These scenarios are reviewed each financial year and validated against existing trends and economic forecasts of conditions that have the potential to affect planning outcomes.

The Board holds management accountable through annual budgets and reporting of non-financial information which is monitored against actual results and strategic plans on a monthly basis.

Through the Board and a dedicated team of individuals delivering and supporting the services we provide, Stellar Living is poised with their small foot-print to deliver valuable initiatives throughout the coming years.

(Satisfaction Survey)

24 legal items

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After Balance Date EventsOn 1 August 2013 Stellar Living Ltd executed a Funding Agreement with the Department of Housing for the provision of a grant of $3.1m from the sale of some of the department’s Meadow Springs properties. This grant will be put towards the construction cost of 22 dwellings in Erskine Mandurah.

On 7 August 2013 Stellar Living Ltd was formally advised it had been successful in securing 22 National Rental Affordable Scheme (NRAS) entitlements for the construction of 22 dwellings in Erskine Mandurah. These entitlements are esti-mated to provide Stellar Living with a further $2.5m over a 10 year period.

On 6 September 2013 settlement was achieved for the purchase of property in Erskine, Mandurah for the total purchase price of $1.25m plus GST, less a deposit of $150,000 paid prior to balance date.

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

Environmental IssuesOther than for normal residential tenancies, Stellar Living’s operations are not regulated by any significant environmental body regulator under a law of the Commonwealth or of a state or territory.

Future Developments, ProspectsLikely developments in the operations of the Company and the expected results of those operations in future financial periods have not been included in this report as the inclusion of such information is likely to result in unreasonable prej-udice to the Company.

26Members’ Guarantee

Stellar Living Ltd is a Company Limited by Guarantee and accordingly, the liability of each member is limited. The Company’s constitution states each member undertakes to contribute an amount not more than $1 to the property of the company if it is wound up while they are a member or within one year after they cease to be a member, for payment of the company’s debts and liabilities before the time they ceased to be a member and the costs, charges and expenses of winding up. As at 30 June 2013 there was one member, being Centrecare Incorporated.

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 12.

Signed in accordance with a resolution of the Board of Directors:

Stuart Duplock Chair Dated this 25th day of September 2013

Indemnification of Officers and Auditors

No indemnities have been given, or insurance premiums paid, during or since the end of the financial period for any person who is or has been a director, officer or auditor of the Company.

However to the extent permitted by law the company indemnifies a director and officer against any liability to any person incurred while acting in their capacity and in good faith. Indemnification includes costs and expenses incurred in their capacity in successfully defending legal proceedings and ancillary matters.

Proceedings on behalf of the Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The company was not a party to any such proceedings during the period.

Directors’ Benefits

During or since the financial year, no Director of the Company has received or become entitled to receive a benefit because of a contract that the Director or a firm of which the Director is a member or an entity in which the Director has a substantial financial interest made with the Company or an entity that the Company controlled, or a body corporate that was related to the Company, when the contract was made or when the Director received, or becomes entitled to receive the benefit other than:

i. a benefit included in the aggregate amount of emoluments received or due and receivable by the Directors shown in Note 14; or

ii. the fixed salary of a full time employee of the Company or an entity that the Company controlled or a related body corporate.

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AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of Stellar Living Ltd for the year ended 30 June 2013, I declare that to the best of my knowledge and belief, there have been no contraventions of:

a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b) any applicable code of professional conduct in relation to the audit.

Perth, Western Australia L Di Giallonardo

25 September 2013 Partner

.HLB Mann Judd (WA Partnership) Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: [email protected]. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation HLB Mann Judd (WA Partnership) is a member of HLB International, a worldwide organisation of accounting firms and business advisers.

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CONSOLIDATED FINANCIAL STATEMENTSJUNE 30 2013

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STATEMENT OF comprehensive income

Note 2013 2012

$ $

Revenue from ordinary activities 2 2,276,398 1,234,200

Contribution of land & buildings 5.1 11,578,748 24,806,986

13,855,146 26,041,186

Expenses:

Depreciation & Amortisation (638,275) (431,982)

Property Management expenses (370,103) (290,703)

Administration expenses (309,778) (747,182)

Employee Benefits (697,134)

(2,015,290) (1,469,867)

Profit for the year 11,839,856 24,571,319

The accompanying notes form part of the financial statements.

