Annual Report 2009 (VIC, TAS, SA, WA, NT) by The Salvation Army

I’ll Fight While trafficked women weep, as they do now, I’ll fight; While little children are orphaned by Aids, as they are now, I’ll fight; While men die because their government spends more on weapons Transforming Lives, Caringthan for people, Reforming healthcare, society, MakingI’llDisciple fight;

“You Shall Love Your Neighbour As Yourself”

The 2009 Annual Report

A look at The Salvation Army Australia Southern Territory year

I’ll Fight

While women weep, as they do now, I’ll fight; While little children go hungry, as they do now, I’ll fight; While men go to prison, in and out, in and out, as they do now, I’ll fight; While there is a drunkard left, While there is a poor lost girl upon the streets, While there remains one dark soul without the light of God, I’ll fight – I’ll fight to the very end!

General William Booth, Founder of The Salvation Army

While trafficked women weep, as they do now, I’ll fight; While little children are orphaned by Aids, as they are now, I’ll fight;

While men die because their government spends more on Transforming Lives, Caringweapons for people, Reforming than society, Makinghealthcare, Disciple

“You Shall Love Your Neighbour As Yourself”

The Salvation Army Mission, Vision and Values The Salvation Army is a worldwide Christian movement. In Australia we are known as one of the nation’s largest welfare providers. We are dedicated to helping Australians in crisis. Raised up by God our mission is to: • • • •

Transform lives Care for people Make disciples Reform society

Our vision is that we’re a growing, loving community of people dynamically living God’s mission in a broken world. This requires us to be people who are wholly devoted to God, obediently responsive to the Holy Spirit,

powerfully committed to each other, compassionately engaged with people in need, totally dedicated to reaching other people with the good news of Jesus Christ and leading them to faith. Our values: • • • • •

Human dignity Justice Hope Compassion Community 1

Southern Territory Leadership Executive

Commissioner James Knaggs, Territorial Commander

Commissioner Carolyn Knaggs, Territorial President of Women’s Ministries

Report from the Territorial Commander Commissioner James Knaggs

Colonel Raymond Finger, Chief Secretary

Lieut-Colonel Frank Daniels, Secretary for Personnel

Lieut-Colonel Ian Hamilton, Secretary for Programme

Major Denis Rowe, Assistant Chief Secretary

Lieut-Colonel Peter Walker, Secretary for Business Administration

The Salvation Army Melbourne Advisory Board

The Salvation Army appreciates the services provided by the following key business leaders within the corporate sector. They give valuable advice to the leadership of The Salvation Army and attend quarterly meetings. 2

Miss Elizabeth Alexander (Chairperson) Mr John Paterson Mr Peter Mahon Ms Angie Dickschen Mr Mark Pearce Mr Michael Coomer Mr Michael Johnston Commissioner James Knaggs Commissioner Carolyn Knaggs Colonel Raymond Finger Lieut-Colonel Peter Walker Lieut-Colonel Frank Daniels Lieut-Colonel Ian Hamilton Major Rodney Barnard Major Neil Venables Major Bram Cassidy (Minute Secretary)

Colonel Aylene Finger, Territorial Secretary of Women’s Ministries

I greet you in the name of our Lord Jesus Christ! As you read this annual report and identify your part in it, I thank you for your role in the mission of The Salvation Army in the Australia Southern Territory. We are grateful to God for so many who give and who serve, making a difference in the lives of those with whom The Salvation Army journeys. We see ourselves as part of belonging communities that embrace others, seeking and believing for God’s wholeness for every person. We build relationships and journey with people because we are present, visible and connected in our communities and in the world. In a year when the world has faced a debilitating financial climate, the Victorian bushfires at the start of 2009 created severe crisis for individuals and communities. Through the generosity of so many,

we have been part of bringing healing and hope. At a time when personal budgets have been stretched, the job market insecure and the global economic situation restrictive, Australians have given unprecedented support to the work of The Salvation Army. Recognising the escalating need for our work amongst the most disadvantaged and marginalised, ordinary people with compassionate hearts have generously helped us in reaching out to those most in need. This report highlights examples of just some of the services and programmes operating across the country: our frontline service during and beyond the bushfires; support of families facing crisis in Perth through our Community Support Centre; bringing hope to those enslaved by drug and alcohol addiction at our Towards Independence programme in Adelaide; dealing

with the trauma of domestic violence at Catherine Booth House in Darwin; and initiatives to grapple with impact of homelessness through work in Tasmania. Although an annual report is the opportunity to reflect on the numbers, and this is important, can I emphasise that at the foundation of all that we do is the conviction that people count. For the more than one million people served by The Salvation Army in Australia every year, your choice to join and support us in our mission makes you part of the transforming of lives. May God bless you, and all who serve in this great mission! Sincerely James Knaggs Commissioner Territorial Commander

The Salvation Army and the Australian Community

Report from the Territorial Social Programme Secretary

The Salvation Army and the Australian Community

Major Robyn Fernihough

Our core areas of work

I’ll Fight While trafficked women weep, as they do now, I’ll fight; While little children are orphaned by Aids, as they are now, I’ll fight;

There continues to be a strong need for The Salvation Army to support and advocate for Australians who are socially and economically excluded. This year, services in the Australia Southern Territory have experienced unprecedented demand for assistance with more than 5,000 people a week receiving support.

of whole communities and families. More than 4,000 survivors were assisted by The Salvation Army in bushfireaffected areas, with the recovery effort continuing today.

The Global Financial Crisis (GFC) has meant that new groups of people have called upon The Salvation Army for support. This includes people who have found themselves unemployed or under-employed, as well as people on low incomes who have struggled with the increased cost of living and housing pressures.

• 6 0% of people believed they were either worse off or a lot worse off because of the GFC; • 54% of people felt stressed about the future; and • 41% of people felt ‘pessimistic or very pessimistic’ about the next 12 months.

This was compounded in Victoria by the events of Black Saturday. The devastating fires resulted in the tragic loss of lives and the devastation

In May 2009, we surveyed 1,500 people accessing our Community Support Services regarding the personal impact of the GFC. This survey showed:

The Salvation Army is committed to stand alongside those people most vulnerable to the pressures and impacts of a changing environment by ensuring:

• I nnovative service delivery that provides practical responses to people in crisis; • A dvocacy with and on behalf of the people the organisation serves, to ensure a fair and just society; • P artnerships with a wide range of agencies and communities, which enhance opportunities for participation and support; • R esearch that enables effective evidence-based advocacy and service development; and • E ducation that enhances community understanding and empowers vulnerable people. By doing so, The Salvation Army continues to support the transformation of the lives and circumstances of vulnerable Australians. Major Robyn Fernihough Territorial Social Programme Secretary

While men die because their government spends more on weapons Transforming Lives, Caringthan for people, Reforming healthcare,

fight; society, MakingI’llDisciple

In the Australia Southern Territory, The Salvation Army provides more than 600 social programmes, each one specifically developed to meet the needs of the area it operates in. Through regular research and review we ensure these programmes continue to meet the needs of the communities it serves. We also look to develop new programmes and services to meet the changing needs of our community.

In the last 12 months we have assisted more than one million Australians in the form of: • • • • • • •

food vouchers and parcels clothing furniture toys blankets financial assistance drug, alcohol and gambling addictions counsel • homeless and domestic violence refuges • court and prison chaplain comfort and assistance

Our core areas of work The Salvation Army assists communities in many different ways; central areas of assistance include: • F amilies facing crisis • Drug, alcohol and gambling addiction • Family/domestic violence • Homelessness • Emergency Services

The Salvation Army and the Australian Community

Families facing crisis

Drug, alcohol and gambling addictions

Case study: Perth Community Support Centre

“

Across the territory, The Salvation Army assists thousands of individuals and families who come to our Community Support Service centres. Some are experiencing an intermittent crisis such as the loss of a job, death of a family member or family breakdown. In cases like this we provide a practical response to meet immediate needs. Often these people have the resources to remain independent but need a helping hand to get through a rough patch. 6

For others who are experiencing a chronic state of crisis we provide long-term intensive support, looking to identify often-complex issues leading into crisis. This usually requires connecting people to a wide range of professional services.

From more than 120 community support centres, we provide assistance in a variety of ways.

Regardless of whether people need our help for a day, a week or a year, we are committed to providing assistance. From more than 120 community support centres, we provide assistance in a variety of ways. For example, food vouchers or food, assistance with utility bills, education expenses and emotional support. Case study: Perth Community Support Centre More than 30 people a day go to the Perth Community Support Centre for emergency relief and assistance in times of crisis. For many people the rising costs of fuel, food and living expenses are causing great financial strain and they need some assistance to help them get by.

“

Case Study: Towards Independence Bridge Programme – South Australia

This centre also supports migrants who are new to the area and may be finding it difficult to settle in and have no idea where to go for help. It is important to help people to feel comfortable in their new home and to assist them to build a support network around them. Accommodation is a significant issue in Perth. Each day at least five people go to the centre looking for crisis accommodation. With an increase in families living in caravan parks and sleeping in cars, and other people looking for doorways that provide shelter at night, the demand for crisis accommodation outstrips supply.

Assisting people to become free of their addiction is a core part of the work of The Salvation Army. Whether it is an addiction to drugs, alcohol and other substances, or an addiction to gambling, we have trained teams across the territory to assist people to transform their life. More than 500 Australians come to The Salvation Army each week for assistance to overcome their addictions. Depending on their individual circumstances they may spend time at one of our withdrawal units and then stay for a number of weeks at a residential rehabilitation centre. In other cases having access to dedicated counselling and support groups may be the best way for them to overcome their addiction.

Case Study: Towards Independence Bridge Programme – South Australia The Towards Independence Bridge Programme in Adelaide offers community based alcohol and other drug counselling and support services for people in their home environments. This service is open to men and women who have been assessed as having an alcohol and/or drug problem who desire assistance in overcoming substance abuse issues. Towards Independence provides individual counselling and advocacy, practical support including helping to develop money and time management skills, advice on relationship issues, and personal development support to help people to develop their own goals and build self-esteem.

Each year the Towards Independence Bridge Programme in South Australia assists nearly 250 people to face and overcome their addiction. More broadly, the total services offered through Towards Independence, which includes supported accommodation, a sobering up unit, stabilisation facilities as well as the Bridge Programme, assists more than 10,000 people each year.

The Salvation Army and the Australian Community

Family/domestic violence

Homelessness

Case study: Catherine Booth House – Northern Territory

“

Domestic violence is a serious issue in Australia. According to a report from the Australian Government, 1 in 17 women experience domestic violence each year. Domestic violence is increasing in Australia with more women reporting cases of domestic abuse compared to 10 years ago. Domestic violence causes long-term damage to those involved and is a key contributor to women becoming homeless.

The Salvation Army provides 500 victims of domestic abuse with refuge accommodation every week.

The Salvation Army provides 500 victims of domestic abuse with refuge accommodation every week. Through more than 20 Salvation Army Women’s and Family Violence Crisis Service networks, we offer protected crisis housing in secure and confidential areas, with 24 hour, 7 day a week support. We are dedicated to providing support, guidance and security to sufferers of domestic and family violence. Case Study: Catherine Booth House – Northern Territory

Catherine Booth House, in Darwin, is a women’s crisis centre which accommodates around 400 women a year as well as providing non-residential support to other women on a daily basis. The majority of women coming to Catherine Booth House are fleeing a domestic violence situation and

“

Case Study: Salvation Army Support and Housing (SASH) – Tasmania

are in need of accommodation as well as comprehensive support. The location of this centre is confidential to protect the residents. Women coming to Catherine Booth House have access to domestic violence counselling, support in dealing with legal processes and assistance with accessing crisis payments. Through an indigenous support worker and outreach team, Catherine Booth House actively engages with the most marginalised and disadvantaged homeless women in the community. It is expected that, with Federal Government funding, The Salvation Army will soon begin development of a new purposebuilt facility to replace the present Catherine Booth House.

For more than 125 years The Salvation Army has extended care to homeless people and those at risk of becoming homeless. The provision of crisis accommodation, transitional accommodation and long-term housing are critical parts of the support provided. In addition to accommodation, Salvation Army outreach teams are working with homeless people who are living on the streets. By providing blankets for warmth, food, and warm drinks, teams develop relationships with each person. Through building relationships we are better able to assist the individual by having an understanding of their complex issues and the sort of support they need.

At Salvation Army centres across the country regular meals are also provided, ensuring that people experiencing homelessness have access to nutritious meals as well as being aware of the forms of assistance they can access at our centres. Case Study: Salvation Army Support and Housing (SASH) – Tasmania Salvation Army Support and Housing (SASH) is a transitional service for single men of all ages, to help them move from a crisis accommodation into longterm housing. Men come to SASH from other Salvation Army services, crisis accommodation and the prison system to access accommodation support. The men coming to SASH are often dealing with other issues like addiction, family conflict

and mental health problems. The team at SASH work with each individual to address their high-level complex issues and assist them to find sustainable long-term accommodation. Each week SASH assists nearly 70 men, with help ranging from finding them somewhere to live, providing them with support through legal processes and helping them to adjust to living in their own accommodation. Clients are also given the opportunity to learn how to develop a personal budget, cooking healthy and economical meals, setting up bank accounts and developing literacy skills.

â&#x20AC;&#x153;

To date, The Salvation Army has spent more than $8.4 million on bushfire relief and recovery work.

