Statement of profit or loss and other comprehensive income

for the financial year ended 30 June 2017

		2017	2016
	Notes	$'000	$'000
REVENUE
Government funding
Operating - Commonwealth funded		614,837	619,535
Operating - State funded		44,238	49,445
Capital - Commonwealth and state funded		52,376	55,006
Total government funding		711,451	723,986
Sale of goods		27,912	26,031
Rendering of services		16,177	15,413
Donations, bequests and sponsorships	4	87,331	89,495
Investment revenue	5	11,285	11,125
Non-government grant		5,230	4,299
Other revenue		12,168	23,683
Total revenue		871,554	894,032
EXPENDITURE
Employee expenditure	7	(453,459)	(447,666)
Operating expenditure	7	(245,450)	(241,798)
Cost of services, sale of goods and consumables	7	(108,162)	(109,040)
Depreciation and amortisation		(53,416)	(55,771)
Interest and debt servicing costs		(5,341)	(6,552)
Net loss on assets	6	(5,323)	(12,585)
Total expenditure		(871,151)	(873,412)
NET SURPLUS FOR THE YEAR		403	20,620
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified subsequently to profit or loss
Actuarial gain/(loss) on retirement benefit obligations	17	2,701	(1,281)
Items that may be reclassified subsequently to profit or loss
Net gain/(loss) arising on investment revaluation	18	4,904	(2,246)
Other comprehensive income/(deficit) for the year		7,605	(3,527)
TOTAL COMPREHENSIVE SURPLUS FOR THE YEAR		8,008	17,093
The accompanying notes on pages 66 to 101 form part of these financial statements. For divisional reporting refer to Note 3.

Statement of financial position

as at 30 June 2017

		2017	2016
	Notes	$'000	$'000
ASSETS
Current assets
Cash and cash equivalents	21(a)	199,584	230,693
Trade and other receivables	8	21,527	23,781
Inventories	9	19,659	24,271
Other financial assets	10	135,931	110,341
Prepayments		11,441	7,571
Assets classified as held for sale	11(b)	3,029	-
Total current assets		391,171	396,657
Non-current assets
Property, plant and equipment	11(a), 11(b)	365,950	375,810
Intangible assets	12	44,298	47,758
Total non-current assets		410,248	423,568
TOTAL ASSETS		801,419	820,225
LIABILITIES
Current liabilities
Trade and other payables	13	52,393	47,449
Borrowings	14	14,648	10,786
Provisions	15	81,157	72,316
Other liabilities	16	98,414	124,171
Total current liabilities		246,612	254,722
Non-current liabilities
Borrowings	14	35,094	49,741
Provisions	15	16,105	17,813
Defined benefit superannuation plans	17	748	3,346
Other liabilities	16	4,534	4,285
Total non-current liabilities		56,481	75,185
TOTAL LIABILITIES		303,093	329,907
NET ASSETS		498,326	490,318
EQUITY
Reserves	18	135,852	120,836
Specific purpose funds	19	36,530	40,056
Accumulated funds	20	325,944	329,426
TOTAL EQUITY		498,326	490,318
The accompanying notes on pages 66 to 101 form part of these financial statements. For divisional reporting refer to Note 3.

Statement of changes in equity

for the financial year ended 30 June 2017

		Accumulated funds	Specific purpose funds	Investment revaluation reserve	Special reserve	Capital reserve	Total
YEAR ENDED 30 JUNE 2016	Notes	$’000	$’000	$’000	$’000	$’000	$'000
Balance as at 1 July 2015		310,065	51,958	1,983	58,696	50,523	473,225
Net surplus for the year	20	20,620	-	-	-	-	20,620
Other comprehensive (deficit) for the year	18, 20	(1,281)	-	(2,246)	-	-	(3,527)
Transfers to / (from) specific purpose funds	19	11,902	(11,902)	-	-	-	-
Transfers to / (from) other reserves	18	(11,880)	-	-	6,816	5,064	-
Balance as at 30 June 2016		329,426	40,056	(263)	65,512	55,587	490,318
YEAR ENDED 30 JUNE 2017
Net surplus for the year	20	403	-	-	-	-	403
Other comprehensive surplus for the year	18, 20	2,701	-	4,904	-	-	7,605
Transfers to / (from) specific purpose funds	19	3,526	(3,526)	-	-	-	-
Transfers to / (from) other reserves	18	(10,112)	-	-	7,438	2,674	-
Balance as at 30 June 2017		325,944	36,530	4,641	72,950	58,261	498,326
The accompanying notes on pages 66 to 101 form part of these financial statements. For divisional reporting refer to Note 3.

Statement of cash flows

for the financial year ended 30 June 2017

		2017	2016
	Notes	$'000	$'000
Cash flows from operating activities
Receipts from donors, government and other sources		924,317	948,046
Payments to suppliers and employees		(881,054)	(840,752)
Interest and other costs of finance paid		(5,341)	(6,552)
Net cash provided by operating activities	21(b)	37,922	100,742
Cash flows from investing activities
Payments for property, plant and equipment and intangibles		(48,582)	(62,021)
Proceeds from disposal of property, plant and equipment		844	450
Net payments for purchase of investment securities		(20,946)	(39,453)
Dividends received		2,069	1,780
Interest received		8,405	8,629
Net cash used in investing activities		(58,210)	(90,615)
Cash flows from financing activities
Proceeds from borrowings		-	1,500
Repayment of borrowings		(10,786)	(18,292)
Net cash used in financing activities		(10,786)	(16,792)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(31,074)	(6,665)
Cash and cash equivalents at the beginning of the financial year		230,693	237,354
Effects of exchange rate changes on the balance of cash held in foreign currencies		(35)	4
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR	21(a)	199,584	230,693
The accompanying notes on pages 66 to 101 form part of these financial statements. For divisional reporting refer to Note 3.

Notes to the financial statements

for the financial year ended 30 June 2017

NOTE 1. PRINCIPAL ACTIVITIES AND REGISTERED OFFICE IN AUSTRALIA

Australian Red Cross Society (‘Society’) undertakes a wide range of humanitarian activities to reduce vulnerability and improve lives in Australia and overseas.

Australian Red Cross Society is an organisation incorporated by Royal Charter and is a member of the International Federation of Red Cross and Red Crescent Societies. Australian Red Cross Society operates as two key operating divisions: Humanitarian Services, which provides relief in times of crisis and care for people experiencing vulnerability in Australia and around the world; and the Australian Red Cross Blood Service (Blood Service), providing quality blood products, tissues and related services for the benefit of the community.

Australian Red Cross Society is domiciled in Australia and its registered office and principal place of business is:

Australian Red Cross Society

155 Pelham Street
CARLTON VIC 3053
Tel: (03) 9345 1800
ABN 501 69 561 394

The Humanitarian Services’ head office is at 155 Pelham Street, Carlton, Victoria and it operates from more than 395 sites, including retail stores and and offices in capital cities of all states and territories in Australia. The delivery of humanitarian services is funded principally through government grants, public donations (in particular regular monthly giving and bequests from generous Australians) and approved corporate/private donors. A network of 17,486 members support fundraising and advocacy efforts, while almost 20,000 volunteers assist us to deliver services to those most in need.

Melbourne, Victoria and it operates in all states and territories in Australia. The Blood Service operates four major blood processing centres, two major inventory and distribution hubs, plus approximately 100 fixed and mobile blood donor centres in metropolitan and regional areas across Australia. The Blood Service is funded for this activity by the Commonwealth, State and Territory Governments under a Deed of Agreement (Deed) which is administered by the National Blood Authority (NBA). In the event that the Blood Service ceases to perform services under the Deed, the Deed-funded net assets of the Blood Service would be transferred to the NBA for no consideration. The financial statements of the Australian

Red Cross Society, inclusive of the Australian Red Cross Blood Service, have been prepared on the basis of the continuation of operations under the Deed. As the Blood Service carries on its work as a seperate operating division of the Society, any cessation of services under the Deed is not anticipated to adversely impact the operations of the remainder of the Society.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards and Interpretations, and complies with other requirements of the law and the Australian Charities and Not-for-profit Commission Act 2012.

Accounting Standards include Australian equivalents to International Financial Reporting Standards (A-IFRS). Compliance with A-IFRS ensures that the financial statements and notes of the Society comply with International Financial Reporting Standards (IFRS), except for the requirements applicable to not-for-profit organisations. The financial report of Australian Red Cross Society for the year ended 30 June 2017 was authorised for issue in accordance with a resolution of the Board on 28th October 2017.

For the purpose of the financial report the entity is considered to be a not-for-profit entity.

ACFID Compliance

Australian Red Cross is a signatory to the Australian Council for International Aid and Development (ACFID) Code of Conduct and is committed to full adherence to its requirements. The Code aims to improve international development outcomes and increase stakeholder trust by enhancing the transparency and accountability of signatory organisations. The financial statements have been prepared in accordance with the requirements set out in the ACFID Code of Conduct and should be read in conjunction with the Financial Statements and accompanying notes. For further information on the code, please refer to www.acfid.asn.au

2.1 Application of new and revised Accounting Standards

Amendments to Australian Accounting Standards Board and interpretations that are mandatorily effective for the current year

In the current year, the Society has applied the following amendments to the AASB issued by the Australian Accounting Standards Board (AASB) that are mandatorily effective for an accounting period that begins on or after 1 July 2016, and therefore relevant for the current year end.

AASB 2014-4 ‘Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation’

AASB 2015-1 ‘Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 Cycle’

AASB 2015-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101’ The application of the above amendments has not had a material impact on the disclosures or amounts recognised in the financial statements.

2.2 Standards and interpretations issued not yet effective

At the date of authorisation of the financial statements, a number of standards and interpretations were in issue but not yet effective. These are listed below.

