INDEX

Board Members’ Report...... 3 Auditor’s Independence Declaration ...... 6 Statement of Comprehensive Income ...... 7 Statement of Financial Position ...... 8 Statement of Changes in Equity ...... 9 Statement of Cash Flows ...... 10 Notes to the Financial Statements ...... 11 Board Members’ Declaration ...... 26 Independent Auditor’s Report ...... 27

2 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page BOARD MEMBERS’ REPORT

The Board Members of Anglican Schools Corporation (the ‘Corporation’) present their report for the financial year ended 31 December 2016.

The names of the Board Members in office at any time during or since the end of the year are:

NAME AND DETAILS OF BOARD MEMBERS Name and Qualifications Experience and Special Responsibilities Mr Anthony Willis Assistant to the Bishop of Wollongong. Appointed as Board BA, DipEd, BTh, JP Member November 2008. Appointed as Chairman November Chairman 2009. Member of the Governance Committee and the Education and Strategic Development Committee.

Mr David Minty Actuary. Appointed as Board Member February 2003. MBA, FIAA, FAICD, ANZIIF (Fellow) CIP, JP Appointed as Deputy Chairman November 2007. Chair of the Deputy Chairman (to October 2016) Governance Committee to October 2016. Member of the Finance and Audit Committee. Term Expired October 20161

Mr Andrew Cox Surveyor/Consultant. Appointed as Board Member May 2008. BBuild.CE (Hons), AAIQS, ARI, GAICD Appointed as Deputy Chairman October 2016. Chair of the Deputy Chairman (from October 2016) Strategic Implementation Committee.

Mr Gregory Catto Company Director. Appointed as Board Member May 2012. CertComm(Acctg), GradCert(CostAcctg), ASA, MAHRI, Chair of the Governance Committee from October 2016. MACS, MAICD, JP Member of the Strategic Implementation Committee.

Prof George Cooney AM Academic. Appointed as Board Member October 2016. Member PTC, BSc (Hons), MSc, PhD, DipEd, PTC of the Education and Strategic Development Committee.

Dr Bryan Cowling Executive Director. Appointed as Board Member November BA, DipEd, MEd, MEd(Admin), EdD, PTC, FACE, 2007. Member of the Education and Strategic Development MACEL, MAICD Committee.

Rev Jennifer Everist Pastoral Care Minister. Appointed as Board Member November DipTh, JP 2011.

Rev Peter Greenwood Clergyman. Appointed as Board Member May 2014. Member of BE(Comp)(Hons), BD(Hons), MA(Th) the Strategic Implementation Committee.

Mr Martyn Mitchell Chartered Accountant. Appointed as Board Member October BSc (Chem Eng), DipTh, CA 2014. Chair of the Finance and Audit Committee.

Rev Kerrie Newmarch Chaplain. Appointed as Board Member November 2015. BEd, DipTeach, AdvDipMin, DipTh Member of the Education and Strategic Development Committee.

Mrs Julie Pearson Chartered Accountant. Appointed as Board Member December BBus(Acctg), CA 2009. Member of the Finance and Audit Committee.

Mr Ron Webb Retired Principal. Appointed as Board Member December 2009. BA, MEd(Admin), MACE, MACEL Member of the Governance Committee and the Education and Strategic Development Committee.

1 In accordance with Governance Policy for Diocesan Organisations (September 2015) and the Anglican Schools Corporation Ordinance 1947.

Operating Result The consolidated operating surplus of the Corporation for the financial year amounted to $16,494,774 (2015: $14,877,215).

Principal Activities The Principal activity of the Corporation during the financial year was the running of educational establishments in a manner

consistent with the objectives below. There was no significant change in the nature of this activity during the year.

3 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page BOARD MEMBERS’ REPORT (CONTINUED)

Mission and Objectives The mission of the Anglican Schools Corporation is “to provide affordable quality Christian education”. To help achieve this mission, the Board Members have adopted the 2020 Strategic Plan. The plan has five objectives:

• To provide a high quality education within a Christian worldview shaped by the Bible. • To communicate in word and deed the gospel of Christ to students, staff, parents and the wider community. • To provide education that is financially accessible to local communities. • To operate the Corporation efficiently and safely. • To grow the Corporation.

There are goals, strategies and action plans which underpin these objectives and although the objectives are fixed, each school within the group has different strategies and plans tailored to its local environment.

Future Developments

Disclosure of information regarding likely developments in the operations of the Anglican Schools Corporation in future years and the expected results of those operations may result in unreasonable prejudice to the Anglican Schools Corporation. Accordingly this information has not been disclosed in this financial report.

Subsequent Events

On 1 January 2017, Loquat Valley Anglican School Pittwater became a campus of St Luke’s Grammar School to be known as St Luke’s Grammar School, Bayview Campus.

Significant Events

During the reporting period, the Board resolved to close Shoalhaven Anglican School effective 31 December 2016.

Staff and Student Numbers

As at the date of the Commonwealth Government Census conducted in August, the Anglican Schools Corporation had the following numbers of staff and students:

2016 2015

Teaching Staff (Full Time Equivalents) 1,013 965 Non-Teaching (FTE) 374 350 Total Staff 1,387 1,315

Primary Pupils 6,254 6,177 Secondary Pupils 7,192 6,905 Total Students 13,446 13,082

Summary of Board Members Meetings during the Financial Year

Number of Meetings Eligible to Attend Number of Meetings Attended Mr Tony Willis (Chairman) 12 12 Mr David Minty (Deputy Chairman to October 2016) 8 7 Mr Andrew Cox (Deputy Chairman from October 2016) 12 10 Mr Gregory Catto 12 11 Prof George Cooney 4 4 Dr Bryan Cowling 12 5 Mrs Jennifer Everist 12 10 Rev Peter Greenwood 12 7 Mr Martyn Mitchell 12 10 Rev Kerrie Newmarch 12 9 Mrs Julie Pearson 12 10 Mr Ron Webb 12 12 4 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page BOARD MEMBERS’ REPORT (CONTINUED)

Summary of Education and Strategic Development Committee* Meetings during the Financial Year

Number of Meetings Eligible to Attend Number of Meetings Attended Mr Bill Shields (Chair) 5 5 Dr Bryan Cowling 5 2 Prof George Cooney 1 1 Mr Ron Webb 5 5 Mr Tony Willis 5 5

* A Committee member who has been appointed by the Board, but is not a Members of the Corporation is Dr Norman McCulla.

Summary of Finance and Audit Committee* Meetings during the Financial Year

Number of Meetings Eligible to Attend Number of Meetings Attended Mr Martyn Mitchell (Chair) 10 10 Mr David Minty (Term expired October 2016) 7 6 Mrs Julie Pearson 10 10

*A Committee member who has been appointed by the Board, but is not a Member of the Corporation is Mr Niall Henderson.