â&#x20AC;&#x153;

Emergency Services

The Salvation Army Australia Southern Territory Emergency Services

The Salvation Army has a long history of assisting communities dealing with natural and man-made disasters. Over the years The Salvation Army has been present at major accidents, disasters and incidents across the nation. Emergency Services teams were on site at the collapse of the Tasman Bridge in Tasmania, Cyclone Tracey in Darwin and the Ash Wednesday bushfires in Victoria, serving meals and providing support to emergency response teams and communities affected. 10

In the past year Salvation Army Emergency Services teams in the Southern Territory have attended 270 incidents and have served more than 100,000 meals, provided blankets and clothing and emotional support to those involved.

The Salvation Army Australia Southern Territory Emergency Services

Case Study: Response to Victorian Bushfires

On the evening of Friday, 6 February, 2009, Victorians were preparing for one of the hottest days on record, with temperatures expected to soar to 47º. Warnings broadcast across the state were stressing the importance of home owners having a fire plan and being vigilant, spotting and reporting potential fires. Even with these warnings no one could have foreseen the tragic devastation that was to come the next day.

The bushfires that broke out on Saturday afternoon caused enormous tragedy, loss and destruction. Sadly, 173 people lost their lives and more than 5,000 people were left without their homes. More than 2,000 homes were destroyed and 78 townships affected by fire.

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The Salvation Army was on site at more than 15 bushfire relief centres

Before the news of the bushfires came through, Salvation Army Emergency Services Teams had already been mobilised across Victoria. In the beginning The Salvation Army was on site at more than 15 bushfire relief centres including Yarra Glen, Healesville, Wallan, Bendigo, Warragul and Traralgon. Emergency Services crews provided more than 40,000 meals during the bushfire response period and importantly provided chaplaincy support to emergency response teams who were returning from fighting the fires. The people who fought the fires experienced extreme trauma from the horrific sights they encountered while trying to save lives. It was vital for Salvation Army chaplains to stand beside these teams, giving them someone to talk to.

In addition to supporting those fighting the fires, The Salvation Army also quickly set up teams in relief centres and at local Salvation Army centres to assist people affected by the fires. Providing immediate financial relief to affected people meant they could purchase necessities without delay. From relief centres The Salvation Army also provided material aid and offered clothing, food and other goods to people affected.

The Salvation Army lost two properties in the bushfires; thankfully no lives were lost. The Overdale Rural Rehabilitation Centre at Kilmore was lost, this facility having provided vital rehabilitation services to hundreds of Victorians since its establishment six years ago. The Salvation Army’s Camp Bambara at Mount Disappointment has provide a place for hundreds of troubled youth to get away from their urban environment for many years. Sadly, this camp was completely destroyed in the Wandong fire. Today, The Salvation Army is still heavily involved in supporting communities as they re-build. Each week around 500 people come into our bushfire recovery centres for assistance. We are providing material aid and financial support from

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our centres like Whittlesea, Healesville, Traralgon, Wodonga, Seymour and Flowerdale. The Salvation Army remains responsive to the changing needs of the communities. Through the provision of practical and emotional support, we will continue to support bushfire-affected communities through the ongoing recovery and rebuilding phases.

To date, The Salvation Army has spent more than $8.4 million on bushfire relief and recovery work. 13

The Salvation Army Australia Southern Territory

Advocacy for Marginalised Australians

Violence Against Women During Homelessness

I’ll Fight

“

While trafficked women weep, as they do now, I’ll fight;

...we are ensuring the voices of the people we serve are heard.

While little children are orphaned by Aids, as they are now, I’ll fight;

“

Somewhere Safe to Call Home

While men die because their government spends more on weapons Transforming Lives, Caringthan for people, Reforming healthcare,

fight; society, MakingI’llDisciple

As part of our service to the community, The Salvation Army actively advocates on behalf of marginalised and disadvantaged people and groups. 14

It is important for the public, government and corporate groups to understand the often complex needs of the people who come to The Salvation Army for assistance, as well understanding ways these needs can be addressed.

Through research, working with individuals and working with other social welfare groups, we are ensuring the voices of the people we serve are heard.

The Salvation Army St Kilda Crisis Services funded the Somewhere Safe to Call Home study to examine the prevalence of violence against homeless women. In partnership with RMIT University, this research involved talking to homeless women accessing services at the Crisis Centre to understand the incidence of violence in their lives. All the women interviewed described the violence and intimidation that occurred during homelessness. Some of the common experiences

described included sexual violence and intimidation perpetrated by male co-residents, and physical assaults and harassment perpetrated by both male and female co-residents. Key recommendations developed from this research include increasing the availability of women’s crisis and transitional accommodation, addressing the quantity and quality of public housing, increasing long-term support, developing early intervention responses and working with police to

provide improved responses to incidences of violence against homeless women. Violence is known to be the key contributor to a woman becoming homeless. Through this research it is clear that homeless women living in boarding houses, public housing, crisis accommodation and sleeping rough are more exposed to violence in various forms, and so it is important we develop ways to help women who are homeless as they are exposed to a greater risk of violence.

Does Camping Count Children’s Experiences of Homelessness

Does Camping Count?

I’ll Fight

Children’s Experiences of Homelessness

09 “

While trafficked women weep, as they do now, I’ll fight;

This unique report emphasises the negative social, health and educational effects of homelessness on children. The Salvation Army Crossroads Network commissioned this research in partnership with the Council to Homeless Persons, Family Access Network and Melbourne Citymission; it was conducted by the University of Melbourne.

Through speaking with children and asking them to illustrate certain aspects of their lives this research was able to uncover the extreme impacts being homeless has on a child as well as develop an understanding of the ways we can address this issue.

members live, is comfortable and safe. It is vital that we provide families and children experiencing homelessness with appropriate, safe and affordable accommodation where they can remain connected to their extended family, friends, community and school.

Families experiencing homelessness are generally subject to multiple moves. Children participating in this research reported having moved between three and eleven times, which may have included hotels or motels, other varieties of emergency accommodation, refuges, sleeping rough or in cars, rooming or boarding houses, and caravan parks.

The report outlines a set of key recommendations; primarily that no family should experience eviction or be asked to move on, and that greater coordination across governments and agencies is needed to assist stability, reduce impact and harm and, ultimately reduce the number of homeless people. It is clear that finding any house is not a solution, we need to provide children experiencing homelessness with a home.

This report offers an understanding of what home means for these children. Home is a place where significant family

While men die because their government spends more on weapons Transforming Lives, Caringthan for people, Reforming healthcare,

“You Shall Love Your Neighbour As Yourself”

fight; society, MakingI’llDisciple

“

It is clear that finding any house is not a solution, we need to provide children experiencing homelessness with a home.

“

The Does Camping Count? report highlights children’s experience of homelessness and makes significant recommendations to reduce the impact of homelessness on children.

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Families experiencing homelessness are generally subject to multiple moves.

While little children are orphaned by Aids, as they are now, I’ll fight;

The Salvation Army Australia Southern Territory Reports

Australia Southern Territory Finance Summary

Major Neil Venables Territorial Public Relations Secretary

Sources of Income

Social Centre Expenditure

2009

2008

Government Income

46%

49%

Aged Care & Disability Services

Trading Revenue

23%

18%

13%

Investment Income

Legacies

Miscellaneous

Residents Contributions Red Shield Appeal/ Other Donations

2009

2008

Employment, Education and Training 20%

24%

Salvos Stores

23%

20%

Homelessness & Domestic Violence

14%

13%

Individual & Family Support

11%

10%

Children & young people at risk

12%

Addictions & substance abuse

Administration & research

Net Allocations to capital funds

100%

Red Shield Appeal Finance Summary

2009 was a difficult year for so many Australians. We have witnessed the impact of the global financial crisis on members of our community who were already experiencing financial difficulties. The effects of rising unemployment, housing pressure and increased costs of living has brought more people to our door for assistance this year. Although economic pressures appear to be easing, there are still too many Australians finding it hard to make ends meet. We have assisted new emerging groups, like homebuyers and low-income earners, who we have not traditionally been in need of our support.

In July 2009 we asked 1,500 people who came to our Community Support Centres, during a defined period, how the global economic crisis was affecting them. This survey showed that 48% of our clients felt depressed about their situation, 53% had cut down on basis necessities and 22% had experienced new conflict in their families because of the worsening economic conditions. Our services are still in great demand, with people coming to us every day in need of accommodation, food, clothing, addiction services, financial aid, chaplaincy and employment. This demand is reflected in our expenditure, which was more than $315 million in the past year compared to $271 million in 2007/08.

These pages illustrate how The Salvation Army devotes its time, resources and donations to helping people in need. The tables show how public donations and other income directly supports disadvantaged people at every level.

This year in the Australia Southern Territory a total of $36 million was raised through the Red Shield Appeal. These funds are vital to the daily operation of so many of our community support services; without this amazing support we wouldnâ&#x20AC;&#x2122;t be able to continue to reach out to those in need. The generosity of the Australian public has again been incredible; to all our donors, volunteer collectors, corporate partners and supporters I say thank you. On behalf of the thousands of people who come to us for help each day, thank you for making our work possible. This year has been a challenging one; financial pressures, severe natural disasters, increasing unemployment and other factors have impacted on the community as a whole. Our own operations are also subject to the same increased costs of operations as other organisations, meaning we need to look to the public for their commitment to support our work. Red Shield Appeal Results Victoria South Australia Western Australia Tasmania Northern Territory Total Southern Territory

Amongst all the uncertainly we have seen the unwavering devotion of our generous supporters. Witnessing the unity of so many individuals and groups coming together to support people affected by the Victorian Bushfires showed the true strength of the spirit of Australians. Even though some people were finding life difficult they still managed to find something to give to communities devastated by the worst bushfires this country has seen. In total, Australians donated almost $26 million to The Salvation Armyâ&#x20AC;&#x2122;s Victorian Bushfire Appeal. This amazing generosity was again evident in our Red Shield Appeal results, it is fantastic to see fellow Australians standing together and supporting those in need. It is also important that we acknowledge the committed leadership of our advisory boards and many others, who work hard throughout the year to ensure The Salvation Army can continue to 2009

2008

Difference

20,759,000 4,766,000 7,726,000 2,092,000 465,000 35,808,000

20,508,000 4,205,000 7,077,000 1,990,000 353,000 34,133,000

1.22% 13.34% 9.17% 5.13% 31.73% 4.9%

35,070,000

19,321,000

81.51%

1,682,000

2,950,000

-42.98%

72,560,000

56,404,000

28.64%

Wills and Bequests Southern Territory Other/miscellaneous donations Southern Territory Total Fundraising results Southern Territory

Fundraising costs: 13.4 cents for every dollar raised

meet the needs of the community. This dedication is vital to the success of the Red Shield Appeal and paramount to our ability to open our doors to people who come to us for help. Volunteers, in all capacities, make our diverse work possible. With the support of thousands of volunteers we are able to operate with greater cost efficiency, allowing us to spend more resources on delivering services and programmes to people in need. The strength of our volunteer contingent is a tremendous advantage when trying to meet the broad needs of the community. I would like to take this opportunity to thank everyone who contributed to the success of the Red Shield Appeal. The loyalty of thousands of our supporters gives us the capacity to transform lives.

* No fundraising costs have been applied to The Salvation Army Victorian Bushfire Appeal. All donations made to The Salvation Army Victorian Bushfire Appeal have been and will continue to be used for bushfire recovery and relief work, donations to this appeal total $25.6 million.

Service highlights from around the Territory Reports

Service highlights from around the Territory Northern Territory – Katherine Outreach Ministry South Australia – Children’s Camps

Western Australia – Crossroads West Victoria – The Couch Tasmania – Launceston Needle and Syringe Programme

Northern Territory – Katherine Outreach Ministry Katherine Outreach Ministry has been running for three years and has grown from being open a couple of days a week to being a full-time operation. Members of the community can access emergency relief in the form of food parcels, vouchers for utility bills, vouchers for Salvos Stores and housing support. There is significant demand for services in the area with Katherine having the highest percentage of homeless people per capita. 20

Working with other organisations in the area, The Salvation Army has recently opened a soup kitchen, which, during busy times, provides more than 80 meals a day. The team at Katherine Outreach has also worked on developing solid

Victoria – The Couch The Couch, opened this year, is an international student centre located at 69 Bourke Street in Melbourne. It was created so that international students had a safe and free space to socialise, relax, rest, study and importantly seek information and assistance.

networks with other agencies to help provide comprehensive care to the many local people in need. Katherine Outreach Ministry also provides chaplaincy support to members of the community and attends local emergency incidents to provide support to response groups. South Australia – Children’s Camps Twice a year The Salvation Army in South Australia offers a camp for disadvantaged children. Each January and July, with assistance from Special Children’s Christmas Parties and Morgan Media, a group of 60 children get the opportunity to experience a four-day camp with a group of volunteers and experienced leaders. Children who attend these camps may come from families

who could not afford to take a holiday or where parents are very unwell and not able to take their children out. These camps are a fantastic opportunity to give children something to look forward to on school holidays as well as something to share when they return to school. Groups attended camp at Victor Harbour where they go bowling, visit the adventure park and participate in craft groups. These memorable experiences also help children who are some times isolated to connect to other children, develop selfesteem and also feel a sense of belonging. Children’s camps in South Australia have been running for more than 10 years with the assistance of many volunteers who often give up their annual leave to attend camp.

Western Australia – Crossroads West

Tasmania – Launceston Needle and Syringe Programme

Crossroads West is a Salvation Army response to youth homelessness in Western Australia. Through the provision of five different programmes, Crossroads West supports children and young adults who have not got a suitable, safe and permanent place to call home.

Using a harm minimisation approach, the needle and syringe programme ensures that intravenous drug users have access to new and safe needles and injecting equipment.

Crossroads West also looks to create happy memories for residents. The annual celebration dinner offers an opportunity for the team to take time to celebrate and recognise the effort and change seen in individual clients. For the young people who are recognised this is often the first time they have been acknowledged and celebrated in their life. For around 200 children and young adults each year who call a Crossroads West house their home, the Crossroads team is the closest thing to a family they have.

