Compass Housing Services Co (Queensland) Ltd...Greg Budworth 5 5 Paul Hughes 5 5 Paul Johnson 5 5 Barry Martin 4 5 Caroline McMillen 5 5 Michael Page 4 5 Jennifer Roberts 5 5 Susan

Compass Housing Services Co (Queensland) LtdAnnual report for the year ended 30 June 2020

ABN 28 123 318 767

Compass Housing Services Co (Queensland) LtdABN 28 123 318 767

Annual report - 30 June 2020

Contents Page

Directors' report 1 Financial statements 6 Independent auditor's report to the members 27

Compass Housing Services Co (Queensland) Ltd 30 June 2020

1

Directors' report

Your directors present their report on Compass Housing Services Co (Queensland) Ltd (the Company) for the year ended 30 June 2020.

Directors The following persons held office as directors of the Company during the financial year and up to the date of this report unless otherwise disclosed:

Paul JohnsonKwesi Addo (Chair)Greg BudworthBarry MartinPaul HughesMichael PageJennifer RobertsSusan Williams (Deputy Chair)Caroline McMillen

Principal activities During the year the principal continuing activities of the company consisted of providing social and affordable housing in the areas of Logan and Greater Brisbane.

There were no significant changes in the nature of the activity of the Company during the year.

Compass Housing Services Co (Queensland) Ltd received funding support from the Department of Housing and Public Works through grant subsidies for the Community Rent Scheme Program.

Dividends The company is a not for profit organisation and is prevented by its constitution from paying dividends.

Review of operations The results from ordinary activities before tax for the year ended 30 June 2020 amounted to loss of $979,890 (2019: nil).

Significant changes in the state of affairs The COVID-19 outbreak was declared a pandemic by the World Health Organization in March 2020. The outbreak and the response of Governments in dealing with the pandemic is interfering with general activity levels within the community and the economy. Following the COVID-19 outbreak, the Company has continued its business operations. The situation is unprecedented and management continues to consider the potential implications of COVID-19, which may include disruptions to the provision of services, availability of employees and changes in customer demand. However, as at the date these financial statements were authorised, the Company was not aware of any material adverse effects on the financial statements or future results as a result of the COVID-19.

There have been no other significant changes in the state of affairs of the Company during the year.

Event since the end of the financial year Except as disclosed in note above, no other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect:

(a) the Company's operations in future financial years, or (b) the results of those operations in future financial years, or (c) the Company's state of affairs in future financial years.

Likely developments and expected results of operations Aside from the above and in the opinion of directors there are no significant developments or expected results of operations that have occurred or are expected to occur subsequent to year end.

Environmental regulation The Company is not affected by any significant environmental regulation in respect of its operations.


2

Directors' report Information on directors Paul Johnson

QualificationsCertified Practicing Accountant. Graduate member of the Australian Institute of Company Directors. Member of the Australian Computer Society.

Experience Involved in the Community Housing Sector as a Director since 2008. Paul is a retired Chief Executive of a financial institution with over 27 years' experience as a senior executive in the financial services and not-for-profit sectors in Australia.

Special responsibilitiesChair of Compass (NZ). Chair of Internal Review Committee. Chair of Australian Service Committee. Chair of Logan City Community Housing Co Ltd. Chair of MyPlace Property Pty Ltd.

Kwesi Addo (Chair)

QualificationsFellow of the Australian Institute of Company Directors. Fellow of the Governance Institute of Australia. Bachelor of Laws. Master of Business Administration - International Business (Hons).Master of International Relations. Master of Construction Law.

ExperienceKwesi is an experienced non-executive director. He has nearly 15 years’ experience in the community housing sector and also has over 13 years of legal experience in corporate and commercial law across local governance matters and a range of commercial and corporate areas of law including major infrastructure projects, commercial and civil litigation, debt recovery and insolvency, privacy, tax and employment law. Kwesi has served on the working groups and boards of other not for profit organisations and is the author of 3 editions of a NSW legal text on community housing and 1 edition of a QLD legal text on community housing.

Special responsibilitiesChair of Parent Board. Chair of Compass (Qld). Chair of Governance and Remuneration Committee.

Greg Budworth

QualificationsMaster of Business Administration. Master of Business. Other tertiary qualifications in: Project Management,Business Management, Workplace Safety, Workplace Training. Graduate Member of the Australian Instituteof Company Directors. Member of the Australasian Housing Institute. Member of Managers and LeadersAustralia.

ExperienceGroup Managing Director of the Compass Group. Previous directorships include Australasian Housing Institute, Community Housing Industry Association (National), Community Housing Industry Association (NSW), and PowerHousing Australia as well as a member of various other related committees and panels. He has previous experience in CEO and senior management roles in for profit human services organisations. Greg has previously undertaken the roles of the Vice President of the General Assembly of Partners, Co-Chair of the Civil Society Organisation and Chair of the International Partnership of Housing External Relations committee.

