Estate Agents Co-operative Limited ABN 52 079 055 637
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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CONTENTS FOR YEAR ENDED 30 JUNE 2018
Notice of Annual General Meeting
2
Chairperson's Report
3
Directors' Report
4
Auditor's Independence Declaration
6
Statement of Profit or Loss and Other Comprehensive Income
7
Statement of Financial Position
8
Statement of Changes in Equity
9
Statement of Cash Flows
10
Notes to the Financial Statements Directors' Declaration Independent Audit Report
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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III
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Fifty Eighth Annual General Meeting of the Co-operative is being held at our office at 2A/175 James Ruse Drive, Rosehill NSW 2142 on Wednesday 24 October at 10.00am. Business to be discussed at the meeting: BUSINESS
· · ·
To confirm the Minutes of the 2017 Annual General Meeting. To receive the report of the Board of Directors. To receive the financial statements for the year ended 30 June 2018 and the report of the auditors thereon.
·
To announce the appointment of Directors for the ensuing period and to approve the payments of fees to the Directors.
· ·
To appoint the Co-operative Auditors for the ensuing year. Any other business – notice of which has been given in accordance with the rules.
By order of the Board
Sylvia A Cortez Chief Executive Officer / Co-operative Secretary
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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CHAIRPERSON'S REPORT This is my second year as Chairman in a time of great change to both the industry and EAC. Probably the greatest I’ve seen in 30 years of participation. With far more industry challenges to come. Shifting technology, legislative review, multiple disruptors, smarter competition, reducing margins and increasing costs are, all contributing to a challenging landscape for the modern agent. And EAC is certainly not immune to these trials too. This year saw the tightening of the residential real estate market with clearance rates dropping after 5 years of sustained growth. The contemporary agent is looking for a greater level of care and smarter advice to support their business. EAC is rising to that challenge with attendance at the Property Portal Watch Conference in Bangkok in February/March to hear presentations from around the world with an emphasis on seamless technology. In addition, we saw our CEO, David Crombie move on in May, after 12 years at the helm and the appointment of our first female CEO in Sylvia Cortez. EAC has invested considerable energy, resources and thinking time over the past year into new technologies including Video Marketing, Virtual Reality Tours and Marketing, EAC Dashboard, Web-site services together with our traditional media represented by the Realtor publication. We sit alongside other industry groups as representatives at the Real Estate Reference Group (RERG). RERG meets monthly with Fair Trading representatives and is charged with a legislative review of the Property Stock and Business Agents Act. The Property Stock and Business Agents Amendment (Property Industry Reform) Bill passed through Parliament in March 2018. This substantial review is expected to come into effect in 2019. The Co-operative also went through a brand change in 2017 with a totally new look and feel. This was incredibly well received and now projects a modern image to a changing landscape. We strengthened our ties with AON, Jemmeson & Fisher, Australian College of Professionals, David Colman (CCE Consulting and Training) and EAC entered into a commercial partnership with JB HiFi Commercial to assist agents with their technology needs. Our membership base grew by 27% over the financial year to a total of 366 members and branch offices with the aim to have 400 members early 2019. It is expressly noted the Management Team have worked very hard in a trying year to deliver a firm base for growth in 2019. The Board is exceptionally grateful for their time and effort. I would also like to thank the EAC Board for wise counsel and guidance and sometimes robust debate. I’m stepping down this year after 23 years of EAC involvement and I wish the new Board well for the future.