When the programme began approximately three years ago it was predicted that the service would be used roughly 100 times each month. Currently the service is being used more than 500 times a month, with many clients beginning rehabilitation because of the care provided. This service not only ensures that people are using clean needles but also gives people the opportunity to enquire about rehabilitation services, health issues and ongoing emotional support.

After coming into contact with many international students experiencing hardship and separated from their support network, the team at the Life Centre at 69 Bourke Street developed The Couch project specifically tailored to meet the needs of these students who may have difficulties due to language barriers, cultural beliefs, and presenting with specific needs. Here students can access support services and information on a range of issues including housing, employment, counselling, student services and legal aid. Since opening in July, The Couch has seen more than 1,000 students come to this centre for support, assistance and interaction.

The Salvation Army Australia Southern Territory Reports

Capital/Infrastructure Updates

Salvos Stores

09 22

• R efurbishment of 69 Bourke Street, Melbourne, Victoria • C onstruction of a new St Kilda Crisis Accommodation Centre, Victoria • D evelopment of facilities at the Ingle Farm centre, South Australia • R e-development of Lentara to provide a new men’s crisis accommodation centre in Perth, Western Australia

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Increasing the capacity of current services or developing current facilities to better meet the needs of the community.

Salvos Stores experienced another outstanding year. Its contribution to the The Salvation Army’s Social Fund was $12.5 million, more than $1million in excess of budget. Additionally, $2.6 million worth of goods were provided free to people seeking support from The Salvation Army. Many of our stores received a much-needed refurbishment and capital investment including new state of the art software for our call centre. The installation of our online communications link is now complete and fully operational.

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Across the territory, The Salvation Army is undertaking new projects to provide new services, increase the capacity of current services or developing current facilities to better meet the needs of the community. Key capital and infrastructure project include:

Salvos Stores took responsibility for handling all material aid donated to The Salvation Army for use by the Victorian bushfire survivors and despite our resources being stretched to the limit we still managed to keep the rest of the business operational. Despite the massive corporate contribution to the Victorian Bushfire Appeal, Salvos Stores continues to receive wonderful support from Corporate Australia in donating new goods to supplement our normal donated stock.

During the course of the year we opened 17 new and relocated stores across the Territory. Once again our success would not have been possible without our wonderful volunteers and dedicated staff. Allen Dewhirst Chief Executive Officer Salvos Stores

The Salvation Army Australia Southern Territory Reports

Employment Plus

National Editorial Department

Major John Simmonds Chief Executive Officer

Captain Mal Davies National Editor-in-Chief

The Salvation Army Employment Plus (TSAEP) has experienced another year of challenge and reward amidst the upheaval caused by the financial crisis.

In a climate of climbing unemployment and economic strain it has been an important time to be meeting the needs of jobseekers and employers, and we have been privileged to help more than 32,000 people find work. Our staff in Queensland, New South Wales, Victoria, Tasmania, South Australia and Western Australia provided assistance to almost 200,000 people this year. This assistance included training, support, liaising with employers to find vacancies, placing jobseekers into those jobs, and supporting these new employees during their first few months at work. Our services have been tailored to the needs of each community,

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whether the work was undertaken in remote Aboriginal communities or in the complex labour markets of large cities. We have continued to place an emphasis on working closely with businesses and industries, developing innovative projects and programmes to match jobseekers’ skills to areas of skills shortage and career opportunity. It has also been a year of change within the employment services industry, as the Australian Government’s Job Network system was replaced by a new model, Job Services Australia. For TSAEP this has meant a change from 80 full-time offices to 67 full time offices and 48 visiting services, as well as great internal change.

We look forward to the coming 12 months as we adapt and evolve to help “pierce the darkness of unemployment to let the light shine through”.

For more than 125 years, The Salvation Army in Australia has used the written word and the publishing enterprise to reach the general public with its message of faith, hope and love. The first locally produced War Cry was released in June 1883, and it has long established itself as Australia’s most popular Christian weekly publication. The War Cry magazine is distributed nationwide each week and contains a mix of articles, columns, reviews, interviews, puzzles and news items. It serves as a vital resource for Salvation Army representatives to distribute to the public and works as a means of informing people of the work of the Salvos, introducing people to Christian concepts, and challenging people on aspects of morality,

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For more than 125 years, The Salvation Army in Australia has used the written word and the publishing enterprise to reach the general public with its message of faith, hope and love.

community and faith. The Salvation Army also produce a fortnightly magazine called On Fire; this acts as an ‘internal’ magazine for Salvo members, staff, volunteers and supporters and keeps the territory up to date with the latest projects and events.

Kidzone is our third magazine and is released nationally and weekly. Aimed at primaryschool aged children, Kidzone is incredibly popular with its mix of fun articles, competitions, puzzles and activities. No other church publishing in Australia produces anything like Kidzone; it is unique in Australian Christian publishing. Come Christmas, the national editorial department releases a range of Christmas products including calendars, kids’

sticker sheets, special magazines and a pocket diary. Each year we distribute approximately 300,000 items of Christmas stock around the country. The national editorial department also works closely with the territorial literary department, responsible for releasing books under the publishing banner of ‘Salvo Publishing’. With 15 new titles released in the past two years, Salvo Publishing is currently the most prolific book publisher of any Salvation Army territory in the world. The Australia Southern Territory of The Salvation Army - producing quality magazines and books that help to serve and fulfil our mission.

The Salvation Army Australia Southern Territory Thank you

Thank you Victoria

Loyalty Pacific Pty Ltd

The Orloff Family Charitable Trust

Jim Kidd Sports

A A Holdings Pty Ltd

Magistrates’ Court of Victoria

Katana Asset Management

Andyinc Foundation Limited

Major Furnace International P/L

The Sarah & Baillieu Myer Foundation

AON Risk Services Australia Limited

Mallesons Stephen Jaques

Tieco International (Aust) Pty Ltd

Kleenheat Gas

Australian Drilling Associates Pty Ltd

McConnell Dowell Corporation Ltd

AXA Asia Pacific Holdings Ltd

Medibank

AXA Australia

Melbourne Airport – Management

Bell Charitable Trust

Minter Ellison Lawyers

BlueScope Steel Limited

Myer Community Fund

CAF Community Fund

Myshare Marketing

Coles Group Limited

Newcrest Mining Limited

South Australia

Collier Charitable Fund

Optus Giving

Arrowcrest Group

Collingham - Bell Partners

Origin Energy

Arts Project Australia Pty Ltd

Community Enterprise Foundation

Petrel Phil Pty Ltd

ATCO Power Australia

CSIRO

Pitcher Partners (Payroll)

Australian Executor Trustees Limited

Devine Homes

Portland House Grove

Dibbs & Massie Foundation

BankSA Staff Charitable Fund

Reece Pty Ltd

Drakensberg Trust

Bendigo & Adelaide Banks Ltd

Regional One Credit Union

Elgas Limited

CEDA

Rio Tinto Limited

Equity Trustees

Channel 7

Ritchies Stores Pty Ltd

Estate O C Hearne

Christmas Party for Special Children

Robert M Jack Trust

Faith Miller Family Trust

Silvant Nominees Pty Ltd

Community Benefit SA

Flaming Rhino

Smith & Smith Manufacturing

Ford Motor Co of Aust Ltd

Sony Foundation

Ford Motor Company

Swan Plumbing Plus

Flexichem Pty Ltd

G P Smith Equipment (Vic) Pty Ltd

Telstra

Graeme Johnson Pty Ltd

Geelong Community Foundation

IGA

George W Vowell Foundation Ltd

Medallion Homes

The Bob & Emma House Foundation

Goldman Sachs JBWere

Medibank Private

The Cassidy Bequest Gift Fund

Gourlay Nominees Pty Ltd

Messenger Community News

The Danks Trust

Grenet Foundation Ltd

National Dental Foundation

The Decor Corporation Pty Ltd

Hazeldene’s Chicken Farm Pty Ltd

Perpetual Ltd

The Garry White Foundation

Hugh Williamson Foundation

Radio 5AA

IAG Insurance Australia Group

The General Fiduciary Co Ltd Client of

Throughout the year The Salvation Army receives enormous support from individuals, businesses, trusts and foundations that believe in our ability to provide relief and resolution to Australians in crisis. Without this assistance many of our programmes would cease operation. It’s here that we wish to acknowledge and thank our generous supporters; we cannot express our gratitude enough.

Diamond Photographics Ernst & Young

Mary Little Trust Foundation

The Andrews Foundation

Urban Seed Westpac Banking Corporation William Angliss Victoria Charitable Fund Winifred & John Webster Charitable Trust Wood Family Foundation

Gresham Partners Ltd

The Calvet-Jones Foundations The Myer Foundation

Alcock Brown-Neaves Foundation

Temco Distributors

Westpac

AMCHAM

The Richardson Foundation

Apache Energy Ltd

The Sunday Times

Austal

The Stan Perron Charitable Trust

Austereo

The Wearne Charitable Trust

Backstop Foundation

The West Australian Newspapers Ltd

Bedding Superstore Bendigo Bank Budget Rent-A-Car Building Belonging Bunnings Group Limited City of Bayswater Coco’s Restaurant Community Newspaper Group Compass Foundation Courier Australia Dale Alcock Homes DVG Automotive Group Flinders Charitable Foundation Fruit Boost Fuel Creative HBOSA Foundation

Innovative Hair Loss Solutions

Jack Brockhoff Foundation Ltd

The Kingdom Support Trust

Jancic Pty Ltd

Savings & Loans Credit Union

JH & HM Bennett Pty Ltd

The Marian & E H Flack Trust

Jayleaf Holdings Pty Ltd

SGIC

John T Reid Charitable Trusts

Task Forklifts Pty Ltd

Kilwinning Nominees Pty Ltd

The Michael and Andrew Buxton Foundation

Van Vietnamese Restaurant

Kimo Pty Ltd

Westpac Banking Corporation

Kmart Australia Pty Ltd

The Myer Foundation

Printforce

AXA

Swan Transit Operations Pty Ltd

Advertising Federation of Australia

The Kimberley Foundation

The Miller Foundation Limited

PEK Nominees Pty Ltd

Harold Mitchell Foundation

Scanlon Foundation

IKEA

SA State Government Department of Youth

Mining and Civil Australia Pty Ltd

Australian Drilling Associates

SGIO

The James Charitable Trust

SA State Government

Medibank Private

Ramjet Concrete WA Pty Ltd

Western Australia

Isabel & John Gilbertson CharitableTrust

Inner Range Pty Ltd

McVay Foundation

Annie & John Paterson Foundation

Jack & Robert Smorgon Families Foundation

The Jack & Ethel Goldin Foundation

Incitec Pivot Ltd

Rundle Mall Management

Mallesons Stephens Jacques

Professional Business Equipment

HS Sales and Contracting Pty Ltd

Rotary International

Kimbar Nominees Pty Ltd

Thank you to the groups that supported our capital fundraising campaign:

IGA Stores

Total Telephone WA Business News Wonteco Pty Ltd Wythenshawe Foundation Tasmania ABC Giving Tree Allport Trust Aurora Energy Budget Rent a Car Colin Bisdee Trust AG Cowley Trust Bruce Wall Estate Grote Reber Foundation Hills Transplants Pty Ltd Motorcycle Riders Association Namarragon Pty Ltd State Government of Tasmania Tasmanian Community Fund The Examiner Vodafone Foundation

Leave a legacy of hope Include The Salvation Army in your Will and you’ll provide shelter for thousands of homeless and abused men, women and children. For further information about how a bequest in your Will can turn someone’s life around please contact us. The Director Wills and Bequests The Salvation Army Po Box 9888 In your capital city Call 1800 337 082 Or visit us at www.salvationarmy.org. au/wills

FINANCIAL REPORT THE SALVATION ARMY AUSTRALIA Southern Territory Social Fund for the Year Ended 30 June 2009

Contents

Financial Report The Salvation Army Australia

Trustees’ Report

Income Statement

Balance Sheet

Statement of Cash Flows

Statement of Changes in Capital Funds

Notes to the Financial Statements

Trustees’ Declaration

Independent Audit Report

Southern Territory Social Fund for the Year Ended 30 June 2009

The Salvation Army Australia Southern Territory WILLIAM BOOTH – Founder SHAW CLIFTON – General JAMES M KNAGGS - Territorial Commander 28

International Headquarters 101 Queen Victoria Street, London, EC4P 4EP Australia Southern Territory Headquarters 95-99 Railway Road, Blackburn 3130 PO Box 479, Blackburn 3130 Telephone (03) 8878 4500 Fax (03) 8878 4603 www.salvationarmy.org.au

The Salvation Army Australia Southern Territory Social Fund TRUSTEES’ REPORT

The Trustees of The Salvation Army Australia Southern Territory have pleasure in submitting the following report, together with the financial statements, on the operations of the Social Fund for the financial year ended 30 June 2009, and the independent audit report thereon. 1. The Salvation Army

The Salvation Army Australia Southern Territory Social Fund TRUSTEES’ REPORT

4. Events Subsequent to Reporting Date In the opinion of the Trustees, since 30 June 2009, there have been no transactions or events of an unusual nature likely to affect significantly the operations of The Salvation Army Australia Southern Territory Social Fund, the results of those operations, or the state of affairs of the entity in future financial years.

The Salvation Army is an evangelical branch of the universal Christian Church. Its message is based on the Bible and its ministry motivated by love for God. This mission is both spiritual and practical, encompassing the preaching of the gospel of Jesus Christ and alleviating human suffering and distress without discrimination.

