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Lorne CommunityHospital

8Annual Report Version Kate.indd 1 14/09/2018 9:55:53

2 Lorne Community Hospital

Annual Report Version Kate.indd 2 14/09/2018 9:55:54

Annual Report 2017/18

2 Report of Operations & Responsible Bodies Declaration

3 Vision, Mission and Values 2016-2020

4 Our Services

5 Board of Management Committee Structure

6 Organisation Chart

7 Board of Management Report

9 Key Financial & Service Performance Reporting

10 Executive Report

13 Recognition of Donors & Major Fundraising

14 Compliance Requirements

17 Statement of Priorities

Appendix 1 Statement of Priorities Financial & Service Performance Activity Funding

Appendix 2Five Year Analysis of Financial ResultsAcronyms used in Annual Financial Statements

Appendix 3 Disclosure Index

Appendix 4 Annual Financial Statements 2017-2018

page



Responsible Bodies Declaration

In accordance with the Financial Management Act 1994, I am pleased to present the Report of Operations for Lorne Community Hospital for the year ending 30 June 2018.

Dr Damien Smith AMChairman – Board of Management Lorne, Victoria 30 June 2018

BOARD OF MANAGEMENT 2017– 2018Position Name Date of Commencement

Chairman Dr Damien Smith AM 1 July 2012Vice Chair Mr Greg Aimers 1 July 2012Vice Chair Ms Sue Guinness 1 July 2016Board Member Mr Gary Allen 1 July 2015Board Member Dr Ian Brown 1 July 2013Board Member Mrs Margaret Cartledge 1 July 2016Board Member Mr Ray Jacobson 1 July 2013Board Member Ms Megan Clark 1 July 2016Board Member Ms Vicki Hammond 1 July 2016Board Member Ms Kelli Nicola-Richmond 1 July 2016Board Member Mrs Deborah McSephney 1 July 2016

Executive StaffChief Executive Officer Ms Kate GillanClinical Services Manager Ms Andrea Russell Senior Staff Nurse Unit Manager – Aged Care Mr Brock ShielsNurse Unit Manager – Acute Care Mr Jason PhielerSupport Services Manager Ms Janet SmarttBusiness Manager Mr Michael MarkhamIntegrated Care Coordinator Ms Julie Walter

Auditors McLaren Hunt Financial Group Appointed by Victorian Auditor Generals Office

Solicitors Health Legal Pty Ltd

Bankers Commonwealth Bank of Australia Westpac Bendigo Community Bank Responsible Ministers

The Hon. Jill Hennessy MP Minister for Health; Minister for Ambulance Services

The Hon. Jenny Mikakos MP Minister for Families and Children; Minister for Youth Affairs

The Hon. Martin Foley MP Minister for Housing, Disability and Ageing; Minister for Mental Health

BOARD MEETING ATTENDANCES 2017 – 2018

Board Member Att LOA % Greg Aimers 11 100Gary Allen 7 3 90Ian Brown 10 1 100 Margaret Cartledge 9 2 100Megan Clark 7 2 81 Sue Guinness 8 3 100Vicki Hammond 10 90Ray Jacobson 9 1 90 Deborah McSephney 9 1 90Kelli Nicola-Richmond 9 1 90Damien Smith 10 1 100

Lorne Community Hospital is a public hospital incorporated under the Victorian Health Services ACT 1988 and operates under the provisions of the ACT.

Report of Operations

ENVIRONMENTAL MANAGEMENT Lorne Community Hospital has in place an Environmental Policy and Environmental Management Plan, to ensure it complies with statutory requirements. Key aspects of the plan are reviewed by the Quality, Risk and Safety Sub Committee as part of its annual reporting requirements. The Lorne Community Hospital Environmental Policy is a statement of the hospital’s environmental intentions and the aim of LCH is to provide high quality sustainable health care, embedding sustainability into its operations and encourage key partners and stakeholders to do the same.

LCH recognizes that good maintenance and care of the environment contributes to the long-term health of people, their social wellbeing and economic prosperity and have ensured this through our Environmental Management Plan. This strategy ensures that LCH delivers services in an environmentally responsible manner that minimises undue risk and adverse environmental impacts on human health and the natural environment.



VisionTo create great care for our community.

MissionTo provide high quality care through the provision of a range of viable and integrated health, aged and community care services.

ValuesIntegrity

• We strongly adhere to moral and ethical principles

• We act with sound moral character and honesty

• We earn trust through professional behaviour

• We are loyal to colleagues and the organisation

Respect

• We value the qualities, beliefs and abilities of individuals

• We have empathy and compassion

• We encourage, support and nourish self esteem

• We positively assist learning and development

Accountability

• We are responsible for quality of care, services and teamwork

• We transparently report and explain• We are answerable for the

consequences resulting from our actions



Lorne Community Hospital is the only Hospital on the SurfCoast, an area which extends from Torquay to Lorne.

Lorne Community Hospital was established over 50 years ago and is highly valued and respected by the local community.

The Lorne Community Hospital was officially opened in 2006 and has been completely re-developed on its original site. It provides a modern work environment which is well equipped with current technology and equipment. A broad range of services include: Aged Residential, Acute Hospital, Emergency, Community Health, Home Nursing, Medical, Rehabilitation and Palliative Care to our catchment area, which includes Aireys Inlet, Moggs Creek, Eastern View, Fairhaven, Deans Marsh and Wye River.