E. J. Hanson Chairperson
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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DIRECTORS’ REPORT The directors of the Estate Agents Co-operative Limited (hereafter referred to as the Co-operative) submit herewith the annual report of the Co-operative for the financial year ended 30 June 2018. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: Information about the directors The names of the directors of the Co-operative during or since the end of the financial year are: Name of Directors
E. J. Hanson (Chairperson) A. D. Chapman (Vice Chairperson) L. M. Buckett J. F. Sercombe B. L. Styles G. Toner D. R. Whittaker (resigned 6 March 2018)
The above named directors held office during or part of the whole of the financial year and since the end of the financial year. Principal Activities The principal activity of The Estate Agents Co-operative Limited during the financial year were:
- Agency Practice Support - Information related services including: • Listing Management • Property Information • Current Market Information • Electronic Newsletters • CRM • Online Property Searches - Web services including: • Web Site Design and Creation • Web Site Hosting • Email Hosting
- realestateworld.com.au - realestateworld.com.au Publications - Real Estate Forms and Stationery No significant changes in the nature of the Co-operative's activity occurred during the financial year. Operating Results The Profit/(Loss) of operations including interest received was:
Operating Profit/(Loss)
Year ended 30-Jun-18$
Year ended 30-Jun-17$
($283,176)
($298,242)
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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DIRECTORS’ REPORT (Continued) Dividends No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made. Changes in the state of affairs There have been no significant changes in the state of affairs of the Co-operative during the year. Subsequent events No other matters or circumstances have arisen since the end of the financial year that would significantly affect or may significantly affect the operations of the Co-operative or the results of those operations, or the state of affairs of the Co-operative in the future financial years. Indemnification of officers or auditors During the financial year, the Co-operative paid a premium in respect of a contract insuring the directors of the Co-operative (as named above), the Co-operative's secretary, Mr David Crombie, and all executive officers of the Co-operative and of any related body corporate against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001 . The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Co-operative has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Co-operative or of any related body corporate against a liability incurred as such an officer or auditor. Insurance premiums paid for directors The Co-operative has paid premiums to insure each of the directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of Director of the Co-operative, other than conduct involving a wilful breach of duty in relation to the Co-operative. Proceedings on behalf of Co-operative No person has applied for leave of court to bring proceedings on behalf of the Co-operative or intervene in any proceedings to which the Co-operative is a party for the purpose of taking responsibility on behalf of the Co-operative for all or any part of those proceedings. The Co-operative was not a party to any such proceedings during the year. Auditor’s Independence Declaration The lead auditor’s independence declaration for the year ended 30 June 2018 has been received and can be found on page 7 of the directors’ report. Signed in accordance with a resolution of the Board of Directors.
______________________ E. J. Hanson Chairperson Dated this 12th day of October 2018
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
______________________ Anthony Chapman Chairperson
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AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
To the Directors of Estate Agents Co-operative Limited:
I declare that, to the best of my knowledge and beliefs, there have been no contraventions of any applicable code of professional conduct in relation to the audit.
Ben Fock Registered Company Auditor Dated this 12th day of October 2018
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018 Note
2018 $
2017 $
Revenue
2
2,728,478
3,003,056
Other income
2
82,182
57,531
(72,094)
(244,658)
(70,991)
(107,883)
(1,906,984)
(1,899,132)
(13,423)
(16,161)
(24,202)
(57,859)
(272,819)
(341,005)
(149,977)
(135,314)
(825,750)
(554,177)
1
(525,580)
(295,602)
4
242,404
Administration Expenses Depreciation and amortisation Employee
3
benefit expense Finance costs Raw materials and consumables used Realtor prepress, distribution and printing Occupancy expense Other expenses Profit/(loss) before income tax Income tax(expense)/benefit Profit/(loss) for the year Other comprehensive income
(283,176)
(2,640) (298,242)
Items that will not be classified subsequently to Profit and Loss
Net gain on revaluation of non-current assets
-
-
Items that may be classified subsequently to Profit and Loss
-
-
Other comprehensive income for the year
-
-
Total comprehensive income for the year
(283,176)
(298,242)
Profit attributable to the members of the Co-operative