Standard/interpretation	Effective for annual reporting periods beginning on or after	Expected to be initially applied in the financial year ending
AASB 9 ‘Financial Instruments’ and the relevant amending standards	1 Jan 18	30 Jun 19
AASB 15 ‘Revenue from Contracts with Customers’, AASB 2014-5 ‘Amendments to Australian Accounting Standards arising from AASB 15’, AASB 2015-8 ‘Amendments to Australian Accounting Standards – Effective date of AASB 15’, and AASB 2016-3 'Amendments to Australian Accounting Standards – Clarifications to AASB 15', AASB 2016-7 'Amendments to Australian Accounting Standards – Deferral of AASB 15 for Not-for-Profit Entities' and AASB 2016-8 'Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities'	1 Jan 19	30 Jun 19
AASB 2016-7 'Amendments to Australian Accounting Standards – Deferral of AASB 15 for Not-for-Profit Entities' and AASB 2016-8 'Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities'	1 Jan 19	30 Jun 19
AASB 16 ‘Leases’	1 Jan 19	30 Jun 20
AASB 1058 'Income of Not-for-Profit Entities', AASB 2016-7 'Amendments to Australian Accounting Standards – Deferral of AASB 15 for Not-for-Profit Entities' and AASB 2016-8 'Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities'	1 Jan 19	30 Jun 19
AASB 2016-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107’	1 Jan 17	30 Jun 18
AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle	1 Jan 17	30 Jun 18

The Directors have considered the above pending standards and anticipate that the adoption of the new revenue and leasing standards may have a material impact on measurements and disclosure within the financial statements. Other pending standards are being considered, and while some further impacts are expected, they are unlikely to be material.

AASB 15 Revenue from Contracts with Customers and AASB 1058 Income of Not-for-Profit (NFP) Entities

The AASB has issued new income recognition requirements for NFP entities via: AASB 1058 Income of NFP entities, AASB 2016-8 NFP specific guidance in AASB 15 and AASB 2016-7 deferral of AASB 15. The new standards will be effective for the Society beginning 1 July 2019 and the Society currently anticipate early adoption of the standards effective 1 July 2018.

AASB 1058 shifts the focus from the current reciprocal/non-reciprocal basis to basis of assessment that considers the enforceability of a contract and the specificity of performance obligations.

The core principle of the new income recognition requirements under AASB 1058 is that where there is an ‘enforceable’ contract with a customer with ‘sufficiently specific’ performance obligations, income would be recognised when (or as) the performance obligations are satisfied under AASB 15. Should the transaction fall outside of the scope of AASB 15, then income would be recognised immediately under AASB 1058. It is anticipated the main revenue stream impacted will be grant income.

Further, upon AASB 16 Leases becoming effective there will also be a change in how peppercorn leases will be recognised and recorded whereby the benefit (i.e. fair value of the right to use the asset) of the full lease term is to be recognised.

NFP entities have a choice of applying the new standards retrospectively or to use a modified transition approach (with no restatement of comparatives). The Society anticipate adopting the modified transitional approach where transactional adjustments are to be recognised in retained earnings at the date of implementation of the standard without adjustment comparatives.

2.3 Basis of preparation

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected financial assets and liabilities, including derivatives, for which the fair value basis of accounting has been applied. Historical cost is based on the fair values of the consideration given in exchange for assets.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Society takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of AASB 117.

In addition, for financial reporting purposes fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable; and the significance of the inputs to the fair value measurement in its entirety. These are described as follows:

• Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at measurement date;
• Level 2: Inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices); and
• Level 3: Inputs are unobservable inputs for the asset or liability.

The Society’s financial statements are prepared by combining the financial statements of Humanitarian Services and Blood Service. Consistent accounting policies are employed in the preparation of and presentation of the financial statements across the divisions. The financial statements include the information and results of both divisions.

There is a change in the presentation of the financial statements as compared to the previous year. The introduction of note 3 ‘Divisional Reporting’, presents the Society’s results and financial position split by Humanitarian Services and Blood Service (divisions). All other notes are shown at an aggregated level except for note 29 ‘Key Management Personnel’. Following a review of the financial statements, change in presentation was implemented to provide more relevant and simpler presentation to the users of the financial statements.

In preparing the financial statements, all balances and transactions between Humanitarian Services and the Blood Service, as well as unrealised profits arising within the entity, are eliminated in full.

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

(a) Foreign currency

The functional and presentation currency of Australian Red Cross Society is Australian dollars ($AUD).

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at reporting date. All foreign currency differences in the financial report are taken to profit or loss,

Derivative financial instruments

Derivatives are initially recorded at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event, the timing and recognition in other comprehensive income depends on the nature of the hedge relationship.

(b) Income tax

The Society, being a humanitarian organisation, is exempt from income tax under subsection 50-5 of the Income Tax Assessment Act 1997. The entity is also registered as a deductible gift recipient for tax.

(c) 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 taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified within operating cash flows.

(d) Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Society and the revenue can be reliably measured.

Training services

Revenue is recognised when the training services have been provided to participants and the fee is receivable.

Grants

Government grants are received by the entity in return for past or future compliance with certain conditions relating to the operating activities of the entity. Government grants also include income where there are no conditions specifically relating to the operating activities of the entity other than the requirement to operate in certain regions or industry sectors.

Grant income is recognised in accordance with AASB 1004 ‘Contributions’ when: the entity obtains control or the right to receive the contribution; the amount of the contribution can be measured reliably; and it is probable that the future economic benefits comprising the contribution will flow to the entity.

The expenditure to which the grant relates is expensed as incurred and may not correlate to the timing of grant receipts.

Output-based funding

The Blood Service recognises income for the delivery of products to approved health providers on an accrual basis, representing the right to receive contributions from the NBA. Under the Output Based Funding Principles, the Blood Service can apply to retain up to $5.000 million of any surplus for the purpose outlined in the Principles. If the annual surplus is more than $5.000 million in any year then the surplus funding over that amount will be returned to the NBA unless otherwise agreed between the Blood Service and the NBA. Any excess funds to be returned are recorded as a liability within revenue in advance.

Capital funding

The arrangement with the Blood Service and the NBA provides for capital funding comprising 10% of the funding for the Main Operating Programme for the financial year. Capital funding from government grants are recognised as revenue when the Blood Service obtains control of the contribution, or the right to receive the contribution, and it is probable that the economic benefits of the contribution will flow to the Blood Service. Capital funding received in one year may be carried forward and expended in future years.

Sale of goods

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and it can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer.

Interest

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. Interest accruing on funds held for a special purpose within international projects is transferred to the Special Purpose Fund within equity after first being recorded in profit or loss.

Dividends

Dividend revenue is recognised when the shareholder’s right to receive payment has been established, provided it is probable that the economic benefits will flow to the Society and the amount of income can be measured reliably.

Rental income

Rental income received from properties owned by the Society is accounted for on a straight-line basis over the lease term. Contingent rental income is recognised as income in the periods in which it is earned.

Donations, bequests and sponsorships

The Society receives part of its income from donations, either as cash or in-kind. Amounts donated can be recognised as revenue only when the Society gains control, economic benefits are probable and the amounts can be measured reliably.

The Society establishes controls to ensure that donations are recorded in the financial records, however at times it is impractical to maintain effective controls over the collection of such revenue prior to its initial entry into the financial records. Therefore, donations are recognised as revenue when they are recorded in the books and records of the Society. Donations received for specific purposes are transferred to a separate fund within equity after being first recorded in profit or loss.

Bequests are recognised at the fair value of the benefit received when receipt of the amount is certain. Where required, bequests are recognised in accordance with the express terms of the Will.

Sponsorship agreements entitle the sponsor to something of value in return for their support. Revenue is recognised when the Society gains control, economic benefits are probable and the amounts can be reliably measured.

(e) Cash and cash equivalents

For the purposes of the statement of cash flows, cash and cash equivalents include cash on-hand; deposits held at call with financial institutions; and 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. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

(f) Non-derivative financial instruments

Financial instruments are initially measured when the related contractual rights or obligations exist, with cost including acquisition and related transaction costs on the trade date. Subsequent to initial recognition these instruments are measured as set out below:

Financial assets

Financial assets are recognised and derecognised on trade date where purchase or sale of a financial asset is under contract, the terms of which require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value.

Subsequent to initial recognition, financial assets are classified into the following categories depending on the nature and the purpose of the financial asset as determined at the time of initial recognition.

(i) Held-to-maturity investments These investments have fixed maturities, and it is the Society’s intention to hold these investments to maturity. This category includes government bonds and fixed-interest securities. Any held-to-maturity investments held by the Society are stated at amortised cost using the effective interest method less impairment, with revenue recognised on an effective-yield basis.

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or where appropriate, a shorter period.

(ii) Available for sale financial assets Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from the changes in fair value are recognised in other comprehensive income and accumulated in the investment revaluation reserve, except for impairment losses which are recognised in profit or loss.

Loans and other receivables

Loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest income is recognised by applying the effective interest rate.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arms-length transactions and reference to similar instruments.

Impairment

At each reporting date, the Society assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial assets, a prolonged or significant decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in profit or loss. For financial assets carried at amortised cost, the amount of the impairment 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.

The carrying amount of financial assets including uncollectible trade receivables is reduced by the impairment loss through the use of an allowance account. Subsequent recoveries of amounts previously written-off are credited against the allowance account. Changes in the allowance account are recognised in profit or loss.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to the profit or loss in the period.

With the exception of available-for-sale equity instruments, if in a subsequent period the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised directly in other comprehensive income and accumulated under the heading of investments revaluation reserve.

Derecognition of financial assets

Financial assets are recognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Society neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Society recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Society retains substantially all the risks and rewards of ownership of a transferred financial asset, the Society continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount, the sum of the consideration received and receivable, and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity, is recognised in profit or loss.

On derecognition of a financial asset other than in its entirety (e.g. when the Society retains an option to repurchase part of a transferred asset or retains a residual interest that does not result in the retention of substantially all the risks and rewards of ownership and the Society retains control), the Society allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer.

The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in the profit or loss.

A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

Financial liabilities Non-derivative financial liabilities, including loans and borrowings, are recognised at amortised cost, comprising original debt less principal payments and amortisation.

(g) Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Where inventories are held for distribution or are to be consumed by the Society in providing services or aid at no or nominal charge, they are valued at the lower of cost and replacement cost.

Retail inventory

Retail inventory is valued at cost. No value is assigned to donated goods based on the lower of cost and net realisable value principle.

Blood inventory

Inventories held for distribution display the following three essential characteristics:

(i) There must be future economic benefits;
(ii) The entity must have control over the future economic benefits; and
(iii) The transaction giving rise to the entity’s control over future economic benefit must have occurred.

The Blood Service provides products and services in accordance with the Deed with the NBA. In the discharge of this agreement, the Blood Service is responsible for a range of activities, including collection, testing, processing, inventory management and distribution of blood and blood products. In this context, the Blood Service recognises certain categories of blood and blood products as current assets, to be measured at the lower of cost and current replacement cost. Cost comprises direct materials, direct labour and overheads of the division incurred in the collection, processing and testing of blood.