Susan Williams (Deputy Chair)

QualificationsMember of the Australian Institute of Company Directors (AICD). Fellow Certified Practicing Accountant. Fellow of the Governance Institute of Australia. Fellow of the Institute of Chartered Secretaries and Administrators. Master of Business Administration (International Business). Graduate Diploma of Applied Corporate Governance, Bachelor of Arts (Accounting). Registered Tax Agent.

Experience Non-Executive Director with over 10 years’ experience in both disability and community housing. Executive career including CFO and Company Secretary roles with ASX, NSX and NASDAQ listed companies, as well as private and not-for-profit organisations across a range of industries.

Special responsibilitiesDeputy Chair of the Parent Board. Deputy Chair Compass (Qld). Chair of Audit, Risk and Compliance Committee.


3

Directors' report Information on directors (continued) Barry Martin

QualificationsFellow of the Australian Institute of Company Directors. Diploma of Business. Certificate IV in Frontline Management. Qualifications in workplace training and assessment. Qualifications in alcohol and other drug training. Certificate IV Personnel & Industrial Relations.

Experience and expertiseBoard member 2011 - 2014, 2016 - present. Non-Executive Director with experience in business development, contract management, projects, business planning and relationship management and human resource consultant.

Paul Hughes

QualificationsBachelor of Commerce (Accounting Major). Fellow of the Australian Institute of Company Directors.

ExperienceOver 20 years’ experience as a non-executive director of unlisted public companies, not-for-profits and government organisations. Paul's leadership roles span over 30 years, with 20 years in local government senior management. As CEO of Newcastle Airport from 2005 - 2015, Paul led its evolution as a major regional economic driver.

Michael Page

QualificationsFellow of the Australian Institute of Company Directors. Bachelor of Engineering (Civil).

Experience and expertiseNon-executive director with over 8 years’ experience in community housing. Executive career for 35 years, including executive director, regional manager and project director roles with ASX listed companies in funds management, finance, development and construction. General manager, chief executive officer and board member of a variety of infrastructure, health and social infrastructure related PPPs and assets and not-for-profit organisations.

Jennifer Roberts

QualificationsFellow of the Australia Institute of Company Director (FAICD), Bachelor of Economics (Honours First Class), Diploma of Education, Diploma of Urban and Regional Planning.

Experience and expertiseSenior executive in State and Local government for 20 years. 10 years as a private consultant in economic, strategy and property. Experience on private and public sector Boards and advisory groups. Extensive knowledge and skills in public sector strategy and policy development, project management, engagement and stakeholder relations. Strong experience in grant funding, economic impact assessment and project approval pathways

Professor Caroline McMillen

QualificationsOfficer of the Order of Australia (AO), Fellow of the Australian Academy of Health and Medical Sciences, Honorary Fellow of the Asian College of Knowledge Management, Bragg Member of the Royal Institution Australia, Fellow of the Royal Society of New South Wales, and MAICD. BA (Honours) and Doctor of Philosophy (University of Oxford), MB, B Chir (University of Cambridge) and Honorary Doctorate of Science, University of Adelaide.Senior academic leadership positions prior to taking up the role as Vice-Chancellor at the University of Newcastle and subsequently as Chief Scientist for South Australia. Experience on Boards, international and national disciplinary bodies, research policy and assessment panels and national and state industry and government leadership groups focused on R&D and innovation.

Meetings of directors The numbers of meetings of the Company's board of directors held during the year ended 30 June 2020, and the numbers of meetings attended by each director were:


4

Directors' report Information on directors (continued)

Full meetingsof directors

A B Kwesi Addo 5 5 Greg Budworth 5 5 Paul Hughes 5 5 Paul Johnson 5 5 Barry Martin 4 5 Caroline McMillen 5 5 Michael Page 4 5 Jennifer Roberts 5 5 Susan Williams 5 5

A = Number of meetings attendedB = Number of meetings held during the time the director held office during the year

Insurance of officers

During the financial year, Compass Housing Services Co (Queensland) Ltd paid a premium of $4,842 (2019: $4,023) to insure directors of the company. The insurance policy provides cover for the Directors named in this report, the company secretary, officers and former directors and officers of the company.

Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.Auditor's independence declaration A copy of the auditor's independence declaration as required under section 60-40 of the Australian Charities and Not-for-Profit Commission (ACNC) Act 2012 is set out on page 5 and forms part of the directors’ report.