(283,176)
(298,242)
Total comprehensive income attributable to the members of the Co-operative
(283,176)
(298,242)
The accompanying notes form part of these financial statements
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 Note ASSETS CURRENT ASSETS Cash assets Trade and other receivables Inventories Other assets Other Financial assets TOTAL CURRENT ASSETS
2018 $
2017 $
5 6 7 8 9
889,918 271,712 66,676 106,074 38,663 1,373,043
139,314 346,072 55,551 99,969 1,049,998 1,690,904
8 10 11 12
12,180 9,591 241,640 584,444 847,855
12,180 18,071 280,237 622,561 933,049
2,220,899
2,623,953
13 14 16
391,672 261,912 653,584
508,967 5,195 313,151 827,313
12 14 16
31,290 36,740 47,255 115,285
4,145 29,000 28,292 61,437
768,869
888,750
NET ASSETS
1,452,030
1,735,204
EQUITY Retained earnings Reserves TOTAL EQUITY
81,552 1,370,477 1,452,029
364,728 1,370,477 1,735,205
NON-CURRENT ASSETS Other assets Property, plant and equipment Other intangible assets Deferred tax assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Payables Borrowings Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liabilities Borrowings Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES
The accompanying notes form part of these financial statements
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018
Retained Earnings
Capital profits Reserve
Asset revaluation reserve
Share Redemption Reserve
Total
$
$
$
$
$
-
216,840
662,968
1,153,637
Profit/(loss) attributable to the Co-operative
(298,240)
-
-
-
(298,240)
Total other comprehensive income for the year
(298,240)
-
-
-
(298,240)
364,728
1,153,637
216,840
1,735,204
Profit/(loss) attributable to the Co-operative
(283,176)
-
-
-
(283,176)
Total other comprehensive income for the year
(283,176)
-
-
-
(283,176)
Total comprehensive income attributable Balance at 30 June 2018
81,552
1,153,637
216,840
1,452,029
Balance at 1 July 2016
2,033,444
Comprehensive Income
Total comprehensive income attributable Balance at 30 June 2017
-
Comprehensive Income
-
Capital profit reserve The capital profit reserve records gains on sale of properties purchased prior to 19 September 1985. Asset revaluation reserve The asset revaluation reserve records revaluation of non-current assets. Share redemption reserve The share redemption reserve records the entrance fees received by members prior to 1979.
The accompanying notes form part of these financial statements
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018
Note
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from trading activities and subscriptions Payments to suppliers & employees Interest received Finance costs Net cash provided by operating activities
2018 $
2017 $
21(b)
2,736,300 (1,962,437) 19,272 (13,423) 779,714
3,034,857 (3,037,914) 28,805 (16,161) 9,587
10(a)
(23,914)
(58,532)
CASH FLOWS FROM INVESTING ACTIVITIES Payment for plant & equipment
8,183
Proceeds from sale of assets (23,914)
(50,349)
Proceeds from borrowing Payment of borrowing
(5,195)
(44,477)
Net cash provided by from financing activities
(5,195)
(44,477)
Net cash provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES
NET INCREASE IN CASH HELD Cash at beginning of the year CASH AT THE END OF THE YEAR
21(a) 21(a)
750,605
(85,239)
139,314 889,919
224,553 139,314
The accompanying notes form part of these financial statements
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Statement of Compliance These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards – Reduced Disclosure Requirements, and comply with other requirements of the law. Basis of preparation The Co-operative applies Australian Accounting Standards – Reduced Disclosure Requirements as set out in AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010-2: Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements. The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards – Reduced Disclosure Requirements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The Co-operative is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise. The financial statements, except for the cash flow information, have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The amounts presented in the financial statements have been rounded to the nearest dollar. The financial statements were authorised for issue on 12 October 2018 by the directors of the Co-operative. Accounting Policies (a) Revenue and other income Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for rebates and other similar allowances.
Sale of goods Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. Dividend revenue and interest income Dividend income from investments is recognised when the shareholder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Co-operative and the amount of income can be measured reliably). Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Co-operative and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. All revenue is stated net of the amount of goods and services tax (GST).
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (b) Inventory Inventories are measured at the lower of cost and current replacement cost. Net realisable value represents the estimated selling price for inventories less all costs necessary to make the sale. (c) Property Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value as indicated, less where applicable, accumulated depreciation and impairment losses.