The Blood Service distributes in Australia the supply of fractionated plasma products manufactured in Australia and imported finished product. Plasma-derived products are manufactured in Australia by the fractionator, CSL Limited (‘CSL’). In relation to blood products held for distribution, the Blood Service does not recognise plasma supplied to CSL for fractionation, fractionated product held at CSL and fractionated product at the Blood Service held for distribution. This is due to the retention of control and risk over these specific products by parties other than the Blood Service and the absence of future economic benefit under output-based funding arrangements.

Inventory at year end includes:

(i) all fresh blood products and plasma for fractionation (not yet supplied to CSL) held at the Blood Service or at a Blood Service storage facility; and
(ii) all work in progress held at the Blood Service.

Consumable inventory has been valued at weighted average cost. Fresh product volumes are physically counted and valued as individual units. The value of work in progress is calculated using the average daily quantity supplied during the June period. All blood products are valued at direct costs plus operating overheads.

(h) Trade receivables

Trade receivables, which generally have 30-day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.

An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred. The carrying value less impairment of trade receivables are assumed to approximate fair value due to their short-term nature.

(i) Non-current assets held for sale

Non-current assets classified as assets held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. The sale of the asset is expected to be completed within one year from the date of classification.

(j) Property, plant and equipment

Property, plant and equipment are recorded at historical cost, less any subsequent accumulated depreciation and any impairment in value. Cost includes expenditure that is directly attributable to the item. Grant funded assets are depreciated in accordance with the terms of funding agreement.

The initial cost of the asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This relates to leasehold improvements and the restoration obligations to restore the property to its original condition. These costs are included in leasehold improvements with a corresponding provision for site restoration.

Depreciation is provided on property, plant and equipment including leasehold buildings but excluding freehold land. Depreciation is calculated on a straight-line basis so as to write-off the net cost of each asset (including leasehold buildings but excluding freehold land) over the shorter of its expected useful life or period of the lease, to its estimated residual value. The estimated useful life, residual values and depreciation method are reviewed at the end of each annual reporting period.

The following estimated useful lives are used in the calculation of depreciation:

	Humanitarian Services		Blood Service
	Years	%	Years	%
Freehold buildings and renovations	5 - 40	2.5 - 20	40	2.5
Leasehold improvements	Shorter of lease period or useful life		Shorter of lease period or useful life
Shop fit-outs	Shorter of lease period or useful life		-	-
Plant and equipment:
- Motor vehicles	5	20	4 - 10	10 - 25
- Computer equipment	3	33.33	4	25
- Plant, furniture, fittings and equipment	5	20	5 - 20	5 - 20

The gain or loss on disposal of fixed assets is determined as the difference between the carrying amount of the asset at the time of disposal and the proceeds of the disposal, and is included in profit or loss in the year of disposal.

The useful life and residual value of property, plant and equipment are reviewed annually. Judgement is applied in determining the useful lives of property, plant and equipment. Any reassessment of useful life and residual value in a particular year will affect depreciation expense (either increasing or decreasing) from the date of reassessment through to the end of the reassessed useful life for both the current and future years.

(k) Intangibles

Intangible assets with finite lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives and is recognised in profit or loss. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Subsequent expenditure is capitalised only when it increases the future economic benefits for the specific assets.

The following estimated useful lives are used in the calculation of amortisation:

	Humanitarian Services		Blood Service
	Years	%	Years	%
Intangibles	5 - 40	2.5 - 20	40	2.5

(l) Borrowings

All borrowing costs directly attributable to the acquisition, construction or production of qualifying assets (which are assets that necessarily take a substantial period of time to get ready for their intended use or sale) are initially recognised at cost against the borrowing.

All borrowings are initially recorded at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, borrowings are subsequently measured at amortised cost using effective interest rate method. Amortised cost is calculated by taking into account any issue cost and discount premium on settlement.

Gains and losses are recognised in the profit or loss when the liabilities are derecognised, as well as through the amortisation process.

(m) Payables

These amounts represent liabilities for goods and services provided to the Society prior to the end of the financial year which are unpaid. The amounts are unsecured and are generally due for settlement within 30 days of recognition.
The carrying value of trade payables is assumed to approximate their fair value due to their short-term nature.

(n) Impairment

At each reporting date, the Society reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from the other assets, the Society estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. The future economic benefits of the Society’s assets are not primarily dependent on their ability to generate net cash inflows. The value in use is determined as the depreciated replacement cost of the asset, rather than by using discounted future cash flows. Depreciated replacement cost is defined as the current replacement cost of an asset less, where applicable, accumulated depreciation calculated on the basis of such cost to reflect the already consumed or expired future economic benefits of the asset. The current replacement cost of an asset is its cost measured by reference to the lowest cost at which the gross future economic benefits of that asset could currently be obtained in the normal course of business.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit and loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amounts of the asset (cash-generating unit) in prior years. A reversal is recognised immediately as profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

(o) Finance costs

Finance costs are recognised as an expense when incurred.

(p) Leases

Finance leases

Finance leases transfer to the Society substantially all the risks and benefits incidental to ownership of the leased item and are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and the finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Operating leases

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as the lease income.

Operating lease payments are recognised as an expense in the profit or loss on a straight-line basis over the lease term.

Lease incentives

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefits of incentives are recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

(q) Employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, and long-service leave when it is probable that settlement will be required and they are capable of being measured reliably.

Liabilities recognised in respect of short-term employee benefits are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. The liability for annual leave and long-service leave is recognised under provision for employee benefits. All other short-term benefit obligations are presented as payables.

Liabilities recognised in respect of long-term employee benefits are measured as the present value of the estimated future cash outflows to be made by the Society in respect of services provided by employees up to the reporting date. Expected future payments are discounted using corporate bond yields. Consideration is given to future wage and salary levels, experience of employee departures and periods of service.

Superannuation

The Society contributes to various staff retirement funds, both defined benefit and accumulation schemes, to provide members with benefits on death or retirement. The defined benefit funds operated by the Society are the Local Government Superannuation Scheme (“LGSS”) in New South Wales, Australian Red Cross Staff Superannuation Plan and the Australian Red Cross Queensland Staff Retirement Fund.

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.

Defined benefit costs are categorised as follows:

(i) Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
(ii) Net interest expense or income; and
(iii) Remeasurement.

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Society recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees, according to a detailed formal plan without the possibility of withdrawal, or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after statement of financial position date are discounted to present value and classified as non-current.

(r) Provisions

Provisions are recognised when the Society has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value 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. Provisions include an amount relating to the site restoration requirements on leased properties.

(s) Judgements and estimates

In the application of the Society’s accounting policies, management are required to make judgements, estimates and assumptions about carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period; or in the period of the revision and future periods, if the revision affects both current and future periods.

Long-service leave and annual leave

Management judgement is applied in determining the following key assumptions used in the calculation of long-service leave at reporting date:

(i) future increases in salaries, wages and on costs;
(ii) experience of employee departures and period of service; and
(ii) flow of anticipated leave.

Allowance for doubtful debts

Management’s judgement is applied in determining the allowance for doubtful debts. If the estimated recoverable amount of the debt is less than the amount of revenue recognised, the difference is recognised in the allowance for doubtful debts.

Provision for site restoration

The provision for the costs of site restoration represents the present value of the best estimate of the future sacrifice of economic benefits that will be required to remove leasehold improvements from leasehold properties. The estimate has been made on the basis of historical restoration costs, a review of leases and future rentals. The unexpired terms of the leases range from one to 40 years.

Property, plant and equipment & intangibles

Useful lives and residual value of property, plant and equipment & intangibles are reviewed annually. Judgement is applied in determining the useful lives of property, plant and equipment. Any reassessment of useful lives and residual value in a particular year will affect depreciation and amortisation expense (either increasing or decreasing) from the date of reassessment through to the end of the reassessed useful life for both the current and future years.

(t) Comparative amounts

Certain comparative amounts in the financial statements have been reclassified or re-represented to conform to changes in presentation in the current financial year.

Operating divisions

The Australian Red Cross Society comprises the following operating divisions as defined in Note 1 to this report:

Australian Red Cross
Humanitarian Services

(Humanitarian Services)
Australian Red Cross Blood Service
(Blood Service)

The accounting policies of the reportable divisions are the same as the group’s accounting policies described in Note 2. Division surplus represents the surplus earned by each division. There is no allocation of central administration costs.

Interdivision transactions include rent paid by the Blood Service operating division to the Humanitarian Services operating divsion. Accumulated funds balances for both Humanitarian Services and Blood Service includes eliminations of interdivision transactions amounting to $5.835 million.

Divisional statement of profit or loss and other comprehensive income

	2017			2016
	Humanitarian Services	Blood Service	Society	Humanitarian Services	Blood Service	Society
	$’000	$’000	$’000	$’000	$’000	$'000
Revenue
Government funding
Operating - Commonwealth funded	104,810	510,027	614,837	127,022	492,513	619,535
Operating - State funded	21,467	22,771	44,238	27,883	21,562	49,445
Capital - Commonwealth and state funded	-	52,376	52,376	-	55,006	55,006
Total government funding	126,277	585,174	711,451	154,905	569,081	723,986
Sale of goods	27,912	-	27,912	26,031	-	26,031
Rendering of services	16,177	-	16,177	15,413	-	15,413
Donations, bequests and sponsorships	87,331	-	87,331	89,495	-	89,495
Investment revenue	3,253	8,032	11,285	3,384	7,741	11,125
Non-government grant	5,230	-	5,230	4,299	-	4,299
Other revenue	-	12,168	12,168	-	23,683	23,683
Total revenue	266,180	605,374	871,554	293,527	600,505	894,032
Expenditure
Employee expenditure	(153,988)	(299,471)	(453,459)	(155,002)	(292,664)	(447,666)
Operating expenditure	(106,968)	(138,482)	(245,450)	(124,393)	(117,405)	(241,798)
Cost of services, sale of goods and consumables	(5,911)	(102,251)	(108,162)	(6,561)	(102,479)	(109,040)
Depreciation and amortisation	(8,010)	(45,406)	(53,416)	(9,530)	(46,241)	(55,771)
Interest and debt servicing costs	(888)	(4,453)	(5,341)	(1,263)	(5,289)	(6,552)
Net loss on assets	(33)	(5,290)	(5,323)	(759)	(11,826)	(12,585)
Total expenditure	(275,798)	(595,353)	(871,151)	(297,508)	(575,904)	(873,412)
NET SURPLUS/(DEFICIT) FOR THE YEAR	(9,618)	10,021	403	(3,981)	24,601	20,620
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified subsequently to profit or loss
Actuarial gain/(loss) on retirement benefit obligations	-	2,701	2,701	-	(1,281)	(1,281)
Items that may be reclassified subsequently to profit or loss
Net gain/(loss) arising on investment revaluation	1,458	3,446	4,904	(1,008)	(1,238)	(2,246)
Other comprehensive income/(deficit) for the year	1,458	6,147	7,605	(1,008)	(2,519)	(3,527)
TOTAL COMPREHENSIVE SURPLUS/(DEFICIT) FOR THE YEAR	(8,160)	16,168	8,008	(4,989)	22,082	17,093