Rounding of amounts The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the 'rounding off' of amounts in the directors' report. Amounts in the directors' report have been rounded off in accordance with the instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar.

Auditor PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of directors.

Kwesi AddoDirector

Susan WilliamsDirector

Newcastle_________202028 October

PricewaterhouseCoopers, ABN 52 780 433 757 Level 3, 45 Watt Street, PO Box 798, NEWCASTLE NSW 2300 T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Auditor’s Independence Declaration As lead auditor for the audit of Compass Housing Services Co (Queensland) Ltd for the year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of any applicable code of professional conduct in relation to the audit.

Caroline Mara Partner PricewaterhouseCoopers

Newcastle 28 October 2020

5


6

Compass Housing Services Co (Queensland) LtdABN 28 123 318 767

Annual report - 30 June 2020

Contents Page Financial statements Statement of comprehensive income 7 Statement of financial position 8 Statement of changes in equity 9 Statement of cash flows 10 Notes to the financial statements 11 Directors' declaration 26 Independent auditor's report to the members 27

These financial statements are the financial statements of Compass Housing Services Co (Queensland) Ltd as an individual entity.

Compass Housing Services Co (Queensland) Ltd is a company limited by guarantee, incorporated and domiciled in Australia.

Its registered office principle place of business is:

Compass Housing Services Co (Queensland) Ltd905 Stanley StreetEast Brisbane QLD 4169

A description of the nature of the entity's operations and its principal activities is included in the directors' report on page 1, which is not part of these financial statements.

The financial statements were authorised for issue by the directors on 28 October 2020. The directors have the power to amend and reissue the financial statements.

The above statement of comprehensive income should be read in conjunction with the accompanying notes.


7

Statement of comprehensive income For the year ended 30 June 2020

Notes 2020 $

2019 $

Revenue from continuing operations 1 9,270,498 9,213,554 Other income 2(a) 236,834 237,767 Tenancy and property management expenses 2(b) (7,967,982) (6,536,841) Administrative expenses 2(b) (2,496,339) (2,914,450) Finance expenses (22,901) (30) (Loss) before income tax (979,890) - Income tax expense - - (Loss) for the year (979,890) - Total comprehensive (loss) for the year (979,890) -

The above statement of financial position should be read in conjunction with the accompanying notes.


8

Statement of financial position As at 30 June 2020

Notes 2020 $

2019 $

ASSETS Current assets Cash and cash equivalents 3(a) 1,377,644 1,810,643 Trade and other receivables 3(b) 313,683 987,990 Other current assets 346,850 357,053 Total current assets 2,038,177 3,155,686

Non-current assets Plant and equipment 4(a) 75,191 115,475 Right-of-use assets 4(b) 618,034 - Investment properties 4(c) 4,680,000 4,717,500 Intangible assets 11,700 25,788 Total non-current assets 5,384,925 4,858,763

Total assets 7,423,102 8,014,449

LIABILITIES Current liabilities Trade and other payables 3(c) 1,114,411 1,352,633 Lease liabilities 4(b) 104,088 - Provisions 80,207 58,652 Deferred revenue 32,459 59,127 Total current liabilities 1,331,165 1,470,412

Non-current liabilities Borrowings 3(d) 4,195,500 4,195,500 Lease liabilities 4(b) 529,046 - Provisions 23,401 24,657 Total non-current liabilities 4,747,947 4,220,157

Total liabilities 6,079,112 5,690,569

Net assets 1,343,990 2,323,880

EQUITY Retained earnings 5 1,343,990 2,323,880

Total equity 1,343,990 2,323,880

The above statement of changes in equity should be read in conjunction with the accompanying notes.


9

Statement of changes in equity For the year ended 30 June 2020

NoteRetained earnings

$ Total

$ Balance at 1 July 2018 2,323,880 2,323,880 Profit for the year - - Total comprehensive income for the year - - Balance at 30 June 2019 2,323,880 2,323,880

Balance at 1 July 2019 2,323,880 2,323,880 (Loss) for the year (979,890) (979,890) Total comprehensive (loss) for the year (979,890) (979,890) Balance at 30 June 2020 1,343,990 1,343,990

The above statement of cash flows should be read in conjunction with the accompanying notes.