Plant and Equipment Plant and equipment is measured on a cost basis less depreciation and 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 asset's employment and subsequent disposal.
Depreciation The depreciable amount of all fixed assets, including buildings and capitalised lease asset, but excluding freehold land, is depreciated on a straight line basis over the asset’s useful life to the Co-operative 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 Plant and Equipment Computer equipment Computer software Other Plant and Equipment
Depreciation Rate 5% to 25% 10% to 40% 12.5% to 40% 5% to 25%
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each reporting period. Asset classes carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives. (d) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at-call with banks and other short-term highly liquid investments with original maturities of six months or less.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (e) Goods and Services Tax (GST) 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 circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. (f) Income Tax
Current income tax expense The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Co-operative’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Co-operative is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Co-operative expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Co-operative intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the year Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (g) Employee Provisions
Short-term employee provisions Provision is made for the Co-operative’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.
Other long-term employee provisions Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures, and are discounted at rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that approximate the terms of the obligations. Upon the remeasurement of obligations for other long-term employee benefits, the net change in the obligation is recognised in profit or loss as a part of employee benefits expense. The Co-operative’s obligations for long-term employee benefits are presented as non-current employee provisions in its statement of financial position, except where the Co-operative does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions. (h) Financial Instruments
Initial Recognition and Measurement Financial assets and financial liabilities are recognised when the Co-operative becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the Co-operative commits itself to either purchase or sell the asset (ie trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs except where the instrument is classified ‘at fair value through profit or loss’ in which case transaction costs are expensed to profit or loss immediately. Classification and Subsequent Measurement Finance instruments are subsequently measured at either fair value, amortised cost using the effective interest rate method or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Amortised cost is calculated as: 1. the amount at which the financial asset or financial liability is measured at initial recognition; 2. less principal repayments; 3. plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and 4. less any reduction for impairment. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Held-to-Maturity Investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments and it is the Co-operative's intention to hold these investments to maturity. They are subsequently measured at amortised cost. Financial Liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. (i) Impairment of Assets At the end of each reporting period, the Co-operative reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Co-operative estimates the recoverable amount of the cashgenerating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cashgenerating units for which a reasonable and consistent allocation basis can be identified. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. When an impairment loss subsequently reverses, the carrying amount of the asset (or cash- generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. (j) Critical Accounting Estimates and Judgments In the application of the Co-operative’s accounting policies, the directors of the Co-operative are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Critical judgements in applying The following are the critical judgements, apart from those involving estimations, that the directors have made in the process of applying the Co-operative’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements. Held-to-maturity financial assets The directors have reviewed the Co-operative’s held-to-maturity financial assets in the light of its capital maintenance and liquidity requirements and have confirmed the Co-operative’s positive intention and ability to hold those assets to maturity. The carrying amount of the held-to-maturity financial assets is $38,663 (30 June 2017: $1,049,998). Details of these assets are set out in Note 9. Key sources of estimation The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Useful lives of property, plant and equipment As described at Note (e) above, the Co-operative reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. Employee benefits For the purpose of measurement, AASB 119: Employee Benefits (September 2011) defines obligations for short-term employee benefits as obligations expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related services. The Co-operative expects most employees will take their annual leave entitlements within 24 months of the reporting period in which they were earned, but this will not have a material impact on the amounts recognised in respect of obligations for employees’ leave entitlements. (k) Provisions Provisions are recognised when the Co-operative has a present obligation (legal or constructive) as a result of a past event, it is probable that the Co-operative will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. (l) Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Co-operative as lessee Assets held under finance leases are initially recognised as assets of the Co-operative at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Co-operative’s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. (m) Fair Value Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Co-operative takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in the financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of AASB 2, leasing transactions that are within the scope of AASB 117, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in AASB 2 or value in use in AASB 136. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: • • •
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Co-operative can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability.