ContentsSTATEMENT OF COMPREHENSIVE INCOME ...................................................33STATEMENT OF FINANCIAL POSITION ................................................................34STATEMENT OF CASH FLOW .......................................................................................35STATEMENT OF CHANGES IN EQUITY .................................................................36NOTES TO THE FINANCIAL STATEMENTS ........................................................39

STATEMENT OF CASH FLOW

Note 2013 2012

$ $

Cash Flows from Operating Activities

Receipts from customers 1,871,591 1,210,214

Payments to suppliers and employees (1,419,178) (852,258)

Interest received 22,937 7,742

Net cash provided by operating activities 10(b) 475,350 365,698

Cash Flows from Investing Activities

Purchase of property, plant & equipment (297,263) (78,178)

Net cash (used in) investing activities (297,263) (78,178)

Cash Flows from Financing Activities

Net (repayments to)/loans from Centrecare Inc (31,667) 380,656

Net cash provided by / (used in) investing activities (31,667) 380,656

Net increase in cash held 146,420 668,176

Cash at the beginning of the year 818,176 150,000

Cash at the end of the year 10(a) 964,596 818,176


STATEMENT OF FINANCIAL POSITION

Note 2013 2012$ $

CURRENT ASSETS

Cash assets 3 964,596 818,176

Trade & other receivables 4 46,715 31,945

TOTAL CURRENT ASSETS 1,011,311 850,121

NON-CURRENT ASSETS

Property, plant & equipment 5 35,697,998 24,460,262

TOTAL NON-CURRENT ASSETS 35,697,998 24,460,262

TOTAL ASSETS 36,709,309 25,310,383

CURRENT LIABILITIES

Trades & other payables 6 133,276 168,749

Borrowings 7 44,891 461,078

Provisions 8 24,902 14,172

TOTAL CURRENT LIABILITIES 203,069 643,999

NON-CURRENT LIABILITIES

Provisions 8 5,975 5,975

TOTAL NON-CURRENT LIABILITIES 5,975 5,975

TOTAL LIABILITIES 209,044 649,974

NET ASSETS 36,500,265 24,660,409

EQUITY

Retained profits 9 36,500,265 24,660,409

TOTAL EQUITY 36,500,265 24,660,409


STATEMENT OF changes in equity

Note Retained Profits ($)

Balance at 1 July 2011 89,090

Profit for the year ended 30 June 2012 9 24,571,319

Balance at 30 June 2012 24,660,409

Profit for the year ended 30 June 2013 9 11,839,856

Balance at 30 June 2013 36,500,265


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notes to the FINANCIAL STATEMENTSJUNE 30 2013

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The following material accounting policies, which are consistent with the previous period unless otherwise stated, have been adopted in the preparation of this report.

a. Revenue

Any non-reciprocal grant revenue is recognised in the statement of compre-hensive income as revenue when the entity obtains control of the grant, it is probable that the economic benefits gained from the grant will flow to the entity and the amount of the grant can be measured reliably.

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

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

Stellar Living Ltd is a not-for-profit (non-reporting) entity and may receive non-reciprocal contributions of assets from the government and other parties for zero or a nominal value. These assets are recognised at fair value on the date of acquisition in the statement of financial position, with a corresponding amount of income recognised in the statement of comprehensive income. Donations and bequests are recognised as revenue when received.

Interest revenue is recognised as it accrues using the effective interest rate method, which for floating rate financial assets is the rate inherent in the instru-ment. Dividend revenue is recognised when the right to receive a dividend has been established.

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. All revenue is stated net of the amount of goods and services tax (GST).

b. Cash

For the purposes of the statement of cash flows, cash includes cash on hand and at call deposits with banks or financial institutions, investments in money market instruments maturing within less than two months and net of bank over-drafts.

c. Receivables and Other Debtors

Trade receivables and other receivables are normally recorded as a Current Asset at amounts due less any allowance for doubtful debts. Receivables expected to be collected beyond 12 months are recorded as a Non-Current Asset.

1. Statement of significant accountingpolicies

This financial report is a special purpose financial report prepared in order to satisfy the financial report preparation requirements of the Corporations Act 2001 and the requirements of the Company’s Constitution. The Directors have determined that the company is not a reporting entity as there are no users who are dependent on its financial statements.

Stellar Living Ltd is a Company Limited by Guarantee, incorporated and domi-ciled in Australia. It is a not-for-profit entity for financial reporting purposes under Australian Accounting Standards.