Divisional Statement Of Financial Position

	2017			2016
	Humanitarian Services	Blood Service	Society	Humanitarian Services	Blood Service	Society
	$’000	$’000	$’000	$’000	$’000	$'000
ASSETS
Current assets
Cash and cash equivalents	39,501	160,083	199,584	36,955	193,738	230,693
Trade and other receivables¹	17,160	4,367	21,527	16,392	7,389	23,781
Inventories	1,198	18,461	19,659	1,405	22,866	24,271
Other financial assets	45,561	90,370	135,931	39,681	70,660	110,341
Prepayments	2,559	8,882	11,441	2,465	5,106	7,571
Assets classified as held for sale	3,029	-	3,029	-	-	-
Total current assets	109,008	282,163	391,171	96,898	299,759	396,657
Non-current assets
Property, plant and equipment	61,152	304,798	365,950	67,371	308,439	375,810
Intangible assets	16,551	27,747	44,298	17,687	30,071	47,758
Total non-current assets	77,703	332,545	410,248	85,058	338,510	423,568
TOTAL ASSETS	186,711	614,708	801,419	181,956	638,269	820,225
LIABILITIES
Current liabilities
Trade and other payables²	17,584	34,809	52,393	13,854	33,595	47,449
Borrowings	-	14,648	14,648	-	10,786	10,786
Provisions	21,124	60,033	81,157	15,735	56,581	72,316
Other liabilities	2,718	95,696	98,414	3,912	120,259	124,171
Total current liabilities	41,426	205,186	246,612	33,501	221,221	254,722
Non-current liabilities
Borrowings	-	35,094	35,094	-	49,741	49,741
Provisions	3,739	12,366	16,105	4,519	13,294	17,813
Defined benefit superannuation plans	-	748	748	65	3,281	3,346
Other liabilities	-	4,534	4,534	-	4,285	4,285
Total non-current liabilities	3,739	52,742	56,481	4,584	70,601	75,185
TOTAL LIABILITIES	45,165	257,928	303,093	38,085	291,822	329,907
NET ASSETS	141,546	356,780	498,326	143,871	346,447	490,318
EQUITY
Reserves	2,771	133,081	135,852	1,313	119,523	120,836
Specific purpose funds	36,530	-	36,530	40,056	-	40,056
Accumulated funds	102,245	223,699	325,944	102,502	226,924	329,426
TOTAL EQUITY	141,546	356,780	498,326	143,871	346,447	490,318
¹ FY17 Trade and other receivables is offset by nil (2016: $0.080 million) intra-division transaction elimination. ² FY17 Trade and other payables is offset by nil (2016: $0.091 million) intra-division transaction elimination.

Divisional statement of changes in equity

		Humanitarian Services			Blood Service				Total
		Accumulated funds	Specific purpose funds	Investment revaluation reserve	Accumulated funds	Special reserve	Capital reserve	Investment revaluation reserve
	Notes	$’000	$’000	$’000	$’000	$’000	$'000	$'000	$'000
YEAR ENDED 30 JUNE 2016
Balance as at 1 July 2015		94,581	51,958	2,321	215,484	58,696	50,523	(338)	473,225
Net surplus/(deficit) for the year	20	(3,981)	-	-	24,601	-	-	-	20,620
Other comprehensive (deficit) for the year	18,20	-	-	(1,008)	(1,281)	-	-	(1,238)	(3,527)
Transfers to / (from) specific purpose funds	19	11,902	(11,902)	-	-	-	-	-	-
Transfers to / (from) other reserves	18	-	-	-	(11,880)	6,816	5,064	-	-
Balance as at 30 June 2016		102,502	40,056	1,313	226,924	65,512	55,587	(1,576)	490,318
YEAR ENDED 30 JUNE 2017
Net surplus/(deficit) for the year	20	(9,618)	-	-	10,021	-	-	-	403
Other comprehensive surplus for the year	18,20	-	-	1,458	2,701	-	-	3,446	7,605
Transfers to / (from) specific purpose funds	19	3,526	(3,526)	-	-	-	-	-	-
Transfers to / (from) other reserves	18	-	-	-	(10,112)	7,438	2,674	-	-
Elimination of interdivision transactions		5,835	-	-	(5,835)	-	-	-	-
Balance as at 30 June 2017		102,245	36,530	2,771	223,699	72,950	58,261	1,870	498,326

Divisional statement of cash flows

		2017			2016
		Humanitarian Services	Blood Service	Total	Humanitarian Services	Blood Service	Total
	Notes	$’000	$’000	$’000	$’000	$’000	$'000
Cash flows from operating activities
Receipts from donors, government and other sources		267,240	657,077	924,317	296,005	652,041	948,046
Payments to suppliers and employees		(258,529)	(622,525)	(881,054)	(289,400)	(551,352)	(840,752)
Interest and other costs of finance paid		(888)	(4,453)	(5,341)	(1,263)	(5,289)	(6,552)
Net cash provided by operating activities	21(b)	7,823	30,099	37,922	5,342	95,400	100,742
Cash flows from investing activities
Payments for property, plant and equipment and intangibles		(4,446)	(44,136)	(48,582)	(2,284)	(59,737)	(62,021)
Proceeds from disposal of property, plant and equipment		636	208	844	159	291	450
Net payments for purchase of investment securities		(3,909)	(17,037)	(20,946)	(575)	(38,878)	(39,453)
Dividends received		1,195	874	2,069	737	1,043	1,780
Interest received		1,247	7,158	8,405	1,931	6,698	8,629
Net cash used in investing activities		(5,277)	(52,933)	(58,210)	(32)	(90,583)	(90,615)
Cash flows from financing activities
Proceeds from borrowings		-	-	-	1,500	-	1,500
Repayment of borrowings		-	(10,786)	(10,786)	(8,346)	(9,946)	(18,292)
Net cash used in financing activities		-	(10,786)	(10,786)	(6,846)	(9,946)	(16,792)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		2,546	(33,620)	(31,074)	(1,536)	(5,129)	(6,665)
Cash and cash equivalents at the beginning of the financial year		36,955	193,738	230,693	38,491	198,863	237,354
Effects of exchange rate changes on the balance of cash held in foreign currencies		-	(35)	(35)	-	4	4
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR	21(a)	39,501	160,083	199,584	36,955	193,738	230,693

Note 4 DONATIONS, BEQUESTS AND SPONSORSHIPS	2017	2016
	$'000	$'000
Donations and sponsorships	66,199	62,772
Appeals - international
Cyclone Pam (Vanuatu) Appeal	38	59
Ebola Outbreak Appeal	1	4
Nepal Earthquake Appeal	80	839
Syria Crisis Appeal	1,083	1,455
Tropical Cyclone Winston (Fiji) Appeal	44	4,546
Typhoon Haiyan (Philippines) Appeal	14	99
East Africa Food Crisis Appeal	1,261	-
Bequests	12,571	12,594
Membership fee and fundraising	2,208	2,546
Raffle tickets	3,832	4,581
Total donations, bequests and sponsorships	87,331	89,495
Note 5 INVESTMENT REVENUE
Interest revenue - bank deposits	7,654	7,463
Interest revenue - Available-for-sale investments	751	1,166
Dividends from other entities and imputation credit	2,487	2,036
Other income	393	460
Total investment revenue	11,285	11,125
Note 6 GAINS AND (LOSSES)
(Losses) / gains on disposal of property, plant and equipment	(1,132)	67
Write off of intangible projects	(618)	(1,192)
Impairment of property, plant and equipment	(2,741)	(11,440)
Impairment losses of intangibles	(667)	-
Gains on disposal of investments	464	488
Impairment of available-for-sale financial assets¹	(574)	(462)
Foreign exchange losses	(55)	(46)
Total (losses) and gains	(5,323)	(12,585)
¹ Where an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to the profit or loss in the period.
Note 7 EXPENDITURE	2017	2016
	$'000	$'000
Employee expenditure
Wages and salaries	410,622	407,331
Post employment benefits
Defined benefit plans	168	367
Defined contribution plans	36,901	36,640
Termination benefits	5,768	3,328
Total employee expenditure	453,459	447,666
Depreciation of property, plant and equipment and amortisation of intangibles
Depreciation of property, plant and equipment	41,827	48,178
Amortisation of intangible	11,589	7,593
Total depreciation of property, plant and equipment and amortisation of Intangibles	53,416	55,771
Interest and debt servicing costs	5,341	6,552
Total Interest and Debt Servicing Costs	5,341	6,552
Operating expenditure
Decrease / (increase) in inventory	5,129	(3,360)
Impairment of trade receivables	23	(28)
Operating lease rental expenditure - minimum lease payments	39,919	40,040
Other expenditure
Partner and call centre expense	15,752	17,633
Buildings and facilities expense	7,071	7,200
Client support costs	11,791	12,757
Travel and accommodation	6,069	5,644
Contribution to other partner societies	12,129	14,836
Advertising and promotional activities	8,286	9,438
Other operational costs	30,497	41,699
Overheads	106,342	93,612
Workers compensation costs	2,442	2,327
Total operating expenditure	245,450	241,798
Cost of services, sale of goods and consumables
Cost of sales	3,819	3,012
Cost of rendering training services	2,092	3,549
Consumables	102,251	102,479
Total cost of services, sale of goods and consumables	108,162	109,040
Note 8 TRADE AND OTHER RECEIVABLES
Trade receivables	9,457	11,154
Allowance for doubtful debts	(154)	(213)
Total trade receivables	9,303	10,941
Other receivables	11,243	12,835
Goods and services tax receivable	981	5
Total trade and other receivables	21,527	23,781
Trade receivables are non-interest bearing and are generally on 30 day terms. Where debts are assessed to be non-recoverable, these are written off.
Note 8 TRADE AND OTHER RECEIVABLES (Continued)	2017	2016
	$'000	$'000
Ageing of past due but not impaired trade receivables
30-60 days	262	69
60-90 days	22	52
90-120 days	28	38
120+ days	11	134
Total past due but not impaired trade receivables	323	293
Movement in the allowance for doubtful debts
Opening balance 1 July	213	299
Impairment (losses recognised)/written back on receivables	23	(28)
Amounts written off as uncollectible	(82)	(58)
Closing balance 30 June	154	213
Ageing of impaired trade receivables
0-30 days	28	48
30-60 days	8	4
60-90 days	30	15
90-120 days	16	23
120+ days	51	123
Total impaired trade receivables	133	213
Note 9 INVENTORIES
Consumables inventory	7,226	6,796
Finished goods	11,453	16,519
Work in progress	980	956
Total inventories	19,659	24,271
Note 10 OTHER FINANCIAL ASSETS	2017	2016
	$'000	$'000
Current
Available-for-sale financial assets
Shares	43,429	35,054
Managed funds
Listed managed funds	1,342	626
Unlisted managed funds	9,989	9,975
Bonds
Listed bonds	11,787	12,325
Unlisted bonds	60,324	43,838
Total available-for-sale financial assets	126,871	101,818
Held-to-maturity investment
Term deposits	9,060	8,523
Total current other financial assets	135,931	110,341
Fair value measurements recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into levels 1 to 3 based on the degree to which the fair value is observable. • Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