(n) Comparative Figures Where required by Accounting Standards, comparative figures have been adjusted to conform with changes in presentation for the current financial year. When the Co-operative applies an accounting policy retrospectively, makes a retrospective restatement or reclassifies items in its financial statements, a statement of financial position as at the beginning of the earliest comparative period must be disclosed. (o) Adoption of New and Revised Accounting Standards The AASB has issued a number of new and amended Accounting Standards that have mandatory application dates for future reporting periods, some of which are relevant to the Co-operative. The Co-operative has decided not to early adopt any of the new and amended pronouncements. The Co-operative's assessment of the new and amended pronouncements that are relevant to the company but applicable in future reporting periods is set out below:
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019) When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases. The main changes introduced by the new Standard include: - recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and leases relating to low-value assets); - depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components; - variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date; - by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead account for all components as a lease; and - additional disclosure requirements. The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application. Although the directors anticipate that the adoption of AASB 16 will impact the Co-operative's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 2: REVENUE AND OTHER INCOME
2018 $
2017 $
Revenue and Other Income Included in operating profit are the following items of operating revenue: Sales revenue - provision of service - member subscription Other revenue - other trading revenue - interest received - entrance fees
Total Revenue from customers Other income Commission & sponsorship Discounts and rebates Training & compliance service fee Profit on disposal of fixed assets Sundry income Total other income
2,212,340 447,090 2,659,430
2,544,708 349,986 2,894,694
48,510 19,272 1,266 69,048
75,579 28,805 3,980 108,364
2,728,478
3,003,056
20,770 (8,528) 1,498 68,442 82,182
20,768 (8,170) 6,536 8,182 30,215 57,531
(a) The following is an analysis of investment income by category of asset Loans and receivables (including cash and bank balances ) and Held-to-maturity
19,272
28,805
Total interest income earned on financial assets that are not designated as at fair value
19,272
28,805
Cost of sales Interest expense on financial liabilities not at fair value through profit or loss
24,202
57,859
13,423
16,161
Depreciation of property, plant and equipment
70,991
107,883
1,906,984
1,899,132
NOTE 3: PROFIT BEFORE INCOME TAX Expenses:
Employee benefits
4,517
Bad debts written off Loss on disposal of fixed assets
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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-
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 4: INCOME TAXES
Note
2018 $ (a) Income tax recognised in profit or loss, in respect of the current year Current tax Deferred tax
4(b) 12
Total income tax expense recognised in the current year
2017 $
307,667 (65,263)
(2,640)
242,404
(2,640)
(144,534)
(81,290)
19,523 112,001 (13,010)
29,668 118,130 66,508
(134,615) 147,625 307,667
(116,933) 50,425
(b) Reconciliation of income tax to accounting profit: Prima facie tax payable on profit/(loss) from ordinary activities before income tax at 27.5% (2017: 27.5%) Add: Tax effect of: - non-deductible depreciation and amortisation - other non-allowable items Less: Tax effect of: - other deductible items Additional losses brought to account in current year R&D refund received in the 2018 year Income tax expense
307,667
-
The tax rate used for the 2017 & 2018 year is the small business corporate tax rate of 27.5%. During the year the company amended the 2016 and 2017 year tax returns for research and development (R&D). The amounts of $155,324 and $152,342 were refunded to the company in the second half of the year. As the 2018 income tax return or the application for R&D have not been prepared, no R&D has been accounted for in the 2018 income tax reconciliation. NOTE 5: CASH ASSETS