Summary of Governance Committee Meetings during the Financial Year

Number of Meetings Eligible to Attend Number of Meetings Attended Mr David Minty (Chair to October 2016) 7 6 Mr Gregory Catto (Chair from October 2016) 8 7 Mrs Jennifer Everist (Resigned May 2016) 2 2 Mr Ron Webb 8 8 Mr Tony Willis 8 8

Summary of Strategic Implementation Committee* Meetings during the Financial Year

Number of Meetings Eligible to Attend Number of Meetings Attended Mr Andrew Cox (Chair) 8 7 Mr Gregory Catto 8 8 Rev Peter Greenwood 8 2

* A Committee member who has been appointed by the Board, but is not a Member of the Corporation is Mr John Ward.

Entity Incorporation

The entity was incorporated under the powers given to the Synod of the Anglican Church Diocese of by an Act of Parliament of the State of and is a legal entity in its own right.

Auditor’s Independence Declaration

The lead auditor’s independence declaration for the year ended 31 December 2016 has been received and can be found on page 6 of the financial report.

Signed in accordance with a resolution of the Board Members.

______

______

______

Dated 28 March 2017

5 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page Auditor’s Independence Declaration

Under Section 60-40 of the Australian Charities and Not-for-profits Commission Act 2012 To the Board Members of Anglican Schools Corporation

I declare that, to the best of my knowledge and belief, during the year ended 31 December 2016, there have been:

i. no contraventions of the auditor independence requirement as set out in the Australian Charities and Not-for-profits Commission Act 2012 in relation to the audit; and

ii. no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Anglican Schools Corporation and controlled operations during the year.

Robert Bradfield Bradfield Partners Date: 28 March 2017 Sydney,

Page 6

Bradfield Partners Pty. Limited. A.B.N. 21 001 697 614 Liability limited by a Scheme approved under the Professional Standards legislation 323 Princes Highway, Rockdale NSW 2216, Australia. P.O. Box 139, Rockdale NSW 2216 P: 9597 6699 F: 9597 2990 STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2016

PARENT CORPORATION Note 2016 2015 2016 2015 Educational Activities $'000 $'000 $'000 $'000 Revenue Government Funding (State & Commonwealth) 2 122,751 114,359 122,773 114,425 Interest Subsidies 2 2,592 3,030 2,592 3,030 Private Fees (Tuition and Materials) 125,942 117,140 125,911 117,140 Trading Activities 12,193 11,100 12,264 11,162 Other Revenue 3,536 2,646 3,049 2,807 Interest Received 2,480 181 94 165 Total Revenue from Educational Activities 269,495 248,456 266,683 248,729 Expenses Administration Expenses 33,307 29,187 34,344 30,693 Audit Fees 534 403 534 403 Bad Debts written off and provided for (223) 162 (223) 162 Borrowing Costs 13,760 15,191 4,234 7,554 Interest Rate Swap Termination 0 0 0 12,060 Depreciation & Amortisation 30,464 22,285 30,466 22,290 Property Expenses 14,805 13,473 14,805 13,473 Rental Expenses on Operating Leases 1,528 1,592 1,528 1,592 Tuition Expenses & Staff Overheads 157,514 149,897 157,526 149,954 Trading Expenses 10,863 9,594 10,893 9,646 Total Expenses from Educational Activities 262,553 241,784 254,107 247,827 Surplus from Educational Activities 6,943 6,672 12,576 902 Other Corporation Activities Revenue Donations 392 537 395 537 Building, Library and Scholarship Funds Revenue 1,585 1,113 1,591 1,113 Commonwealth Government Capital Grants 2 1,870 3,569 1,870 3,569 State Government Capital Grants 2 450 891 450 891 Rental Properties 2,455 2,388 2,455 2,388 Transfer from Endowment Funds 15,984 0 0 0 Net Gains from the Disposal of Non-Current Assets 0 9,094 0 9,094 Gain on Loans Written Off 1,338 2,302 0 0 Total Revenue from Other Corporation Activities 24,072 19,894 6,761 17,592 Expenses Rental Properties - Borrowing Costs 989 1,269 635 1,269 Rental Properties - Depreciation & Amortisation 502 452 502 452 Rental Properties - Other 307 280 307 280 Demolition Write-down 1,379 1,616 1,379 1,616 Net Losses from the Disposal of Non-Current Assets 18 0 18 0 Total Expenses from Other Corporation Activities 3,195 3,617 2,841 3,617 Surplus from Other Corporation Activities 20,878 16,277 3,920 13,975 Operating Surplus 27,820 22,949 16,495 14,877 Other Comprehensive Income Items that will not be reclassified to surplus or deficit Net change in fair value of land 0 49,421 0 49,421 Items that may be reclassified to surplus or deficit Net gain on revaluation of interest rate swaps 0 0 950 1,496 Other Comprehensive Income for the year 0 49,421 950 50,917 Total Comprehensive Income for the year 27,820 72,370 17,446 65,794

The accompanying Notes form part of these Financial Statements 7 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page STATEMENT OF FINANCIAL POSITION As at 31 December 2016

PARENT CORPORATION Note 2016 2015 2016 2015 $'000 $'000 $'000 $'000 Current Assets Cash 3 722 720 3,014 1,384 Receivables 4 4,523 3,217 4,540 3,219 Investments 5 52,102 51,487 0 0 Inventories 850 850 850 850 Other Assets 6 2,119 1,737 2,119 1,861 Total Current Assets 60,318 58,011 10,523 7,314

Non-Current Assets Intangible Assets 7 832 891 832 891 Property Plant & Equipment 8 570,315 556,416 570,320 556,423 Interest Rate Hedge 9 0 0 1,628 0 Total Non-Current Assets 571,147 557,307 572,780 557,314

Total Assets 631,464 615,318 583,303 564,628

Current Liabilities Payables 10 22,144 23,237 23,088 36,517 Interest Bearing Liabilities (Secured) 11 0 270 1,000 110,020 Interest Bearing Liabilities (Intragroup) 12 43,774 50,316 0 0 Provisions 13 20,750 18,923 20,788 18,958 Interest Rate Hedge 9 0 0 678 0 Total Current Liabilities 86,668 92,746 45,554 165,495

Non-Current Liabilities Payables 10 5,147 5,328 5,182 5,389 Interest Bearing Liabilities (Secured) 11 0 0 121,500 0 Interest Bearing Liabilities (Intragroup) 12 162,641 167,937 0 0 Provisions 13 8,497 8,615 8,503 8,625 Total Non-Current Liabilities 176,285 181,880 135,185 14,014