Basis of Accounting

The report has been prepared in accordance with the requirements of the Corporations Act 2001 and the following applicable Australian Accounting Stan-dards:

AASB 101: Presentation of Financial Statements

AASB 107: Cash Flow Statements

AASB 108: Accounting Policies, Changes in Accounting Estimates & Errors

AASB 110: Events after Balance Date

AASB 116: Property, Plant and Equipment

AASB 137: Provisions

AASB 1004: Contributions

AASB 1031: Materiality

AASB 1048: Interpretation and Application of Standards

No other applicable Accounting Standards, Accounting Interpretations or other authoritative pronouncements of the Australian Accounting Standards Board have been applied.

The report is also prepared on an accruals basis. It is based on historic costs and does not take into account changing money values or, except where specifically stated, current valuations of non-current assets.

42

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are recognised immediately in profit or loss. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained earnings.

e. Leases

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

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

Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.

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

f. Impairment of Assets

At the end of each reporting period, the entity reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is recognised immediately in profit or loss.

Where the future economic benefits of the asset are not primarily dependent upon on the asset’s ability to generate net cash inflows and when the entity would, if deprived of the asset, replace its remaining future economic benefits, value in use is determined as the depreciated replacement cost of an asset.

Where it is not possible to estimate the recoverable amount of a class of asset, the entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Where an impairment loss on a re-valued asset is identified, this is debited against the revaluation surplus in respect of the same class of asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same class of asset.

d. Property, Plant and Equipment

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

Plant and equipment

Plant and equipment are measured on the cost basis less depreciation and any impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets’ employment and subsequent disposal. The expected net cash flows have been discounted to their present values in deter-mining recoverable amounts.

Plant and equipment that have been contributed at no cost, or for nominal cost, are recognised at the fair value of the assets at the date they are acquired.

Depreciation

The depreciable amount of all assets above including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line basis over the asset’s useful life to the entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Depreciation Rate

Office equipment and furniture 20%

Plant and equipment 20%

Buildings 2.5%

Building Improvements 2.5%

The assets’ residual values and useful lives are reviewed, and adjusted if appro-priate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

44

k. Intangibles

Software

Software is recorded at cost. Software has a finite life and is carried at cost less accumulated amortisation and any impairment losses. It has an estimated useful life of between one and three years. It is assessed annually for impairment.

l. Provisions

Provisions are recognised when the entity has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions recog-nised represent the best estimate of the amounts required to settle the obliga-tion at the end of the reporting period.

m. Comparative Figures

Where required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

When an entity applies an accounting policy retrospectively, makes a retrospec-tive restatement or reclassifies items in its financial statements, the effect as at the beginning of the earliest comparative period must be disclosed.

n. Critical Accounting Estimates and Judgments

The Company evaluates estimates and judgments incorporated into the financial statements based on historical knowledge and best available current informa-tion. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the company.

Key estimates during the year:

(a) Impairment

The company assesses impairment at the end of each reporting period by eval-uating conditions and events specific to the company that may be indicative of impairment triggers.

g. Employee Benefits

Provision is made for the company’s liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may not satisfy vesting require-ments. Those cash outflows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows attributable to employee benefits.

Contributions are made by the entity to an employee superannuation fund and are charged as expenses when incurred.

h. Accounts Payable

Trade payables and other accounts payable are normally recognised as a current liability when the entity within 12 months, the entity becomes obliged to make future payments resulting from the purchase of goods and services. Non-current liabilities are assessed as amounts requiring repayment beyond a period of 12 months.

i. Income Tax

The company is exempt from income tax under Subdivision 50-5 of the Income Tax Assessment Act 1997 and has endorsement as a Charity and a Deductible Gift Recipient.

j. Goods and Services Tax (GST)

Stellar Living Ltd is registered for GST purposes. Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circum-stances, the GST is recognised as part of the cost of acquisition of the assets or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

46

o. Economic Dependence

Stellar Living Ltd as a Not For Profit (Non-reporting) entity is dependent on the Department of Housing for the majority of its revenue derived to operate the business. At the date of this report the Board of Directors has no reason to believe the Department of Housing will not continue to support Stellar Living Ltd.

p. New Accounting Standards for Application in Future Periods

In the year ended 30 June 2013, the Company has reviewed all of the new and revised Standards and Interpretations issues by the AASB that are relevant to its operations and effective for the current annual reporting period.

The Company has determined that there is no impact, material or otherwise, of the new and reused Standards and Interpretations on its business and, therefore no change necessary to the Company’s accounting policies.