5. Likely Developments

The Salvation Army exists in 116 countries around the world. The Salvation Army is raised up by God for the work of:

6. Environmental Issues

• • • •

Transforming lives Caring for people Making disciples Reforming society

This is manifested in the various expressions of Salvation Army work. The two key distinctions in Salvation Army operations are its General Work (this is The Salvation Army’s church work) and its Social Work. 2. Principal Activities During the year, the principal continuing activities of The Salvation Army Australia Southern Territory Social Fund comprised of: • • • • • • •

Aged care and disability services Employment, education and training services Homelessness and domestic violence programmes Individual and family support programmes Children and young people at risk programmes Addictions and substance abuse programmes Salvos Stores

No changes in the nature of these activities occurred during the financial year. 3. Review of Operations

In the opinion of the Trustees, there are no likely changes in the operations of The Salvation Army Australia Southern Territory that will adversely affect the results of the Social Fund in subsequent financial years.

The operations of The Salvation Army Australia Southern Territory are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory. 7. Insurance of Officers The Salvation Army has, during the financial year, paid an insurance premium in respect of an insurance policy for the benefit of the Trustees and Officers of The Salvation Army. The insurance is in the normal course of business and grants indemnity for liabilities permitted to be indemnified by the Salvation Army under Section 199 of the Corporations Act 2001. In accordance with commercial practice, the insurance policy prohibits disclosure of the terms of the policy including the nature of the liability insured against and the amount of the premium. 8. Auditor KPMG continues as The Salvation Army’s auditor at the date of this report. 9. Corporate Governance The Salvation Army endorses the Principles of Good Corporate Governance and Best Practice Recommendations developed by the Australian Securities Exchange (ASX) in 2003 and revised in 2007. The Salvation Army, being a not-for-profit organisation, is not required to include a statement of the main corporate governance practices, which is required of listed corporations. However, it is considered most appropriate by the Trustees to ensure best practice in reporting by including corporate governance practices in this Trustees’ report. 9.1. Governance and Oversight

In 2009, The Salvation Army Australia Southern Territory Social Fund’s operating result was a surplus after allocations of $1,922,000 (2008: deficit after allocations of $653,000). Total revenues were $341,705,000 (2008: $293,044,000), whilst total operating expenses were $315,393,000 (2008: $271,032,000). In line with The Salvation Army’s policies and compliance with donors’ restrictions on the use of certain funds, net transfers of $24,390,000 (2008: $22,665,000) were made to capital projects or set aside in various reserves for future specific purposes. The significant impacts on the 2009 result are: • The below budget performance of investments as a result of the Global Financial Crisis • The reduction in the fair value of investments recognised through the recording of impairment expense

The Salvation Army has its international headquarters in London. At the head of the international Salvation Army is the General of The Salvation Army, who is elected at the High Council and is based in London. The Salvation Army in Australia has been operating in Australia since 1880. For the business purposes of its Australia Southern Territory, it is incorporated by the following Acts of Parliament: • • • • •

The Salvation Army (Victoria) Property Trust Act 1930 The Salvation Army (South Australia) Property Trust Act 1931 The Salvation Army (Western Australia) Property Trust Act 1931 The Salvation Army (Tasmania) Property Trust Act 1930 The Salvation Army (Northern Territory) Property Trust Act 2002

The Salvation Army Australia Southern Territory Social Fund TRUSTEES’ REPORT

The Territorial Commander acts as the representative of the General in The Salvation Army Australia Southern Territory. The Territorial Commander receives a Commission and acknowledges this by signing a bond under legal seal. This document is legally binding upon the parties concerned, and creates a legal relationship between the Territorial Commander and the General of The Salvation Army. From time to time, further particulars affecting that relationship may be set down in a power of attorney issued from the General to the Territorial Commander.

The Salvation Army Australia Southern Territory Social Fund TRUSTEES’ REPORT

The number of Trustees’ meetings and the number of meetings attended by each of the Trustees during the financial year are: Trustee

9.2. Trustees The Salvation Army acts as a trustee of the gifts, grants and contributions received from individuals and bodies (private and governmental). As a result, after meeting its legal obligations, its internal and international financial reports are prepared to meet the needs of donors, contributors, grantors and managements. It is essential that The Salvation Army meets its obligations to each donor, etc, who specifies any particular use to which a gift is to be put, and it is a clearly stated principle that the Territorial Commander, on behalf of the General, has control of funds entrusted to him, and is authorised to expend them for the purpose for which they are obtained and no other. This standard of scrupulous stewardship is maintained through the structure of its accounting systems and records, and the manner of presentation of its accounts. The Trustees of the respective Property Trusts are required to ensure the assets owned by the Trusts are properly released for the use of The Salvation Army. There is a meeting of Trustees who authorise these assets to be so used. The Territorial Finance Council and Territorial Property Council make the decisions of The Salvation Army in relation to finance and property matters respectively. The following persons were Trustees of The Salvation Army Australia Southern Territory during the whole of the financial year and to the date of this report: • • • •

Commissioner J M Knaggs Colonel R A Finger Lieutenant-Colonel F A Daniels Mr G F Stowe

Number of Meetings Attended

Commissioner J M Knaggs

Colonel R A Finger

Lieutenant-Colonel J L Knapp

Lieutenant-Colonel F A Daniels

Lieutenant-Colonel P R Walker

Lieutenant-Colonel I E Hamilton

Major J R Vale

Major A K Daddow

Mr G F Stowe

9.3. Board Processes The Territorial Finance Council, other councils and committees, while not relieving the Territorial Commander or any other Salvation Army officer of personal responsibility for the success of the work of The Salvation Army, are established to: • Give strength to decisions taken • Guard against ill-considered action • Provide information at first hand from people who are constantly in close personal touch with all aspects of the work; and • Secure counsel and advice on all matters involving the expenditure of The Salvation Army’s funds.

Major J R Vale was a Trustee from the beginning of the financial year until 14 January 2009.

The membership of the various councils and committees determined by the Territorial Commander, with certain council memberships required to be endorsed by International Headquarters. Council and committee members are required to attend meetings regularly and to acquire a broad knowledge and understanding of The Salvation Army’s operations and functions. They must be aware of, and conversant with, the statutory, regulatory and policy requirements affecting the operations of The Salvation Army.

Major A K Daddow was a Trustee from the beginning of the financial year until 22 June 2009.

9.4. Territorial Finance Council

Lieutenant-Colonel P R Walker was appointed on 1 February 2009, and continues as a Trustee at the date of this report.

The Territorial Finance Council (TFC) is the territory’s supreme policy- and decision-making body for the control and management of territorial financial and property resources. The TFC is responsible for approving:

Lieutenant-Colonel J L Knapp was a Trustee from the beginning of the financial year until 1 May 2009.

Lieutenant-Colonel I E Hamilton was appointed on 1 May 2009, and continues as a Trustee at the date of this report. 32

Number of Meetings Eligible to Attend

• • • • • • • • • • •

The territorial budget and any subsequent revisions Non-budgeted expenditures Capital spending The price at which property is bought and sold Grants to divisions and other centres Allowances of officers and employees Investment of funds Transfers to and from reserves and trust funds Furniture requisitions for leading officers Grants to officers Annual statements of accounts

The Salvation Army Australia Southern Territory Social Fund TRUSTEES’ REPORT

The TFC also monitors the performance of the territorial budget, plans future financial strategy (including the raising of money), deals with serious matters arising out of audit reports, considers matters of a confidential nature, and supervises the work of expenditure councils. It meets on a weekly basis. Membership of the TFC is currently 13 members, reviewed and approved annually by International Headquarters, one of whom must be the Financial Secretary. The Territorial Commander presides exofficio. In the absence of the Territorial Commander, the Chief Secretary presides. No meeting can be held without one or the other present. Four members form a quorum. The number of TFC meetings held during the year ended 30 June 2009 and the number of meetings attended by each member were:

Member

Number of Meetings Eligible to Attend

Number of Meetings Attended

Commissioner J M Knaggs

Commissioner C R Knaggs

Lieutenant-Colonel R A Finger

Lieutenant-Colonel A T Finger

Lieutenant-Colonel P R Walker

Lieutenant-Colonel J L Knapp

Lieutenant-Colonel F A Daniels

Lieutenant-Colonel I E Hamilton

Major J R Vale

Major A K Daddow

Major N R Venables

Major G S Hart

Major C I Faragher

Major D G Rowe

Major J L Pratt

Mr G F Stowe

Mr D A Sinden

9.5. Territorial Policy Council 34

The Territorial Policy Council (TPC) is the policy-making body for the strategic and mission direction of The Salvation Army. It meets on a weekly basis. Membership comprises the executive leadership of the territory, with the Territorial Commander presiding. In the absence of the Territorial Commander, the Chief Secretary presides. No meeting can be held without one or the other present.

9.6. Territorial Property Council The Territorial Property Council is the official body authorised to conduct property business, which meets each fortnight. It gives direction regarding property purchases, sales, construction, land acquisition, extensions, renovations, replacements, financing, etc and also recommends to the TFC any payment of accounts relating to property expenditure above the limit to which divisional/regional expenditure boards may approve. The Council’s authority must be obtained before alterations, renovations, purchase, sale or lease of property, or other expenditure may take place. The Council is chaired by the Territorial Commander, and its membership comprises all seven Trustees of the Australia Southern Territory, and a further eight representatives from various territorial headquarters departments. 9.7. General Management Council The General Management Council (GMC) is responsible for monitoring, recommending and approving in a consistent and efficient manner all expenditure according to the approved budget in the following areas: • • • •

Requisitions (including motor vehicles) Cash requirements for payment of accounts Officer health assistance scheme payments General business matters, including insurance claims

The chairperson of the GMC is the Secretary for Business Administration, and membership includes the Chief Financial Officer and eight other senior staff members from territorial headquarters. The GMC meets weekly, and all minutes of the GMC are tabled at the TFC for ratification. Similar expenditure boards operate in each of the divisional headquarters within the territory, to monitor, recommend and approve all expenditure within the division in accordance with approved budgets, and within the authority levels prescribed and approved by the TPC. 9.8. Melbourne Advisory Board The role of the Melbourne Advisory Board is to advise and assist the Territorial Commander and the appointed Trustees in the administration of their responsibilities. Expertise and practical support is provided in four key areas: • Strategic planning • Business administration, including the raising of funds as well as the efficient administration of resources • Programme development, including discernment of demographic trends and analysis of Federal and State Government policy • Human resources management The Melbourne Advisory Board operates under the leadership of an appointed Chairperson recruited from the business community. Membership includes a minimum of five Trustees, a minimum of seven community members in addition to the Chairperson, The Salvation Army Public Relations Secretary and The Salvation Army Victoria State Council Chairperson. Meetings are held no less than four times per calendar year. A Property Advisory Board also operates as a sub-committee of the Melbourne Advisory Board, to provide independent advice to territorial leadership on matters relating to property and real estate.

The Salvation Army Australia Southern Territory Social Fund TRUSTEES’ REPORT

9.9. Investment Committee

10.2. Official Minutes

The Salvation Army also established an Investment Committee to provide independent and unbiased advice to the territorial leadership on matters relating to the management of investment assets for the territory. The Committee is comprised of the Trustees and two senior finance department staff members, plus two external advisors who are drawn from relevant professional and commercial sectors of the community, and are responsible for working closely with the Trustees and making recommendations to the Trustees on investment management. The Territorial Commander appoints one of the external advisors as chairperson of the Committee.

The Salvation Army publishes a variety of policies by way of its Official Minutes. These are statements of policy covering operational, financial, administrative and organisational issues affecting the organisation.

The Investment Committee’s responsibilities include: • • • • • •

Provision of independent and unbiased information Assistance in the development of investment policy and guidelines Monitoring compliance with investment policy and guidelines Assistance in the development of strategic asset allocation targets Assistance in the development of performance measurement standards Monitoring and evaluation of investment manager performance on an ongoing basis

The Committee currently meets on a quarterly basis during the year. 9.10. Territorial Audit Council The Territorial Audit Council meets, on average, every two months and considers internal audit reports and associated responses to internal audit reports. The Council consists of Salvation Army Officers and senior staff appointed annually by the Chief Secretary. The chairman of the Council is always the Secretary for Business Administration. Three members constitute a quorum and no proxies are permitted. 10. Promote Ethical and Responsible Decision-Making The Salvation Army has key policies and codes of conduct that apply to all Salvation Army officers and employees throughout the Australia Southern Territory. 10.1. Orders and Regulations Orders and regulations are documents published by the international headquarters of The Salvation Army, which outline the principles and procedures specific to various types of activity undertaken in The Salvation Army. They apply to all Salvation Army officers throughout the world, irrespective of rank, appointment or territory. These orders and regulations aim at the prevention of misunderstanding, and are intended to ensure that the decisions arrived at, and the work undertaken, are in harmony with the interests, principles and aims of The Salvation Army as a whole. 36

The Salvation Army Australia Southern Territory Social Fund TRUSTEES’ REPORT

It was never envisaged that The Salvation Army would be governed solely by orders and regulations, for a living army engaged in resolute defence and aggressive warfare has sometimes to make expedient decisions on the spot related to the circumstances of the time. Nevertheless, in general, guidelines are necessary, which are based on Christian principles and the best methods discovered from experience. Every officer, cadet and candidate for officership may learn from these. Even the subjects covered by the order and regulations will not deal with every possible contingency. Principles, however, are paramount and serve as a proven guide in every situation, which demands an officer’s personal judgement.