Total Liabilities 262,953 274,626 180,739 179,509

Net Assets 368,512 340,692 402,564 385,119

Equity Accumulated Funds 265,736 237,916 298,838 282,343 Asset Revaluation Reserve 102,776 102,776 102,776 102,776 Interest Rate Hedge Revaluation Reserve 0 0 950 0 Total Equity 368,512 340,692 402,564 385,119

The accompanying Notes form part of these Financial Statements

8 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2016

PARENT Interest Rate Asset Hedge Accumulated Revaluation Revaluation Funds Reserve Reserve Total $'000 $'000 $'000 $'000 Balance as at 1 January 2015 214,967 56,852 0 271,819 Operating Surplus for the Year 22,949 0 0 22,949 Appropriations to/(from) Reserves 0 (3,497) 0 (3,497)

Other Comprehensive Income: Net change in fair value of land 0 49,421 0 49,421 Balance as at 31 December 2015 237,916 102,776 0 340,692

Operating Surplus for the Year 27,820 0 0 27,820 Appropriations to/(from) Reserves 0 0 0 0

Other Comprehensive Income: Net change in fair value of land 0 0 0 0 Balance as at 31 December 2016 265,736 102,776 0 368,512

CORPORATION Interest Rate Asset Hedge Accumulated Revaluation Revaluation Funds Reserve Reserve Total $'000 $'000 $'000 $'000 Balance as at 1 January 2015 267,466 56,852 (13,556) 310,762 Operating Surplus for the Year 14,877 0 0 14,877 Appropriations to/(from) Reserves 0 (3,497) 0 (3,497)

Other Comprehensive Income: Net change in fair value of Interest Rate Hedge 0 0 1,496 1,496 Net Interest Rate Hedge (gain)/loss recognised to Statement of Comprehensive Income 0 0 12,060 12,060 Net change in fair value of land 0 49,421 0 49,421 Balance as at 31 December 2015 282,343 102,776 0 385,119

Operating Surplus for the Year 16,495 0 0 16,495 Appropriations to/(from) Reserves 0 0 0 0

Other Comprehensive Income: Net change in fair value of Interest Rate Hedge 0 0 950 950 Net Interest Rate Hedge (gain)/loss recognised to 0 0 0 0 Statement of Comprehensive Income Net change in fair value of land 0 0 0 0 Balance as at 31 December 2016 298,838 102,776 950 402,564

The accompanying Notes form part of these Financial Statements

9 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page STATEMENT OF CASH FLOWS For the year ended 31 December 2016

PARENT CORPORATION Note 2016 2015 2016 2015 $'000 $'000 $'000 $'000 Cash Flows from Operating Activities Receipts from Government Funding 122,643 114,402 122,664 114,469 Receipts from Government Block Grant Authority 2,080 5,259 2,080 5,259 Receipts from Private Fees and Other Revenue 143,722 134,389 143,273 134,510 Receipts from Interest Subsidies 2,689 3,173 2,689 3,173 Donations to Building Fund, Library and Scholarship Fund 1,585 1,113 1,591 1,113 Transfers from Endowment Fund 15,984 0 0 0 Interest Received 2,480 181 78 165 Payments to Suppliers and Employees (215,592) (200,973) (216,521) (201,979) Interest and Other Financing Costs (14,629) (16,460) (17,132) (8,245) Rental Expenses on Operating Leases (1,521) (1,592) (1,521) (1,592) Net Cash provided by Operating Activities 3 59,440 39,493 37,202 46,874

Cash Flows from Financing Activities New Loans 0 0 213,500 6,000 Debt Reductions (270) (135) (201,020) (27,968) Unsecured Deposit Notes 0 0 0 3 New Loans - Capstone Finance Limited 6,851 13,186 0 0 Debt Reductions - Capstone Finance Limited (17,352) (22,026) 0 0 Net Cash provided by Financing Activities (10,770) (8,975) 12,480 (21,965)

Cash Flows from Investing Activities Purchase of Property, Plant & Equipment (48,359) (43,212) (48,359) (43,107) Purchase of Intangibles - Computer Software (433) (238) (432) (238) Sale of Non-Current Assets 740 17,417 740 17,417 Net Cash used by Investing Activities (48,052) (26,033) (48,052) (25,928)

Net Cash Movement 618 4,485 1,630 (1,020)

Cash at the Beginning of the Financial Year 52,207 47,722 1,384 2,404

Cash at the End of the Year 3 52,824 52,207 3,014 1,384

The accompanying Notes form part of these Financial Statements

10 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The Anglican Schools Corporation (‘the Parent Entity’) is incorporated under the powers given to the Synod of the Anglican Church Diocese of Sydney by an Act of Parliament of the State of New South Wales and is a legal entity in its own right. The consolidated financial statements of the Corporation as at 31 December 2016 comprise the Corporation and its subsidiaries (together referred to as the ‘Corporation’).

The financial report was authorised for issue by the Board Members on 28 March 2017. a. Statement of Compliance

The financial statements are tier 2 general purpose financial statements that have been prepared in accordance with Australian Accounting Standards – Reduced Disclosure Requirements of the Australian Accounting Standards Board, the Australian Charities and Not-for-profits Commission Act 2012 and Accounts, Audits and Annual Reports Ordinance 1995 of the Synod of the Diocese of Sydney. b. Basis of Preparation

i. Functional and Presentation Currency The financial report is measured in Australian Dollars.

ii. Rounding of Amounts The Corporation is an entity of the kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in the financial statements. In accordance with that Instrument, all financial information presented has been rounded to the nearest thousand dollars, unless otherwise stated.

iii. Historical Cost Convention The financial report is prepared on an accruals basis and is based on historical costs except for the following material items in the Statement of Financial Position:

• Land is measured at fair value. • Cash flow interest rate hedges are measured at fair value.

iv. Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform with changes in presentation for the current financial year.

These Accounting Policies are applicable to all entities that form part of the Corporation. c. Critical Accounting Estimates and Judgements

The preparation of the financial report requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial report. Management continually evaluate its judgements and estimates in relation to assets, liabilities, contingent assets, contingent liabilities, revenues and expenses.

The Board Members evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Corporation.

The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of certain assets and liabilities within the next annual reporting period are:

i. Estimates – Impairment The Board Members assess impairment at each reporting date by evaluating conditions specific to the Corporation that may lead to impairment of assets.

The method of assessing impairment of individual asset classes is discussed later in this report.

