CONSOLIDATED ENTITY

ANNUAL FINANCIAL REPORT 2020

INDEX TO THE

FINANCIAL STATEMENTS

EDMUND RICE EDUCATION AUSTRALIA Consolidated Entity Financial Statements

Year Ended 31 December 2020 Statement of Profit or Loss and Other Comprehensive Income 3 Statement of Financial Position 4 Statement of Changes in Equity 5 Statement of Cash Flows 6 Notes to the Financial Statements 1 Significant Events in the Accounting Period 7 2 Critical Accounting Estimates and Judgements 8 3 Revenue and Other Income 9 4 Expenses 11 5 Trade and Other Receivables 12 6 Financial Assets 13 7 Property, Plant and Equipment 14 8 Trade and Other Payables 16 9 Financial Liabilities 16 10 Provisions 17 11 Other Liabilities 18 12 Inventories 18 13 Other Assets 18 14 Intangible Assets 19 15 Reserves 19 16 Notes to the Consolidated Statement of Cash Flows 20 Risk 17 Financial Risk Management 21 Group Structure 18 Parent Entity Financial Information 22 Unrecognised Items 19 Enforceable Undertaking 23 20 Contingent Liabilities and Assets 23 21 Capital and Operating Lease Commitments 23 22 Subsequent Events 24 Other Information 23 Related Party Transactions 24 24 General Information 25 25 Summary of Significant Accounting Policies 27 Statement by the Management of Edmund Rice Education Australia 30 Statement by the Board of Edmund Rice Education Australia 31 Statement by the Council of Edmund Rice Education Australia 32 Independent Auditor’s Report 33 Auditors Independent Declaration 34

The Trustees of Edmund Rice Education Australia Consolidated Entity Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2020

2020 2019 Notes $ $ REVENUE AND INCOME Revenue from ordinary activities 3 928,256,757 906,960,837 Income from capital grants 3 1,849,921 2,870,700 Income from other activities 3 13,215,125 8,136,389

Total Revenue 943,321,803 917,967,926

EXPENSES Administration, Boarding and Depreciation 4 149,656,349 140,487,558 Employee benefits 4 609,090,502 576,270,572 Finance costs 8,568,040 9,254,521 Operating Costs 4 105,133,587 117,830,315 Trading activities – Gross Expenditure 14,698,179 20,178,364 Other Significant expenses 4 2,013,391 2,541,245 Total Expenses 889,160,048 866,562,575

Profit/(Loss) for the year 54,161,755 51,405,351

OTHER COMPREHENSIVE INCOME Changes in Reserves - 79,120

Total other comprehensive income/(loss)for the year - 79,120

Total comprehensive income for the year 54,161,755 51,484,471

.

The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

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The Trustees of Edmund Rice Education Australia Consolidated Entity Statement of Financial Position For the year ended 31 December 2020

2020 2019 Notes $ $ ASSETS Current assets Cash and cash equivalents 16 327,755,074 290,561,461 Trade and other receivables 5 22,776,099 23,876,477 Inventories 12 4,090,706 4,796,692 Other current assets 13 8,062,564 9,709,114 Financial assets 6 24,745,683 22,958,497

Total current assets 387,430,126 351,902,241

Non-current assets Trade and other receivables 5 8,007,373 7,528,956 Financial assets 6 7,982,542 9,904,033 Property, plant and equipment 7 2,128,992,187 2,092,704,928 Intangible assets 14 440,000 440,000

Total non-current assets 2,145,422,102 2,110,577,917

2,532,852,228 2,462,480,158 Total assets

LIABILITIES Current liabilities Trade and other payables 8 61,212,511 79,280,868 Financial liabilities 9 39,345,341 40,830,267 Short term provisions 10 104,353,094 95,868,877 Other liabilities 11 36,445,392 41,042,815

Total current liabilities 241,356,338 257,022,827

Non-current liabilities Financial liabilities 9 197,377,509 169,825,374 Long term provisions 10 178,619 137,786 Other liabilities 11 24,451,066 44,732,789

Total non-current liabilities 222,007,194 214,695,949

Total liabilities 463,363,532 471,718,776

Net assets 2,069,488,696 1,990,761,382

EQUITY Retained surplus 15 1,985,400,034 1,901,973,842 Reserves 15 84,088,662 88,787,540

Total equity 2,069,488,696 1,990,761,382

The above State of Financial Position should be read in conjunction with the accompanying notes.

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The Trustees of Edmund Rice Education Australia Consolidated Entity Statement of Changes in Equity For the year ended 31 December 2020

Retained Reserves Total Surplus Equity $ $ $ Balance at 1 January 2019 1,852,171,424 87,105,487 1,939,276,911

Total Comprehensive Income 51,484,471 - 51,484,471 Profit transferred to reserve (1,682,053) 1,682,053 - Movements in reserves - - -

Balance at 31 December 2019 1,901,973,842 88,787,540 1,990,761,382

Balance at 1 January 2020 1,901,973,842 88,787,540 1,990,761,382

Adjustment re new accounting standard 24,565,559 - 24,565,559

Revised Balance at 1 January 2020 1,926,539,401 88,787,540 2,015,326,941

Total Comprehensive Income 54,161,755 - 54,161,755 Profit transferred to reserve 4,698,878 (4,698,878) - Movements in reserves - - - Balance at 31 December 2020 1,985,400,034 84,088,662 2,069,488,696

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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The Trustees of Edmund Rice Education Australia Consolidated Entity Statement of Cash Flows For the year ended 31 December 2020

2020 2019 Notes $ $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 436,813,281 436,167,335 Receipts form government 508,226,860 478,140,996 Payments to suppliers and employees (806,101,756) (781,471,972) Interest received 4,266,932 6,203,887 Borrowing costs paid (8,689,946) (9,259,026) Net cash generated from operating activities 16(b) 134,515,371 129,781,220

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment 2,896,413 1,475,046 Payments for property, plant and equipment (115,656,786) (91,587,001) Proceeds from insurance claims - - Proceeds from sale of investments 2,399,214 - Payments for investments (477,646) (1,414,923) Reclassification of financial assets - - Net cash used in investing activities (110,838,805) (91,526,878)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 59,787,061 46,102,026 Repayment of borrowings (40,083,127) (51,859,190) Net proceeds / (Repayments) of finance lease commitments (6,186,887) (6,755,155) Net cash from (used in) financing activities 13,517,047 (12,512,319)

Net increase (decrease) in cash held 37,193,613 25,742,023 Cash and cash equivalents at the beginning of the year 290,561,461 264,819,438 Cash and cash equivalents at the end of the year 16(a) 327,755,074 290,561,461

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

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Notes to the Financial Statements

1. SIGNIFICANT EVENTS

On establishment of EREA as a Public Juridical Person (PJP), an Agreement (“Agreement”) in 2013 was formally entered into between the Trustees of Christian Brothers Oceania Province and the Trustees of Edmund Rice Education Australia, which set out the provisions for implementing the transfer by the Christian Brothers Civil Entities to the TEREA Civil Entity, of the Christian Brothers civil entities' legal title and beneficial interest in the educational facilities, educational resources and the land which will enable the TEREA Civil Entity to own, govern, manage and conduct the educational facilities.

New and Revised Accounting Standards that have been issued but not yet effective At the date of authorisation of the financial statements, EREA has not applied the following new and revised Australian Accounting Standards, Interpretations and amendments, that have been issued but are not yet effective:

x AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities

New and Revised Accounting Standards that have been issued and are effective EREA complies with AASB 1054 Australian Additional Disclosures as a charity registered with the Australian Charities and Not-for-profits Commission, in disclosing information concerning compliance with all the recognition and measurement requirements in Australian Accounting Standards (AAS).

These requirements are effective for annual periods ending on or after 30 June 2020, that is, for EREA for the year ended 31 December 2020.

New and Revised Accounting Standards that were previously issued and implemented in respect of the 2019 financial year In the 2019 year, EREA adopted the new accounting pronouncements which became effective that year, being

x AASB 15 Revenue from Contracts with customers x AASB 16 Leases x AASB 1058 Income for Not-for-Profit entities

AASB 1058 clarifies and simplifies the income recognition and measurement requirements that apply to Not-for-profit (NFP) entities in conjunction with AASB 15.