The international headquarters of The Salvation Army issues Official Minutes to all territories and commands throughout the world, on matters of policy and procedure supporting the mission and values of The Salvation Army. The Salvation Army Australia Southern Territory issues its own Official Minutes, on the authority of the Chief Secretary, to address policy and procedural matters relating to a wide range of activities and situations that confront the territory. These policy statements are periodically reviewed and updated, to ensure that they remain relevant to the current needs of the territory, including its officers, employees and members. 10.3. Manual of Accounting Policies and Procedures The international headquarters of The Salvation Army provides a manual of accounting policies and procedures for all its territories and commands throughout the world, which outlines its international accountancy policies and standards. While the basic principles of accountancy are recognised in the various countries where The Salvation Army is at work, there is not the same uniformity in the acceptance of professional standards of accountancy practice between traditions, and between the blocks of countries that have accepted those various traditions. These disparities are particularly evident when considering the accounts of charitable bodies. This manual does not supersede orders and regulations. It supplements them, drawing attention to references which have a bearing on various aspects of accounting policies and procedures, and giving guidance on the practical application of the various directives. It includes the introduction of a simplification of the layout of the balance sheets and the income and expenditure accounts, which is seen to be applicable to the circumstances of all territories, whatever their size and the variety of the expressions of service encompassed by them. Whilst recognising the individual professional standards that may apply in individual countries, it provides a framework for accounting within The Salvation Army that can be consistently applied across all territories and commands. 10.4. Code of Conduct The Code provides a basis for all employees to maintain a working environment that is productive, positive, enjoyable, safe and free from harassment and discrimination. It also assists managers to induct employees into the organisation and address any circumstances that may arise, which conflict with the required standards, mission and values of The Salvation Army. The Code outlines standards of personal and professional conduct, which are in keeping with both organisational and community expectations of employees working for The Salvation Army. It provides guidelines for the appropriate behaviour of all employees, and is provided to employees as part of their induction process. The Code is consistent with the mission and values of The Salvation Army, and will be periodically reviewed so that is continues to benefit employees and the organisation. 10.5. Human Resources Manual The Human Resources Manual provides information on the ways The Salvation Army enables and facilitates more effective people and organisation practices to support the Australia Southern Territory ’s mission, values and strategic activities. It documents principles and policies and their rationale, which together with any external legislative requirements, provide the framework for managing our human resources in this large and diverse organisation. It also provides access to tools and forms to enable managers and other employees to action human resource management requirements.

The Salvation Army Australia Southern Territory Social Fund TRUSTEES’ REPORT

11. Safeguard Integrity in Financial Reporting The Audit Committee was established in April 2006. The Committee assists The Salvation Army executive in fulfilling its governance responsibilities, and is responsible for the oversight of: • • • • • • • • • •

inancial performance and the financial reporting process including the annual financial statements F The scope of work, performance and independence of internal audit Providing advice to management in relation to the engagement of the external auditor The scope of work, performance and independence of the external auditor The operation and implementation of the risk management framework Matters of accountability and internal control affecting the operations of The Salvation Army The effectiveness of management information systems and other systems of internal control The acceptability of and correct accounting treatment for and disclosure of significant transactions The sign off of accounting policies The Salvation Army’s process for monitoring compliance with laws and regulations and its own Code of Conduct and Code of Financial Practice

In performing its duties, the Committee maintains effective working relationships with the TFC, territorial leadership, relevant heads of departments, and the internal and external auditors. Membership of the Committee comprises up to four members recruited from outside The Salvation Army and the Secretary for Business Administration. The Territorial Commander and Chief Secretary are exofficio members. The Chief Financial Officer attends meetings of the Committee, but is not a member of the Committee. The period of service will be three years with an option to extend for up to a further three years, at the discretion of the Territorial Commander. The chairperson is selected and appointed by the Territorial Commander. The Committee currently meets eight times during the year. 12. Make Timely and Balanced Disclosures The Salvation Army is not subject to the ASX Listing Rule disclosure requirements. The Salvation Army does, however, report to its stakeholders in the form required by the ASX Principles of Good Corporate Governance – Principle 5. 13. Respect the Rights of Shareholders The Salvation Army does not have shareholders. The Salvation Army advocates communication with stakeholders in an open, regular and timely manner. The policy provides for the use of electronic and other means that ensures a regular and timely release of information about the organisation to stakeholders. Such means include: • T he printed version of the Annual Report and Annual Financial Report • Access to communications through the use of information technology, either via intranet or The Salvation army’s website: www.salvationarmy.org.au 38

The Salvation Army’s practice is to ensure that its independent external auditor attends the meeting of the TFC at which its Annual Financial Report is presented for signing, and is available to answer council members’ questions about the conduct of the audit and the preparation and content of the auditor’s report.

The Salvation Army Australia Southern Territory Social Fund TRUSTEES’ REPORT

Our programs are consistent with the Australian/New Zealand Standard for Risk Management: AS/NZS 4360. We anticipate that The Salvation Army will be able to comply with the proposed new international standard when it is introduced. The Salvation Army has a Risk Management Policy and Procedure Manual encompassing Business Continuity Management, Occupational Health & Safety, and Workers Compensation. The Risk Management Manual details clearly the roles and responsibilities of leadership, managers and employees, and the requirements for contractors and visitors in relation to risk management. Human Resources and Risk Management professionals are in place throughout the Territory, and support divisions and departments in achieving good governance and compliance. The Salvation Army risk management electronic system – ARK (Army Risk Knowhow) has been developed with relevant training programs. ARK was piloted in November 2008 and was implemented in 2009. Risk management programs will be subject to audits, in order to ensure risk management compliance requirements are achieved. ARK will also include identification of ‘at risk’ areas in order to prioritise prevention strategies, the monitoring of compliance using a set of standard practices and requirements, the reporting of any exceptions and assessments of the effectiveness of the implementation of The Salvation Army policy and procedure. 15. Remunerate Fairly and Responsibly The Trustees are officers or staff of The Salvation Army Australia Southern Territory, and receive remuneration in accordance with established Salvation Army guidelines. In addition, officer Trustees also receive accommodation and use of a motor vehicle at no cost as part of their officership, in accordance with established Salvation Army guidelines. No additional remuneration is received by these officers for acting in their capacity as Trustees of The Salvation Army. Staff Trustees receive the use of a motor vehicle as part of their employment contract. Salvation Army employees are paid in accordance with their classification position as per the relevant award or agreement under which they are employed, and are paid any pay increases or other variations to remuneration and benefits as per the relevant award or agreement. Non-award/agreement employees are paid in accordance with their terms and conditions outlined in their contracts of employment. For non-award employees, internal review of remuneration is conducted on an annual basis to maintain market position in the non-for-profit sector, with recommendations for salary adjustments submitted to the TFC for consideration. Individual remuneration submissions are submitted to the appropriate board at divisional or council at territorial level for approval. External members of advisory boards and committees volunteer their time and skills to the organisation and as such, no remuneration was paid or is payable to these persons in their capacity as board members. Signed in accordance with a resolution of the Trustees:

James M Knaggs, Commissioner Territorial Commander TRUSTEE

Gregory F Stowe Chief Financial Officer TRUSTEE

14. Risk Management The Trustees are responsible for the oversight of The Salvation Army’s risk management. The Audit Committee assists the Trustees in fulfilling their responsibilities in this regard by reviewing The Salvation Army’s risk policies, as well as the financial and reporting aspects of the organisation. In recognising its legal responsibilities and other obligations, The Salvation Army places a high priority on human resources and risk management requirements in all aspects of its operations. Our values provide significant anchor points for our risk management programs, particularly the values of human dignity and compassion.

Dated at Melbourne this 26th day of October 2009

The Salvation Army Australia Southern Territory Social Fund INCOME STATEMENT

The Salvation Army Australia Southern Territory Social Fund BALANCE SHEET

FOR YEAR ENDED 30 JUNE 2009

AS AT 30 JUNE 2009

NOTE

2009 $’000

2008 $’000

Revenue from rendering of services

165,932

151,257

Other revenues from ordinary activities

93,451

80,739

Financing Income

4,876

18,852

53,767

34,133

Total operating revenue

318,026

284,981

Red Shield Appeal donations

Capital revenue: Legacies 20,595 6,525

Government grants

994

962

Other revenue

2,090

576

Total capital revenue

23,679

8,063

Total revenue

341,705

293,044

Employee expenses (155,841) (145,660) Depreciation expenses (6,545) (4,448) Computer expenses (2,289) (2,120) Financing expenses (266) (242) Impairment expense 1(i), 21 (14,172) (3,665) Welfare/Jobseeker expenses (36,922) (22,388) Building/Occupancy expenses (41,189) (37,194) Motor Vehicle expenses (9,000) (8,901) Contribution - General Fund 1(q) (18,173) (17,465) Rollover accommodation bond expenses 1(f)(i) 1,919 83 Amenities and supplies (9,587) (8,908) Other expenses from ordinary activities (23,328) (20,124) Total operating expenses (315,393) (271,032) Operating surplus before allocations 14 26,312 22,012 Allocations 3 (24,390) (22,665) Net surplus/(deficit) after allocations 1,922 (653)

The income statement is to be read in conjunction with the notes to the financial statements set out on pages 44 to 67

NOTE

2009 $’000

2008 $’000

CURRENT ASSETS Cash 6 6,200 6,279 Receivables 7 11,090 17,973 Other financial assets 8 60,365 33,720 Inventories 9 916 684 TOTAL CURRENT ASSETS 78,571 58,656 NON-CURRENT ASSETS Receivables 7 34,793 27,905 Property, plant and equipment 10 178,805 162,126 Other financial assets 8 132,699 136,168 TOTAL NON-CURRENT ASSETS 346,297 326,199 TOTAL ASSETS 424,868 384,855 CURRENT LIABILITIES Payables 11 31,039 28,280 Employee benefits 12 14,085 13,391 Provisions 13 2,750 1,998 TOTAL CURRENT LIABILITIES 47,874 43,669 NON-CURRENT LIABILITIES Payables 11 22,349 19,427 Employee benefits 12 1,625 1,848 Provisions 13 3,600 6,059 Interest free loans 16 4,474 2,672 Special purpose funds 17 128 149 TOTAL NON-CURRENT LIABILITIES 32,176 30,155 TOTAL LIABILITIES 80,050 73,824 NET ASSETS 344,818 311,031 CAPITAL FUNDS Working capital fund 14(a) 5,718 3,796 Property contributions fund 14(a) 181,040 171,933 Reserves 14(a) 110,356 105,111 Trusts and special purpose funds 14(a) 26,492 8,542 Legacies 14(a) 21,212 21,649 TOTAL CAPITAL FUNDS 344,818 311,031

The balance sheet is to be read in conjunction with the notes to the financial statements set out on pages 44 to 67

The Salvation Army Australia Southern Territory Social Fund STATEMENT OF CASH FLOWS

The Salvation Army Australia Southern Territory Social Fund STATEMENT OF CHANGES IN CAPITAL FUNDS

FOR YEAR ENDED 30 JUNE 2009

NOTE

YEAR ENDED 30 JUNE 2009 ($’000)

2009 $’000

2008 $’000

CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts in the course of operations 314,911 259,325 Cash payments in the course of operations (291,904) (261,284) Net cash received/(used) in operating activities 20(ii) 23,007 (1,959) CASH FLOWS FROM INVESTING ACTIVITIES Investment revenue received 3,174 24,016 Receipts from redemption of investments 58,278 11,430 Payments for investments (88,149) (6,831) Capital revenue received 23,679 8,063 Payments for property, plant and equipment (25,391) (34,945) Proceeds from sale of property, plant and equipment 3,693 6,575 Net cash used by investing activities (24,716) 8,308

CASH FLOWS FROM FINANCING ACTIVITIES Interest paid (266) (242) Repayment of borrowings - (3,681) Proceeds from borrowings 1,100 Proceeds from residents’ interest free loans 1,561 1,118 Repayment of residents’ interest free loans (765) (494) Net cash provided by financing activities 1,630 (3,299) Net increase/(decrease) in cash held (79) 3,050 Cash at the beginning of the financial year 6,279 3,229 Cash at the end of the financial year 20(i) 6,200 6,279

At 1 July 2007 Operating Surplus before allocations

Working Capital Fund

Property Contrib’n Fund

4,449

155,696

Reserves Trusts and Special Purpose Funds 121,502

7,745

Legacies

Total

17,901

307,293

22,012

26,461

155,696

121,502

7,745

17,901

329,305

(22,665)

16,237

1,882

797

3,748

3,796

171,933

123,384

8,542

21,649

329,305

(18,273)

At 30 June 2008

3,796

171,933

105,111

8,542

21,649

311,031

At 1 July 2008

3,796

171,933

105,111

8,542

21,649

311,031

26,312

30,108

171,933

105,111

8,542

21,649

337,343

(24,390)

9,107

(2,231)

17,950

(437)

5,718

181,040

102,880

26,492

21,212

337,343

7,476

5,718

181,040

110,356

26,492

21,212

344,818

Allocations to/(from) other capital funds Transfers to/(from) fair market reserve

Operating Surplus before allocations Allocations to/(from) other capital funds Transfers to/(from) fair market reserve At 30 June 2009

The statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 44 to 67

The statement of changes in capital funds is to be read in conjunction with the notes to the financial statements set out on pages 44 to 67

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

1. Statement of Significant Accounting Policies

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The Social Fund aggregates the results of all social centres, Salvos Stores and a 50% share of the Employment Plus Programme.

(ii) Depreciation With the exception of freehold land, depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. Depreciation commences from the date of acquisition or, in respect of constructed assets, from the time an asset is completed and ready for use.