The Board Members have determined that there is no impairment up to the date of signing of this report other than

as disclosed elsewhere within this report. 11 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ii. Judgments – Leasehold Land

The Board Members are not aware of any matters or issues that would put at risk the continuance of Special Lease 1963/59 Metropolitan, being for Lot 2112 in Deposit Plan 752038 of 1.267 hectares at Dee Why Parish, Manly Cove, County Cumberland, Warringah Shire. The Board Members believe that the policy of depreciating buildings on a straight line over 40 years is appropriate for buildings constructed on this land.

iii. Demolition Write-down

The Board Members determined to recognise in the Statement of Comprehensive Income at 31 December 2016 a write-down of $1,378,770 for demolition required prior to the development of sites at Arndell Anglican College, Claremont College, Danebank School, Penrith Anglican College, Roseville College, St Luke’s Grammar School and Wollondilly Anglican College.

iv. Liquidity

The Board Members believe the Corporation will be able to pay its debts as and when they become due and payable because adequate banking facilities of $32,623,962 remain available (refer Note 11), sufficient surpluses and operating cash inflows are generated annually together with the significant amount of cash inflows received in January each year. The Corporation has a net deficiency in current assets compared to current liabilities of $35,029,391 as at 31 December 2016 which is primarily due to the conservative classification of employee entitlements. d. Change in Accounting Policies – Changes in Accounting Estimates

During the current reporting period, the Corporation determined that the useful lives of the internal components of buildings capitalised from 1 January 2016 is 10 or 15 years. Consequently, internal components of buildings are now depreciated at either 10% or 6.67% in accordance with the requirements of AASB 116 Property, Plant & Equipment. There was no change to the estimated useful lives of existing buildings capitalised up to 31 December 2015 and they will continue to be depreciated over their remaining useful life. The Corporation has concluded that this change is a change in accounting estimate in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. e. Consolidation Principles

The consolidated financial statements incorporate the assets, liabilities and results of the entities controlled by the Corporation. A controlled operation is any operation the Corporation has the power to control. Control exists where the Corporation has the authority to govern the decision-making in relation to the financial and operating policies of another operation so that the other operation acts with the Corporation to achieve the objectives of the Corporation.

A list of controlled operations is contained in Note 16 to the financial statements. All controlled entities have a December financial year end.

All inter-company balances and transactions between operations in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. f. Cash

For the purpose of the Statement of Cash Flows, cash includes cash on hand and at call deposits with banks, and money market instruments maturing within less than two months. g. Economic Dependence

The Corporation is economically dependent on funding received from State and Commonwealth Governments for a significant proportion of its revenue used to operate the business. At the date of this report, the Board Members believe it is reasonable to expect that the State and Commonwealth Governments will continue to support the Corporation.

12 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) h. Debtors and Provision for Impairment Loss

Amounts due to the Corporation in respect of fees are recorded as Debtors.

A provision for impairment loss is raised based on an understanding of the likelihood or otherwise of collecting the outstanding amounts. Bad debts are written off as incurred. i. Investments

Current investments are measured on a cost basis. The carrying amount of investments is reviewed annually to ensure it is not in excess of the recoverable amount of these investments. The expected net cash flows from investments have not been discounted to their present value in determining the recoverable amounts. j. Inventories

Inventories are measured at the lower of cost or net realisable value. Costs are assigned on a first-in first-out basis. k. Intangible Assets

Intangible Assets are capitalised software expenditure. Intangible Assets that are acquired by the Corporation are measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is recognised on a straight-line basis over the intangible assets’ useful lives. 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. l. Property, Plant and Equipment

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

i. Land Land is measured at fair value in accordance with AASB 116 Property, Plant and Equipment. Fair value is based on periodic, but at least biennial valuations by independent valuers. The last independent valuation of land was performed during November 2015 – January 2016, dated 31 December 2015. In the years where land is not subject to independent valuation the Board Members review the key assumptions adopted in the most recent valuation to ensure the carrying amount of land correctly reflects the fair value less cost to sell.

ii. Buildings Buildings are measured at cost in accordance with AASB 116 Property, Plant and Equipment.

Buildings in progress are recorded at the total cost of the project incurred up to 31 December 2016, which may initially include items of freehold improvement and/or equipment that will be allocated to the relevant class of non- current asset upon completion of the project.

iii. Equipment and Motor Vehicles Equipment and motor vehicles are measured on a cost basis.

The carrying amount of equipment and motor vehicles is reviewed annually to ensure it is not in excess of the recoverable amount from those assets. m. Depreciation and Amortisation

The depreciable amount of all fixed assets (and the full cost to be amortised) including buildings and capitalised leased assets, but excluding freehold land, are depreciated or amortised on a straight line basis over their estimated useful lives to the Corporation commencing from the time that the asset is held ready for use.

Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful life of the improvements. 13 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The depreciation rates used for each class of assets are: Class of Asset Depreciation & Amortisation Rate Buildings 2.5% - 10% Computers 20% - 33% Freehold and Leasehold Improvements 5% - 20% Furniture and Fittings 10% - 30% Library Books 33% Motor Vehicles 15 - 20% Plant and Equipment 20% Software 33% n. Impairment of Assets

At each reporting date, the Board Members review the carrying values of the tangible and intangible assets of the Corporation to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Statement of Comprehensive Income.

AASB 136 – Impairment of Assets, Paragraph Aus 32.1, states that in respect of not-for-profit entities, where the future economic benefits of an asset are not primarily dependent upon the assets ability to generate net cash inflows and where the entity would, if deprived of the asset, replace its remaining future economic benefits, ‘value in use’ shall be determined as the depreciated replacement cost of the asset.

AASB 136 – Impairment of Assets, Paragraph Aus 32.2, states that 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. o. Trade and Other Payables

Trade and other payables represent the liabilities for goods and services received by the Corporation during the reporting period that remain unpaid at the end of the reporting period. These liabilities are recognised at cost. p. Interest Bearing Liabilities and Interest Rate Hedging

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of costs associated with the borrowing.

The Corporation uses interest rate swaps and collars to hedge its risks associated with interest rate fluctuations.

For the purpose of hedge accounting, hedges are classified as:

• Fair value hedges when they hedge the exposure to changes in fair value of a recognised asset or liability;

• Cash flow hedges when they hedge exposure to variability in cash flows that is attributable either to a particular risk associated with a recognised asset or liability or to a forecast transaction. A hedge of the interest rate risk of a firm commitment is accounted for as a cash flow hedge.

At the inception of a hedge relationship, the Corporation formally designates and documents the hedge relationship to which the Corporation wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they are designated.

The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is recognised in the Statement of Comprehensive Income.