AASB 1058 and AASB 15 (see below) supersede all the income recognition and measurement requirements relating to private sector NFP entities, and the majority of income recognition and measurement requirements relating to public sector NFP entities, previously in AASB 1004 Contributions.

Identifiable impacts at the date of the 2020 report were:

Some grants received by EREA were recognised as a liability, and subsequently recognised progressively as revenue as it satisfies its performance obligations under the grant agreement. At present, such grants are recognised as revenue upfront. Grants that are not enforceable and/or not sufficiently specific will not qualify for deferral and continue to be recognised as revenue as soon as they are controlled.

AASB 15 Revenue from Contract with customers

Under AASB15, revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control, at a point in time or over time, requires judgement.

AASB 16 Leases

EREA has adopted AASB 16 from 1 January 2019. The standard replaced AASB 117 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases, right-of-use assets and corresponding lease liabilities were recognised in the statement of financial position.

The adoption of this new Standard resulted in EREA recognising a right-of-use asset and related lease liability in connection with all former operating leases, except for those identified as having a remaining lease term of less than 12 months from the date of initial application or transactions that do not meet the requirements to be classified as a lease.

The new Standard was applied using the modified retrospective approach. EREA elected not to include initial direct costs in the measurement of the right-of-use asset for operating leases in existence at the date of initial application of AASB 16, being 1 January 2019. At this date, EREA also elected to measure the right-of-use assets at an amount equal to the lease liability adjusted for any prepaid or accrued lease payments that existed at the date of transition.

Instead of performing an impairment review on the right-of-use assets at the date of initial application, EREA relied on its historic assessment as to whether leases were onerous immediately before the date of initial application of AASB 16.

For those leases previously classified as finance leases, the right-of-use asset and lease liability were measured at the date of initial application at the same amounts as under IAS 17 immediately before the date of initial application.

On transition to AASB 16 the weighted average incremental borrowing rate applied to lease liabilities recognised under AASB 16 was 4.1%. EREA has benefited from the use of hindsight for determining the lease term when considering options to extend and terminate leases.

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2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Critical Accounting Estimates and Judgements EREA evaluates 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 group.

Key Estimates: Impairment of assets EREA assesses impairment at each reporting date by evaluating conditions specific to the entity that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Fair value less costs to sell or current replacement cost calculations performed in assessing recoverable amounts incorporate a number of key estimates.

Provisions Provisions are recognised when EREA has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions recognised represent the best estimate of the amounts required to settle the obligation at the end of the reporting period.

Economic Loss Allowance (ECL) When measuring ECL EREA uses reasonable and supportable forward looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other.

Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.

Provision for Long Term Employee Benefits Several estimations and assumptions used in calculating long service leave provision include expected future salary rates, discount rates, employee retention rates and expected future payments.

Classification between current and non-current liability is subject to the portability arrangements within the catholic Education system.

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3. REVENUE AND INCOME 2020 2019 $ $ Revenue and Income from Ordinary Activities Commonwealth Government grants 386,033,983 352,501,114 State Government grants 117,936,080 115,282,977 Fees and levies 382,190,421 382,715,912 Trading activities - Gross Income 22,550,543 29,896,398 Grants from other organisations 152,003 157,882 Donations 3,046,333 5,658,004 Gain/(loss) on disposal of non-current assets 463,027 778,813 Interest received 4,267,057 6,203,887 Capital gain on investments - Realised and Unrealised (179,440) 438,499 Sundry Income 10,068,124 11,226,133 Rental income 1,728,626 2,101,218

Total Revenue and Income from Ordinary Activities 928,256,757 906,960,837

Income from Capital Grants Commonwealth Government grants 829,652 282,163 State Government grants 931,929 2,404,921 Other organisations 88,340 183,616

Total Income from Capital Grants 1,849,921 2,870,700

Income from Other Activities Other Significant Income 5,490,117 668,020 P & F Donations 324,847 195,515 Member Entities Foundation Donations 1,455,154 2,038,333 Building Fund Donations 3,549,697 4,353,791 Other 2,395,310 880,730 Contribution of Land Assets by TOCB - - Total Income from Other Activities 13,215,125 8,136,389

Total Revenue and Income 943,321,803 917,967,926

Revenue

Revenue arises mainly from • fee raised in the provision of tuition for students within the year. • fee charged when an application is received to place a prospective student on a waiting list to be considered for admission in their desired year • fees charged when an offer of enrolment is accepted by a prospective student To determine whether to recognise revenue, the School follows a 5-step process: 1. Identifying the contract with a customer 2. Identifying the performance obligations 3. Determining the transaction price 4. Allocating the transaction price to the performance obligations 5. Recognising revenue when/as performance obligation(s) are satisfied. Revenue is recognised either at a point in time or over time, when or as the School satisfies performance obligations by transferring the promised goods or services to its customers. EREA recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in the statement of Financial Position. Similarly, a performance obligation is satisfied before it receives the consideration, either a contract asset or a receivable is recognized in its statement of financial position, depending on whether something other than the passage of time is required before the consideration is due.

Tuition Fees

Revenue from the provision of tuition for a fixed fee is recognised over time or when the performance obligation to the student is satisfied

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3. REVENUE AND INCOME (CONT.)

Application fees received when student placed on waiting list Fees derived by provision of administration processes in this regard, are considered not to contain performance obligations and the application fee is considered to be income recognised immediately.

Confirmation Fees

Fees are considered to be applicable to the provision of tuition fees delivered over the years or time the student receives tuition. The income is considered to be earned over the time of the contract, whether formalised or implied, if there is no requirement to remit the fee once student has concluded their schooling. If there is a requirement to remit the fee in a way at the discretion of the fee paying parent, the income is considered to be earned at that point in time.

Bequest and Donations

Bequests and Donation income is recognised when received as there is no “sufficiently specific” promises for the school to transfer goods or services to the customer or third party beneficiaries.

Recurrent Government grants

Recurrent grants are recognised as revenue when the school obtains control over them, which is usually upon receipt of funds as there is no “sufficiently specific” promises to be delivered.

Capital Grants

Capital grants received are tied to specific projects for the construction, replacement or upgrade of existing noncurrent assets. This does not fall within the scope of AASB 15 given the asset is for a school’s own use. However, AASB 1058 will require a school to defer income until it has acquired or constructed the asset in accordance with the terms of the transfer.

Revenue from Ordinary Activities and Capital Grants

Grants received from Federal and State governments, consists of: • Recurrent grants – funds received on a yearly basis subject to the funding guidelines of the relevant statutory bodies, to provide operational educational facilities such as wages for teaching and administration staff.

• Capital grants – funds received to assist in the provision of capital improvements, such as infrastructure, which may traverse accounting periods.

Schools, colleges and flexible learning centres receive government grant monies to fund projects either for contracted periods of time or for specific projects irrespective of the period of time required to complete those projects.

These contributions are considered non-reciprocal transfers and are recognised as income when three conditions have been met: • control of the contribution or right to receive the contribution has been obtained; • probability that the future economic benefits will flow; and • the amount of the contribution can be measured reliably.

Fees and levies – Represents fees and where applicable levies charged to parents in respect of education of students.

Revenue is brought to account upon the issue of fee account invoices, with the exception of where fee accounts are issued in advance of the particular school term. In these instances, such revenue is deferred until the term when education is delivered.

Trading Activities – Gross income recorded in respect of the operations of facilities such as canteens, uniform shops and libraries. These facilities may be operated by paid or volunteer staff.

Revenue from the sale of goods is recognised upon delivery of goods to students and families.

Interest Received – Monies earned from the investment of funds with banking facilities.

Income from Other Activities

Significant Income • Other - Monies received in relation to third party matters such as receipt of funds from an insurance claim.

College Foundation Donation – Income recorded in respect of donations made by external Foundations considered not controlled by EREA but associated with a College.

Building Fund Donations – Receipt of specified and directed funds received by individual Colleges in respect of third party donations to building and other funds operated within a College, and which is treated as a deductible gift, by the Australian Taxation Office (ATO).