The financial report was authorised for issue by the trustees on 26th October 2009. (a) Statement of compliance The financial report is a general purpose financial report, which has been prepared in accordance with Australian Accounting Standards (‘AASBs’) adopted by the Australian Accounting Standards Board (‘AASB’). International Financial Reporting Standards (‘IFRSs’) form the basis of Australian Accounting Standards (‘AASBs’) adopted by the AASB, and for the purpose of this report are called Australian equivalents to IFRS (‘AIFRS’) to distinguish from previous Australian GAAP. (b) Basis of preparation The financial report is presented in Australian dollars. New standards and interpretations not yet adopted The following standards, amendments to standards and interpretations have been identified as those that may impact the entity in the period of initial application. They are available for early adoption at 30 June 2009, but have not been applied in preparing this financial report. Revised AASB 101 Presentation of Financial Statements introduces a financial statement (formerly “primary” statement) the “statement of comprehensive income”. The revised standard does not change the recognition, measurement or disclosure of transactions and events that are required by other AASBs. The revised AASB 101 will become mandatory for the Social Fund’s 30 June 2010 financial statements. The Social Fund has not yet determined the potential effect of the revised standard on the Fund’s disclosures. (c) Annual Appeals The Salvation Army Red Shield Appeal is an annual appeal. The amount raised and corresponding fundraising expenses are reflected in the financial report in the same year as the appeal. In addition, the Territorial Public Relations department oversights our wills and bequests works, and overseas appeals. (d) Property, plant and equipment (i) Owned assets Items of property, plant and equipment are stated at cost, or if donated, at appraised value at date of gift, less accumulated depreciation (note (d)(ii)) and impairment losses. Capital gifts are shown as revenue and an allocation is made to the property contributions fund. Property that is being constructed for future use is classified as ‘building schemes in progress’ and stated at cost until construction is complete, at which time it is reclassified as ‘freehold buildings’ or ‘leasehold property’.

Upon disposal of freehold properties, the cost is transferred to a capital property reserve, together with sales proceeds to determine the profit or loss on the sale of the property. In addition, the funding contribution or grant in the property contributions fund relating to the disposal is transferred to the same reserve, to provide funding for future property acquisitions. Independent valuations are obtained as to the market value of any property before it is sold.

The estimated useful lives in the current and comparative periods are as follows: • • • • •

Buildings Plant and Equipment (excluding motor vehicles) Motor Vehicles/Trucks Leasehold Improvements Information Technology capital projects

50 years 3 years 5 years Term of the lease Deemed useful life to a maximum of 5 years

The residual value, the useful life and the depreciation method applied to an asset are reassessed annually. (iii) Capital Contribution Property Reserve Under International Salvation Army accounting policies and procedures, funds that have been utilised to finance the acquisition of freehold properties must be transferred to the capital contribution – property reserve. These contributions are transferred to meet building depreciation costs, thus relieving the impact on the working capital fund. (e) Investments The Salvation Army classified its investments in the following categories: financial assets at fair value through profit and loss, receivables, held-to-maturity and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-tomaturity, ‘re-evaluates’ this designation at each reporting date. (i) Financial assets at fair value Financial assets at fair value through profit and loss are the investments held by managed portfolio, which are acquired principally for the purpose of selling in the short term with the intention of making a positive return. (ii) Receivables Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the organisation provides goods or services directly to a debtor with no intention of selling the receivables. They are included in current assets, except for those with settlements greater than 12 months after the balance sheet date, which are classified as non-current assets. Receivables are carried at amortised cost using the effective interest method. Receivables are included in receivables in the balance sheet (note 7). (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the organisation’s management has the positive intention and ability to hold to maturity. These investments normally have a maturity of more than three months but less than 12 months from the date of acquisition. (iv) Available-for-sale financial assets Available-for-sale financial assets comprise principally the managed investment portfolio. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The fair value of available for sale financial assets is determined by reference to their quoted closing bid price at the reporting date.

(g) Inventories Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. No allocation of overheads has been included in the valuation.

Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category, including interest and dividend income, are presented in the income statement within other income or other expenses in the period in which they arise. Gains or losses arising from changes in the fair value of the “available-for-sale” investments are recognised in equity unless there is evidence of impairment. When investments classified as available-for-sale from the long term managed investment portfolio are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from investment portfolio. The Salvation Army assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of investment portfolio classified as available-for-sale, a significant or prolonged decline in the fair value of an investment portfolio below its cost is considered in determining whether the investment is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the profit and loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments classified as available-for-sale are not reversed through the income statement.

Inventory is assessed on a regular basis, and slow moving or damaged items are provided for within a provision for stock obsolescence. (h) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash at bank and cash in transit balances. (i) Impairment The carrying amounts of the Social Fund’s assets, other than inventories (see accounting policy 1(g)) and investments are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Calculation of recoverable amount The recoverable amount of the Social Fund’s receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted.

The fair value of available for sale assets is determined by reference to the redemption price at the reporting date.

Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred.

(f) Accommodation Bond (i) Rollovers Prior to 1 August 2002, the practice of the Social Fund was to ‘rollover’ an independent living unit (ILU) resident’s ingoing contribution when that resident moved from an ILU into low care/hostel accommodation on the same site. As part of the sale of various aged care centres on 1 July 2005, the Social Fund retained responsibility, under certain conditions, to fund part/all of any future accommodation bonds charged to ILU residents who had resided at such centres prior to 1 August 2002, when they moved into low care/hostel accommodation on the same site. The majority of any funds released under this ‘rollover’ policy will be repaid to the Social Fund when the residents vacate the aged care centre.

(j) Employee benefits (i) Defined contribution superannuation funds Obligations for contributions to defined contribution superannuation funds are recognised as an expense in the income statement as incurred.

An assessment was made at balance date by the Social Fund as to the present value of estimated future payments under this rollover policy, and estimated receivables representing funds to be returned to the Social Fund, when the residents vacate the aged care centre, with any adjustment recorded through the Income Statement. 46

Stocks of foodstuffs and consumable stores held at various social centres are expensed.

(ii) Refundable/Amortisable Accommodation Bonds Many residents of aged care centres pay a refundable and amortisable accommodation bond to The Salvation Army. The refundable portion is in the form of an interest free loan repayable in full, whilst the amortisable amount is recognised as revenue and then transferred from accumulated surplus to reserves and held for aged care centre capital projects. The return of accommodation bond is solely dependent upon the resident. The Salvation Army does not have an unconditional right to defer settlement of the liability and therefore it has been accounted for as a current liability.

(ii) Wages, salaries, annual leave and non-monetary benefits Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees’ services provided to reporting date, are calculated at undiscounted amounts based on remuneration wage and salary rates that the Social Fund expects to pay as at reporting date including related on-costs. (iii) Long-term service benefits The Social Fund’s net obligation in respect of long-term service benefits, other than the Officer Retirement Fund, is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates, and is discounted using the rates attached to the Commonwealth Government bonds at the balance sheet date which have maturity dates approximating to the terms of the consolidated entity’s obligations. (k) Other payables Payables are stated at cost, being non-interest bearing, and are normally settled within 30 days.

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS AS AT 30 JUNE 2009

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(l) Revenues Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST).

(p) Accounting estimates and judgements Management discussed with the Territorial Finance Council and the Audit Committee the development, selection and disclosure of the Social Fund’s critical accounting policies and estimates and the application of these policies and estimates. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Revenue from government grants for rendering services and funding for the Employment Plus Job Network is recognised in the period in which the services are provided, having regard to the stage of completion of the service agreements. Trading revenue from the sale of goods is recognised when control of goods passes to the customer. Resident contributions and patients’ fees are recognised when the service is provided. Revenue from legacies and donations is recognised when the Social Fund gains control of the contribution. The Territorial Finance Council in accordance with the expressed terms of the Testator approves all allocations of bequests. Interest revenue is recognised as it accrues. Dividends are recognised when they are received. Any profit on the sale of a non-current asset is recorded as revenue when control of the asset passes to the buyer. The profit is calculated as the difference between the carrying amount of the asset, and net proceeds received from the buyer. (m) Expenses Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Borrowing costs are expensed as incurred and included in financing expenses. (n) Provisions A provision is recognised in the balance sheet when the Social Fund has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. (o) Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). 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 are stated with the amount of GST excluded. 48

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet. Cash flows are included in the statement of cash flows on a net basis. The GST components of cash flows arising from investing and financing activities, which are recoverable from, or payable to, the ATO are classified as operating cash flows.

Key sources of estimation uncertainty Notes 1(n) and 22 contain information about the provision for compensation claims. (q) Contribution to General Fund The General Fund records all territorial and divisional headquarters’ costs. These headquarters oversee the social infrastructure of The Salvation Army. An ‘arms length’ contribution is charged by the General Fund to the Social Fund for services provided. (r) Capital Revenue available for allocation The Salvation Army Australia Southern Territory has adopted a policy of separately disclosing revenue received which is designated for capital purposes rather than operating activities. This designation is determined either directly by the donor or by the trustees of The Salvation Army Australia Southern Territory. This revenue is fully allocated to reserves and special purpose funds to be used to provide and maintain the various service programmes of The Salvation Army Australia Southern Territory. (s) Employment Plus The Salvation Army Australia Southern Territory in conjunction with The Salvation Army Australia Eastern Territory has been jointly involved in the management of the national Salvation Army Employment Plus programme since 1 May 1998. This project commenced when The Salvation Army in Australia won a tender from the Federal Government to provide employment services to long term unemployed persons. This project is considered to be part of the overall aims of The Salvation Army and is not considered separate from these aims in any way. This programme is not considered to be a stand-alone operation. It is consistent with the aims of The Salvation Army to assist the long term unemployed. The proportionate interests in the assets, liabilities, income and expenses of the Employment Plus joint programme activity have been incorporated in the financial statements. (t) Leases The Salvation Army leases some shops and office facilities. The provisions of these leases are such that substantially all the risks and benefits of ownership of the property are retained by the lessors and accordingly, in the financial statements, they are classified as operating leases. Payments made under operating leases are expensed on a straight-line basis over the term of the lease. Refer note 18 for details of non-cancellable operating lease commitments. (u) Comparatives Where necessary, comparative information has been reclassified to achieve consistency in disclosure with current financial year amounts and other disclosures. (v) Rounding All amounts in the financial report have been rounded to the nearest thousand dollars except where otherwise indicated.

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

FOR YEAR ENDED 30 JUNE 2009

AS AT 30 JUNE 2009

NOTE

2009 $’000

2008 $’000

2. REVENUE FROM ORDINARY ACTIVITIES Revenue from rendering of services: Government grants 96,733 86,612 Fee for service – Government Funding

58,959

55,879

Resident contributions and patient fees

10,240

8,766

165,932 151,257 Other revenue from ordinary activities: Trading revenue 77,409 66,352 Donations received – other than from the Red Shield Appeal

9,342

2,950

Profit on sale of property, plant and equipment

1,355

4,367

Other

5,345

7,070

93,451 80,739 Total revenue from ordinary activities 259,383 231,996 3. ALLOCATIONS Allocations have been made to/(from) the following capital funds, excluding working capital: Property contributions fund 14(a) (1,339) (2,664)

Reserves Trusts and special purpose funds

14(a)

(13,581)

17,306

14(a)

18,649

1,964

Legacies

14(a)

20,661

6,056

24,390

22,665

4. AUDITORS’ REMUNERATION Audit services: Auditors of the Trust KPMG Australia Audit of the Social Fund 455 435 Other services: Auditors of the Trust

KPMG Australia

NOTE

2009 $’000

2008 $’000

5. RED SHIELD APPEAL DONATIONS Donations Victoria 20,759 20,508 South Australia 4,766 4,205 Western Australia 7,726 7,077 Tasmania 2,092 1,990 Northern Territory 465 353 Victorian Bushfire Appeal (including interest) 17,959 - 53,767 34,133 Less: Expenses

(8,660)

(7,118)

Net Revenue Available For Distribution/Allocations

45,107

27,015

Distribution/Allocations Social programme deficits: Employment, education and training Children and young people at risk Addictions and substance abuse Aged care and disability support Individual and family support Homelessness and domestic violence Chaplaincy

550 1,605 2,502 210 11,404 4,250 3,023

420 1,808 3,055 255 9,459 4,099 2,847

Social services and community programmes total

23,544

21,943

Capital Appeals Other Emergency Appeals One off donation Victorian Bushfire Appeal (a) Donor designated gifts for social services and community programmes

557 81 - 17,959 2,966

887 282 500 - 3,403

Total Distribution/Allocations

45,107

27,015

(a) In addition, $7,660,052 was received and recorded as donations for the Victorian Bushfire Appeal through The Salvation Army Australia Eastern Territory Red Shield Appeal. These funds have been forwarded to The Salvation Army Australia Southern Territory for oversight and disbursement, and are disclosed as ‘other donations received’ in Note 2. Refer Note 14(d) in relation to undistributed bushfire funds held at 30 June 2009. Victorian Bushfire Appeal

Donations The Salvation Army Australia Southern Territory Red Shield Appeal Capital Appeals The Salvation Army Australia Eastern Territory Red Shield Appeal Emergency Appeals

17,959

7,660

25,619

Expenditure to 30 June 2009 (within welfare/jobseeker expenses)

(7,487)

Allocated to reserves for commitments beyond 30 June 2009

18,132

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

FOR YEAR ENDED 30 JUNE 2009

NOTE

FOR YEAR ENDED 30 JUNE 2009

2009 $’000

2008 $’000

6. CASH Cash on hand 160 140 Cash in transit 295 193 Cash at bank 5,745 5,946 20 6,200 6,279 7. RECEIVABLES Current Prepayments 869 1,012 Accommodation Bond Rollovers 419 Sundry debtors 9,802 16,961 11,090 17,973 Non-current Deferred Consideration 3,300 3,432 Accommodation Bond Rollovers 30,812 24,473 Sundry debtors 681 34,793 27,905 8. OTHER FINANCIAL ASSETS