	Level 1	Level 2	Level 3	Total
	$’000	$’000	$’000	$'000
YEAR ENDED 30 JUNE 2017
Available-for-sale financial assets
Bonds	11,787	60,324	-	72,111
Shares	43,429	-	-	43,429
Managed funds	1,342	9,989	-	11,331
Held-to-maturity investment
Term deposits	9,060	-	-	9,060
Total current other financial assets	65,618	70,313	-	135,931
YEAR ENDED 30 JUNE 2016
Available-for-sale financial assets
Bonds	12,325	43,838	-	56,163
Shares	35,054	-	-	35,054
Managed funds	626	9,975	-	10,601
Held-to-maturity investment
Term deposits	8,523	-	-	8,523
Total current other financial assets	56,528	53,813	-	110,341
There were no transfers between levels during the period.

Note 11(a) PROPERTY, PLANT AND EQUIPMENT	Land, buildings and renovations	Shop fit-outs	Plant and equipment	Work in progress	Total
	$’000	$’000	$’000	$’000	$'000
YEAR ENDED 30 JUNE 2017
Gross carrying amount
- Balance as at 30 June 2016	349,984	5,420	276,196	36,519	668,119
- Balance as at 30 June 2017	347,077	4,501	271,832	54,899	678,309
Accumulated depreciation
- Balance as at 30 June 2016	(114,953)	(4,837)	(172,519)	-	(292,309)
- Balance as at 30 June 2017	(126,718)	(3,995)	(181,646)	-	(312,359)
Net book value as at 30 June 2016	235,031	583	103,677	36,519	375,810
Net book value as at 30 June 2017	220,359	506	90,186	54,899	365,950
Note 11(b) PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED 30 JUNE 2016
Gross carrying amount
Balance as at 1 July 2015	332,564	5,692	268,279	34,640	641,175
Classification transfer	16	-	(16)	-	-
Transfer to intangible	-	-	-	(655)	(655)
Additions	674	1	374	47,252	48,301
Disposals	(1,417)	(400)	(7,445)	-	(9,262)
Transfers to / (from) work in progress	18,147	127	15,004	(33,278)	-
Impairment loss of property, plant and equipment	-	-	-	(11,440)	(11,440)
Balance as at 30 June 2016	349,984	5,420	276,196	36,519	668,119
Accumulated depreciation
Balance as at 1 July 2015	(98,491)	(4,466)	(149,605)	-	(252,562)
Classification transfer	(16)	-	16	-	-
Depreciation	(17,635)	(722)	(29,821)	-	(48,178)
Disposals	1,189	351	6,891	-	8,431
Balance as at 30 June 2016	(114,953)	(4,837)	(172,519)	-	(292,309)
Net book value as at 30 June 2016	235,031	583	103,677	36,519	375,810
YEAR ENDED 30 JUNE 2017
Gross carrying amount
Balance as at 1 July 2016	349,984	5,420	276,196	36,519	668,119
Transfer to asset held for sale¹	(5,010)	-	-	-	(5,010)
Classification transfer ²	-	-	460	76	536
Additions	740	-	-	38,496	39,236
Disposals	(3,844)	(1,350)	(16,637)	-	(21,831)
Transfers to / (from) work in progress	5,207	431	12,187	(17,825)	-
Impairment loss of property, plant and equipment	-	-	(374)	(2,367)	(2,741)
Balance as at 30 June 2017	347,077	4,501	271,832	54,899	678,309
Note 11(b) PROPERTY, PLANT AND EQUIPMENT (Continued)	Land, buildings and renovations	Shop fit-outs	Plant and equipment	Work in progress	Total
	$’000	$’000	$’000	$’000	$'000
Accumulated depreciation
Balance as at 1 July 2016	(114,953)	(4,837)	(172,519)	-	(292,309)
Transfer to asset held for sale¹	1,982	-	-	-	1,982
Depreciation expense	(17,034)	(313)	(24,480)	-	(41,827)
Disposals	3,287	1,155	15,353	-	19,795
Balance as at 30 June 2017	(126,718)	(3,995)	(181,646)	-	(312,359)
Net book value as at 30 June 2017	220,359	506	90,186	54,899	365,950
¹ In 2017, assets classified as held for sale ($3.028 million) include properties in Larrakeyah (Northern Territory) and Hobart (Tasmania). ² In 2017 $0.536 million in assets were reclassified to computer equipment from software (intangibles). Refer to note 12.

Note 12 INTANGIBLE ASSETS (Continued)	Software	Work in progress	Total
	$’000	$’000	$'000
YEAR ENDED 30 JUNE 2016
Gross carrying amount
Balance as at 1 July 2015	63,654	8,490	72,144
Transfer from property, plant and equipment	-	655	655
Additions to work in progress	-	14,329	14,329
Disposals / Write Off	(7)	(1,129)	(1,136)
Transfers to / (from) work in progress	10,049	(10,049)	-
Balance as at 30 June 2016	73,696	12,296	85,992
Accumulated amortisation
Balance as at 1 July 2015	(30,645)	-	(30,645)
Amortisation expense	(7,593)	-	(7,593)
Disposals	4	-	4
Balance as at 30 June 2016	(38,234)	-	(38,234)
Net book value as at 30 June 2016	35,462	12,296	47,758
YEAR ENDED 30 JUNE 2017
Gross carrying amount
Balance as at 1 July 2016	73,696	12,296	85,992
Transfer to property, plant and equipment	(460)	(76)	(536)
Additions to work in progress	-	9,950	9,950
Disposals / write off	-	(618)	(618)
Transfers to / (from) work in progress	9,842	(9,842)	-
Impairment losses recognised in profit or loss	-	(667)	(667)
Balance as at 30 June 2017	83,078	11,043	94,121
Accumulated amortisation
Balance as at 1 July 2016	(38,234)	-	(38,234)
Transfer to property, plant and equipment	-	-	-
Amortisation expense	(11,589)	-	(11,589)
Disposals	-	-	-
Balance as at 30 June 2017	(49,823)	-	(49,823)
Net book value as at 30 June 2017	33,255	11,043	44,298