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4. EXPENSES

2020 2019 $ $ Administration, Boarding and Depreciation Administration Expenses 62,933,639 59,664,743 Depreciation and amortisation 79,367,336 72,915,506 Boarding Expenses 7,355,374 7,907,309 Total Administration Expenses 149,656,349 140,487,558

Employee Benefits Expenses Wages & Salaries 540,962,505 512,486,265 Superannuation 53,851,576 51,736,422 Other Benefits 14,276,421 12,047,885 Total Employee Benefits Expenses 609,090,502 576,270,572

Operating Costs Faculties & Co-curricular Expenses 41,896,535 59,317,326 Insurances 10,213,375 9,124,714 Building Grounds – Operations Maintenance 46,846,742 46,220,583 Doubtful Debts 2,108,398 410,929 Bad Debts 3,099,340 2,272,576 Lease Costs 473,789 337,164 Loss on sale of fixed assets 495,408 147,023 Total Operating Costs 105,133,587 117,830,315

Other Significant Expenses ERSES Expenses 970,702 1,005,655 Insurance 359,504 - Other 683,185 1,535,590 Total Other Significant Expenses 2,013,391 2,541,245

ERSES Expenses: Expenses incurred relating to Edmund Rice Special Educations Services at St. Edmund’s College and St. Gabriel’s College.

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5. TRADE AND OTHER RECEIVABLES

2020 2019

$ $ Trade Receivables

(i) Current 25,937,917 25,655,761

Loss Allowance (iii) (7,559,645) (7,566,810) Total Current Trade Receivables 18,378,272 18,088,951

Non-Current (ii) 17,294,238 14,259,737

Loss Allowance (iii) (10,300,386) (7,903,411) Total Non-Current Trade Receivables 6,993,852 6,356,326

Total Trade Receivables 25,372,124 24,445,277

Other Receivables

Current - GST 3,019,700 2,476,477 Current - Other 1,378,127 3,311,049

Total Current Other Receivables 4,397,827 5,787,526

Non-Current - Other 1,013,521 1,172,630

Total Non-Current Other Receivables 1,013,521 1,172,630

Total Other Receivables 5,411,348 6,960,156

Total Trade & Other Receivables 30,783,472 31,405,433

2020 2019 Summary $ $ Current 22,776,099 23,876,477 Non-Current 8,007,373 7,528,956

Total Trade & Other Receivables 30,783,472 31,405,433

Trade Receivables Current Trade receivables are generally on a school term basis. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

Loss Allowance – In 2018, the group applied the Accounting Standard AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of prior years loss rates.

The expected loss rates are based on the payment profiles of over a period of 5 years. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the parent to settle the receivables.

(i) Current Trade Receivables Current Trade Receivable represent those school fees and levies which are considered collectable by 31 December 2021.

(ii) Non-Current Trade Receivables Non-Current Trade Receivables represent those fees and levies which are subject to repayment plans, other debt management arrangements and those monies considered not collectable in the forthcoming year. These funds are deemed collectable after 31 December 2021.

(iii) Loss Allowance of receivables Management of the member entities has determined that the recoverability of a portion of the trade receivables at year end is uncertain hence an allowance for impairment has been made. All impairment calculations are based on commercial assessment criteria, including ageing, billing and collections procedures and prevailing trends.

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6. FINANCIAL ASSETS Current 2020 2019 $ $ Financial Assets at Fair Value through profit or loss 1,013,346 1,355,967

Financial Asset at amortised cost - Right to reimbursement of LSL 23,732,337 21,602,530 Total Current Financial Assets 24,745,683 22,958,497

Non-Current Financial Assets at Fair Value through profit or loss 7,982,542 9,904,033 Total Non-Curent Financial Assets 7,982,542 9,904,033

Total Current and Non-Current Financial Assets 32,728,225 32,862,530

Financial Instruments Initial Recognition and Measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument.

For financial assets this is equivalent to the date that the entity commits itself to either purchase or sell the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs except where the instrument is classified at "fair value through profit or loss", in which case transaction costs are expensed to profit or loss immediately.

Financial assets at Amortised Costs The group classifies its financial assets as at amortised cost only if both of the following criteria are met:

• the asset is held within a business model whose objective is to collect the contractual cash flows, and • the contractual terms give rise to cash flows that are solely payments of principal and interest

Classification of financial assets at fair value through profit or loss The group classifies the following financial assets at fair value through profit or loss (FVPL):

• debt investments that do not qualify for measurement at either amortised cost or FVOCI • equity investments that are held for trading, and • equity investments for which the entity has not elected to recognise fair value gains and losses through OCI.

Right to reimbursement of LSL Right to reimbursement of LSL represent funds invested by participating Victorian Colleges in the Victorian Catholic Schools Long Service Leave Scheme regarding long service leave entitlements.

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7. PROPERTY, PLANT & EQUIPMENT 2020 2019 $ $ Land Freehold Land - at cost 971,780,958 973,220,958 971,780,958 973,220,958 Buildings & Improvements Buildings and Improvements - at cost 1,606,681,347 1,546,908,959 Depreciation (586,875,913) (545,908,544) Total Buildings & Improvements 1,019,805,434 1,001,000,415

Plant and Equipment Plant and Equipment (Including Motor Vehicles) - at cost 254,220,882 246,082,162 Depreciation (185,375,988) (179,061,111) Total Plant & Equipment 68,844,894 67,021,051

Right-of-use Assets Right-of-use Assets – at cost 30,413,479 20,625,831 Depreciation (10,106,883) (5,618,827) Total Right-of-use Assets 20,306,596 15,007,404

Capital Works in Progress Buildings 47,309,620 33,847,315 IT Projects 944,685 2,607,785 Total Capital Works in Progress 48,254,305 36,455,100

Total Property, Plant & Equipment 2,128,992,187 2,092,704,928

Movements in Carrying Amounts Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year.

Freehold Plant & Right-of-use Work in Buildings Total Land Equipment Assets Progress

$ $ $ $ $ $

2020 Balance at the beginning of 973,220,958 1,001,000,415 67,021,051 15,007,404 36,455,100 2,092,704,928 the year Additions at cost - 22,571,440 19,904,285 - 64,283,660 106,759,385 Additions re R-O-U assets - - 20,649 12,222,377 - 12,243,026 as per agreements Work In progress transfers - 43,377,328 9,107,127 - (52,484,455) - Disposals (1,440,000) (3,110,863) (11,985,714) (361,887) - (16,898,464) Depreciation on disposal - 2,812,772 10,734,552 3,322 - 13,550,646 Depreciation expense - (46,845,658) (25,957,056) (6,564,620) - (79,367,334)

Carrying amount at year 971,780,958 1,019,805,434 68,844,894 20,306,596 48,254,305 2,128,992,187 end

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7. PROPERTY, PLANT & EQUIPMENT (CONT.)

Property, Plant and Equipment Each class of property, plant and equipment is carried at cost as indicated, less, where applicable, accumulated depreciation and impairment losses.

Freehold Land represents: Land transferred in previous years by TOCB under an agreement which identifies rights of each party, together with land purchased by individual schools.

The fair value of land transferred from TOCB in 2017 and past years, was determined by independent valuer and is now deemed to be at cost.

Buildings represent assets utilised in its operation. There are buildings located on land which is currently owned and registered to the TOCB Australia, or in limited circumstances other Catholic Church bodies. There is an agreement in place to allow EREA to govern and manage the education facilities located on such land (St. Virgil’s College).

Plant and Equipment Plant and equipment are measured on the cost basis less depreciation and impairment losses. For plant and equipment that have been contributed at no cost or for nominal cost, its fair value as at the date of acquisition is considered at its cost.

Right-of-use Asset On implementation of Accounting Standard AASB 16 as at 1 January 2019, Leases, EREA elected to measure the right-of-use assets at an amount equal to the lease liability adjusted for any prepaid or accrued lease payments that existed at the date of transition.

Depreciation The depreciable amount of all property, plant & equipment including buildings and capitalised lease assets is depreciated on a straight-line basis over the asset’s useful life to EREA from the time the asset is available for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The unexpired period of the lease includes any option period where exercise of the option is probable.

The depreciation rates (based on a useful life assessment of years) for each class of depreciable assets are:

Class of Fixed Assets Depreciation Rate Buildings 2.50% Plant and Equipment 20-33.33% Leased Motor Vehicles 20-33.33%

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the Statement of Comprehensive Income.