Current Short term deposits 60,365 33,720 Non-current Unlisted units in managed investment funds 98,424 136,168 Long term deposits 34,275 132,699 136,168 193,064 169,888 9. INVENTORIES Raw materials and stores 280 228 Work in progress 13 19 Finished goods 634 497 Less provision for stock obsolescence (11) (60) 916 684 10. PROPERTY, PLANT AND EQUIPMENT Freehold Land and Buildings Freehold land at cost 29,332 25,650 Buildings at cost 153,304 135,302 Accumulated depreciation (33,164) (30,613) 120,140 104,689 Total Freehold Land and Buildings 149,472 130,339

NOTE

2009 $’000

2008 $’000

10. PROPERTY, PLANT AND EQUIPMENT (continued) Leasehold Property At cost 8,457 8,665 Accumulated depreciation (2,067) (1,019) Total Leasehold Land and Buildings 6,390 7,646 Building Schemes in Progress - at cost 13,317 16,779 Motor Vehicles At cost 3,563 3,418 Accumulated depreciation (2,592) (2,487) Total Motor Vehicles 971 931 Plant and Equipment At cost 13,062 8,799 Accumulated depreciation (4,407) (2,368) Total Plant and Equipment 8,655 6,431 Total Property, Plant and Equipment Net Book Value 178,805 162,126 Social Fund land and buildings of $155,862,000(2008: $137,985,000) are funded through the Property Contributions Fund (excluding building schemes in progress funding) of $155,135,000 as at 30 June 2009 (2008: $137,507,000). The remaining balance is funded from the following sources: Unsecured loans

695

Social Fund freehold properties – unfunded

383

Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below: Freehold Land and Buildings Carrying amount at beginning of year 130,339 122,612 Additions (transfers from Building Schemes in Progress - Cost) 23,589 12,525 Disposals (1,837) (2,168) Depreciation (2,619) (2,630) Carrying amount at end of year 149,472 130,339 Leasehold Property Carrying amount at beginning of year 7,646 1,454 Additions (transfers from Building Schemes in Progress - Cost) 333 6,640 Disposals (230) Depreciation (1,359) (448) Carrying amount at end of year 6,390 7,646

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

FOR YEAR ENDED 30 JUNE 2009

NOTE

FOR YEAR ENDED 30 JUNE 2009

2009 $’000

2008 $’000

10. PROPERTY, PLANT AND EQUIPMENT (continued) Building Schemes in Progress – Cost Carrying amount at beginning of year 16,779 7,066 Additions 21,506 29,761 Transfers to Freehold Land and Buildings/Leasehold Property (23,922) (19,165) Transfers to Plant and Equipment (1,046) (883) Carrying amount at end of year 13,317 16,779 Motor Vehicles Carrying amount at beginning of year 931 619 Additions 452 641 Disposals (97) - Depreciation (315) (329) Carrying amount at end of year 971 931 Plant and Equipment Carrying amount at beginning of year 6,431 2,086 Additions (including transfers from Building Schemes in Progress – Cost) 4,480 5,426 Disposals (5) (40) Depreciation (2,251) (1,041) Carrying amount at end of year 8,655 6,431 11. PAYABLES Current Sundry creditors and accruals 20,800 18,672 Prepaid fee for service – government funding 6,686 6,360 Accommodation bond rollovers 1(f) 3,553 3,248 54

31,039

28,280

Non-current Accommodation bond rollovers 1(f) 22,349 19,427 12. EMPLOYEE BENEFITS Current Employee entitlements 14,085 13,391 Non-current Employee entitlements 1,625 1,848

NOTE

2009 $’000

2008 $’000

13. PROVISIONS Current Compensation claims 2,750 1,998 Non-current Compensation claims 3,600 6,059 14. CAPITAL FUNDS (a) Movements in Capital Funds Property Contributions Fund Opening Balance 171,933 155,696 Net Transfers 10,446 18,901 Allocations from/(to) working capital fund 3 (1,339) (2,664) Closing balance

181,040

171,933

Reserves Opening Balance 105,111 121,502 Net Transfers - other 11,350 (15,424) Transfer to/(from) Fair Market Reserve 7,476 (18,273) Allocations from/(to) working capital fund 3 (13,581) 17,306 Closing balance

14(c)

110,356

105,111

Trusts And Special Purpose Funds Opening Balance 8,542 7,745 Net Transfers (699) (1,167) Allocations from working capital fund 3 18,649 1,964 Closing balance

14(d)

26,492

8,542

Legacies Opening Balance 21,649 17,901 Net Transfers (21,098) (2,308) Allocations from working capital fund 3 20,661 6,056 Closing balance

21,212

21,649

Working Capital Fund Opening Balance 3,796 4,449 Operating surplus before allocations 26,312 22,012 Allocations from/(to) other capital funds 3 (24,390) (22,665) Closing balance 5,718 3,796

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

FOR YEAR ENDED 30 JUNE 2009

14. CAPITAL FUNDS (continued)

(b) Property Contributions Fund

Social Programme Enhancement and Development This balance represents funds retained by specific social centres to be utilised, in conjunction with the funding bodies supporting these programmes, for the enhancement and development of these programmes, as well as unused quota funding available at the reporting date by division for future social programme development, within their social centres.

Under International Salvation Army accounting policies and procedures, all contributions, grants, donations and other revenue that will finance property projects must be specifically accounted for in the books of The Salvation Army Australia Southern Territory. Upon completion of each project, the respective contributions are transferred to the Property Contributions Fund. This balance represents the commitments that were fulfilled in acquiring the land and buildings shown as assets held by The Salvation Army Australia Southern Territory. These contributions remain in the balance sheet to ‘fund’ the depreciation on these properties, thus relieving the working capital fund of this charge.

2009 $’000

2008 $’000

Board Designated Funds Property development 21,778 8,867 Training 8,865 8,910 Social programme enhancement and development 19,288 18,130 Capital asset contribution 5,641 4,400 Planned maintenance 6,672 5,859 Asset replacement 6,605 7,014 Aged care reserves 30,690 27,951 Capital projects funding 3,909 4,604 Employment and training 14,178 12,964 Fair Market Investment Reserve - (7,476) Investment Fluctuation Reserve (9,478) 11,546 Other 2,208 2,342

110,356

105,111

These balances are amounts set aside by the Territorial Finance Council to meet realistic, planned or anticipated needs for The Salvation Army Australia Southern Territory, thereby relieving the working capital fund from the future cost of these needs. An explanation of the purpose of each reserve is provided below. Property Development This balance represents funds set aside for future property development within the Social Fund. 56

It also represents the net proceeds on sold properties, which are set aside until allocated to new capital schemes. In most cases, the net proceeds on a particular sold property are utilised as part funding for a specific new capital scheme. However, in some cases, excess property is sold and the net proceeds are available more generally for a number of capital schemes, or other purposes as determined by the Territorial Finance Council. It also includes a specific allocation for property development purposes in relation to retired officers quarters. Training This balance represents funds set aside to be used towards the cost of officer and employee training, and to further enhance future service provision and delivery.

Capital Asset Contribution This balance represents funds utilised to purchase capital assets (excluding land and buildings). These funds will be used to offset the future expensing of such assets through depreciation charges in subsequent financial periods. Planned Maintenance This balance represents funds set aside for the future maintenance and repair of property assets held by the Social Fund of The Salvation Army Australia Southern Territory. Asset Replacement This balance represents funds set aside for the future replacement of various fixed assets, including computers, across various social centres and territorial headquarters social departments. Aged Care Reserves This balance includes funds set aside for warranty issues resulting from the sale of 15 aged care centres on 1 July 2005, forthcoming major property developments at aged care centres retained by The Salvation Army; and a perpetual reserve, from which its interest will be used to assist with funding the ongoing operational costs within our remaining aged care centres. Capital Projects Funding This balance represents funds set aside by the Territorial Finance Council to cover various project costs included within non-current assets. Employment and Training This balance represents funds set aside for future initiatives across the territory, including the servicing of existing Employment Plus clients during the remainder of the current Job Network contract period and beyond. Fair Market Investment Reserve This balance represents the unrealised gain or loss on unlisted units held in managed investment funds as at 30 June 2009. As the Social Fund recorded an impairment expense of $14,172,000, there is no unrealised gain or loss on unlisted units held in managed investment funds as at 30 June 2009. Investment Fluctuation Reserve This balance represents the impairment expense recorded on unlisted units in managed investment funds to 30 June 2009, offset by realised gains set aside in previous financial years on disposal of unlisted units. Other This is the balance of a number of minor reserves that have been set aside at the direction of the Territorial Finance Council.

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

FOR YEAR ENDED 30 JUNE 2009

14. CAPITAL FUNDS (continued) (d) Trust and Special Purpose Fund Balances

16. INTEREST FREE LOANS 2009 $’000

2008 $’000

Restricted Funds Special purpose trusts 2,233 2,116 Emergency Appeals 18,904 1,316 General deposits 3,775 3,988 Building deposits 1,580 1,122 26,492 8,542

The Salvation Army is called upon to utilise large amounts of specified donations and other restricted revenue, which must be accounted for meticulously in accordance with the donor’s wishes. It is therefore common for large balances to be unavoidably carried forward from one year to another, until such time as the funds can be used for the specific purposes for which they have been given. On this basis, the trusts and special purpose fund balances are not actually revenue available to The Salvation Army Australia Southern Territory until they are expended on the purpose specified by the donors. There can be no change of purpose of any amount donated without reference to the person or organisation that set the conditions. An explanation of the purpose of each special purpose reserve is provided below. Special Purpose Trusts The Salvation Army holds a number of balances, where the donor has stipulated that the capital is invested, and interest generated on such capital funds be used in a particular way. This reserve identifies the balance of such capital funds. Emergency Appeals The Salvation Army has received funds from donors for specific emergency appeals, mainly for Victorian bushfire relief.(refer Note 5). These relief efforts will continue well beyond 30 June 2009 so this balance represents the unexpended portion of funds donated for this purpose. Building and General Deposits This balance represents funds held on behalf of specific social centres, set aside for specific purposes until used. For example, if a centre receives a specified donation from the Red Shield Appeal, but has not utilised the funds at the end of the year, then the funds are carried forward to the next year as part of this reserve. 15. INCOME TAX 58

The following Salvation Army organisations are endorsed by the Australian Taxation office as Income Tax Exempt Charities: The Salvation Army Australia Southern Territory General Work Institution The Salvation Army Australia Southern Territory Social Work Institution The Salvation Army (Victoria) Property Trust The Salvation Army (Tasmania) Property Trust The Salvation Army (South Australia) Property Trust The Salvation Army (Western Australia) Property Trust The Salvation Army (Northern Territory) Property Trust Donations of two dollars ($2) or more given to the following funds attract income tax deductibility: (i) (ii)

The Salvation Army Australia Southern Territory Social Work Institution The Salvation Army Red Shield Appeal

2009 $’000

2008 $’000

Entry contributions/Accommodation Bonds – amortisable Entry contributions/Accommodation Bonds – refundable Unsecured Loan

251 3,028 1,195

232 2,345 95

4,474

2,672

Entry Contributions/Accommodation Bonds These balances are repayable to residents of aged care centres upon their vacating of the centres. When taking up residence at aged care centres, government legislation allows for residents to pay a refundable and an amortisable entry contribution to The Salvation Army. The refundable portion is in the form of an interest-free loan repayable in full, while the amortisable portion is amortised over five years. The amortisation amount is transferred to reserves held for aged care redevelopments. 17. SPECIAL PURPOSE FUNDS - NON-CURRENT LIABILITY This amount relates to trust funds held by The Salvation Army on behalf of residents of various social centres. 18. COMMITMENTS (a) Capital Commitments The Salvation Army Australia Southern Territory is constantly engaged in planned and ongoing construction projects requiring the commitment of significant funds. Certain portions of these funds will be provided by Territorial Headquarters and other funds will be received from other sources. Due to the uncertainties necessarily surrounding funding from sources other than Territorial Headquarters, it is not possible, at any point in time, to quantify the exact financial commitment required of Territorial Headquarters for these projects. However, the maximum values are

2009 $’000

2008 $’000

Cost to complete property schemes in progress 22,649 30,227 Property schemes approved but not commenced As at 30 June 2009 1,192 651 23,841 30,878

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

FOR YEAR ENDED 30 JUNE 2009

(b) Operating Lease Commitments Future operating lease rentals for properties not provided in the financial statements and payable:

20. NOTES TO THE STATEMENT OF CASH FLOWS

2009 $’000

2008 $’000

Not later than one year Later than one year but not later than five years Later than five years

22,330 41,644 615

23,404 25,358 11

64,589

48,773

The Social Fund leases a number of properties under operating leases. The leases typically run for a period of 3 to 5 years and usually include an option to renew the lease after that period. Lease payments are increased at the end of the lease period to reflect market rentals. 19. RELATED PARTY DISCLOSURES (a) General The Salvation Army Australia Southern Territory is part of the International Salvation Army and follows operational guidelines issued by the International Headquarters of The Salvation Army in London, United Kingdom. Transactions are conducted on a normal commercial basis. (b) Key Management Personnel Disclosures The Trustees of The Salvation Army are deemed to be the key management personnel of the Social Fund. The names of the Trustees who held office during the year ended 30 June 2009 were: Commissioner James M. Knaggs Colonel Raymond Finger Lieutenant-Colonel Peter Walker Lieutenant-Colonel Ian Hamilton Lieutenant-Colonel Jocelyn Knapp Lieutenant-Colonel Frank Daniels Major John Vale Major Allan Daddow Mr Gregory Stowe

Total income paid or payable, or otherwise made available to all Trustees of the Social Fund from the Social Fund or any related party

NOTE

2009 $’000

2008 $’000

Cash

6,200

6,279

(ii) Reconciliation of Total Surplus to Net Cash used in Operating Activities Total operating/capital surplus before allocations 26,312 22,012 Add/(less) items classified as investing/financing activities: Interest paid 266 Investment income received (3,174) Capital revenue received (23,679) Net (profit)/loss from sale of property, plant and equipment (1,529) Accommodation bond rollover expense (1,919) Add/(less) non-cash items: Impairment expense 14,172 Depreciation 6,545 Amortisation of entry contributions (94)

242 (24,016) (8,063) (4,367) (83)

3,665 4,448 (92)

Net cash provided in operating activities before change in assets and liabilities 16,900 (6,254)

Trustees’ Remuneration The Trustees are officers or staff of The Salvation Army Australia Southern Territory, and receive remuneration in accordance with established Salvation Army guidelines as below. In addition, officer trustees also receive accommodation and use of a motor vehicle at no cost as part of their officership, in accordance with established Salvation Army guidelines. No additional remuneration is received by these officers for acting in their capacity as Trustees of the Social Fund. Staff trustees receive the use of a motor vehicle at no cost as part of their employment contract.