The Company has also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2013. As a result of this review, the Company has determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore no change necessary to the company’s accounting policies.

2013 2012

$ $

2. REVENUE FROM ORDINARY ACTIVITIES

Operating Activities

Rental Revenue 1,865,796 1,225,232

Interest Revenue 22,937 7,742

Profit / (Loss) on Sale of Asset 80

Sundry Revenue 3,143 1,146

Donation from Centrecare Incorporated 384,522 -

2,276,398 1,234,200

3. CASH & CASH EQUIVALENTS

Cash at Bank 104,664 460,373

Petty Cash 300 183

Term Deposit 859,632 357,620

964,596 818,176

The effective interest rate on bank deposit was 4.00%. The weighted average term of these deposits is between 1-3 months and all deposits are held at call.

4. OTHER CURRENT ASSETS

Trade Debtors 13,580 15,734

Prepayments 14,629 5,016

Rental Security Bonds 2,727 4,689

GST Receivables 15,423 5,997

Other Receivables 356 509

46,715 31,945

48

Note to 4. Other Current Assets

Current trade receivables are non-interest bearing. Non-tenant debtors are generally on 30 day net terms. Tenant debtors terms are fortnightly. No provision for impairment has been made as it is considered immaterial due to low risk of default.

5.1 The company received land and building from the Department of Housing during the year in the amount of $11,578,748. Disposal rights of these properties are limited by agreement and caveats have been lodged by the Department as disclosed in Note 17.

5.2 Work in Progress – Property Development – at cost:

Deposit on Erskine land $150,000 Planning costs $2,900 Legal & consultancy fees $6,145 Survey costs $3,400

$162,445

Note 2013 2012

$ $

5. PROPERTY, PLANT & EQUIPMENT

Land – at cost 5.1 6,673,027 4,763,778

6,673,027 4,763,778

Buildings – at cost 5.1 29,712,707 20,043,208

Accumulated Depreciation (1,059,871) (429,112)

28,652,836 19,614,096

Building Improvements – at cost 152,340 73,140

Accumulated Depreciation (3,906) (785)

148,434 72,355

Plant and Equipment – at cost 32,694 888

Accumulated Depreciation (1,259) (257)

31,435 631

Office equipment and furniture - at cost 16,618 11,596

Accumulated Depreciation (5,512) (2,194)

11,106 9,402

Leasehold Property: Refurbishment & Improvements - cost

18,790 -

Accumulated Depreciation (75) -

18,715 -

Work in Progress - Property Development – at cost

5.2 162,445 -

162,445

35,697,998 24,460,262

502013 2012

$ $

6. TRADE & OTHER PAYABLES

Trade Creditors 37,017 16,245

Accrued Expenses 10,386 73,793

Payroll Liabilities 30,951 28,254

Tenant Bonds 5,820 2,611

Rental Income in Advance 10,246 16,711

Annual Leave Accrual 38,856 31,135

133,276 168,749

7. BORROWINGS

Non-interest bearing unsecured loan payable to Centrecare Inc (no collateral has been pledged as security)

44,891 461,078

44,891 461,078

8. PROVISIONS

Current Long Service Leave

Opening Balance 14,172

Additional Provision Raised 10,730 14,172

TOTAL CURRENT 24,902 14,172

2013 2012

$ $

Non-Current Long Service Leave

Opening Balance 5,975 -

Additional Provision Raised - 5,975

TOTAL NON CURRENT 5,975 5,975

TOTAL PROVISIONS 30,877 20,147

9. RETAINED PROFITS

Balance at beginning of year 24,660,409 89,090


Balance at end of year 36,500,265 24,660,409

52

12. COMPANY DETAILS

The registered office and principal place of business of the company is Unit 4, 1 Binley Place, Maddington Western Australia 6109.

13. COMMITMENTS

The Company entered into a lease agreement for premises in Maddington for a period of 24 months from 1 May 2013 to 30 April 2015 with an option of a further 3 years. The annual rental commitment is $36,000 plus GST plus outgoings.

The Company purchased land and paid a deposit of $150,000 during the year. Settlement took place on 6 September 2013 for the balance of $1.1m plus GST.

14. RELATED PARTY TRANSACTIONS

The sole member of Stellar Living Ltd is Centrecare Inc. Centrecare has advanced sums to Stellar Living (refer to Note 7) and operates a Service Level Agreement for the provision of financial, accounting, payroll, information tech-nology and human resources services throughout the financial year to Stellar Living for an annual fee of $54,000.