Note 13 TRADE AND OTHER PAYABLES		2017	2016
	Notes	$'000	$'000
Current
Trade payables		35,420	32,271
Accruals and other payables		16,973	13,627
Goods and services tax payable		-	1,551
Total trade and other payables		52,393	47,449
Trade payables are non interest bearing and are normally settled on 30 day terms. Other payables are non interest bearing and have an average term of 30 days. The continuous monitoring of cash flow ensures payables are paid within the credit timeframe.
Note 14 BORROWINGS
Current - secured
Bank loans		5,380	4,943
Finance lease liabilities	23	9,268	5,843
Non-current - secured
Bank loans		16,860	22,239
Finance lease liabilities	23	18,234	27,502
Total borrowings		49,742	60,527
Disclosed in the financial statements as:
Current borrowings		14,648	10,786
Non-current borrowings		35,094	49,741
Total borrowings		49,742	60,527
Financing facilities
Unsecured bank overdraft facility:
amount used		-	-
amount unused		16,000	18,000
Total		16,000	18,000
Secured bank loan facility:
amount used		-	27,182
Total		-	27,182
Unsecured cash advance facility:
amount used		-	-
amount unused		4,000	25,000
Total		4,000	25,000
Secured leasing facility:
amount used	23	27,502	33,345
Total		27,502	33,345
Credit card facility:
amount used		938	645
amount unused		1,712	2,005
Total credit card facility		2,650	2,650
The Society is not in default of the financing facilities.
Note 15 PROVISIONS
Current
Employee benefits		77,272	69,349
Site restoration		3,885	2,967
Non-current
Employee benefits		10,362	10,703
Site restoration		5,743	7,110
Total provisions		97,262	90,129
Disclosed in the financial statements as:
Current provisions		81,157	72,316
Non-current provisions		16,105	17,813
Total provisions		97,262	90,129
The employee benefits provision contains provisions for long service leave, rostered days off and other employee entitlements.
Movements in employee benefits provisions
Opening balance 1 July		80,052	77,137
Provision recognised during the year		7,582	2,915
Closing balance 30 June		87,634	80,052
Movements in site restoration
Opening balance 1 July		10,076	9,773
Provision (utilised) / recognised during the year		(448)	303
Closing balance 30 June		9,628	10,076
Note 16 OTHER LIABILITIES
Current
Lease incentive		1,523	1,462
Government funding refundable¹		22,277	42,016
Revenue in advance²		74,614	80,693
Non-current
Lease incentive		4,534	4,285
Total other liabilities		102,948	128,456
Disclosed in the financial statements as:
Current other liabilities		98,414	124,171
Non-current other liabilities		4,534	4,285
Total other liabilities		102,948	128,456
¹ Government funding refundable relates to the expected return of funds to the NBA for surpluses in the reported period. ²Revenue in advance includes:(i) Output funding net cash relates to the working capital advance received by the Blood Service operating division from the NBA upon commencement of the Output Based Funding Model from 1 July 2011, less June 2017 revenue not received until July 2017(ii) Funds received relating to reciprocal grants of $10.854 million
Note 17 DEFINED BENEFIT SUPERANNUATION PLANS
Local Government Super (NSW): Local Government Super provides defined benefits whereby components of the final benefit are derived from a multiple of member salary and years of membership. Members receive lump sum or pension benefits on retirement, death, disablement and withdrawal. The defined benefits scheme was closed to new members effective from 15 December 1992. The Local Government Superannuation Scheme was established on 1 July 1997 to specifically cater for the superannuation requirements of Local Government employees. LGSS Pty Ltd (ABN 68078003497) (AFSL 383558) is the Trustee of the Local Government Superannuation Scheme (known as Local Government Super). Local Government Super is a resident regulated superannuation scheme within the meaning of the Superannuation Industry (Supervision) Act 1993. Australian Red Cross Queensland Staff Retirement Fund (QLD): The fund, offering both defined benefit and a defined contribution plans, is a final average (3years) lump sum benefit arrangement providing benefits on death, disability, resignation and retirement. The defined benefit section provides benefits based on the length of service and final average salary. The defined contribution section receives fixed contributions and the employer's legal or constructive obligation is limited to these contributions. The fund commenced on 15 June 2006 as a successor fund transfer from the Australian Red Cross Qld Staff Superannuation Plan. This fund is a sub-fund of the AMP Superannuation Savings Trust which was established under a Trust Deed dated 1 July 1998. The Trustee is AMP Superannuation Limited. The plans in Australia typically expose the Australian Red Cross to actuarial risks such as; investment risk, interest rate risk, longevity risk and salary risk:
Investment Risk	The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to high quality corporate bond yields; if the return on plan asset is below this rate, it will create a plan deficit. Currently the plan has a relatively balanced investment in equity securities, debt instruments and real estate. Due to the long-term nature of the plan liabilities, the board of the pension fund considers it appropriate that a reasonable portion of the plan assets should be invested in equity securities and in real estate to leverage the return generated by the fund.
Interest Risk	A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan's debt investments.
Longevity Risk	The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of the plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability.
Salary Risk	The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan's liability.
The risk relating to benefits to be paid to the dependants of plan members (widow and orphan benefits) is re-insured by an external insurance company. No other post-retirement benefits are provided to these employees. The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation was carried out at 30 June 2017 by Mr Jeff Humphries , Principal, CHR Consulting Pty Ltd for Australian Red Cross Queensland Staff Retirement Fund (QLD) - Mr Richard Boyfield, Partner, Representative of Mercer Consulting (Australia) Pty Ltd for Local Government Super (NSW). The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
Note 17 DEFINED BENEFIT SUPERANNUATION PLANS (Continued)		2017	2016
	Notes	%	%
Principal actuarial assumptions:
Discount rate		4.00%	3.30%
Expected rate of salary increases		3.00%	3.00%
Anticipated rate of return on plan assets		6.38%	6.40%
		2017	2016
		$'000	$'000
Amounts recognised in the statement of profit or loss and other comprehensive income:
Current service cost		68	305
Net interest cost		100	62
Components of defined benefit costs recognised in profit or loss		168	367
Remeasurement on the net defined benefit liability:
Return on plan assets (excluding amounts included in net interest expense)		(1,093)	476
Actuarial gains arising from changes in demographic assumption		-	(4)
Actuarial (gains) and losses arising from changes in financial assumption		(1,253)	1,334
Actuarial gains arising from experience adjustments		(355)	(525)
Components of defined benefit gain recognised in other comprehensive income		(2,701)	1,281
Contributions by plan participants (employer and members) in profit or loss		-	-
Total defined benefits (gain) / costs		(2,533)	1,648
The current service cost and the net interest expense for the year are included in staff expenditure in the Statement of Profit or Loss and Other Comprehensive Income. The remeasurement of the net defined benefit liability is included in Other Comprehensive Income.
Amounts recognised in the statement of financial position:
Present value of funded obligations (a)	17 (a)	19,753	21,820
Fair value of plan assets (b)	17 (b)	(19,005)	(18,474)
Net liability arising from defined benefit plan obligation		748	3,346
(a) Reconciliation of movement in the present value of the defined benefit obligations in the current year were as follows:
Balance at beginning of the year		21,820	21,104
Current service cost		848	932
Interest on obligation		677	858
Remeasurement (gains) / losses		-	-
Actuarial gains arising from changes in demographic assumptions		-	(4)
Actuarial losses and (gains) arising from changes in financial assumptions		(1,253)	1,334
Actuarial gains arising from experience adjustments		(355)	(525)
Benefits paid (including expenses and taxes)		(1,863)	(1,879)
Other		(121)	-
Balance at end of the year		19,753	21,820

(b) Reconciliation of movements in the fair value of the plan assets in the current year were as follows:
Balance at beginning of the year		18,474	19,406
Interest income		577	796
Remeasurement (gains) / losses
Return on plan asset (excluding amounts included in net interest expense)		1,158	(476)
Contributions by the employer		726	587
Contributions from plan participants		54	40
Benefits paid (including expenses and taxes)		(1,863)	(1,879)
Other		(121)	-
Balance at end of the year		19,005	18,474
The fair value of the plan assets at the end of the reporting period for each category, are as follows:
Australian equities		4,637	4,794
International equities		4,827	4,683
Property		1,996	1,672
Australian fixed interest		1,501	2,374
International fixed interest		342	775
Cash		1,805	2,402
Other		3,897	1,774
Balance at end of the year		19,005	18,474
		2017	2016
		%	%
Other disclosures:
The percentage contribution of each majority category of total plan assets comprises:
Australian equities		24.4%	23.7%
International equities		25.4%	24.8%
Property		10.5%	10.4%
Australian fixed interest		7.9%	7.9%
International fixed interest		1.8%	1.4%
Cash		9.5%	12.6%
Other		20.5%	19.2%
		100.0%	100.0%
The sensitivity analysis above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the statement of financial position. Sensitivity analysis for actuarial assumptions Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below has been determined based on reasonably possible changes of the respective assumptions occuring at the end of the reporting period, while holding all other assumptions constant. - If the discount rate is 50 basis points higher/(lower), the defined benefit obligation would (decrease)/increase by $0.653 million (2016: $0.801 million). - If the expected salary growth increases/(decreases) by 50 basis points, the defined benefit obligation would increase/(decrease) by $0.259 million (2016: $0.460 million). There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years other then the change in the bond rate used to calculate the employee liability obligations. Asset-Liability matching study There were no asset-liability matching strategies adopted by the funds during the period. Effects on future cash flows Local Government Super's funding arrangements are assessed at least every three years following the release of the triennial actuarial review. Following completion of the last review as at 30 June 2015, the Blood Service operating division had sufficient assets to cover its liabilities, and no adjustments to funding have occurred. The Society reviews its funding positions annually with funding arrangements adjusted as appropriate. Members of the Australian Red Cross Queensland Staff Retirement Fund contribute at the rate of 5% of salary. The residual contribution (including back service payments) is paid by the Society. The funding requirements are based on the local actuarial measurement framework. In this framework the discount rate is set on the expected return on the Fund's assets. The Society carries the investment volatility risk and may be required to make additional contributions from time to time if assets do not cover members' vested benefits. The average duration of the benefit obligation for the funds at 30 June 2017 is 8.92 years (2016: 8.95 years). This number can be analysed as follows: • active members: 9.53 years (2016: 9.59 years); • retired members: 8.78 years (2016: 9.14 years). The Society expects to make a contribution of $0.551 million to the defined benefit plans during the next financial year.
		2017	2016
		$'000	$'000
Historic summary
Defined benefit plan obligations		19,753	21,820
Plan assets		(19,005)	(18,474)
Deficit		748	3,346
Actual return on assets		1,158	(476)
Cumulative amount recognised in the other comprehensive income
Cumulative amount of actuarial losses		2,519	5,220
Expected contributions and funding arrangements
Expected employer contributions at 30 June		551	553

Note 18 RESERVES	Investment revaluation reserve (i)	Special reserve (ii)	Capital reserve (iii)	Total
	$’000	$'000	$’000	$'000
Year ended 30 June 2016
Balance as at 1 July 2015	1,983	58,696	50,523	111,202
Net loss arising on revaluation	(2,246)	-	-	(2,246)
Transfers to reserves from accumulated funds	-	6,816	5,064	11,880
Balance as at 30 June 2016	(263)	65,512	55,587	120,836
Year ended 30 June 2017
Balance as at 1 July 2016	(263)	65,512	55,587	120,836
Net gains arising on revaluation	4,904	-	-	4,904
Transfers to reserves from accumulated funds	-	7,438	2,674	10,112
Balance as at 30 June 2017	4,641	72,950	58,261	135,852
(i) Investment revaluation reserve comprises the cumulative net change in the fair value of available-for-sale investments until the investment is derecognised net of any permanent impairment identified and reserved to the profit or loss. (ii) The Society’s special reserve records retained surplus over which the Society has restricted use. (iii) The Society’s Capital Reserve records capital surplus less capital expenditure relating to various capital funded programs or funds received for the purpose of future capital expenditure.

Note 19 SPECIFIC PURPOSE FUNDS	Domestic appeals	International projects	Domestic programs	Strategic Initiatives	Total
	$’000	$'000	$’000	$’000	$'000
Year ended 30 June 2016
Balance as at 1 July 2015	586	32,913	18,459	-	51,958
Transfers to accumulated funds	(586)	(3,694)	(7,622)	-	(11,902)
Balance as at 30 June 2016	-	29,219	10,837	-	40,056
Year ended 30 June 2017				-
Balance as at 1 July 2016	-	29,219	10,837	-	40,056
Transfers from/(to) accumulated funds	-	(6,014)	(1,182)	3,670	(3,526)
Balance as at 30 June 2017	-	23,205	9,655	3,670	36,530
Specific purpose funds are unspent tied funds carried forward for the purpose of spending on specific activities or programs in the future.