(i) Reconciliation of Cash For the purposes of the statement of cash flows, cash includes cash on hand and at bank, cash in transit and cash held at social centres net of outstanding bank overdrafts. Cash at the end of financial year as shown in the statement of cash flows is reconciled to the related items in the balance sheet as follows:

2009 $’000

2008 $’000

314

394

Change in assets and liabilities during the financial year: Decrease/(increase) in inventories (232) (213) Decrease/(increase) in receivables 1,914 3,033 (Decrease)/increase in payables 5,681 2,217 (Decrease)/increase in employee entitlements 471 1,201 (Decrease)/increase in provisions - (Decrease)/increase in other liabilities (1,727) (1,943) Net Cash provided in Operating Activities

23,007

(1,959)

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

FOR YEAR ENDED 30 JUNE 2009

21. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE

21. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (continued)

Financial risk management

Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Fund’s income and expenses or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, whilst optimising the return.

Overview The Fund has exposure to the following risks from its use of financial instruments: • Credit risk; • Liquidity risk; and • Market risk. This note presents information about the Fund’s exposure to each of the above risks, its objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout this financial report. The Trustees of the Fund have overall responsibility for the establishment and oversight of risk management. The Trustees have established the Investment Committee, which is responsible for developing and monitoring investment policies. The committee reports to the Territorial Finance Council on its activities, and meets on a quarterly basis.

Currency risk Currency risk is the risk that changes in exchange rates affects the Fund’s income and expenses, or the value of its holdings of certain financial assets. The Fund holds ‘available-for-sale’ assets, which include units in overseas equities, some of which are ‘unhedged’. These units are managed by MLC Implemented Consulting, on behalf of The Salvation Army. Interest rate risk Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from interest-bearing financial assets of the Fund.

Risk management policies are established to identify and analyse the risks faced by the Fund, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Fund’s activities. The Fund, through its training and management standards and procedures, aim to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. Credit risk Credit risk is the risk of financial loss to the Fund if a debtor or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Fund’s receivables from debtors and other financial assets.

Trade and other receivables The Fund’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Fund’s receivables primarily consist of government funding provided from Commonwealth and State Governments and investment income from financial institutions. Losses have occurred infrequently. An allowance for impairment is recognised when it is expected that any receivables are not collectible. The Fund does not require any collateral in respect of trade and other receivables.

Other financial assets The Fund limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have very high credit ratings. Management does not expect any counterparty to fail to meet its obligations. Liquidity risk Liquidity risk is the risk that the Fund will not be able to meet its financial obligations as they fall due. Senior finance staff review forecasted cash flows of the Fund and determine the level of funding that will be required to meet expected expenditure as it falls due. The Fund’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Fund’s reputation. Typically the Fund ensures that it has sufficient cash on demand to meet expected operational expenses as they come due.

Other market price risks Equity price risk arises from available for sale investments held by the Fund in the form of investments in listed equities held within the managed investment funds units. The portfolio of investments is managed by external portfolio managers, who buy and sell equities based on their analysis of returns. The asset position and returns are reported to the Investment Committee on a quarterly basis. At this meeting, the Investment Committee members monitor the effective returns. Financial instruments The carrying amount of the Fund’s financial assets represents the maximum credit exposure. The Fund’s maximum exposure to credit risk at the reporting date was: Carrying Amount

2009 $’000

2008 $’000

Cash Receivables Other financial assets

6,200 45,883 193,064

6,279 45,878 169,888

245,147

222,045

Impairment losses At 30 June 2009 the Social Fund has reviewed its financial assets for impairment. As a result, the Social Fund is recording an impairment expense of $14,172,000 on unlisted units in managed investment funds, resulting in an overdrawn Investment Fluctuation Reserve of $9,478,000 at 30 June 2009.

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

FOR YEAR ENDED 30 JUNE 2009

21. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (continued)

Liquidity risk

Sensitivity analysis The Fund’s main investment is in unlisted units held in managed investment funds, managed by MLC Implemented Consulting on behalf of The Salvation Army. Units are held in six different trusts, and the Investment Committee determines the percentage allocated to each trust, with advice from MLC Implemented Consulting.

The following are the contractual maturities of the financial liabilities included estimated interest payments. Contractual amounts are expected payments that have not been discounted:

2009 Financial liabilities Payables Interest-free loans

Carrying amount

Contractual cash flows

0-6 months

6-12 months

More than 12 months

$’000

53,388

31,039

22,349

4,474

57,862

31,039

26,823

47,707

28,280

19,427

2008 Financial liabilities Payables Interest-free loans

2,672

50,379

28,280

22,099

Interest rate/market risk

Profile At the reporting date, the carrying amounts of the Fund’s interest-bearing financial instruments was:

MLC’s investment approach is designed to deliver superior long-term returns, and to do so with consistency. The portfolio is rebalanced when the actual asset allocation moves away from the strategic ‘neutral’ target exposure for each asset sector, by a predetermined margin (usually 2%). The nature of each unit trust is as follows (with ‘neutral’ percentage allocations indicated in brackets) – • Australian shares (14%) – equity ownership of corporations predominantly listed on the Australian Stock Exchange. • Global shares unhedged (11.5%) – equity ownership of corporations listed on any exchange globally, including emerging markets, but with exposure to exchange rate fluctuations. • Global share hedged (8.5%) – equity ownership of corporations listed on any exchange globally, including emerging markets, but derivatives are used to ‘hedge’ currency risk, therefore providing a buffer against currency movements. • Property securities (3%) – equity ownership of property-related corporations and trusts listed on any exchange globally. • Short-term maturity diversified debt (48%) – investment in a wide range of different types of debt securities, including domestic nominal and inflation-linked securities, cash and short-term securities, global credit, global high-yield, global inflation-linked securities and emerging markets debt securities, with an average duration of 3 years. • All-maturity diversified debt (15%) - investment in a wide range of different types of debt securities, including domestic nominal and inflation-linked securities, cash and short-term securities, global credit, global high-yield, global inflation-linked securities and emerging markets debt securities, with an average duration of 8-10 years. At 30 June 2009, the following market value of the Fund’s investment of units in each trust, and the impact of a specified movement in the market value of each holding, was as follows –

2009

2008

$’000

Short term deposits

60,365

33,720

Long term deposits

34,275

94,640

33,720

Fixed rate instruments

2009 ($’000)

Type

Australian Shares

Equity

$13,336

+/- 10%

+/-$1,334

Global Shares – unhedged

Equity

$11,292

+/- 10%

+/-$1,129

Global Shares - hedged

Equity

$7,634

+/- 10%

+/-$763

Property Securities

Equity

$3,072

+/- 10%

+/-$307

Short-term maturity diversified debt

Debt

$48,012

+/- 2%

+/-$960

Floating rate instruments

Financial assets

All-maturity diversified debt

Debt

$15,078

+/- 2%

+/-$302

Financial assets

Cash and cash equivalents

5,745

5,946

Unlisted units in managed investment funds

98,424

136,168

104,169

142,114

Mkt Value 6/09

% Impact

$ Impact

$98,424

The Salvation Army Australia Southern Territory Social Fund NOTES TO THE FINANCIAL STATEMENTS

The Salvation Army Australia Southern Territory Social Fund TRUSTEES’ DECLARATION

FOR YEAR ENDED 30 JUNE 2009

21. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (continued) It should be noted that the full impact amounts disclosed above would not necessarily result in an immediate impact through the Income Statement, as these units are deemed to be ‘available-for-sale’ investments. Such amounts would only be recorded through the Income Statement if they were realised, either from unit disposals (including re-balancings), or if an impairment loss was recorded at year-end. As outlined in the 2008 Social Fund accounts, the trustees sold a portion of its units in equity-type trusts on 29 July 2008, reducing the Fund’s overall exposure to equity-type products from 50% to 37%, whilst increasing the Fund’s overall exposure to debt-type products from 50% to 63%. Upon redemption of these units, the trustees took out a 4-year term deposit with a major financial institution, earning a returning of 8.3% per annum.

FOR YEAR ENDED 30 JUNE 2009

In the opinion of the Trustees of the Salvation Army Australia Southern Territory Social Fund: (i) The accompanying financial statements and notes set out on pages 40 to 66 are drawn up so as to present fairly the financial position of the Social Fund as at 30 June 2009 and the results of its operations and its cash flows for the year then ended; (ii) The operations of the Social Fund have been carried out in accordance with its Trusts Deeds poll during the year ended 30 June 2009; and (iii) The financial statements have been prepared in accordance with Accounting Standards in Australia. Signed in accordance with a resolution of the Trustees:

Fair values Fair values versus carrying amounts The carrying amounts of assets and liabilities shown in the balance sheet approximate their fair value. 22. CONTINGENT LIABILITIES

James M Knaggs, Commissioner Territorial Commander TRUSTEE

Sale of aged care centres on 1 July 2005 On 1 July 2005, The Salvation Army completed the sale of 14 of its 19 sites catering for aged care hostels and nursing homes, as well as retirement living units to Retirement Care Australia (RCA). In addition, TriCare acquired the Hayville retirement village in Box Hill, Melbourne. The business sale agreements included various warranties from The Salvation Army to the purchasers, whereby under certain circumstances, they may seek financial compensation from The Salvation Army. In addition, at the time of divesting some of its aged care centres, the Department of Health and Ageing had provided The Salvation Army with capital grant funding towards the construction of Gilgunya Village, Weeroona Hostel, Inala Village Nursing Home, Edenfield Hostel, Warrina Hostel and Darwin Nursing Home. Under certain conditions, a portion of these capital grants may need to be repaid by The Salvation Army to the Department of Health and Ageing. The amount repayable to the Department of Health and Ageing reduces over time, with 2021 being the last expiration date for the capital grant funding provided for Gilgunya Village. As at 30 June 2009, the maximum capital grant funding which would have been repayable to the Department of Health and Ageing was $3,059,540.

Gregory F Stowe Chief Financial Officer TRUSTEE Dated at Melbourne this 26th day of October 2009

At 30 June 2009, the trustees are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of economic benefits will be required. However, funds have been set aside to an ‘aged care divestment warranty reserve’ to cover contingencies. Compensation claims 66

The Salvation Army has publicly expressed it is deeply regretful of any incident of abuse perpetrated by any of its staff that occurred between the 1940’s and 1980’s, towards children who had been in its care. This provision is to cover claims currently being processed, including costs for access to professional counselling services, pastoral care, medical expense reimbursements and legal costs. In addition to the provision for compensation of $6,350,000 recorded at 30 June 2009 (refer Note 13), there may be further claims lodged with The Salvation Army, which would need to be assessed. The Salvation Army is unable to quantify the estimated future costs of such claims.

Independent audit report to the trustees of The Salvation Army Australia Southern Territory Social Fund We have audited the accompanying financial report of The Salvation Army Australia Southern Territory Social Fund (the Social Fund), which comprises the balance sheet as at 30 June 2009, and the income statement, statement of changes in capital funds and cash flow statement for the year ended on that date, a summary of significant accounting policies and other explanatory notes set out on pages 40 to 67 and the Trustees’ Declaration. Trustees’ responsibility for the financial report The trustees of the Social Fund are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations). This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from, material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. 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. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement 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 entity’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 the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the trustees, as well as evaluating the overall presentation of the financial report. We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of the entity’s financial position, and of its performance and cash flows. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

O boundless salvation! deep ocean of love, O fullness of mercy, Christ brought from above, The whole world redeeming, so rich and so free, Now flowing for all men, come, roll over me!

General William Booth (1829-1912)

Independence In conducting our audit, we have complied with the independence requirements of the Australian professional accounting bodies. Auditor’s opinion In our opinion: The financial report presents fairly, in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations), the financial position of The Salvation Army Australia Southern Territory Social Fund as of 30 June 2009 and of its financial performance and its cash flows for the year then ended. 68

KPMG

Paul McDonald Partner Melbourne Dated this

day of

2009.

www.salvationarmy.org.au

Publisher: The Salvation Army Australia Southern Territory 95-99 Railway Road, Blackburn VIC 3130 While every effort has been made to ensure the accuracy of information in this publication, the publisher assumes no responsibility for error or omissions or any consequence of reliance on this publication. ÂŠ 2009 The Salvation Army Australia Southern Territory Editorial Director: Major Brad Halse

Editorial Team: Major Brad Halse Major Neil Venables Amity Cartwright Staff Writer: Amity Cartwright Design: Vanzella Graphic Design