10

Statement of cash flows For the year ended 30 June 2020

Notes 2020 $

2019 $

Cash flows from operating activities Receipts from customers (inclusive of GST) 6,804,949 6,212,399 Payments to suppliers and employees (inclusive of GST) (10,480,133) (10,655,965) Receipts from grants 3,378,541 3,324,719 Interest received 3,239 22,156 Interest paid (22,901) (30) Net cash (outflow) from operating activities 6 (316,305) (1,096,721)

Cash flows from investing activities Payments for property, plant and equipment 4(a) (981) (77,792) Proceeds from financial assets - 1,810,747 Net cash inflow from investing activities (981) 1,732,955

Cash flows from financing activities Principal repayment of lease liabilities (115,713) -

Net increase in cash and cash equivalents (432,999) 636,234

Cash and cash equivalents at the beginning of the financial year 1,810,643 1,174,409 Cash and cash equivalents at the end of the financial year 3(a) 1,377,644 1,810,643


11

Contents of the notes to the financial statements Page

1 Revenue 12 2 Other income and expense items 12 3 Financial assets and financial liabilities 13 4 Non-financial assets and liabilities 14 5 Equity 16 6 Cash flow information 16 7 Critical estimates, judgements and errors 17 8 Financial risk management 17 9 Commitments 18 10 COVID-19 impact 18 11 Events occurring after the reporting period 18 12 Related party transactions 18 13 Summary of significant accounting policies 19 14 Changes in accounting policies 25


12

Notes to the financial statements

1 Revenue The Company derives the following types of revenue:

2020 $

2019 $

From continuing operations Tenant revenue 5,886,844 5,882,959 Grant revenue 3,383,654 3,330,595

9,270,498 9,213,554

Disaggregation of revenue from contracts with customers based on timing of revenue recognition At a point in time 371,338 293,828 Over time 5,515,506 5,589,131 Excluded from scope of AASB 15 3,383,654 3,330,595

9,270,498 9,213,554

See note 13(b) for the accounting policy in relation to the recognition and measurement of revenue.

The Company operates and provides housing in Queensland. Grant income is received under the CRS Funding Agreement with Department of Housing and Public Works (“DHPW) for the provision of very high need and urgent housing in QLD and the contract stipulates the use of funds for these purposes. The Company is not registered directly on the National register of providers and hence utilises its parent, Company Housing Services Co Limited’s (CHS) registration and hence the grant funding is legally paid to CHS and remitted directly then to the Company in accordance with service agreements with tenants. The Company has therefore accounted for this funding as revenue on the basis it is responsible for the delivery of services and fulfilment of performance obligations associated with the services.

2 Other income and expense items

(a) Other income 2020

$ 2019

$ Management income 100,653 113,265 Other interest received 3,239 22,156 Other income 132,942 102,346

236,834 237,767

(b) Breakdown of expenses by nature Tenancy and property management expenses 2020

$ 2019

$ Bad debts 952,232 104,339 Depreciation and amortisation 186,166 91,310 Insurance 123,970 109,712 Property repairs and maintenance 970,374 1,224,791 Rent - rental properties 4,314,083 3,937,103 Utilities 979,997 1,064,629 Other expenses 441,160 4,957 Total tenancy and property management expenses 7,967,982 6,536,841


13

Notes to the financial statements

Other income and expense items

Administration expenses 2020 $

2019 $

Employee benefits 1,648,901 1,526,152 Motor vehicles 38,132 69,768 Rent - office building 52,265 140,495 Other expenses 757,041 1,178,035

2,496,339 2,914,450 3 Financial assets and financial liabilities

(a) Cash and cash equivalents 2020

$ 2019

$ Current assets Cash at bank and in hand 1,377,644 1,810,643

The above cash balance includes a restricted amount attributable to tenant bonds of $69,417 (2019: $36,474).

(b) Trade and other receivables

2020 2019 $ $

Trade receivables Trade receivables 922,699 2,314,288 Provision for impairment of receivables (687,345) (1,425,329) Other receivables 78,329 99,032

313,683 987,990

(c) Trade and other payables 2020

$ 2019

$ Current liabilities Trade payables 444,427 439,255 Employee benefits 101,580 69,674 Accrued expenses 160,780 403,719 Amounts payable to parent entity 205,292 265,992 Annual leave payable 102,560 86,385 Other payables 99,772 87,608

1,114,411 1,352,633 Trade payables are unsecured and are usually paid within 30 days of recognition.

The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature.

(d) Non-current borrowings 2020

$ 2019

$ Secured Loan - Department of Housing and Public Works 4,195,500 4,195,500 Total secured borrowings 4,195,500 4,195,500 Secured liabilities and assets pledged as security The loan is secured by first mortgage over property set out in the capital assistance agreement with the state of Queensland through the Department of Housing and Public Works.