Note 20 ACCUMULATED FUNDS		2017	2016
	Notes	$'000	$'000
Balance at beginning of financial year		329,426	310,065
Surplus for the financial year		403	20,620
Actuarial gain / (loss) on defined benefit superannuation plans	17	2,701	(1,281)
Transfers from specific purpose funds	18, 19	3,526	11,902
Transfers to other reserves	18	(10,112)	(11,880)
Balance at end of financial year		325,944	329,426
Note 21 CASH AND CASH EQUIVALENTS
21(a) Reconciliation of cash and cash equivalents
Cash		32,125	32,302
Term deposits		167,459	198,391
Net cash and cash equivalents		199,584	230,693
21(b) Reconciliation of surplus / (deficit) for the year to cash flows from operating activities
Net surplus / (deficit)		403	20,620
Depreciation and amortisation of non-current assets	7	53,416	55,771
Impairment of property, plant and equipment & intangibles	6	3,408	11,440
Impairment of available-for-sale financial assets	6	574	462
Net foreign currency (gains)	6	55	46
Gain on disposal of investments	6	(464)	(488)
Loss on disposal of property, plant and equipment and intangibles	6	1,750	1,125
Investment interest recognised in profit or loss		(8,405)	(8,629)
Dividends recognised in profit or loss		(2,487)	(2,036)
Changes in assets and liabilities :
Decrease in trade and other receivables		2,254	2,835
(Increase) / decrease in inventory		4,612	(4,433)
Decrease / (increase) in prepayments		(3,870)	2,502
Increase / (decrease) in trade, other payables and other liabilities		5,017	502
(Decrease) / increase in prepaid government funds		(24,424)	14,398
Increase / (decrease) in revenue in advance		(1,153)	3,042
Increase in provisions		7,133	3,218
Components of defined benefit recognised in profit or loss		103	367
Net cash provided by operating activities		37,922	100,742
Note 22 COMMITMENTS
Capital commitments
Capital commitments contracted for at reporting balance date but not provided for in the financial statements are payable as follows:
Not longer than 1 year		14,729	9,411
TOTAL COMMITMENTS		14,729	9,411
The majority of the Society's commitments include premises related activities with the balance committed to other business initiatives.

Note 23 LEASES	Minimum future lease payments		Present value of minimum future lease payments
	2017	2016	2017	2016
	$’000	$'000	$’000	$'000
Finance lease liabilities
Not later than 1 year	11,139	8,168	9,268	5,843
Later than 1 year and not later than 5 years	20,430	29,535	18,234	25,504
Later than 5 years	-	2,035	-	1,998
Minimum future lease payments	31,569	39,738	27,502	33,345
Less future finance charges	(4,067)	(6,393)	-	-
Total lease liabilities	27,502	33,345	27,502	33,345
Included in financial statements as :
Current borrowings	-		9,268	5,843
Non-current borrowings	-		18,234	27,502
Present value of minimum lease payments	-		27,502	33,345
The Society leases various equipment and fit-outs with a carrying value of $27.501 million (2016: $33.345 million) under finance leases expiring within 3 to 10 years. Under the terms of the leases, the Society has the option to acquire the leased assets on expiry of the leases. The Society's obligations under finance leases are secured by the lessor's title to the leased assets.
			2017	2016
			$'000	$'000
Non-cancellable operating lease commitments
Not longer than 1 year			32,091	33,071
Longer than 1 year and not longer than 5 years			84,250	91,128
Longer than 5 years			79,716	99,704
			196,057	223,903
The Society leases various premises used as offices, retail stores, blood collection centres, processing and testing centres, and warehouses under non-cancellable leases expiring within 2 to 20-years.
Note 24 CONTINGENT ASSETS AND LIABILITIES
24.1 Contingent Assets There are no contingent assets or events identified which would be expected to have a material impact on the financial statements in the future. 24.2 Contingent Liabilities There is a potential for claims to arise from viral / bacterial infections or blood-borne disease which are currently unidentified, or in circumstances where there are no test or screening procedures available to test for a virus / bacteria / disease state. In the event that commercial insurance does not cover financial exposure arising as a result of transmission of blood-borne disease occurring subsequent to 1 July 2000, a national managed fund has been established with claims covered at the discretion of the NBA. The Society is entitled to seek, and the NBA may at its discretion grant, indemnities in respect of potential liabilities arising from litigation in relation to pre July 2000 transfusion-transmitted diseases. The Society has bank guarantees in place in relation to certain property leases. The value of these guarantees at 30 June 2017 was $0.226 million (2016: $0.190 million). The Board is satisfied the guarantees will not be called upon and therefore no liability has been recorded in the statement of financial position. There are no other contingent liabilities or events identified which would be expected to have a material impact on the financial statements in the future.

Note 25 FINANCIAL INSTRUMENTS		2017	2016
	Notes	$'000	$'000
(a) Categories of financial instruments
Financial assets
Cash and cash equivalents	21(a)	199,584	230,693
Trade and other receivables	8	21,527	23,781
Prepayment		11,441	7,571
Available-for-sale financial assets	10	126,871	101,818
Held-to-maturity investment	10	9,060	8,523
Financial liabilities
Trade and other payables	13	52,393	47,449
Deferred revenue	16	96,891	122,709
Lease incentives	16	6,057	5,747
Interest bearing loans and borrowings	14	49,742	60,527
The Society's Board considers the above carrying amounts of financial assets and financial liabilities to approximate their fair values.

(b) Financial risk management objectives and policies

The Society’s financial instruments consist mainly of:

• deposits with banks;
  
• investments in equities, managed funds, bonds, debentures and other fixed interest securities;
  
• accounts receivable and payable, which arise directly from the Society’s operations;
  
• derivatives, being forward foreign currency contracts, to manage currency risks.

It is, and has been throughout the financial year, the Society’s policy that no trading in derivative financial instruments shall be undertaken. Similarly, it is not the Society’s policy to trade in investments (i.e. to speculate and engage in short-term profit taking). All investments are held to generate income to further the Society’s causes and as such are classified as ‘available-for-sale’ or ‘held-to maturity’. Sales do occur however with selected investments which are described in the financial statements as ‘available-for-sale’, when the Society is advised to adjust its portfolio in relation to risk exposure and diversification as advised by its investment portfolio managers.

(c) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: market interest rates (interest rate risk), foreign currency risk and market prices (price risk).

(c)(i) Foreign currency risk management

The Society is exposed to fluctuations in foreign currencies arising from purchase of goods and supply of aid in currencies other than the Society’s functional currency ($AUD).

The carrying amount of the Society's foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows:
	2017		2016
	Foreign currency	AUD equivalent	Foreign currency	AUD equivalent
	$’000	$’000	$’000	$’000
Assets
Cash
USD	1,413	1,803	152	199
Euro	239	357	-	-
	1,652	2,160	152	199

Foreign currency sensitivity analysis

The Society is mainly exposed to movements in exchange rates relating to US dollars and Euro. The following table details the Society’s sensitivity to a 10% increase and decrease in the Australian Dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number indicates an increase in profit or loss and other equity where the Australian Dollar strengthens against the respective currency. For a weakening of the Australian Dollar against the respective currency there would be an equal and opposite impact on the profit and other equity, and the balances below would be negative.

		2017	2016
		$'000	$'000
Profit or loss
USD		180	20
Euro		36	-
(c)(ii) Interest rate risk management The Society is exposed to market interest rate fluctuations on its fixed and variable interest securities, as well as interest bearing borrowings. The Society accepts the risk as normal in relation to fixed interest financial assets, as they are held to generate investment income on unused funds. Interest rate sensitivity analysis The following table summarises how the Society's surplus or deficit and equity would have been affected by changes in interest rates at reporting date.

	Carrying amount	- 50 basis points Surplus / (deficit)	- 50 basis points Equity	+ 100 basis points Surplus / (deficit)	+ 100 basis points Equity
	$’000	$’000	$’000	$’000	$'000
Financial assets
Cash and cash equivalents	199,584	(997)	(997)	1,995	1,995
Available-for-sale financial assets	126,871	(634)	(634)	1,269	1,269
Held-to-maturity investment	9,060	(45)	(45)	91	91
Financial liabilities
Bank loans - fixed interest rate	22,240	-	-	-	-
Finance leases	27,501	-	-	-	-
Total increase / (decrease)	385,256	(1,676)	(1,676)	3,355	3,355
Sensitivity analysis does not apply to Bank loans with fixed Interest Rate.
(c)(iii) Price risk Equity price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. (d) Equity price sensitivity The sensitivity analysis below has been determined based on the exposure to equity price risks at year end. If the equity prices of available-for-sale Australian equities had been 5% higher or lower: the surplus for the year ended 30 June 2017 would have been unaffected as the equity investments are classified as available-for-sale and any increment or decrement in the fair value, with the exception of impairment, is an adjustment to other comprehensive income other comprehensive income for the year ended 30 June 2017 would have increased or decreased by $2.171 million (2016: $1.753 million) as a result of the change in the fair value of available-for-sale Australian equities. The Society’s sensitivity to equity prices has not changed significantly from the prior year.

(e) Credit risk management

The maximum exposure to credit risk, excluding the value of any collateral or other security, at reporting date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements.

Credit risk for derivative financial instruments arises from the potential failure by counter parties to the contract to meet their obligations.

The Society does not have any material credit risk exposures to any single receivable or group of receivables under financial instruments. The Society’s largest receivable is from the Federal Department of Immigration and Border Protection (DIBP) which constitutes receipts in accordance with agreed terms.

(f) Liquidity risk management

The Society manages liquidity risk by monitoring forecast cash flows and ensuring that adequate liquid funds or unutilised borrowing facilities are maintained.

The following table details the Society’s remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Society can be requested to pay. The table includes both interest and principal cash flows.

Non-derivative financial liabilities	Weighted average effective interest rate	Less than 1 month	1 - 3 months	3 months to 1 year	1 to 5 years	5 + years	Total
	%	$’000	$’000	$’000	$’000	$'000	$'000
Year ended 30 June 2017
Non-interest bearing	-	124,978	22,568	1,547	3,869	2,380	155,342
Finance lease liability	7.62%	506	1,023	7,738	18,234	-	27,501
Bank loan liability	8.63%	429	862	4,089	16,860	-	22,240
		125,913	24,453	13,374	38,963	2,380	205,083
Year ended 30 June 2016
Non-interest bearing	-	125,025	42,165	1,903	4,240	2,571	175,905
Finance lease liability	7.60%	470	950	4,423	25,504	1,998	33,345
Bank loan liability	8.63%	386	806	3,751	22,239	-	27,182
		125,881	43,921	10,077	51,983	4,569	236,432
The following table details the Society's expected maturity for its non-derivative financial assets. The table below has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the Society anticipates that the cash flow will occur in a different period.
Non-derivative financial assets
Year ended 30 June 2017
Non-interest bearing	-	127,224	-	-	-	-	127,224
Fixed interest rate instruments	2.64%	-	150,000	10,693	41,765	27,713	230,171
Variable interest rate instruments	1.54%	11,088	-	-	-	-	11,088
		138,312	150,000	10,693	41,765	27,713	368,483
Year ended 30 June 2016
Non-interest bearing	-	298,962	-	-	-	-	298,962
Fixed interest rate instruments	3.12%	-	56,163	3,000	5,523	-	64,686
Variable interest rate instruments	1.85%	8,738	-	-	-	-	8,738
		307,700	56,163	3,000	5,523	-	372,386

Note 26 EVENTS AFTER THE REPORTING PERIOD

There have been no material events after the reporting period.