Land asset provided as collateral Title to parcels of land are held as security by financiers such as Catholic Development Funds. The secured titled land may not relate to a particular borrowing by a school.

The Catholic Development Funds hold sufficient land titles to cover the debts owing. The funds owing to the financiers (including loans, chattel mortgages and lease arrangements) under AASB 16, at 31 December 2020 totalled $236,722,850 (2019: $210,655,641).

The following is a reconciliation of total operating lease commitments at 31 December 2019 (as disclosed in the financial statements to 31 December 2019) to the right-of-use assets recognised at 1 January 2019

2020 2019 $ $ For the year ended 31 December 2019 AASB 16.C12(b) Total operating lease commitments disclosed at 31 December 2018 - 7,706,997

Recognition exemptions: • Leases of low value assets - - • Leases with remaining lease term of less than 12 months - (132,934) Variable lease payments not recognised - (12,559) Other adjustments relating to commitment disclosures - - 13,027,467 Total Operating lease liabilities before discounting - 20,588,971 Discounted using incremental borrowing rate - 46,144 Total Operating lease liabilities - 20,635,115 Reasonably certain extension options - - - Finance lease obligations - (1,921) Total Right-of-Use Asset recognised under AASB 16 at 1 January 2019 - 20,633,194

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8. TRADE AND OTHER PAYABLES 2020 2019 $ $ Current Trade payables 15,608,312 23,398,552 Other current payables 45,604,199 55,882,316 Total Trade & Other Payables 61,212,511 79,280,868

Trade and Other Payables Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by EREA during the reporting period, which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. The trade and other payables are unsecured.

Other payables includes accrued annual leave.

9. FINANCIAL LIABILITIES 2020 2019 $ $ Current Lease Liability - Secured 9(a) 5,419,937 5,066,315 Chattel Mortgages - Secured / Unsecured 229,167 221,778 Loan - unsecured 974,001 983,489 Loan - secured 32,722,236 34,558,685 Total Current Borrowings 39,345,341 40,830,267

Non-Current Lease Liability - Secured 9(a) 7,680,987 4,828,793 Chattel Mortgages - Secured / Unsecured 1,256,041 1,183,818 Loan - unsecured 2,536,979 2,973,644 Loan - secured 185,903,502 160,839,119 Total Non-Current Borrowings 197,377,509 169,825,374

Total Current & Non-Current Borrowings 236,722,850 210,655,641

2020 2019 $ $ 9 (a) Lease Commitments Payable - minimum lease payments - not later than 12 months 5,419,937 5,066,315 - later than 1 year but not later than 5 years 5,863,299 4,331,432 - later than 5 years 1,859,406 548,891 Less future finance charges (41,718) (51,530)

Total lease commitments 13,100,924 9,895,108

Allocated: Current 5,419,937 5,066,315 Non-Current 7,680,987 4,828,793

Total lease commitments 13,100,924 9,895,108

Leases In 2019 on implementation of AASB 16, Leases, the School selected to measure the right-of-use assets at an amount equal to the lease liability adjusted for any prepaid or accrued lease payments that existed at the date of transition.

For those leases previously classified as finance leases, the right-of-use assets and lease liability are measured at the date of initial application at the same amounts as under IAS 17 immediately before the date of initial application.

Loan Liabilities – Secured Secured loans obtained by schools and colleges, are entered into with the Catholic Development Fund (CDF) or Commercial Financial Institutions, in the name of Trustees of Edmund Rice Education Australia. Security is provided to all financial institutions, and in respect of the CDF, by the Trustees over nominated parcels of land; such land may not be applicable to the borrowing College.

Edmund Rice Education Australia 2020 / Financial Statements / 16

These member entity loans are for a variety of terms at variable interest rates.

In respect of Colleges located on land that is excluded under the Agreement, secured loans are entered into on behalf of the College by Trustees of the Christian Brothers with undertaking for repayments provided by EREA.

Loan Liabilities – Unsecured Unsecured loan liabilities are owing to various parties and are repayable on agreed terms at various rates.

Lease Liabilities and Chattel Mortgages Leased liabilities and Chattel Mortgages are secured by the underlying leased assets and repayable in accordance with the terms of the various agreements.

The Group has adopted AASB 16 from 1 January 2019. The standard replaces AASB 117 ‘Leases’ and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low value assets, right- of-use assets and corresponding lease liabilities are recognised in the statement of financial position.

The following is a reconciliation of total operating lease commitments at 31 December 2019 (as disclosed in the financial statements to 31 December 2019) to the lease liabilities recognised at 1 January 2019

2020 2019 $ $ For the year ended 31 December 2019 AASB 16.C12(b) Total operating lease commitments disclosed at 31 December 2018 - 7,706,997

Recognition exemptions: • Leases of low value assets - - • Leases with remaining lease term of less than 12 months - (132,934) Variable lease payments not recognised - (12,559) Other adjustments relating to commitment disclosures - - 13,027,467 Total Operating lease liabilities before discounting - 20,588,971 Discounted using incremental borrowing rate - 46,144 Total Operating lease liabilities - 20,635,115 Reasonably certain extension options - - - Finance lease obligations - (1,921) Total Right-of-Use Asset recognised under AASB 16 at 1 January 2019 - 20,633,194

10. PROVISIONS 2020 2019 $ $ Current Provisions Current Long Service Leave Provisions 103,629,760 94,131,889 Current Other Provisions 723,334 1,736,988 Total Current Provisions 104,353,094 95,868,877

Non-current Provisions

Non-current Other Provisions 178,619 137,786 Total Non-current Provisions 178,619 137,786

Total Provisions 104,531,713 96,006,663

Number of Employees 6,503 6,362

Provision for Long Term Employee Benefits The method of calculation of the liability which extends over a period greater than a year, conforms to the Australian Accounting standards, which essentially requires the future expected costs to be estimated and then be discounted to today’s present value.

Several estimations and assumptions used in calculating long service leave provision include expected future salary rates, discount rates, employee retention rates and expected future payments. Changes in these estimations and assumptions may impact on the carrying amount of the long service leave provision.

However, within the Catholic Education environment, of which EREA forms a part, long service leave is portable and follows the employee if they move between Catholic Education bodies. Consequently, the concept of transportability within the Catholic Education system has an overreaching position and as payment is not able to be deferred and payable at a point in time, the net present value of the estimated liability has been shown as a Current Liability.

Edmund Rice Education Australia 2020 / Financial Statements / 17

11. OTHER LIABILITIES 2020 2019 $ $ Current Income billed or received in advance 27,258,849 31,725,998 Other Liabilities 9,186,543 9,316,817 Total Current Other Liabilities 36,445,392 41,042,815

Non-Current Income billed or received in advance 8,768,384 31,039,045 Liability for purchase controlled land 10,396,702 10,396,702 Other Liabilities 5,285,980 3,297,042 Total Non-Current Other Liabilities 24,451,066 44,732,789 Total Other Liabilities 60,896,458 85,775,604

Revenue billed or received in advance Parents of students at times, pay fees in advance of being billed. Such fees are recorded as revenue in the period to which they relate. The component greater than 12 months into the future, is treated as a non-current liability.

In 2008, a College entered into an agreement with a hospital, whereby the hospital was allowed to build and operate a car park on College land, over a period exceeding 50 years. Income was being brought to account over the 50 years. In 2020, it was deemed that under the accounting standards, this income has been earned and now brought to account - Refer Note 15 re adjustment to Retained Earnings.

Current - Other Liabilities Such monies represent normal charges such as GST, FBT and superannuation guarantee levy outstanding, together with an amount for funds held on behalf of schools $8,254,175 (2019: $7,974,301). A number of schools provide funds to be held by EREA in respect of the school’s long service leave commitment. This liability is supported by a corresponding bank balance which is invested on their behalf.

Liability for purchase of non-footprint land Through the Agreement re land contributed to EREA between the TOCB and of EREA, certain land on which title has been transferred to EREA, and for which EREA has become responsible for the maintenance, upkeep and any necessary development, the Trustees of the Christian Brothers have the right to sell such land, with EREA having first right to exercise option to purchase. A provision for the potential purchase of such properties has been accounted for at the value determined in relation to the land contributed.