When a hedging instrument expires or is terminated or when a hedge no longer meets the criteria for hedge accounting, the cumulative gain or loss previously recognised in equity is transferred to the Statement of Comprehensive Income. 14 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) q. Provisions

i. Employee Entitlements Provision is made for the Corporation’s liability for employee entitlements arising from services rendered by employees to balance date. Employee entitlements expected to be settled within one year have been measured at their nominal amount. Other employee entitlements payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those entitlements. In determining the liability, consideration is given to employee wage increases and the probability that the employee may not satisfy vesting requirements. Those cash flows are discounted using market yields on high quality corporate bonds with terms to maturity that match the expected timing of cash flows. Contributions made by the Corporation to an employee’s superannuation fund are charged as an expense when incurred.

ii. Commonwealth Government Grant Repayment Provision is made for the repayment of an ATC grant received from the Commonwealth Government in a prior year. The provision amount reflects the unamortised portion of the grant which the Board Members believe is appropriate to recognise. Provision is made for the repayment of grants received by Shoalhaven Anglican School from the Commonwealth Government in respect of Block Grant Authority (‘BGA’) and Building the Education Revolution (‘BER’) Grants as a result of the decision by the Board Members to close the School from 31 December 2016.

iii. Other Provision is made for the Corporation’s liability for travel, study and associated costs in relation to Principals’ sabbatical in accordance with Corporation policy. The provision is measured with reference to anticipated sabbatical activities. r. Asset Revaluation Reserve

The reserve represents the movement in the fair value of the class of assets, being land, as a result of revaluation.

Net revaluation increases of land are recognised in other comprehensive income and accumulated in equity under the heading of asset revaluation reserve.

Any decrease in the fair value of land is first recognised in other comprehensive income to the extent of any credit balance existing in the asset revaluation reserve. The net revaluation decrease recognised in other comprehensive income reduces the amount accumulated in equity under the heading of asset revaluation reserve. Where there is no asset revaluation reserve credit balance, the decrease as a result of the revaluation is recognised in the operating surplus. s. Revenue

Government Grant and Interest Subsidy revenues are recognised in the Statement of Comprehensive Income when the Corporation obtains control of the grant or subsidy, it is probable that the economic benefits gained from the grant or subsidy will flow to the Corporation, and the amount of the grant or subsidy can be measured reliably. Grants received on the condition that specified services are delivered, or conditions are fulfilled, are initially recognised as a liability and revenue is recognised as services are performed or conditions fulfilled.

Donations and bequests are recognised as revenue when received. Amounts transferred from Endowment Funds are recognised as revenue when received.

Revenue from private fees is recognised during the period to which they relate. Interest revenue is recognised in the period in which it is received.

15 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) t. Government Building Grants

The Corporation has received grants from the Commonwealth and State Governments in respect of facilities and refurbishments. In certain circumstances (e.g. the closure of the Corporation or the facilities ceasing to be used for the approved purpose) an amount may become repayable to the Commonwealth or State.

For Block Grant Authority (‘BGA’) Grants executed by 11 December 2008 and all Trades Skills Centre (‘TSC’) Grants, the balance of the amount repayable is amortised by 5% of the original grant each year of the designated use period. For all Building the Education Revolution (‘BER’) Grants and BGA Grants executed after 11 December 2008, the full amount will be recoverable up to half way through the designated use period, which is generally between 10 and 20 years, then reduced by equal annual proportions of the total amount over the remaining period.

The Board Members have determined to recognise a provision for the repayment of BGA and BER Grants received by Shoalhaven Anglican School as a result of the decision to close the School from 31 December 2016.

As the operation of South Coast Trades Skills Centre is continuing, the Board Members have determined that no contingent liability should be recognised in relation to the Trades Skills Centre (‘TSC’) Grant received by Shoalhaven Anglican School.

The Board Members have determined that no contingent liability should be recognised in relation to either BGA, TSC or BER Grants received by Schools, as the possibility of an outflow of resources embodying economic benefit in relation to these grants is considered remote. This is in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets. u. Borrowing Costs

Borrowing costs are expensed as incurred. v. Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. w. Taxation

The Corporation, by the nature of its operations is exempt from the imposition of income tax. No income tax expense is therefore recorded in the Financial Statements. x. Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST, where applicable.

16 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

PARENT CORPORATION Note 2016 2015 2016 2015 $'000 $'000 $'000 $'000 NOTE 2: GOVERNMENT REVENUE Educational Activities Commonwealth Govt Recurrent Grants 90,922 84,296 90,922 84,297 State Govt Recurrent Grants 31,027 28,991 31,027 28,990 Commonwealth Targeted Program Grants 597 869 597 869 Other State Govt Non-Recurrent Grants 205 203 228 269 122,751 114,359 122,773 114,425

State Government Interest Subsidy 2,592 3,030 2,592 3,030

Total Government Educational Activities 125,343 117,389 125,365 117,455

Other Corporation Activities Commonwealth Govt Block Grant Authority 1,870 2,005 1,870 2,005 Commonwealth Govt Capital Grants 0 20 0 20 Commonwealth Govt Trade Training Centre Grants 0 1,544 0 1,544 State Govt Block Grant Authority 450 885 450 885 State Govt Capital Grants 0 6 0 6 Total Other Corporation Activities 2,320 4,460 2,320 4,460 Total 127,663 121,849 127,685 121,915

NOTE 3: CASH Cash at Bank 707 705 2,999 1,369 Cash on Hand 15 15 15 15 Cash 722 720 3,014 1,384 Investments 5 52,102 51,487 0 0 Cash and Cash Equivalents in the Statement of Cash Flows 52,824 52,207 3,014 1,384

i. Reconciliation of Operating Surplus to Net Cash Flows from Operating Activities Operating Surplus 27,820 22,949 16,495 14,877 Non-Cash Flow in surplus from ordinary activities Depreciation and Amortisation 30,966 22,737 30,968 22,742 (Gain) / Loss from Disposal of Non-Current Assets 18 (9,094) 18 (9,094) Demolition Write-down 1,379 1,616 1,379 1,616 (Gain) on Debt Forgiveness (1,338) (2,302) 0 0 Changes in Assets and Liabilities (Increase)/Decrease in Receivables and other assets (1,250) 1,898 (1,266) 1,898 (Increase)/Decrease in Inventories 0 (28) 0 (28) (Increase)/Decrease in Other Assets (382) 158 (258) 259 (Decrease)/Increase in Payables 519 1,160 (11,842) 14,188 (Decrease)/Increase in Provisions 1,708 399 1,707 416 Net Cash provided by Operating Activities 59,440 39,493 37,202 46,874

17 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

PARENT CORPORATION Note 2016 2015 2016 2015 $'000 $'000 $'000 $'000 NOTE 4: RECEIVABLES Debtors - School Fees 2,777 3,212 2,777 3,212 Less Provision for Impairment Loss (1,233) (1,755) (1,233) (1,755) 1,544 1,457 1,544 1,457 Sundry Debtors 2,979 1,760 2,996 1,762 4,523 3,217 4,540 3,219

Provision for Impairment - opening balance 1,755 1,963 1,755 1,963 Charge/(reduction) for the year (223) 162 (223) 162 Written off (299) (370) (299) (370) Provision for Impairment - closing balance 1,233 1,755 1,233 1,755