Note 27 ECONOMIC DEPENDENCY

A significant portion of revenue is received by way of recurrent and capital grants from Commonwealth, State and Territory governments. The current Deed between the NBA and the Society relates to the period 1 July 2016 to 30 June 2025.

Note 28 KEY MANAGEMENT PERSONNEL

The members of the Australian Red Cross Society Board provide their service on a voluntary basis and receive no payment other than reimbursement for reasonable travel and other expenses incurred in connection with their roles. The Blood Service Board comprises executive and non-executive members who are remunerated. Members of the Society Board who also serve as a member of the Blood Service Board or a Blood Service committee are remunerated by the Blood Service.

Details of remuneration of Board Members and Executive Team are outlined in the following table. The following includes payments for short-term employee benefits, post-employement benefits, long-term employee benefits and termination benefits:

	Short-term employee benefits	Post employment benefits	Long-term employee benefits	Termination benefits	Total
	Salaries and fees	Superannuation contributions	Long service leave
	$	$	$	$	$
SOCIETY
Year ended 30 June 2017
HUMANITARIAN SERVICES	2,071,110	160,585	112,518	418,387	2,762,600
BLOOD SERVICE	3,896,000	357,000	110,000	175,000	4,538,000
Total compensation	5,967,110	517,585	222,518	593,387	7,300,600
Year ended 30 June 2016
HUMANITARIAN SERVICES	4,024,763	304,344	90,452	437,956	4,857,515
BLOOD SERVICE	3,806,000	275,000	(58,000)	-	4,023,000
Total compensation	7,830,763	579,344	32,452	437,956	8,880,515
* In January 2016, there was a change in the leadership structure of Humanitarian Services. Under the new leadership structure, only the Executive Team was included in key management personnel.
For the purposes of the above table, remuneration includes salaries and wages, paid annual leave and paid sick leave, non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services).  Also included in remuneration is an amount relating to long-term employee benefits which have accrued, but not paid, to the employees during the period such as long-service leave.

Board members
SOCIETY	BLOOD SERVICE OPERATING DIVISION
Mr Michael Legge AM (President)	Mr James Birch AM (Chair)
Mr Ross Pinney (Deputy President)	Ms Shelly Park (Chief Executive)
Ms Jan West AM (Chair of Audit and Risk Committee)	Mr Nigel Ampherlaw
Ms Dianne Buckles	Professor Christopher Baggoley AO (from October 2016)
Mr Charles Burkitt	Ms Hannah Crawford (Chair of Audit and Risk Committee)
Mr John D Dorrian	Ms Jenni Mack
The Hon Dr David Hamill AM (to November 2016)	Associate Professor Larry McNicol
Ms Lyndal Herbert	Mr Ross Pinney
Ms Anne Macarthur OAM	Professor John Zalcberg OAM
Mr John Pinney AM	Ms Fiona Balfour (from May 2017)
Ms Margaret Piper AM
Ms Pearl Li
Ms Sue Vardon AO
Mr Sam Wong AM (to October 2016)
Ms Wendy Prowse (from October 2016)
Mr Sam Hardjono
Mr James Birch AM
Mr Ian Hamm (from April 2017)

HUMANITARIAN SERVICES OPERATING DIVISION	BLOOD SERVICE OPERATING DIVISION
Executive Team	Executive Directors
Ms Judy Slatyer - Chief Executive Officer	Ms Shelly Park - Chief Executive Officer
Mr Cameron Power - Chief Financial Officer	Mr John Brown - Executive Director, Finance
Ms Jennifer Gibb - Director, Marketing, Fundraising and Communications (to November 2016)	Ms Jacqui Caulfield - Executive Director, Manufacturing (to July 2016)
Ms Caroline Sheehan - Acting Director, Engagement & Support (from December 2016 to June 2017)	Mr Greg Wilkie - Executive Director, Manufacturing (from October 2016)
Ms Belinda Dimovski - Director, Engagement & Support (from June 2017)	Ms Frances Guyett - Executive Director, Innovation and Commercial Strategy
Ms Kerry McGrath - Director, Community Programs	Mr Philip Nesci - Executive Director, Information and Communications Technology
Mr Noel Clement - Director, Migration, Emergencies & Movement Relations	Ms Anne Heyes - Executive Director, People and Culture (to April 2017)
Mr Chris Steinfort - Director, Human Resources (to December 2016)	Ms Cath Gillard - Executive Director, People and Culture (from April 2017)
Ms Elaine Montegriffo - Director, People & Organisational Effectiveness (from November 2016)	Mr Peter McDonald - Executive Director, Business Improvement
Mr Peter Walton - Director, International Programs	Dr Joanne Pink - Executive Director, Clinical Services and Research
Mr Chris Wheatley - Director, Strategy and Performance	Ms Janine Wilson - Executive Director, Donor Services
Ms Penny Harrison - Director, Volunteering (from November 2016)	Ms Marion Hemphill - General Counsel and Head of Government Relations

Note 29 AUDITORS' REMUNERATION		2017	2016
		$	$
Auditor of Australian Red Cross
Audit of financial report		354,500	344,000
Audit of acquittals in relation to specific purpose grants		93,630	117,740
Other non audit services¹		148,000	92,000
Total Auditor's remuneration		596,130	553,740
¹Other non-audit services relate to consulting fees for the Blood Service operating division Supplier Management framework.

Note 30 RELATED PARTY DISCLOSURES

(a) Board members

The Board Members are disclosed in note 28.

(b) Wholly-owned group

In states and territories where the Blood Service operating division is located on Humanitarian Services operating division premises, there are contractual arrangements for the sub-lease of premises between the respective operating units for the sharing of facilities and outgoings. The effect of the above transactions has been eliminated in full in the Society balances.

During the reporting period,net payments of $1.044 million (2016: $1.053 million) transacted between the Blood Service operating division and Humanitarian Services operating division. The transactions largely relate to the Blood Service operating division’s occupancy of premises owned by Humanitarian Services operating division, whereby there are contractual arrangements for the sub-lease of these facilities by the Blood Service. As at 30 June 2017, an aggregate of $0.772 million (2016: $1.502 million) of commitments for minimum lease payments in relation to non-cancellable operating leases are payable to the Society over a 5-year period.

Australian Red Cross is a signatory to the Australian Council for International Aid and Development (ACFID) Code of Coduct and is committed to full adherence to its requirements. The Code aims to improve international development outcomes and increase stakeholder trust by enhancing the transparency and accountability of signatory organisations.

The financial statements have been prepared in accordance with the requirements set out in the ACFID Code of Conduct and should be read in conjunction with the Financial Statements and accompanying notes. Please refer to the ACFID website www.acfid.asn.au for more details.

Income Statement

for the financial year ended 30 June 2017

	Humanitarian services	Society	Humanitarian services	Society
	2017	2017	2016	2016
	$’000	$'000	$’000	$'000
REVENUE
Donations and gifts¹	74,760	74,760	76,901	76,901
Legacies and bequests	12,571	12,571	12,594	12,594
Grants
• Department of Foreign Affairs and Trade	11,883	11,883	24,358	24,358
• other Australian	115,197	700,371	129,062	698,143
• other overseas	4,427	4,427	5,784	5,784
Investment income	3,253	11,285	3,384	11,125
Other income	10,073	22,241	9,197	32,880
Retail and commercial activities	34,016	34,016	32,247	32,247
Total revenue	266,180	871,554	293,527	894,032
EXPENDITURE
International aid and development programs expenditure
• funds to international programs	(26,676)	(26,676)	(41,728)	(41,728)
• program support costs	(4,700)	(4,700)	(3,428)	(3,428)
• community education²	(1,604)	(1,604)	(1,561)	(1,561)
Domestic programs
• Blood service	-	(595,353)	-	(575,904)
• Migration support	(45,417)	(45,417)	(51,413)	(51,413)
• Social inclusion	(38,993)	(38,993)	(38,929)	(38,929)
• Community based programs	(36,069)	(36,069)	(37,296)	(37,296)
• Disaster and emergency services	(10,979)	(10,979)	(10,186)	(10,186)
• Aboriginal & Torres Straight Islander programs	(7,073)	(7,073)	(7,700)	(7,700)
• emergency appeals	(98)	(98)	(349)	(349)
• other	(5,214)	(5,214)	(4,867)	(4,867)
Fundraising costs³
• public, government, multilateral and private	(23,882)	(23,882)	(24,204)	(24,204)
Retail and commercial activities	(35,144)	(35,144)	(37,122)	(37,122)
Accountability and administration	(39,949)	(39,949)	(38,725)	(38,725)
Total expenditure	(275,798)	(871,151)	(297,508)	(873,412)
(Deficiency)/Excess of revenue over expenditure from continuing operations	(9,618)	403	(3,981)	20,620
1 During the financial year nil (2016:nil) was recorded as non-monetary donations and gifts. In addition to those goods which are capable of reliable measurement, the organisation has received donated goods for sale in its retail outlets as well as volunteer hours in providing community services. Significant contributions are also received by way of gifts in kind as pro bono support from corporate partners and volunteers. These goods and services are of a nature for which fair value cannot be reasonably determined and have not been recorded in this income statement. There has been no non monetary expenditure included in the income statement. 2 Expenditure incurred for International Humanitarian Law is included in Community education as per ACFID guidelines 3 Fundraising costs include both International and Domestic programs. There are no separately recorded costs incurred for Government, multilateral and private fundraising costs. During the financial year there were no transactions (2016:nil) in the International Political or Religious Adherence Promotion program category. Board Members' declaration The Board Members declare that: (a) in the Board’s opinion, there are reasonable grounds to believe that the Society will be able to pay its debts as and when they become due and payable; (b) in the Board’s opinion, the attached financial statements and notes thereto are in accordance with the Australian Charities and Not-for-profits Commission Act 2012, including compliance with Australian Accounting Standards and giving a true and fair view of the financial position and performance of the Society and the ACFID financial statements comply with the ACFID Code of Conduct; and (c) the Board has been given signed declarations by the Chief Executive Officer and the Chief Financial Officer regarding the integrity of the financial statements and that the Society’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects. Signed in accordance with a resolution of the Board. On behalf of the Board Michael Legge AM President of the Society Canberra 28 October 2017