14

4 Non-financial assets and liabilities

(a) Plant and equipment

Plant and equipment

$

Furniture, fittings and equipment

$ Vehicles

$

Leasehold improvements

$

Other plant and

equipment $

Total $

At 30 June 2019 Cost or fair value 34,007 82,464 98,999 62,402 138,117 415,989 Accumulated depreciation (12,577) (36,799) (98,999) (34,864) (117,275) (300,514) Net book amount 21,430 45,665 - 27,538 20,842 115,475 Year ended 30 June 2020 Opening net book amount 21,430 45,665 - 27,538 20,842 115,475 Additions - - - - 981 981 Disposals - - - - - - Depreciation charge (8,864) (9,846) - (12,480) (10,075) (41,265) Closing net book amount 12,566 35,819 - 15,058 11,748 75,191 At 30 June 2020 Cost 34,007 82,464 98,999 62,402 139,098 416,970 Accumulated depreciation (21,441) (46,645) (98,999) (47,344) (127,350) (341,779) Net book amount 12,566 35,819 - 15,058 11,748 75,191


15

Non-financial assets and liabilities

(a) Plant and equipment (continued)

Plant and equipment is recognised at historical cost less depreciation.

Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter lease term as follows:

• Plant and equipment 10 - 15 years • Vehicles 3 - 5 years • Furniture, fittings and equipment 3 - 8 years

See note 13(h) for the other accounting policies relevant to property, plant and equipment.

(b) Leases

This note provides information for leases where the Company is a lessee.

(i) Amounts recognised in the Statement of financial positionThe statement of financial position shows the following amounts relating to leases:

2020 $

2019 $

Right-of-use assets Office Lease 602,498 - Motor vehicle 15,536 -

618,034 - Lease liabilities Current 104,088 - Non-current 529,046 -

633,134 - There were no additions to the right-of-use assets during the 2020 financial year.

(ii) Amounts recognised in the Statement of comprehensive incomeThe statement of comprehensive income shows the following amounts relating to leases:

Notes 2020 $

2019 $

Depreciation charge of right-of-use assets Office Lease 99,041 - Motor vehicle 31,772 -

2(b) 130,813 -

Expense relating to short-term leases (included in Tenancy and property management expenses and administrative expenses) 4,314,083 - Expense relating to leases of low-value assets that are not shown above as short-term leases (included in administration expenses) 52,265 -


16

Non-financial assets and liabilities

(b) Leases (continued)

The total cash outflow for leases in 2020 was $115,713.

(c) Investment properties

2020 $

2019 $

Non-current assets - at fair value Opening balance at 1 July 4,717,500 4,755,000 Other adjustment (37,500) (37,500) Closing balance at 30 June 4,680,000 4,717,500

The properties are secured against the loans outlined in Note 3(d). The Department of Housing and Public Works retains an ownership interest in the properties with the loans reflecting the obligation owing as a % of the property value.

5 Equity Retained earnings Movements in retained earnings were as follows:

2020 $

2019 $

Balance 1 July 2,323,880 2,323,880 Net (loss) for the year (979,890) - Balance 30 June 1,343,990 2,323,880

6 Cash flow information Reconciliation of profit/(loss) after income tax to net cash (outflow) from operating activities

2020 $

2019 $

Profit/(loss) for the year (979,890) - Adjustment for Depreciation and amortisation 186,166 91,940 Parent management fee allocation 179,565 789,963 Change in operating assets and liabilities: Decrease in trade debtors 674,307 121,619 Increase/ (Decrease) in other assets 10,203 (7,791) Decrease in trade creditors (380,287) (2,087,336) Decrease in other operating liabilities (5,113) (5,876) (Decrease)/ Increase in other provisions (1,256) 760 Net cash (outflow) from operating activities (316,305) (1,096,721)


17

7 Critical estimates, judgements and errors The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company’s accounting policies.

Significant estimates and judgements Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

8 Financial risk management

(a) Market risk

(i) Cash flow and fair value interest rate riskThe company has limited exposure to interest rate risk with the parent entity providing short term financial accommodation.

(b) Credit risk

Individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly. The other receivables are assessed collectively to determine whether there is objective evidence that an impairment has been incurred but not yet been identified. For these receivables the estimated credit losses are recognised in a separate provision for impairment. Refer accounting policy for provision for doubtful debts based on AASB 9 expected credit loss model in note 13(f).

Provision for doubtful debts is recognised on the following basis;

Trade debtorsA provision of 10% of trade debtors is recognised on the basis of historical recoupment of these receivables, with balances over 12 months fully provided.

Tenant debtorsA provision of 4% of tenant rent and tenant non rent incidentals receivable is recognised based on historical recoupment for balances outstanding less than 12 months, with balances over 12 months fully provided.

Ex-Tenant debtorsBalances of ex-tenant rent and non-rent incidentals are fully provided on the basis of the significant increase in credit risk associated with ex-tenancy.