CURRENT Cash at bank and in hand
21
889,918
139,314
889,918
139,314
271,718 8,601 (8,607) 271,712
344,998 11,074 (10,000) 346,072
NOTE 6: RECEIVABLES CURRENT Trade debtors Other receivables Provision for impairment
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
6(a) 23
20
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 6: RECEIVABLES (CONT)
Note
2018 $
2017 $
(a) Provision for impairment of receivables The average credit period on sales of goods is 30 days. Interest is charged on outstanding trade receivables at a rate of 10% PA or a minimum of $10. The Co-operative has recognised an allowance for doubtful debts of 100% against all receivables over 120 days because historical experience has been that receivables that are past due beyond 120 days are not recoverable. Allowances for doubtful debts are recognised against trade receivables between 60 days and 120 days based on estimated irrecoverable amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty’s current financial position. Movement in provision for impairment of receivables is as follows: Opening Balance Charge for the year Amounts written off Balance at end of the year
10,000 (1,393) 8,607
10,001 4,516 (4,517) 10,000
66,676 66,676
55,551 55,551
104,874 1,200 106,074
99,249 720 99,969
12,180 12,180
12,180 12,180
38,663
1,049,998
38,663
1,049,998
NOTE 7: INVENTORIES CURRENT Merchandise - at cost
NOTE 8: OTHER ASSETS CURRENT Prepayments Share Capital Unpaid NON-CURRENT Refundable Deposit NOTE 9: FINANCIAL OTHER ASSETS CURRENT Held-to-maturity financial investments carried at amortised cost
23
During the year the Co-operative transferred its term investment into an at call account.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 10: PROPERTY, PLANT & EQUIPMENT At cost Furniture, fixture and fittings Less: accumulated depreciation
Note
At cost Motor vehicles Under lease Accumulated depreciation
At cost Office equipment Accumulated depreciation At cost Computer equipment Less: accumulated depreciation
2018 $
2017 $
43,708 (42,548) 1,160
43,708 (42,453) 1,255
122,243 (122,243) -
95,771 26,472 (111,889) 10,354
20,229 (20,168) 61
20,229 (19,708) 521
212,267 (203,897) 8,370
203,622 (197,681) 5,941
9,591
Total Property, Plant & Equipment
18,071
(a) Movements in Carrying Amounts Movements in the carrying amounts for each class of property plant and equipment between the beginning and the end of the current financial year. Office Total Computer Furniture, Motor equipment equipment fixture and vehicles fittings Balance at the end/start of the year (2017) Additions - at cost Additions - at replacement cost Disposals (net) Depreciation Balance at the end of the year (2018)
1,255 (95) 1,160
10,354 (10,354) -
521 (460) 61
5,941 8,645 (6,216) 8,370
18,071 8,645 (17,125) 9,591
NOTE 11: OTHER INTANGIBLE ASSETS Cost Computer software Accumulated amortisation and impairment Net carrying value
1,690,292 (1,448,652) 241,640
1,674,224 (1,393,987) 280,237
Computer software Balance at the end/start of the year (2017) Additions - at cost Additions - at replacement cost Disposals (net) Depreciation Balance at the end of the year (2018)
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
280,237 15,269 53,866 241,640
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 12: TAX Opening Balance
Deferred tax assets
Charged to Income
Closing Balance
Provisions Provisions - Employee benefits Tax losses Property, plant and equipment Other Balance at 30 June 2017
12,000 92,199 467,679 13,225 585,103
(1,000) 1,699 38,399 (1,640) 37,458
11,000 93,898 506,078 11,585 622,561
Provisions Provisions - Employee benefits Tax losses Other Balance at 30 June 2018
11,000 93,898 506,078 11,585 622,561
(119) (8,876) (31,705) 2,584 (38,118)
10,881 85,022 474,373 14,169 584,444
Opening Balance
Deferred tax liability
Charged to Income
Closing Balance
Property, plant and equipment Balance at 30 June 2017
(35,953) (35,953)
(40,098) (40,098)
4,145 4,145
Property, plant and equipment
4,145
27,145