12. INVENTORIES 2020 2019

$ $

Current Combined Trading Activities 4,090,706 4,796,692 Total Inventories 4,090,706 4,796,692

Trading Activities Inventories held in relation to trading activities are measured at the lower cost and net realisable value. Inventories acquired at no cost, or for nominal consideration are valued at the current replacement cost as at the date of acquisition.

13. OTHER ASSETS 2020 2019 Current $ $ Prepayments 8,062,564 9,709,114 Total Other Assets 8,062,564 9,709,114

Prepayments Prepayments mainly represent the advance payment for services which will be utilised post year end e.g. maintenance contracts.

Edmund Rice Education Australia 2020 / Financial Statements / 18

14. INTANGIBLE ASSETS 2020 2019 $ $

Intangibles Goodwill – at cost 440,000 440,000

Nature and Purpose Goodwill relates to acquisition of a child care centre and it is recorded at cost less any accumulated impairment losses.

Goodwill is assessed for impairment each year. The recoverable amount of the cash generating unit (CGU) was determined based on value in use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period.

15. RESERVES 2020 2019 $ $ Movements during the Year: Opening balance 88,787,540 87,105,487

Movement in Reserves (3,416,195) 2,208,796 Profit (Loss) Attributable to Foundations (1,282,683) (526,743) Transfer from / (to) Reserves (4,698,878) 1,682,053 Closing balance 84,088,662 88,787,540

Total Reserves 84,088,662 88,787,540

Retained Surplus Movements during the year Opening balance at 1 January 2019 1,901,973,842 1,861,360,593 Prior year adjustments - (615,088) Adjustment re non-deferral of income 24,565,559 (8,574,081) Revised balance at 1 January 2019 1,926,539,401 1,852,171,424 Comprehensive Income 54,161,755 51,484,471 Transfer from / (to) Reserves 4,698,878 (1,682,053) Closing balance 1,985,400,033 1,901,973,842 Total Equity 2,069,488,696 1,990,761,382 Made up of: Surplus from Sale of Pascoe Vale Campus (See - 636,966 Note below) Contribution from Congregation 3,918,070 3,945,039 Patrimony Assets (Land Transferred) 886,484,357 886,484,357 Foundations Net Assets 17,480,936 18,667,322 Building Fund’s Net Assets 4,818,650 6,444,396 Profit (Loss) from Operating Activities 1,156,786,683 1,074,583,302 Total Equity 2,069,488,696 1,990,761,382

The combined reserves represents amounts set aside by it’s member entities in regards to areas such as building fund, scholarship fund, special purposes, replacement or other certain requirements.

Reserve Movements In the 2010 year funds were received from Christian Brothers Vic Properties Ltd as a result of the sale of the St Joseph’s Pascoe Vale campus. The sale proceeds were made available to EREA to be utilised for closure costs associated with the St Joseph’s Pascoe Vale campus and the St Joseph North Melbourne campus.

Board and Council Remuneration including Board and Council reimbursement, is reimbursed and offset from the funds received from the Sale of the Pascoe Vale Campus and a contribution from Congregation. The funds available for distribution will reduce accordingly each year.

Accounting Policies, Changes in Accounting Estimates and Errors The entity shall correct material prior period adjustments retrospectively in the first set of financial statements authorised for issue after their discovery by restating the comparative amounts for the prior period.

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15. RESERVES (CONT.)

Adjustment re Accounting Standards

As per Note 1, re Accounting Standard AASB 1 Revenue from Contracts with Customers, EREA has adopted AASB 15 using the cumulative effect method (with practical expedients), with the effect of initially applying this standard recognised at the date of initial application (i.e. 1 January 2019).

The impact on adoption of the Standard is to reduce opening retained earnings at 1 January 2019 by ($8,574,081).

In 2020 year, it was observed that an oversight had occurred in the preparation of St Laurence’s College accounts in the years previous to 2019 year and which also impacted the 2019 year results, in that:

Revenue earned in relation to the construction of the Mater hospital carpark and corresponding contract in years 2008 – 2010, originally deferred and brought to account over the term of the contract being originally 50 years, did not meet the deferral requirements of the accounting standards. This has been adjusted as at 1 January 2019. This totalled $24,565,559 at 1 January 2019 and has been removed from deferred income recognised in the balance sheet as a current and non-current liability, and transferred to retained earnings.

16. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

2020 2019 $ $ a. Reconciliation of Cash Cash on hand 258,694 188,971 Cash at bank 319,871,539 282,503,592 Cash at bank – Building Funds/Foundations 13,122,698 14,481,574 Bank Overdraft (5,497,857) (6,612,676) 327,755,074 290,561,461

b. Reconciliation of Cash Flow from Operations with

Profit/(Loss) from Ordinary Activities Profit/(Loss) from ordinary activities 54,161,755 51,405,351

Non-cash flows in Profit/(loss) from ordinary activities Depreciation and amortisation 79,367,335 72,915,511 Provision for Doubtful Debts 2,720,926 (1,458,292) Net (gain)/loss on revaluation of investments 268,327 (240,592) Net (gain)/loss on disposal of plant and equipment 109,795 (506,577) Other Non-cash Income/Expense item (3,092,105) (3,092,550)

Cash flows Accounted for as Investing Activities Insurance Claim Proceeds - -

Changes in assets and liabilities (Increase)/decrease in receivables 5,432,446 21,136,128 (Increase)/decrease in inventories 702,986 (97,239) (Increase)/decrease in other assets 1,066,821 (1,629,927) Increase/(decrease) in payables (9,972,236) 5,287,298 Increase/(decrease) in provisions 8,724,442 5,845,214 Increase/(decrease) in other liabilities (4,975,121) (19,783,105)

Cash flows from operations 134,515,371 129,781,220

Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at-call with banks or Catholic Development Funds, other short-term highly liquid investments with original maturities of twelve months or less, and bank overdrafts.

Catholic Development Funds do not obtain the benefit of the depositor protection provisions of the Banking Act 1959.

Restricted funds are included in Cash at bank – Building Funds/Foundations of $13,122,698 (2019: $14,481,574). These funds are not available for general use by the other entities in the Group.

Edmund Rice Education Australia 2020 / Financial Statements / 20

RISK

17. FINANCIAL RISK MANAGEMENT

EREA financial instruments consist mainly of deposits with banks or Catholic Development Funds (which do not obtain the benefit of the depositor protection provisions of the Banking Act 1959), investments, fees receivable, payables and external borrowings. The main purpose of non-derivative financial instruments is to raise finance for operations and future projects. EREA does have derivative instruments at 31 December 2020.

Note 2020 2019

$ $

Financial Assets Financial Assets at amortised cost Trade receivables 5 30,783,472 31,405,433 Other financial assets at amortised cost 6 - 5,666,104

Cash and cash equivalents 16 327,755,074 290,561,461 Right to reimbursement of LSL 6 23,732,337 21,602,530

Financial assets at fair value through profit or loss 6 8,995,888 5,593,896

Total Financial Assets 391,266,771 354,829,424

Financial Liabilities

Financial liabilities at amortised cost - Trade and other payables 8 61,212,511 79,280,868 - Borrowings and Leases 9 236,722,850 210,655,641

Total Financial Liabilities 297,935,361 289,936,509

Financial Risk Management Policies The EREA Board’s overall risk management strategy seeks to assist management in meeting its financial targets, whilst minimising potential adverse effects on financial performance. The EREA Board regularly reviews reports from management in relation to identifying risks and to ensure appropriate processes are in place to manage those identified risks.

Specific Financial Risk Exposures and Management The main risks EREA is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk.

Net Fair Values Fair Value Estimation The fair values of financial assets and financial liabilities are presented in the above table and can be compared to their carrying values as presented in the Statement of Financial Position. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.

Fair values derived may be based on information that is estimated or subject to judgement, where changes in assumptions may have a material impact on the amount estimated. Areas of judgement and the assumptions have been detailed below. Where possible, valuation information used to calculate fair value is extracted from the market, with more reliable information available from markets that are actively traded. In this regard, fair values for listed securities are obtained from quoted market bid prices. Where securities are unlisted and no market quotes are available, fair value is obtained using discounted cash flow analysis and other valuation techniques commonly used by market participants.

Differences between fair values and carrying values of financial instruments with fixed interest rates are due to the change in discount rates being applied by the market since their initial recognition by EREA. Most of these instruments which are carried at amortised cost are to be held until maturity and therefore the net fair value figures calculated bear little relevance to EREA.