Receivables for which an impairment provision was recognised are written off against the provision when there is no expectation of recovering additional cash. Impairment losses are recognised in profit or loss within other expenses. Movements in the provision for impairment of trade receivables that are assessed for impairment collectively are as follows:


18

Financial risk management

(b) Credit risk (continued) Provision for impairment 2020

$ 2019

$ As at 1 July 1,425,329 1,320,990 Provision for impairment recognised during the year 952,232 104,339 Receivables written off during the year as uncollectable (1,690,217) - As at 30 June 687,344 1,425,329

9 Commitments Non-cancellable operating leases From 1 July 2019, the Company has recognised right-of-use assets for these leases, except for short-term and low-value leases, see note 14 for further information.

2020 $

2019 $

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within one year - 133,487 Later than one year but not later than five years - 122,470

- 255,957 10 COVID-19 impact The COVID-19 outbreak was declared a pandemic by the World Health Organization in March 2020. The outbreak and the response of Governments in dealing with the pandemic is interfering with general activity levels within the community and the economy. Following the COVID-19 outbreak, the Company has continued its business operations. The situation is unprecedented and management continues to consider the potential implications of COVID-19, which may include disruptions to the provision of services, availability of employees and changes in customer demand. However, as at the date these financial statements were authorised, the Company was not aware of any material adverse effects on the financial statements or future results as a result of the COVID-19.

11 Events occurring after the reporting period Except as disclosed in note 10, no other matter or circumstance has arisen since 30 June 2020 that has significantly affected the Company's operations, results or state of affairs, or may do so in future years.

12 Related party transactions

(a) Parent entities

Name Type Place of incorporation

Ownership interest 2020 2019

Compass Housing Services Co Ltd

Immediate and ultimate parent Australia 100% 100%


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Related party transactions

(b) Transactions with other related parties

The following transactions occurred with related parties:

30 June 2020

$

30 June 2019

$ Sales and purchases of goods and services Purchase of management services from parent 179,565 798,963

(c) Outstanding balances arising from sales/purchases of goods and services

The following balances are outstanding at the end of the reporting year in relation to transactions with related parties:

2020 $

2019 $

Current payables (purchases of goods and services) Payable to Compass Housing Services Co. Ltd (the parent) 205,292 265,992

(d) Terms and conditions

All related party transactions were made on normal commercial terms and conditions and of market value.

13 Summary of significant accounting policies This note provides a list of all significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Compass Housing Services Co (Queensland) Ltd.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and interpretations issued by the Australian Accounting Standards Board and the Australian Charities and Not-for-Profit Commission (ACNC) Act 2012. Compass Housing Services Co (Queensland) Ltd is a not-for-profit entity for the purpose of preparing the financial statements.

Where relevant, amounts in the prior year may have been reclassified to enhance consistency and comparability with the current year.

(i) Compliance with Australian Accounting Standards - Reduced Disclosure RequirementsThe financial statements of the Compass Housing Services Co (Queensland) Ltd Company comply with Australian Accounting Standards - Reduced Disclosure Requirements as issued by the Australian Accounting Standards Board (AASB).

(ii) Historical cost conventionThe financial statements have been prepared on a historical cost basis, except for the following certain classes of property, plant and equipment and investment property - measured at fair value

(iii) New and amended standards adopted by the groupThe Company has applied the following standards and amendments for first time in their annual reporting period commencing 1 July 2019:

• AASB 15 Revenue from Contract with Customers

• AASB 1058 Income of Not-for-Profit Entities

• AASB 16 Leases


20

Summary of significant accounting policies

(a) Basis of preparation (continued)

(iii) New and amended standards adopted by the group (continued)The Company had to change its accounting policies as a result of adopting AASB 16. The Company elected to adopt the new rules retrospectively but recognised the cumulative effect of initially applying the new standard on 1 July 2019. This is disclosed in note 14. The other amendments listed above did not have any impact on the amounts recognised in prior years and are not expected to significantly affect the current or future years.

(b) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable.

The Company recognises revenue when performance obligations have been met, at the value of consideration to which the entity expects to be entitled in exchange for those services and that each specific criteria have been met for each of the company's activities as discussed below.

(i) Tenant revenueRevenue from tenants is recognised in the accounting period in which the services are rendered as the performance obligation is provided.

(ii) Grant revenueGrant revenue is recognised in the statement of comprehensive income when the entity obtains control of thegrant, it is probable that the economic benefits gained from the grant will flow to the entity and the amount of thegrant can be measured reliably. Where specific performance obligations are attached to the grant, the group recognises revenue when those obligations have been met.

When grant revenue is received whereby the entity incurs an obligation to deliver economic benefits directly backto the contributor, this is considered a reciprocal transaction and the grant revenue is recognised in the statementof financial position as a liability until the service has been delivered to the contributor, otherwise the grant isrecognised as income on receipt.