31,290
27,145
31,290
4,145
Balance at 30 June 2018 NOTE 13: PAYABLES
Note
CURRENT Unsecured liabilities Trade creditors EAC Zone advertising account Related party payables Sundry payables and accrued expenses
23
2018 $ 124,650 58,050 66,340 142,632 391,672
2017 $ 146,244 65,656 91,640 205,427 508,967
No interest is charged on the trade payables. The Co-operative has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Note
NOTE 14: BORROWINGS
2018 $
CURRENT Secured - at amortised cost Finance lease Total current borrowings NON-CURRENT Secured - at amortised cost Finance lease Paid up capital Total non current borrowings
2017 $ -
5,195 5,195
36,740 36,740
29,000 29,000
Total borrowings
23
36,740
34,195
(a) Total current and non-current secured liabilities Finance lease obligations Paid up capital
15
36,740 36,740
5,195 29,000 34,195
-
26,472 26,472
(b) The carrying amounts of non-current assets pledged as security are leased plant and equipment
-
Lease liabilities are secured by the underlying leased assets. The borrowings are a mix of variable and fixed interest rate debt with repayment periods not exceeding 4 years. NOTE
15:
CAPITAL
AND
LEASING
COMMITMENTS
(a) Finance lease and Hire Purchase Commitments Payable – minimum lease payments - not later than 12 months - later than 12 months but not later than five
-
5,195 -
Minimum lease payments Less: finance changes Minimum lease payments
-
5,195 5,195
Commercial hire purchases in place for motor vehicle and computer equipment have a term of 3 years. The motor vehicle and computer equipment are being leased with lease payments paid monthly. Finance is also in place for the Co-operative's insurance premiums with repayments paid monthly. (b) Operating lease commitments
Non-cancellable operating leases contracted for but not capitalised in the financial statements Payable – minimum lease payments - not later than 12 months - later than 12 months but not later than five
85,827 240,000
142,942 152,309
Minimum lease payments
325,827
295,251
The property lease is a non-cancellable lease with a three-year term with an option to renew for another three years and with rent payable monthly in advance.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 16: PROVISIONS
Note
CURRENT Employee entitlements NON-CURRENT Employee Entitlements Total employee entitlements
2018 $
2017 $
261,912 261,912
313,151 313,151
47,255 47,255
28,292 28,292
309,167
341,443
Employee Provisions Employee provisions represent amounts accrued for annual leave and Long Service Leave. The current portion for this provision includes the total amount accrued for annual leave entitlements. Based on past experience, the Co-operative does not expect the full amount of annual leave balances classified as current liabilities to be settled within the next 12 months. However, these amounts must be classified as current liabilities since the Co-operative does not have an unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement. The non-current portion for this provision includes amounts accrued for long service leave entitlements that have not yet vested in relation to those employees who have not yet completed the required period of service. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based upon historical data. The measurement and recognition criteria for employee benefits have been discussed in Note 1(g). Long-term Employee Benefits Opening balance at beginning of the year Additional(reduction) of provisions raised during year Amounts used Balance at end of year
184,804 31,084 (57,723) 158,165
192,521 (7,717) 184,804
NOTE 17: RELATED PARTIES Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other persons unless otherwise stated. There were no related party transactions during the year. NOTE 18: KEY MANAGEMENT PERSONNEL Key Management is defined as those persons having authority and responsibility for planning, directing and control of the activities of the Co-operative directly or indirectly, including any director (whether executive or otherwise) of the Cooperative. Total Compensation
683,023
684,846
NOTE 19: CONTINGENT LIABILITY There are no contingent liabilities at 30 June 2018 (2018: $Nil).