NOTE 5: INVESTMENTS Investments in Capstone Finance Limited 52,102 51,487 0 0 3 52,102 51,487 0 0

NOTE 6: OTHER ASSETS Prepayments 2,097 1,716 2,097 1,840 Deposits 22 21 22 21 2,119 1,737 2,119 1,861

NOTE 7: INTANGIBLE ASSETS Computer Software 3,912 3,907 3,912 3,925 Accumulated Amortisation (3,080) (3,016) (3,080) (3,034) 832 891 832 891 Balance at Beginning of Year 891 1,080 891 1,080 Additions 432 582 432 582 Disposals (0) (276) (0) (276) Amortisation Expense (492) (495) (492) (495) Carrying Amount at End of the Year 832 891 832 891

NOTE 8: PROPERTY, PLANT & EQUIPMENT

Freehold Land & Improvements Land at Valuation 215,663 211,342 215,663 211,342 Freehold Improvements at Cost 51,728 43,765 51,728 43,765 Leasehold Improvements at Cost 1,709 1,660 1,709 1,660 Accumulated Depreciation (26,704) (24,078) (26,704) (24,078) 242,396 232,689 242,396 232,689 Buildings At cost 398,104 379,843 398,104 379,843 Accumulated Depreciation (99,322) (85,807) (99,322) (85,807) 298,782 294,036 298,782 294,036 Plant & Equipment At cost 111,927 119,272 112,201 119,547 Accumulated Depreciation (82,790) (89,581) (83,059) (89,849) 29,137 29,691 29,142 29,698

Total Property Plant & Equipment 570,315 556,416 570,320 556,423 18

Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

NOTE 8: PROPERTY PLANT & EQUIPMENT (CONTINUED) Land was valued by Nelson Partners Australia during November 2015 - January 2016, dated 31 December 2015. The following assumptions were made and methods used by the Nelson Partners Australia in estimating the market value of land:

• Regard was given to purchase prices of new properties, but only land value was included where structural improvements had been made to the land • Continued use was assumed for schools • A low risk of environmental issues for the land being valued was assumed • Site inspections were made as well as reference to detailed market investigations and sales data as appropriate • Valuations were predominantly based upon a rate per square metre, allowing for hypothetical redevelopment and utilisation for the “highest and best use”

At 31 December 2016, the Board Members reviewed the last valuation of freehold land valued by Nelson Partners Australia, undertaken in November 2015 - January 2016. The Board Members reviewed the key assumptions adopted by Nelson Partners Australia in that valuation and believe there had not been a significant change in the assumptions made as at 31 December 2015. Accordingly, the Board Members believe the carrying value of the land at 31 December 2016 correctly reflects the fair value less cost to sell.

Existing improvements have been disregarded except for heritage listed properties as this has an impact on the potential for redevelopment of those sites. For the non-active school sites where improvements are existing and are considered to have added value, the improvements have been incorporated into the valuation.

Land at Danebank, Nowra and Roseville purchased during 2016 was valued by Nelson Partners Australian during February 2017, dated 31 December 2016.

During the reporting period, the Corporation entered into a contract to acquire land at Wilton Junction contingent upon the developer completing registration and the proposed subdivision of the defined area. The value of this contract is $10,148,475 and has been disclosed as a contingent asset (refer Note 18).

Reconciliations Reconciliations of the carrying amounts of property, plant and equipment are as follows: PARENT Land & Plant & Improvements Buildings Equipment Total $'000 $'000 $'000 $'000 2016 Balance at Beginning of Year 232,689 294,036 29,691 556,416 Additions 7,511 28,601 10,489 46,602 Disposals (93) (1,381) (754) (2,227) Transfers In / (Out) 5,430 (6,241) 811 0 Revaluation Increments / (Decrements) 0 0 0 0 Depreciation Expense (3,141) (16,233) (11,100) (30,474) Carrying Amount at End of the Year 242,396 298,782 29,137 570,315 CORPORATION Land & Plant & Improvements Buildings Equipment Total $'000 $'000 $'000 $'000 2016 Balance at Beginning of Year 232,689 294,036 29,698 556,422 Additions 7,511 28,601 10,489 46,601 Disposals (93) (1,381) (754) (2,227) Transfers In / (Out) 5,430 (6,241) 811 0 Revaluation Increments / (Decrements) 0 0 0 0 Depreciation Expense (3,141) (16,233) (11,102) (30,476) Carrying Amount at End of the Year 242,396 298,782 29,142 570,320

19 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

PARENT CORPORATION Note 2016 2015 2016 2015 $'000 $'000 $'000 $'000 NOTE 9: INTEREST RATE HEDGE Interest Rate Hedge Asset Non-Current 0 0 1,628 0 9b 0 0 1,628 0

Interest Rate Hedge Liability Current 0 0 678 0 9b 0 0 678 0 Net Interest Rate Hedge Asset/(Liability) 9b 0 0 950 0

a. Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates affect future cash flows or the fair value of fixed interest rate financial instruments.

As at 31 December 2016 $80,000,000 of long term debt has been hedged utilising at a fixed rate swap and $40,000,000 of long term debt has been hedged utilising an interest rate collar swap. It is the policy of the Corporation to use hedging arrangements to ensure that interest rate risk is managed in a prudent, orderly and efficient manner consistent with the values of the Corporation.

The fixed rate swap terminates on 18 July 2026 and the interest rate collar swap terminates on 18 January 2019. The fixed rate swap is at a fixed rate of 4.165% and the interest rate collar swap has a cap rate of 2.9% and a floor rate of 1.45%.

As at 31 December 2015, the Director’s had determined that the prior interest rate hedge was no longer effective and should be terminated. An Interest Rate Swap Termination Liability of $12,060,000 was recognised as at 31 December 2015 and paid on 19 January 2016.

b. The following table indicates the periods in which the cash flows associated with interest rate cash flow hedges are expected to occur and are also expected to impact profit or loss.

CORPORATION 2016 $'000 Carrying Expected 6 Months or More than 5 Amount Cash Flows Less 6-12 months 1-2 years 2-5 years years Interest Rate Swaps Assets 1,628 2,552 0 0 0 459 2,094 Liabilities (678) (1,146) (364) (319) (463) 0 0 950 1,407 (364) (319) (463) 459 2,094 2015 $'000 Carrying Expected 6 Months or More than 5 Amount Cash Flows Less 6-12 months 1-2 years 2-5 years years Interest Rate Swaps Assets 0 0 0 0 0 0 0 Liabilities 0 0 0 0 0 0 0 0 0 0 0 0 0 0

20 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

PARENT CORPORATION 2016 2015 2016 2015 $'000 $'000 $'000 $'000 NOTE 10: PAYABLES Current Student Deposits 707 643 707 643 Fees In Advance 1,316 1,005 1,316 1,005 Interest Rate Swap Termination Liability 9a 0 0 0 12,060 Other Creditors and Accrued Charges 19,891 21,452 20,835 22,670 Unexpended Grants 230 137 230 139 22,144 23,237 23,088 36,517 Non-Current Student Deposits 4,802 4,972 4,802 4,972 Other Creditors and Accrued Charges 345 356 380 417 5,147 5,328 5,182 5,389 27,291 28,565 28,270 41,906

NOTE 11: INTEREST BEARING LIABILITIES (SECURED) Bank Current 0 270 1,000 110,020 Non-Current 0 0 121,500 0 0 270 122,500 110,020

On 20 January 2016 the Corporation terminated its long-term facilities agreement with the Commonwealth Bank of Australia (‘CBA’).