Economic Dependency The continuing operation of EREA is dependent upon the schools within its control achieving and maintaining appropriate student enrolment numbers, the continuation of adequate funding from the Australian Commonwealth and State Governments in respect of operational and capital grants, and the achievement of operating surpluses and positive operating cash flows.

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GROUP STRUCTURE

18. PARENT ENTITY FINANCIAL INFORMATION

2020 2019

$ $ Statement of Financial Position

Current Assets 26,727,315 29,127,929

Non-Current Assets 899,258,658 900,892,941

Total Assets 925,985,9733 930,019,941

Current Liabilities 9,143,548 8,450,060

Non-Current Liabilities 21,506,033 21,550,931

Total Liabilities 30,649,581 30,000,991

Reserves 4,210,477 6,453,403

Retained Earnings 891,125,915 893,565,547

Total Equity 895,336,392 900,018,950

Statement of Comprehensive Income

Revenue 15,870,674 15,483,720

Expenses 20,553,232 14,616,501

Total Profit / (Loss) for the year (4,682,558) 867,219

Changes to Reserves - 79,120

Total Comprehensive Income / (Deficit) for the year (4,682,558) 946,339

Parent Entity Non-Current Assets ostensibly represent land transferred to EREA by TOCB.

Non-Current Liabilities ostensibly represent the liability to the schools and colleges in respect of such land.

Trustees of Edmund Rice Education Australia provides to the CDF’s as part of security, a guarantee in respect of all loan liabilities for particular parcels of land held by certain schools and colleges.

Changes to Reserves – Refer to Note 15

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UNRECOGNISED ITEMS 19. ENFORCEABLE UNDERTAKING The Victorian Regulation and Qualifications Authority (VRQA) made certain findings regarding regulatory and governance matters following a review of St Kevin’s College in 2020. The EREA Board, as the governing body of the College, accepted the findings and offered an Enforceable Undertaking (EU) to the VRQA. EREA is committed to working with the VRQA to satisfy the terms of the EU.

The EU was entered into, accepted, and signed on 22 May 2020. The EU provides certainty to the schools to continue to provide educational capability as an accredited body, whilst the undertakings are implemented. EREA is being supported by the Catholic Education Commission Victoria (CECV) in working through the EU. Since the date of issue of the EU and to date of this report, EREA has complied with and is continuing to work towards compliance with the EU and timeframes.

The EREA Board is of the view that as a result of its adherence to and progress with the undertakings to date, it is unlikely any material financial exposure will crystallise in respect to the EU therefore no financial provision has been made in respect of the EU.

20. CONTINGENT LIABILITIES 2020 2019 $ $ Estimates of the potential financial effect of contingencies that may become payable or receivable:

Block Grant Authority Funding Grants for capital development that could be liable to repayment on a proportional basis should

the school cease operating within a period of 20 years after receiving the grant, are as follows:

Total Potential Liability at 31 December 2020 101,514,107 98,215,437

Contingent Liabilities EREA is in the process of defending claims brought in relation to St Kevin’s College and has made provision based on an estimate of costs in the financial statements in the financial year ended 31 December 2020. The nature and outcome of outstanding proceedings cannot be ascertained with a strong degree of accuracy. In the view of EREA, it is unlikely that the financial outcome of such proceedings will materially exceed what has been accounted for at 31 December 2020.

Redress Scheme On establishment of Trustees of Edmund Rice Education Australia (TEREA) by Trustees of the Christian Brothers (TOCB), under a Master Agreement dated 1 May 2013, various facilities and land were transferred by TOCB to TEREA. Under the Agreement, TEREA agreed to be responsible for any claim, loss or incident (as defined in the Agreement) in respect of their Educational Facilities as from 1 October 2007.

In November 2019, TEREA agreed to become a Participating Member of the Christian Brothers Participating Group, to address the requirements of the National Redress Scheme established under the National Redress Scheme for Institution Child Sexual Abuse Act 2018.

Under the Agreement TOCB indemnifies TEREA in conjunction with relevant Incident occurring on or before 30 September 2007 and TEREA indemnifies TOCB accordingly re relevant incident occurring on or after 1 October 2007. Any such claim includes a redress application under the referred Act.

Currently there has been no such claim made.

21. CAPITAL AND LEASE COMMITMENTS 2020 2019 $ $ a. Lease Commitments

Non-cancellable leases contracted for but not capitalised in the financial statements:

Payable - minimum lease payments - no later than 1 year 5,687 834,455 - later than 1 year but not later than 5 years 1,896 - - later than 5 years - -

Total lease commitments 7,583 834,455

b. Capital Expenditure Commitments Payable - minimum payments - no later than 1 year 44,639,958 18,313,539 - later than 1 year but not later than 5 years - - - later than 5 years - - Total Capital Expenditure Commitment 44,639,958 18,313,539

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22. SUBSEQUENT EVENTS Agreement has been reached, and it is anticipated that legal title in respect of St Virgil’s in Hobart will transfer to EREA within 2021. Subsequent to balance date, the Coronavirus (COVID-19) pandemic continues to impact both communities and businesses throughout the world including Australia and the community where EREA operates. This was considered a non-adjusting subsequent event as at 31 December 2019, however, this pandemic may have a financial impact for the Entity in the 2021 financial year and potentially financial years beyond this date. The scale, timing and duration of the potential impacts on the Entity is unknown. Please refer also to NOTE 25 - Coronavirus (COVID-19) and Going Concern.

OTHER INFORMATION 23. RELATED PARTY TRANSACTIONS 2020 2019 $ $ a. Amounts received from related parties Govt Grants received from the State Based Catholic Education Office 505,623,914 470,454,213 Levies charged to schools 14,804,856 14,546,801 QCEC Levies charged to schools 857,216 1,004,479 Other receipts from EREA schools 11,361,861 8,638,513 Support received by EREA schools from EREA 4,693,590 1,580,374 Other receipts to EREA schools from EREA 12,817,348 5,609,803 Amounts received from Congregation - - Other receipts from Congregation 2,771 6,638 Catholic Development Fund 63,178,609 53,330,470 Other Amount 2,127,711 1,279,921

b. Amounts receivable from related parties Govt Grants receivable from the State Based Catholic Education Office 107,732 16,964 Funds receivable by EREA Schools from EREA - - Funds held by EREA on behalf of EREA schools 8,254,175 7,974,301 Loan receivables from EREA schools 489,468 709,468 Debtors – EREA schools to EREA 2,293,081 4,429,189 Amounts receivable from Congregation - - Other receivables from Congregation (i) 500,000 520,167 Catholic Development Fund 19,545,303 14,405,045 Other Amount 51,699 2,881,720

c. Amounts paid to related parties Govt Grants paid by EREA to EREA Schools 264,225,461 250,396,435 Support from EREA to EREA schools 4,693,590 1,580,374 Levies from EREA schools to EREA 14,804,856 14,546,801 QCEC Levies to EREA 857,216 1,004,479 Levies paid to Congregation/Province 881,544 985,316 Other payments from EREA schools to EREA 11,361,861 8,638,513 Other payments from EREA to EREA schools 12,817,348 5,609,803 Amounts paid to Congregation (ii) 1,648,086 579,471 Other payments to Congregation (iii) 1,156,429 1,134,463 Catholic Development Fund 39,243,318 50,326,674 Other Amount 3,026,596 2,698,647

d. Amounts payable to related parties Govt Grants paid by EREA to EREA Schools 107,732 16,964 Funds held by EREA on behalf of EREA schools 8,254,175 7,974,301 Creditors – EREA Schools 2,293,081 4,429,189 Amounts payable to Congregation 60 931,908 Loan Liability to Congregation (vi) 10,396,702 10,396,702 Loan Liability to EREA 489,468 709,468 Catholic Development Fund 160,310,377 140,249,000 Other Amount 159,895 14,000

Edmund Rice Education Australia 2020 / Financial Statements / 24

Related Party Transactions - Congregation

(i) Other receivables from Congregation Other receivables from Congregation represents an amount payable to St. Virgil’s College.