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 20: EVENTS AFTER BALANCE No other matters or circumstances have arisen since the end of the financial year that would significantly affect or may significantly affect the operations of the Co-operative or the results of those operations, or the state of affairs of the Cooperative in the future financial years. NOTE 21: STATEMENT OF CASH FLOWS RECONCILIATION (a) Reconciliation of Cash For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks. Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to the related items in the statement of financial position as follows: Note Cash at bank and in hand
2018 $
2017 $
889,918
139,314
(b) Reconciliation of Cash Flow from Operations with Profit after Income tax Operating profit after income tax
(283,176)
(298,242)
70,991
107,883 (8,183)
Non cash flows in operating profit: - Depreciation - Provision for doubtful debts - (Profit)/Loss on disposal of assets Changes in Assets & Liabilities: Decrease (Increase) in receivables Decrease (Increase) in inventory Decrease (Increase) in other assets Decrease (Increase) in investment Increase (Decrease) in accounts payable Increase (Decrease) in other liabilities Increase (Decrease) in provisions Decrease (Increase) in tax assets/liability provisions Net cash provided by operating activities
74,360 (11,125) (6,105) 1,011,335 (117,295) 7,742 (32,276) 65,263 779,714
25,732 10,774 (20,511) 306,952 (151,835) 260 34,115 2,640 9,587
NOTE 22: FAIR VALUE MEASUREMENT The Co-operative has no assets that are measured at fair value on a recurring basis after their initial recognition. The Cooperative does not subsequently measure any liabilities at fair value on a recurring basis and has no assets or liabilities that are measured at fair value on a non-recurring basis.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 23: FINANCIAL RISK
Note
2018 $
2017 $
The Co-operative's financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and payable. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows: Financial Assets Cash and cash equivalents Trade receivables Held to maturity investments Financial Liabilities Financial liabilities at amortised cost Trade and other payables Borrowings
5 6
889,918 271,712 38,663 1,200,293
139,314 346,072 1,049,998 1,535,384
13 14(a)
391,672 36,740 428,412
508,967 34,195 543,162
The Co-operative did not have any derivative instruments as at 30 June 2018.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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DIRECTORS’ DECLARATION
The Directors of the Estate Agents Co-operative Limited declare that in the directors’ opinion: a. The financial statements and notes thereto are in accordance with the requirements of the Corporations Act 2001, Co-operatives (Adoption of National Law) Act 2012, Co-operatives National Regulation, including compliance with Australian Accounting Standards - Reduced Disclosure Requirements and giving a true and fair view of the financial position and performance of the Co-operative. b. There are reasonable grounds to believe that the Co-operative will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the board.
______________________ E. J. Hanson
______________________ Anthony Chapman
Dated this 12th day of October 2018
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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INDEPENDENT AUDIT REPORT To the Members of Estate Agents Co-operative Limited, Opinion I have audited the financial report of Estate Agents Co-operative Limited (“the Entity”) which comprises the statement of financial position as at 30 June 2018, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the declaration by the board of Directors. In my opinion, the accompanying financial report of the Entity is in accordance Co-operatives (Adoption of National Law) Act 2012 including: a) giving a true and fair view of the Entity’s financial position as at 30 June 2018 and of its financial performance and cash flows for the year then ended; b) complying with Australian Accounting Standards – Reduced Disclosure Requirements and Co-operatives National. Basis for Opinion I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of my report. I am independent of the Entity in accordance with the auditor independence requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to my audit of the financial report in Australia. I have also fulfilled my other ethical responsibilities in accordance with the Code. I confirm that the independence declaration required by the Co-operatives (Adoption of National Law) Act 2012 and the Corporations Act 2001, which has been given to the board of Directors would be in the same terms if given as at the time of this auditor’s report. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Responsibilities of Management and Those Charged with Governance for the Financial Report Management is responsible for the preparation of the financial report that gives a true and fair view in accordance with the Australian Accounting Standards – Reduced Disclosure Requirements and the Co-operatives (Adoption of National Law) Act 2012 and for such internal control as management determines is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In preparing the financial report, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intend to liquidate the Entity or to cease operations, or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Entity’s financial reporting process.
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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Estate Agents Co-operative Limited Annual Report ABN 52 079 055 637
Auditor’s Responsibilities for the Audit of the Financial Report My objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also: - Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. - Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation - Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.
I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.
Ben Fock Registered Company Auditor Wollongong NSW Dated this 12th day of October 2018
Estate Agents Co-operative Limited Annual Report - ABN 52 079 055 637
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