(iii) DonationsDonations and bequests are recognised as revenue when received.

(iv) Interest incomeInterest income is recognised using the effective interest method. When a receivable is impaired, the Company reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

(v) Unearned rental incomeThe unearned rental income shown in the accounts will brought into account in the subsequent year as itrepresents tenants rent received in advance.

(c) Leases

As explained in note 13(a) above, the Company has changed its accounting policy for leases where the Company is the lessee. The new policy is described in note 4(b) and the impact of the change in note 14.

Until 30 June 2019, leases in which a significant portion of the risks and rewards of ownership were not transferred to the Company as lessee were classifies as operating leases (note 9). Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease. From 1 July 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company.


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(c) Leases (continued)

The Company leases offices and motor vehicles. Rental contracts are typically made for fixed periods of 5 years, but may have extension options as described below.

Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate for which the Company is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable

• variable lease payment that are based on an index or a rate, initially measured using the index or rate as atthe commencement date

• amounts expected to be payable by the Company under residual value guarantees

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the Company:

• where possible, uses recent third-party financing received by the individual lessee as a starting point,adjusted to reflect changes in financing conditions since third party financing was received

• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held byCompass Housing Services Co (Queensland) Ltd, which does not have recent third-party financing, and

• makes adjustments specific to the lease, e.g. term and security.

The Company is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability

• any lease payments made at or before the commencement date less any lease incentives received

• any initial direct costs, and

• restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.

(i) Extension and termination optionsExtension and termination options are included in a number of office leases across the Company. These are used to maximise operational flexibility in terms of managing the assets used in the Company’s operations. The majority of extension and termination options held are exercisable only by the Company and not by the respective lessor.


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(d) Impairment of assets

Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(e) Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

(f) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. See note 8(b) for further information about the group’s accounting for trade receivables.

The Company applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade and other receivables. To measure the expected credit losses, the trade and other receivables are assessed based on credit risk characteristics, the days past due and the historical loss rates which adjusted to reflect current and forward-looking information.

The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

(g) Investments and other financial assets

Classification The group classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through OCI or through profit or loss), and• those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

Recognition and derecognition Regular way purchases and sales of financial assets are recognised on trade date, being the date on which the group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.

Measurement

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Subsequent measurement of debt instruments depends on the group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the group classifies its debt instruments:


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(g) Investments and other financial assets (continued

Measurement (continued)

• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flowsrepresent solely payments of principal and interest are measured at amortised cost. Interest incomefrom these financial assets is included in finance income using the effective interest rate method. Anygain or loss arising on derecognition is recognised directly in profit or loss and presented in othergains/(losses) together with foreign exchange gains and losses. Impairment losses are presented asseparate line item in the statement of profit or loss.

• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets,where the assets’ cash flows represent solely payments of principal and interest, are measured atFVOCI. Movements in the carrying amount are taken through OCI, except for the recognition ofimpairment gains or losses, interest income and foreign exchange gains and losses which arerecognised in profit or loss. When the financial asset is derecognised, the cumulative gain or losspreviously recognised in OCI is reclassified from equity to profit or loss and recognised in othergains/(losses). Interest income from these financial assets is included in finance income using theeffective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses)and impairment expenses are presented as separate line item in the statement of profit or loss

• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain orloss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss andpresented net within other gains/(losses) in the period in which it arises.

(h) Property, plant and equipment

The Company's accounting policy for land and buildings is explained in note 4(a). All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Increases in the carrying amounts arising on revaluation of land and buildings are recognised in other comprehensive income and accumulated in reserves in shareholder's equity. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit or loss. Decreases that reverse previous increases of the same asset are first recognised in other comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to profit or loss. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to profit or loss and depreciation based on the asset's original cost is reclassified from the property, plant and equipment revaluation surplus to retained earnings.

(i) Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

(j) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs.


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(j) Borrowings (continued)

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(k) Borrowing costs

Borrowing costs are expensed in the period in which they are incurred.

(l) Provisions

Provisions for legal claims and make good obligations are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

(m) Investment Properties

Investment properties are held to earn rental and for capital appreciation. Compass Housing Services Co Limited require both these income streams to continue to service the Community Housing market and they are not, in the judgement of the directors, incidental to the purposes of the group or the service delivery obligations of the group.

The group engaged external, independent and qualified valuers to determine the fair value of the groupsinvestment properties. This is conducted on a periodic, but at least triennial basis with one third of the portfolio,valued at least every three years. As at 30 June 2020, the fair values of the investment properties have beendetermined by an external valuer.