(ii) Amounts paid to Congregation Amounts paid to Congregation represents donations made by parents through school accounts to the Edmund Rice Foundation and for the purchase of two properties at a cost of $750,000, which was facilitated by EREA, on behalf of St. Brendan’s College, Yeppoon and Ignatius Park College, Townsville. Both properties were subject to valuation by external professionals.

(iii) Other payments to Congregation Other payments made to Congregation/Province for services related to stipend and superannuation payments for employment services provided by Congregation and rental of facilities for formation programs.

(iv) Loan Liability to Congregation As per Note 11, through the Agreement regarding land contributed to EREA by TOCB, certain land on which title has been transferred to TEREA, and for which TEREA has become responsible for the maintenance, upkeep and any necessary development, the TOCB have the right to sell such land, with TEREA having first right to exercise option to purchase. A provision for the potential purchase of such properties has been accounted for at the value determined by external valuation.

24. GENERAL INFORMATION

Registered Office The registered office of Trustees of Edmund Rice Education Australia is: 112 Mt Keira Road, Wollongong, NSW 2500

Principal Place of Business The principal place of business of EREA is: 9 The Vaucluse, Richmond, Victoria 3121

ABN 96 372 268 340

Legal Form The civil legal form of EREA is that of an incorporated entity titled Trustees of Edmund Rice Education Australia, incorporated under the Roman Catholic Church Communities’ Lands Act 1942 (NSW). The canon legal form of EREA is that of a Public Juridic Person (PJP).

Nature of Operations The principal activity of EREA, parent entity, during the financial year was the provision of support services and governance of its member schools and entities.

The principal activity of its member schools is the provision of Catholic Education in the Edmund Rice tradition, in the form of secondary, primary and pre-school, single sex and co-educational schools.

Disclosure of Interest in Other Entities In compliance with the Australian Accounting Standard AASB 10 Consolidated Financial Statements and AASB 12 Disclosure of Interest in Other Entities, the following entities make up the EREA reporting group with reference to those entities that are endorsed as Deductible Gift Recipients (DGR) or that operate DGR fund.

Entity Name ABN Endorsed as DGR or Operate a DGR Fund Edmund Rice Education Australia 96372268340 Alexander Clark Necessitous Circumstances Fund 60913913855 Ambrose Treacy College Foundation Limited 15601740738 Yes Aquinas College 23983648409 Aquinas College Foundation Inc 93078219075 Yes Aquinas College Ladies Auxiliary 75886804983 Aquinas College Parents & Friends 54161274124 Aquinas_College Uniform Exchange 25273625314 Edmund Rice College Bindoon 80499328286 Yes Christian Brothers College 35815072613 Yes

Edmund Rice Education Australia 2020 / Financial Statements / 25

Entity Name ABN Endorsed as DGR or Operate a DGR Fund Christian Brothers College Adelaide 11857307720 Yes Christian Brothers College St Kilda 93859535917 Yes Christian Brothers High School 55425900934 Yes Christian Brothers St. Paul's College 69060056639 Yes Christian Brothers Trinity College 49717506377 Yes Edmund Rice College 66202837934 Yes Lachlan O'Brien Fund Limited 40145727493 Yes Nudgee College Foundation Building Fund 80135881432 Yes Nudgee College Foundation Limited 62010531183 Parade College Bundoora 93244161048 Yes Rostrevor College 63001070495 Yes St Bernards Christian Brothers College 95064042702 Yes St Dominics College 12838505432 Yes St Dominics College Parents & Friends Assoc 55670208436 St Edmunds College 45551557285 Yes St Edmund's College Foundation Limited 12123323928 St Edmunds School For The Blind & Visually Impaired 15708321408 Yes St Edwards College 75045585228 ST EDWARDS COLLEGE AS THE OPERATOR OF A PBI 69712405730 Yes St Edwards College Building Fund Gosford 68964770573 Yes St Gabriels School For Hearing Impaired Children 11214967027 Yes St Joseph’s Nudgee College Bursary and Scholarships 41570652094 Fund Limited St Josephs College Newtown 74114857147 Yes St Kevin’s College Art Show 66290880113 St Kevins College 39926673059 Yes St Patricks College Ballarat 88183384549 Yes St Patricks College Strathfield 70273700830 Yes St Pius X College 50451308630 Yes St Pius X College Cricket Club 57205097880 St Pius X College Music Parents 82937693696 St Pius X College Parents & Friends Association 98770986491 St Pius X College Rugby Club 71771148645 St Pius X College Tennis Club 85047163709 St Virgil's College Hobart 98599482966 Yes The John Elliott Ross Bursary Fund 25877953392 Yes The Trustee For St Edmund's College Foundation Trust 32319840856 Yes The Trustee For St Pius X College Scholarship Fund 38994618026 Yes The Trustee For The Trinity College Foundation Inc Trust 57995268822 Yes Waverley College 88163305535 Yes Waverley College Clothing Pool 28961966314 Waverley College Rugby Supporters Club 62324139385 Youth Plus Foundation Limited 29161485178 Yes

Edmund Rice Education Australia 2020 / Financial Statements / 26

Key Management Personnel Compensation In compliance with the with AASB 124 Related Party Disclosures which includes the disclosures of key management personnel compensation, the following compensation payments are noted:

2020 2019

$ $ EREA Management 2,234,213 1,876,256 EREA Council and Board Remuneration 663,935 639,447 Post-Employment Benefits (Superannuation) 219,860 182,856

Total Key Management Personnel Compensation 3,118,007 2,698,559

Audit Fees Disclosure In compliance with the with AASB 1054 Additional Disclosures, the following audit and non-audit fees are noted:

2020 2019

$ $ Audit Fees 893,200 780,000 Non-audit Fees 130,076 -

Total Fees 1,023,276 780,000

25. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Trustees of Edmund Rice Education Australia (EREA) is incorporated under the Roman Catholic Church Communities’ Land Act 1942 (NSW). The principal activity of EREA and its member entities is the provision of education throughout Australia, through Catholic schools in the Edmund Rice tradition.

Edmund Rice Education Australia was established under a Memorandum of Understanding by the Province Leader of the Oceania Province on 1 October 2007. On behalf of the Province, EREA has governed, managed and conducted the educational facilities delegated to it.

Until 2012 and previous years EREA was an entity of the Trustees of Christian Brothers Oceania Province (CBOP), incorporated under the Roman Catholic Church Communities Land Act 1942 (NSW).

On 7 September 2012 the petition of the Congregation of Christian Brothers for the granting of canonical status to EREA as a Public Juridical Person (“PJP”) of Pontifical right by the Congregation for Institutes of Consecrated Life and Societies of Apostolic Life was approved. The Decree granting public juridical personality to EREA and confirming approval of the Statutes was issued on 20 September 2012. On 8 February 2013 Trustees of Edmund Rice Education Australia (”Trustees”) was incorporated as a body corporate under the Act.

On establishment of PJP, an Agreement (“Agreement”) was formally entered into between the Trustees of CBOP and the Trustees of Edmund Rice Education Australia, which set out the provisions for implementing the transfer by the Christian Brothers Civil Entities to the EREA Civil Entity of the Christian Brothers civil entities' legal title and beneficial interest in the educational facilities, educational resources and the land which will enable the EREA Civil Entity to own, govern, manage and conduct the educational facilities.

Basis of Preparation The financial report is a special purpose financial report that has been prepared to satisfy the requirements of EREA. The Council of EREA has determined that the entity is not considered to be a reporting entity, and as such special purpose financial statements have been prepared to satisfy the requirements of EREA. In making this determination, they have considered such factors as:

x Government funding bodies, such as Federal and State, in the provision of funding, do not request nor utilise the financial statements to determine funding levels. x The dealing with bodies supplying services to member entities do not request provision of financial information in determining the decision to supply product and services. x The main source of provision of financial funding which is provided by the Catholic Development Finds, have not required provision of general purpose financial statements, and to date have not been dependent such financials. and x by virtue of the existence of no identifiable users dependent on general purpose financial reports prepared by the entity, general purpose financial statements are not required to be completed. The financial report is also prepared to conform with the requirements of the Australian Charities and Not for Profit Commission (ACNC) Act 2012 and The Education Act and Regulations 2013.

Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated.

The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets, non-current liabilities and financial liabilities.

