Royal Institute for Deaf and Blind Children
Annual Report 2016

Annual Concise Financial Report

For the year ended 31 December 2016

Discussion and Analysis of the Financial Statements

Information on RIDBC Concise Financial Report

The financial statements and disclosures in the concise financial report have been derived from the 2016 Full Financial Report of the Royal Institute of Deaf and Blind Children (RIDBC). A copy of the full financial report and auditor’s report will be sent to any member, free of charge, upon request.

The discussion and analysis is provided to assist members in understanding the concise financial report. It is based on RIDBC’s financial statements, the information contained in the concise financial report and in the 2016 Annual Report of RIDBC.

Statement of Income & Expenditure

In 2016, RIDBC recorded total revenue of $54,494,446 which was an increase against 2015 of $13,114,815 or 31.7%.

Total Revenue comprises Operating and Non-Operating Revenue Activities.

Revenue from Operating Activities closed the year at $52,093,484 which was an increase against 2015 of $10,786,313 or 26.1%. Stronger revenues in 2016 were driven by a number of factors, notably Bequests and Investment Income. Bequests income of $14,439,317 was $10,889,617 or 307% higher than last year. This was primarily due to the estate of the Late Mr Ian Paul ($8.7M). Investment Income was $1,462,955 or 21.6% higher than last year. There were mixed results across the rest of the business compared to last year summarised as follows: Lantern Clubs and other Fundraising Committees (+$268,616), Miscellaneous Income (+$134,714), Student and Other Fees (-$79,677), Professional Development (-$157,701), Rainbow Lottery (-$279,346), Government Funding (-$314,163), Donations (-$464,097) and Cochlear Implant Program (-$674,605). RIDBC is very grateful for the generosity and foresight of those who have made provision for RIDBC through their wills.

Revenue from Non-Operating Activities increased by $2,328,502 compared to last year which represented the gain on sale of the property previously owned by RIDBC at North Parramatta.

RIDBC continued to benefit from the ongoing support of the NSW, Queensland and Commonwealth Governments for which we are most appreciative.

Investment Income was $8,238,111 which was a growth of $1,462,955 or 21.6% over 2015.

Economic data in the 2016 calendar year pointed to a continuation of moderate growth across the global economies of Europe, China and United States. This, combined with the $16M increase in the investment portfolio, has contributed to the increase in investment income.

Total Expenditure on Operating Activities increased in 2016 by $1,239,569 to $42,238,512 which included Strategic Initiatives of $553,146. The balance of the increase in other operating costs was 1.6% which is consistent with that of Consumer Price Index (CPI). Strategic initiatives include costs relating to the proposal put forward by a consortium comprising RIDBC, Macquarie University and Cochlear Limited in its bid to secure Australian Hearing Limited (see Note 6 to the Financial Statements). This is consistent with RIDBC’s five year strategic plan of expanding our reach across Australia.

Expenditure increased primarily in Student Services, reflecting an increased breadth and depth of services. RIDBC spent 77% of its outgoings on the Cochlear Implant Program and on Student and Client Services.

Finance, Administration and General Management costs were contained to 7.5% of operational expenditure. This represents a 0.2% improvement against 2015 which reflects the ongoing vigilance around the headcount and operating costs associated with these functions.

Statement of Other Comprehensive Income

The gain of $3,035,257 (2015: Loss of $430,592) comprised of an increase of $2,561,165 in the year end market values of the long term investments held by RIDBC, plus a $474,092 gain on disposal of investments during the year.

Statement of Financial Position

The value of RIDBC’s Net Assets increased by 10.2% to $165,637,181.

Of particular note is the increase in Financial assets (+$16,258,048), consisting of RIDBC’s investment portfolio, which reflects the additional investment of funds as a result of the extraordinary year of bequests received. RIDBC’s investment portfolio is diverse, being invested broadly across a range of managers and asset classes including cash, bonds, equities, infrastructure and property trusts. RIDBC is a long term investor and operates its investment portfolio with the advice of an independent asset consultant and with a special purpose subcommittee of the RIDBC Board.

During 2016, RIDBC’s property, plant and equipment reduced by $3,874,326. Additions of $1,476,671 were offset by depreciation of ($2,497,496) and the disposal ($2,899,159) of the North Parramatta property, previously the residence of the Garfield Barwick School which has now been relocated to North Rocks. The most notable area of additions was in Information Technology ($670,406), Cochlear Implant Program ($203,331), and in the Schools ($172,999).

Statement of Cash Flows

Cash inflows from operating activities increased 232% compared with 2015, primarily due to an increase in receipts from bequests and investments partially offset by increased payments to suppliers and employees.

The increase in cash inflows has been used to fund a 16% increase in investing activities compared with 2015.