15. SUBSEQUENT EVENTS

On 1 August 2013 Stellar Living Ltd executed a Funding Agreement with the Department of Housing for the provision of a grant of $3.1m from the sale of some of the department’s Meadow Springs properties. This grant will be put towards the construction cost of 22 dwellings in Erskine Mandurah.

On 7 August 2013 Stellar Living Ltd was formally advised it had been successful in securing 22 National Rental Affordable Scheme (NRAS) entitlements for the construction of 22 dwellings in Erskine Mandurah. These entitlements are esti-mated to provide Stellar Living with a further $2.5m over a 10 year period.

On 6 September 2013 settlement was achieved for the purchase of property in Erskine, Mandurah for the total purchase price of $1.25m plus GST, less a deposit of $150,000 paid prior to balance date.

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

2013 2012

$ $

10. CASH FLOW INFORMATION

(a) Reconciliation of CashCash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows:

Cash on hand, at bank and term deposits 964,596 818,176

(b) Reconciliation of cash flow from operations with profit for the year


Depreciation 638,275 431,982

Contribution of land & buildings (11,578,748) (24,806,986)

Changes in assets and liabilities:

- Decrease/(Increase) in trade and other receivables

(5,344) (13,515)

- (Decrease)/Increase in trade and other payables/provisions

(418,689) 182,900

Cash flows provided by operating activities 475,350 365,698

11. AUDITOR’S REMUNERATION

Audit of the financial statements 13,000 3,000

Other services - -

Balance at end of year 13,000 3,000

5416. CONTINGENT LIABILITIES

The Company has entered into a Community Housing Agreement with the Department of Housing as part of the transfer of properties from the Department. This Agreement establishes the terms on which the Company must discharge its function as a Community Housing Organisation. The Department has lodged caveats over the properties it transferred to the Company to secure the perfor-mance of the Company’s obligations under the Agreement.

DIRECTORS’ DECLARATION

The Directors have determined that the Company is not a reporting entity. The Directors have determined that this special purpose financial report should be prepared in accordance with the accounting policies outlined in Note 1 to the financial statements.

The directors of the company declare that:

1. The financial statements and notes as set out in this report are in accor-dance with the Corporations Act 2001 and:

a) comply with Accounting Standards to the extent as detailed in Note 1 to the financial statements and the Corporations Regulations 2001; and

b) give a true and fair view of the financial position as at 30 June 2013 and performance for the year ended on that date in accordance with accounting policies described in Note 1 to the financial statements.

2. There are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Direc-tors.

Stuart Duplock

Chair

Dated this 25th day of September 2013

56

INDEPENDENT AUDITOR’S REPORT

To the members of Stellar Living Ltd

We have audited the accompanying financial report of Stellar Living Ltd (“the company”), which comprises the statement of financial position as at 30 June 2013, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration for Stellar Living Ltd.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reason-able assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation and fair presentation of the financial report 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 internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

We believe that the audit evidence we have obtained is sufficient and appro-priate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s opinion

In our opinion:

(a) the financial report of Stellar Living Ltd is in accordance with the Corpora tions Act 2001, including:

(i) giving a true and fair view of the company’s financial position as at 30 June 2013 and of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards to the extent as described in Note 1 and the Corporations Regulations 2001.

Basis of Accounting

Without modifying our opinion, we draw attention to Note 1 to the financial report, which describes the basis of accounting. The financial report has been prepared for the purpose of meeting the company’s requirements to prepare financial statements under its Constitution. As a result, the financial report may not be suitable for another purpose.

HLB Mann Judd L Di Giallonardo Chartered Accountants Partner

HLB Mann Judd (WA Partnership) Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: [email protected]. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation HLB Mann Judd (WA Partnership) is a member of HLB International, a worldwide organisation of accounting firms and business advisers.

58

ABOUT CONTACTStellar Living Ltd is a social investor focused on providing afford-able, quality housing, especially to people who cannot readily access the private market. We see secure housing as a primary need, essential to quality of life and to full economic and social participation in society. Stellar Living Ltd is a not-for-profit Australian Public Company. It has deductible gift recipient status with the Australian Taxation Office.

Unit 4 / 1 Binley PlaceMaddington, 6109Western Australia

Ph: (08) 9452 9200Ph: (08) 9535 7311 (Mandurah)

E-mail: [email protected]

2013 financial report

Sl report1213 final

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