On 20 January 2016 the Corporation settled a 5 year syndicated facilities agreement with the Australian and New Zealand Banking Group, National Australia Bank and Westpac Banking Corporation (‘the Syndicate’) which provides the banking syndicate with appropriate security by way of real property mortgages. Under the syndicated facilities agreement, the facilities available are: • Facility A - Australian Dollar revolving loan facility of $110,000,000 – committed as at 31 December 2016; • Facility B - Australian Dollar amortising term loan facility of $12,000,000 – committed as at 31 December 2016; • Facility C - Australian Dollar revolving loan facility of $30,000,000 – committed as at 31 December 2016; • Facility D - Australian Dollar revolving bank guarantee facility $ 4,500,000 – committed as at 31 December 2016; • Facility E - Accordion facility of $ 25,000,000 – uncommitted as at 31 December 2016.

As at 31 December 2015 the Commonwealth Bank of Australia (CBA) held security over all assets of the Anglican Schools Corporation, Sydney Anglican Schools Limited and Capstone Finance Limited, excluding the land and buildings located at Old Windsor Road, Glenwood (Lot 201/DP 1144231) which is released from the registered equitable mortgage held by the CBA.

Available banking facilities held with the Syndicate (2015: CBA) which includes bank bill facilities, leasing facilities, business credit card facilities, autopay and bank guarantees, are summarised in the following table:

PARENT CORPORATION 2016 2015 2016 2015 $'000 $'000 $'000 $'000 Total committed facilities utilised at year end 0 1,663 122,876 111,413 Total committed facilities available at year end 0 7,520 155,500 132,270 Total committed facilities unused at year end 0 5,857 32,624 20,857

21 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

PARENT CORPORATION 2016 2015 2016 2015 $'000 $'000 $'000 $'000 NOTE 12: INTEREST BEARING LIABILITIES (INTRAGROUP) Capstone Finance Limited Current 43,774 50,316 0 0 Non-Current 162,641 167,937 0 0 206,415 218,253 0 0

NOTE 13: PROVISIONS Current Annual Leave 1,973 1,681 2,011 1,716 Long Service Leave 17,784 17,158 17,784 17,158 Commonwealth Grant Repayment Provision 993 0 993 0 Other 0 84 0 84 20,750 18,923 20,788 18,958 Non-Current Long Service Leave 2,160 1,919 2,166 1,929 Commonwealth Grant Repayment Provision 5,796 6,278 5,796 6,278 Other 541 418 541 418 8,497 8,615 8,503 8,625 29,247 27,538 29,291 27,583

NOTE 14: CAPITAL COMMITMENTS Commitments arising from the execution of a contract for the construction of buildings, which at the date of these financial statements, are incomplete: not later than 12 months 13,246 4,151 13,246 4,151 later than 12 months but not greater than 5 years 0 0 0 0 greater than five years 0 0 0 0 13,246 4,151 13,246 4,151 Details of any guarantees or contingent liabilities are listed in Note 19

NOTE 15: LEASE COMMITMENTS Non-cancellable operating leases contracted for but not capitalised in the financial statements. Receivable Minimum lease payments: not later than 12 months 2,317 2,249 2,317 2,249 later than 12 months but not greater than 5 years 9,997 9,701 9,997 9,701 greater than five years 13,096 15,709 13,096 15,709 25,410 27,659 25,410 27,659

22 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

PARENT CORPORATION 2016 2015 2016 2015 $'000 $'000 $'000 $'000 NOTE 15: LEASE COMMITMENTS (CONTINUED) Payable Minimum lease payments: not later than 12 months 1,626 1,644 1,626 1,644 later than 12 months but not greater than 5 years 2,413 1,158 2,413 1,158 greater than five years 1,874 1,206 1,874 1,206 5,914 4,007 5,914 4,007 The Corporation has operating lease facilities totalling $4.5 million for I.T. Equipment which is accessed by a number of schools. These lease agreements generally expire within two to four years. The Corporation has a 7 year operating lease for office space for Group Office terminating on 30 November 2017. The Corporation has a new 7 year operating lease for a new office space for Group Office which commences on 1 February 2017. The Corporation also has a lease in perpetuity over a parcel of Crown land for St Luke’s Grammar School.

NOTE 16: CONTROLLED OPERATIONS The following schools and entities, including the relevant Building, Library, Scholarship and Education Funds are controlled by the Corporation:

• Arndell Anglican College • ATC Western Sydney Ltd T/as Trades Norwest • Capstone Finance Limited • Claremont College • Danebank, An Anglican School for Girls • Group Office • Loquat Valley Anglican School Pittwater • Macquarie Anglican Grammar School • Mamre Anglican School • Nowra Anglican College • Oran Park Anglican College • Orange Anglican Grammar School • Penrith Anglican College • Richard Johnson Anglican School, Marsden Park Campus • Richard Johnson Anglican School, Oakhurst Campus • Roseville College • Rouse Hill Anglican College • Shellharbour Anglican College • St Luke’s Grammar School • Shoalhaven Anglican School • Sydney Anglican Schools System • Thomas Hassall Anglican College • Trades Norwest Anglican Senior College • Wollondilly Anglican College

NOTE 17: RELATED PARTIES No Board Member, since the end of the previous financial year, has received or become entitled to receive, a benefit by reason of a contract made by the Corporation, or a related entity, with the Board Members, with a firm of which he/she is a member, or a Company in which he/she has a substantial financial interest.

Transactions between the Corporation and its controlled entities were eliminated in the preparation of the consolidated financial statements for the Group.

23 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

NOTE18: CONTINGENT ASSETS There are no known contingent assets at the date of signing the annual report except for those listed below: PARENT CORPORATION 2016 2015 2016 2015 $'000 $'000 $'000 $'000 Land at Cost – Wilton Junction 10,148 0 10,148 0 On 2 June 2016, the Corporation entered into a contract to acquire land at Wilton Junction contingent upon the developer completing registration and the proposed subdivision of the defined area. The value of land at cost under this contract has therefore been disclosed.