The financial report is prepared in accordance with the measurement and recognition of all Australian Accounting Standards. Edmund Rice Education Australia 2020 / Financial Statements / 27

Coronavirus (COVID-19) and Going Concern The impact of the Coronavirus (COVID-19) pandemic continues to impact both communities and businesses throughout the world including Australia and the community where EREA operates. This pandemic will likely have a financial impact for EREA in the 2021 financial year and beyond. The scale, timing and duration of the potential impacts on EREA is unknown, however it is expected that there may be for an increase in the provisioning for bad and doubtful debts expense experienced by Schools, and EREA may in various forms, need to provide assistance to these. The Executive of Edmund Rice Education Australia and Leadership teams within EREA Schools have implemented a series of action plans to address the COVID 19 threat by implementation of the following initiatives:

Financial: • Review of their 2021 annual budget and ongoing forecast to 2024 • Ongoing assessment of the adequacy of the provision for doubtful debts and expected credit losses under AASB 9 • Deferral of non-essential capital expenditure / projects • Deferral of non-routine maintenance • Identification of government subsidies and relief packages • Review over protocols over teacher and non-teaching staff recruitment • 2021 school applications continuing as normal

Operational: • Formation of a COVID-19 subcommittee which will meet as required • Provision of e-learning to all students to deliver the curriculum in the event of any shut down outside of published term dates • Tightened health and cleaning protocols at the school • Cancellation of school musicals, indoor sporting activities and assembly services if required • Mandatory self-imposed isolation for teachers and students who have contacted or come into contact with someone who has the virus • Review of hardship grants for parents who have lost their jobs or who have had their working hours drastically reduced

As a consequence of the abovementioned initiatives re COVID 19 and the fact that a substantial amount of school revenue is from Federal and State funding, the Approved Officers of EREA have prepared the financial report on the basis that the entity is a going concern i.e. that there are reasonable grounds to believe that EREA will be able to pay its debts and meet its financial obligations as and when they become due and payable.

Consolidation The financial report covers the consolidated group of EREA as an individual entity and its controlled member entities. The separate financial statements of the individual entity have been summarized and presented within this financial report as permitted. The financial details of the parent entity are disclosed at Note 24.

The consolidated financial statement incorporates the assets liabilities and results of entities controlled by EREA at the end of the reporting period. A controlled entity is a direct College, educational and restricted use bodies such as Foundations, Parents and Friends Association and Building Funds over which EREA has the power to govern the financial and operating policies so as to obtain benefits from its activities.

In the 2013 year, a number of related bodies such Foundations, Parents and Friends and associated groups and entities had not, to date been included as controlled entities.

In the 2014 and 2015 year, such entities that deemed to be controlled have been included within the consolidated statements as controlled entities.

All inter-company balances and transactions have been eliminated on consolidation. Accounting policies are consistent across all controlled entities and the parent entity.

Presentation Currency The presentation currency used in these financial statements is Australian dollars ($). Amounts in these financial statements are stated in Australian dollars unless otherwise noted.

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

Cash flows are presented in the Cash Flow Statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

Income Tax No provision for income tax has been raised as EREA is exempt from income tax under Division 50 of the Income Tax Assessment Act 1997.

Adoption of New and Revised Accounting During the current year the Member Entities adopted all the new and revised Australian Accounting Standards and interpretations applicable to its operations which became mandatory. The adoption of these standards has impacted the recognition, measurement and disclosure of certain transactions.

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

Edmund Rice Education Australia 2020 / Financial Statements / 28

New Accounting Standards In the 2019 year, the following accounting standards were adopted:

AASB 15 Revenue from Contracts with Customers (beginning on or after 1 January 2019)

The objective of this Standard is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer.

AASB 16 Leases (beginning on or after 1 January 2019)

The Standard introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligations to make lease payments.

AASB 1058 Income of Not for Profit Entities (beginning on or after 1 January 2019)

This Standard clarifies and simplifies the income recognition requirements that apply to not-for-profit (NFP) entities, in conjunction with AASB 15 Revenue from Contracts with Customers.conjunction with AASB 15 Revenue from Contracts with Customers.

In 2020, the following new and revised Australian Accounting Standards, Interpretations and amendments, that have been issued but are not yet effective has not been applied:

AASB 1060 General Purpose Financial Statements - Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities

Edmund Rice Education Australia 2020 / Financial Statements / 29

Crowe Audit Australia ABN 13 969 921 386 Level 16 120 Edward Street Brisbane QLD 4000 Australia Main +61 (07) 3233 3555 Fax +61 (07) 3233 3567 www.crowe.com/au

Independent Auditor’s Report

To the Council of Edmund Rice Education Australia

Opinion We have audited the consolidated financial report (the financial report) of Edmund Rice Education Australia and its Controlled Entities (the “Consolidated Entity”), which comprises the statement of financial position as at 31 December 2020, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and statements by the Management of Edmund Rice Education Australia, the Board of Edmund Rice Education Australia (the “Approved Officers”) and the Council of Edmund Rice Education Australia. In our opinion, the accompanying financial report of the Consolidated Entity has been prepared in accordance with the Division 60 of the Australian Charities and Not-for-profits Commission Act 2012 (the ACNC Act), including: (a) Giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2020 and of its financial performance for the year then ended. (b) Complying with Australian Accounting Standards to the extent described in Note 25, and Division 60 of the Australian Charities and Not-for-profits Commission Regulation 2013.

Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Consolidated Entity in accordance with 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 our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter - Basis of Accounting We draw attention to Note 25 to the financial report, which describes the basis of accounting. The financial report has been prepared for the purpose of fulfilling the Consolidated Entity’s financial reporting responsibilities under the ACNC Act and the Education Act and Regulation 2013 and the information needs of Edmund Rice Education Australia. As a result, the financial report may not be suitable for another purpose. Our opinion is not modified in respect of this matter.

Liability limited by a scheme approved under Professional Standards Legislation. The title ‘Partner’ conveys that the person is a senior member within their respective division and is among the group of persons who hold an equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately-owned organisation and/or its subsidiaries. Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Audit Australia, an affiliate of Findex (Aust) Pty Ltd. © 2021 Findex (Aust) Pty Ltd Edmund Rice Education Australia 2020 / Financial Statements / 33

Responsibilities of the Approved Officers and Council for the Financial Report The Approved Officers and the Council are responsible for the preparation of the financial report that gives a true and fair view and have determined that the basis of preparation described in Note 25 to the financial report is appropriate to meet the requirements of the ACNC Act, the Education Act and the needs of Edmund Rice Education Australia. The Approved Officers and the Council’s responsibility also includes such internal control as they 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 Approved Officers and the Council are responsible for assessing the Consolidated Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intend to liquidate the Consolidated Entity or to cease operations, or have no realistic alternative but to do so. The Approved Officers and the Council are responsible for overseeing the Consolidated Entity’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: x 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. x 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 Consolidated Entity’s internal control. x Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Approved Officers and the Council. x Conclude on the appropriateness of the Approved Officers and the Council’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 Consolidated Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Consolidated Entity to cease to continue as a going concern. x 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.

Edmund Rice Education Australia 2020 / Financial Statements / 34

We communicate with the Approved Officers and the Council 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 the audit.

Crowe Audit Australia

Mike McDonald OAM Partner 30 June 2021 Brisbane

Edmund Rice Education Australia 2020 / Financial Statements / 35

Crowe Audit Australia ABN 13 969 921 386 Level 16 120 Edward Street Brisbane QLD 4000 Australia Main +61 (07) 3233 3555 Fax +61 (07) 3233 3567 www.crowe.com/au

Auditor’s Independence Declaration

As an auditor of Edmund Rice Education Australia and its Controlled Entities for the year ended 31 December 2020, I declare that, to the best of my knowledge and belief, there have been: i. no contraventions of the auditor independence requirements 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.

Crowe Audit Australia

Mike McDonald OAM Partner 22 June 2021 Brisbane

Liability limited by a scheme approved under Professional Standards Legislation. The title ‘Partner’ conveys that the person is a senior member within their respective division and is among the group of persons who hold an equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately-owned organisation and/or its subsidiaries. Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Audit Australia, an affiliate of Findex (Aust) Pty Ltd. © 2021 Findex (Aust) Pty Ltd Edmund Rice Education Australia 2019 / Financial Statements / 36