At the end of each reporting period, the directors update their assessment of the fair value of each property,taking into account the most recent independent valuations. The directors determine a property's value within arange of reasonable fair value estimates.The best evidence of fair value is the current prices in an active market for similar properties. Where suchinformation is not available, the directors consider information from a variety of sources including:

• current prices in an active market for properties of different nature or recent prices of similar properties in lessactive markets, adjusted to reflect those differences.

• discounted cash flow projections based on reliable estimates of future cash flows.

• capitalised income projections based upon properties estimated net market income, and a capitalisation ratederived from an analysis of market evidence.

The fair value of investment properties has been derived using a combination of the cost and market approach.

In March 2020, the World Health Organisation declared COVID-19 as a pandemic. The pandemic has had, and continues to have, a significant impact on the general business environment and financial markets. The evaluation of investment valuations has included further consideration relating to the economic implications of the COVID-19 pandemic and the measures taken to contain it.

Estimating the valuation implications of COVID-19 for the investments has required considerable judgement by the third-party valuers (for directly held assets) and the Directors. In particular, the valuers have estimated values with limited economic data relating to the medium to long term implications for the investment properties. The valuation of the investment property is based on data available at the time of the relevant valuation which may change as circumstances and events continue to unfold. The valuations will be updated as and when new information becomes available and will be reflected in future accounting periods.


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14 Changes in accounting policies This note explains the impact of the adoption of AASB 16 Leases on the Company’s financial statements.

As indicated in note 13(a) above, the Company has adopted AASB 16 Leases retrospectively from 1 July 2019, but has not restated comparatives for the 2019 reporting year, as permitted under the specific transition provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 July 2019. The new accounting policies are disclosed in note 13(c).

On adoption of AASB 16, the Company recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of AASB 117 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 July 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 July 2019 was 2.93%.

There was no impact on retained earnings on 1 July 2019 upon adoption.

(i) Practical expedients appliedIn applying AASB 16 for the first time, the Company has used the following practical expedients permitted by the standard:

• applying a single discount rate to a portfolio of leases with reasonably similar characteristics

• relying on previous assessments on whether leases are onerous as an alternative to performing animpairment review - there were no onerous contracts as at 1 July 2019

• accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 asshort-term leases

• excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application, and • using hindsight in determining the lease term where the contract contains options to extend or terminate the

lease.

(ii) Measurement of lease liabilities

2020$

Operating lease commitments disclosed as at 30 June 2019 255,957 Add: Prior Year leases not disclosed 520,874 Discounted using the lessee’s incremental borrowing rate of at the date of initial application (27,984) Lease liability recognised as at 1 July 2019 748,847 Of which are: - Current lease liabilities 115,713 Non-current lease liabilities 633,134

748,847


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Directors' declaration

In the directors' opinion:

(a) the financial statements and notes set out on pages 6 to 25 are in accordance with the Australian Charities and Not-for-Profit Commission (ACNC) Act 2012, including:

(i) complying with Accounting Standards, the Australian Charities and Not-for-Profit Commission (ACNC) Act 2012 and other mandatory professional reporting requirements, and

(ii) giving a true and fair view of the entity's financial position as at 30 June 2020 and of its performance for the financial year ended on that date, and

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the directors.

Kwesi AddoDirector

Susan WilliamsDirector

Newcastle_________202028 October

PricewaterhouseCoopers, ABN 52 780 433 757 Level 3, 45 Watt Street, PO Box 798, NEWCASTLE NSW 2300 T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Independent auditor’s report To the members of Compass Housing Services Co (Queensland) Ltd

Our opinion In our opinion:

The accompanying financial report of Compass Housing Services Co (Queensland) Ltd (the Company) is in accordance with Division 60 of the Australian Charities and Not-for-profits Commission (ACNC) Act 2012, including:

(a) giving a true and fair view of the Company's financial position as at 30 June 2020 and of itsfinancial performance for the year then ended

(b) complying with Australian Accounting Standards - Reduced Disclosure Requirements andDivision 60 of the Australian Charities and Not-for-profits Commission Regulation 2013.

What we have audited The financial report comprises:

● the statement of financial position as at 30 June 2020● the statement of comprehensive income for the year then ended● the statement of changes in equity for the year then ended● the statement of cash flows for the year then ended● the notes to the financial statements, which include a summary of significant accounting policies● the directors’ declaration.

Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report.

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

Independence We are independent of the Company in accordance with the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Other information The directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report thereon.

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Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards - Reduced Disclosure Requirements and the Australian Charities and Not-for-profits Commission (ACNC) Act 2012 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar4.pdf. This description forms part of our auditor's report.

PricewaterhouseCoopers

Caroline Mara Partner

Newcastle 28 October 2020

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https://www.auasb.gov.au/auditors_responsibilities/ar4.pdf

Documents

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