NOTE 19: CONTINGENT LIABILITIES There are no known contingent liabilities at the date of signing the annual report except for those listed below: Liability for Land – Wilton Junction 10,148 0 10,148 0 Bank Guarantees 376 238 376 238 10,525 238 10,525 238 On 2 June 2016, the Corporation entered into a contract to acquire land at Wilton Junction contingent upon the developer completing registration and the proposed subdivision of the defined area. The liability under this contract has therefore been disclosed. Bank Guarantees are provided at the request of and on behalf of the company by its banker to guarantee the company’s performance under certain contracts. Bank Guarantees are not expected to be called upon in the normal course of business. At year end the aggregate amount of Bank Guarantees is shown above.

NOTE 20: KEY MANAGEMENT PERSONNEL The remuneration of key management personnel during the year was: Short term benefits 5,209 5,313 5,209 5,313 Long term benefits 321 160 321 160 Terminations 208 83 208 83 5,737 5,555 5,737 5,555

NOTE 21: GOVERNMENT GRANTS FOR CAPITAL PROJECTS The unamortised portion of the grants are as follows: Building the Education Revolution Grants (BER) 37,618 38,654 37,618 38,654 Block Grant Authority Grants (BGA) 16,825 15,366 16,825 15,366 Trades Skills Centre (TSC) 4,926 5,200 4,926 5,200

24 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016

PARENT CORPORATION Note 2016 2015 2016 2015 $'000 $'000 $'000 $'000 NOTE 22: FINANCIAL RISK MANAGEMENT The Corporation’s financial instruments consist mainly of deposits with banks, investments, accounts receivable and payable, and borrowings.

Totals for each category of financial instruments, measured in accordance with AASB 139 Financial Instruments: Recognition and Measurement as detailed in the accounting policies to these financial statements, are as follows: Financial Assets: Cash 3 722 720 3,014 1,384 Receivables 4 4,523 3,217 4,540 3,219 Investments 5 52,102 51,487 0 0 Interest Rate Hedge 9 0 0 1,628 0 Total Financial Assets 57,348 55,424 9,182 4,603 Financial Liabilities: Trade and other payables 10 27,291 28,565 28,270 41,906 Loans - Secured 11 0 270 122,500 110,020 Loans - Intragroup 12 206,415 218,253 0 0 Interest Rate Hedge 9 0 0 678 0 Total Financial Liabilities 233,706 247,088 151,448 151,926

Net fair values For other assets and other liabilities the net fair value approximates their carrying value.

The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the Statement of Financial Position and in the Notes to the Financial Statements.

NOTE 23: SUBSEQUENT EVENTS There have been no events subsequent to 31 December 2016, and to the date of this report of a material and unusual nature which would significantly affect the operations of the Corporation, the results of the operations or the state of the affairs of the Corporation in the subsequent financial period, other than as detailed below.

On 1 January 2017, Loquat Valley Anglican School Pittwater became a campus of St Luke’s Grammar School to be known as St Luke’s Grammar School, Bayview Campus.

Contracts for the construction of buildings that have been signed since the date of these financial statements total: $10,473,858.

On 7 March 2017, the Corporation entered into a contract to purchase 12 Heath Street, Randwick for $2,900,000.

25 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page BOARD MEMBERS’ DECLARATION

The Board Members of Anglican Schools Corporation declare that:

1. The Financial Statements and Notes, as set out in pages 7 to 25, are in accordance with the Australian Charities and Not- for-profits Commission Act 2012, Accounts, Audits and Annual Reports Ordinance 1995 of the Synod of the Diocese of Sydney, and a. comply with Australian Accounting Standards - Reduced Disclosure Requirements and the Australian Charities and Not-for-profits Commission Regulation 2013; and b. give a true and fair view of the financial position as at 31 December 2016 and of the performance for the year ended on that date of the Anglican Schools Corporation.

2. In the opinion of the Board Members, there are reasonable grounds to believe that the Anglican Schools Corporation will be able to pay its debts as and when they become due and payable.

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

Signed in accordance with subsection 60.15 (2) of the Australian Charities and Not-for-profits Regulation 2013.

______

______

______

Dated 28 March 2017

26 Anglican Schools Corporation ABN 63 544 529 806

Consolidated Financial Report Page ANGLICAN SCHOOLS CORPORATION

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF ANGLICAN SCHOOLS CORPORATION ABN 63 544 529 806

Report on the audit of financial report

Auditor’s opinion

I have audited the accompanying financial report of Anglican Schools Corporation which comprises the statement of financial position as at 31 December 2016, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the Board Members’ declaration of Anglican Schools Corporation (“the Corporation”).

In my opinion, the financial report of Anglican Schools Corporation has been prepared in accordance with Division 60 of the Australian Charities and Not-for-profits Commission Act 2012, and the Accounts, Audits and Annual Reports Ordinance 1995, including:

(i) giving a true and fair view of the Corporation’s financial position as at 31 December 2016 and of their financial performance and cash flows for the year ended on that date; and

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

Basis for opinion

I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under those standards are further described as in the Auditor's Responsibilities for the Audit of the Financial Report section of my report. I am independent of the Corporation in accordance with the auditor independence requirements of Division 60 of the Australian Charities and Not for profits Commission Act 2012 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the code) that are relevant to my audit of the financial report in Australia. I have also fulfilled my other ethical responsibilities in accordance with the Code.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Page 27

Bradfield Partners Pty. Limited. A.B.N. 21 001 697 614 Liability limited by a Scheme approved under the Professional Standards legislation 323 Princes Highway, Rockdale NSW 2216, Australia. P.O. Box 139, Rockdale NSW 2216 P: 9597 6699 F: 9597 2990 Board Members’ responsibility for the financial report

The Board Members of the Corporation are responsible for the preparation and fair presentation of the financial report in accordance with the Accounts, Audits and Annual Reports Ordinance 1995 (“the Ordinance”), the Australian Accounting Standards - Reduced Disclosure Requirements and the Australian Charities and Not-for-profits Commission Act 2012 (“ACNC Act”), and for such internal control as the Board Members determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

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

Auditor’s responsibility

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

As part of an audit in accordance with the Australian Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

 Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation's internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board Members.  Conclude on the appropriateness of the Board Member's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor's report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor's report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

Page 28 I communicate with the Board Members regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

I also provide the Board Members with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.

Other Information

The Board Members are also responsible for the other information, being the information in the Board Members' Report. My opinion on the financial report does not cover the other information and I do not express any form of assurance conclusion thereon.

In connection with my audit of the financial report, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report and my knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

Robert Bradfield Partner Bradfield Partners Chartered Accountants

Dated in Sydney on 28 March 2017

Page 29