Clinical Servicesge of Service

Acute Care

Aids and Equipment Hire

Aged Care

Community Nursing

Community Welfare

Chronic Disease Management

Day Respite Care

Exercise Classes

Falls Prevention Program

Food Services

Home and Community Care

Immunisation

Infant Welfare

Needle Exchange Program

Nurse Clinic

Occupational Therapy

Palliative Care

Physiotherapy

Residential Aged Care

Residential Respite Care

Social Support

Urgent Care 24/7

Volunteer Support

Visiting Services

Community Services

Audits Board Secretariat

Auspice for Lorne Community House

Communications and Fundraising

Community Nursing

Community Welfare

Customer Service and Reception

Delivered Meals

Domestic Assistance

Executive Assistance to the CEO

Exercise Classes

Exercise Physiology

Falls Prevention Program

Health Coaching

In Home and Social Support Services (HACC/PYP, CHSP, NDIS, TAC, WorkCover)

In Home Respite

Independent Living Units

Occupational Therapy

Lorne Community Hospital’s Central Records, incorporating medical records and FOI

Personal Care

Physiotherapy

Quality Improvement

Risk Management

Social Support Individual

Social Support Group

Volunteer Support

Visiting Services

Corporate Services

Administration

Asset Management

Buildings and Grounds

Cleaning

Financial Management

Governance Support

Grants and Submissions

Human Resources Management

Information Technology

Information Management

Infrastructure Maintenance

Occupational Health and Safety

Lorne Community House

Throughout 2017/2018 the vision for the Lorne Community Hospital is to work with our community, staff, volunteers and patients to build healthier lives.

Through our community engagement events, fundraising activities, patient centered care and staff information sessions, we have continued to bring our vision to reality.

The Hospital also recognises that our consumers, particularly given the small, rural population of our catchment area, play a pivotal role in shaping our services.

Providing Great Healthcare



Board of Management

ChairmanDr Damien Smith AM

Deputy ChairsMr Greg AimersMs Sue Guinness

Mr Gary AllenDr Ian BrownMrs Margaret CartledgeMs Megan ClarkMs Vicki HammondMr Ray JacobsonMrs Deborah McSephneyMs Kelli Nicola-Richmond

Community Liaison Committee

Mr Gary Allen (Chair)Dr Ian BrownMrs Margaret CartledgeMrs Deborah McSephneyCommunity RepresentativesMs Stella O’DonnellMs Susan ReillyMs Sue HarbisonChief Executive OfficerClinical Services ManagerVolunteer CoordinatorConsumer CoordinatorMarketing Coordinator

Finance & Audit Committee:

Mr Ray Jacobson (Chair)Dr Damien Smith (ex-officio)Mr Greg AimersMs Megan ClarkMs Sue GuinnessMs Kelli Nicola-RichmondMrs Deborah McSephneyChief Executive OfficerBusiness ManagerClinical Services Manager

Credentials Committee:(meets only as required)

The Board ExecutiveChief Executive Officer

Asset Management & Capital Works Project Group:

Mr Greg Aimers (Chair)Dr Damien Smith (ex-officio) Dr Ian Brown

Community RespresentativesMr Leo Dwyer

Chief Executive OfficerBusiness ManagerSupport Services Manager

Fundraising Advisory Committee:

Chief Executive OfficerDr Damien Smith (ex-officio)Fundraising CoordinatorMarketing Coordinator

Board of ManagementCommittee Structure

LORNE COMMUNITY HOSPITAL 2017-2018

Safety and Clinical Governance Committee

Ms Vicki Hammond (Chair)Dr Damien Smith (ex-officio)Dr Ian BrownMrs Margaret CartledgeMs Megan ClarkMs Sue GuinnessMr Ray JacobsonMs Kelli Nicola-RichmondChief Executive Officer Clinical Services Manager



Organisation ChartLORNE COMMUNITY HOSPITAL 2017– 2018Current at 1 April 2018

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K:\Admin\Annual Report\AR 2018\LCH Organisation Chart A4 size MARCH 2018.docx

Board of Management

Kate Gillan Chief Executive Officer Andrea Russell

Clinical Services Manager

Brock Shiels Nurse Unit Manager

Aged Care

Jason Phieler Nurse Unit Manager

Acute Care

Julie Walter Integrated Care

Manager

Marian McIIdowie Reception

Coordinator

Lisa Hill Quality Coordinator

Janet Smartt Support Services

Manager

Michael Markham Business Manager

Margaret Dunn / Sian Marlow/

Administration Coordinator

Corrina Dichiera Consumer & Community

Engagement Co-ordinator

Katy Kennedy Fundraising Coordinator

Emily Lens Marketing

Coordinator

Hilary Tigani Project Coordinator

Amanda Farrelly Lorne Medical Centre

Practice Manager



I am pleased to report and comment, on behalf of the Board of Management, upon the operations of the Lorne Community Hospital (LCH) for the year ended 30 June 2018.

It was another very successful year for the Hospital which continues to excel in studies which benchmark its performance against health services of similar size and service profile. The Hospital had a positive financial result, introduced new services, met or exceeded relevant accreditation standards, further strengthened its clinical safety and governance performance, successfully met consumer and community expectations, and entered new partnership arrangements across Western Victoria, and with Otway Health in particular.

The Board, the majority of which was completing only its second year of their term, provided very effective governance. The blend of professional skill sets and community-mindedness makes for strong board capability in a rural health service and this produced several bold initiatives especially around collaboration and partnerships.

The Board believes that carefully chosen partnerships have strong strategic, financial and service rationale, and over the year the Board continued to explore integration of services with Otway Health. The shared CEO arrangement has been extended into the next year, a joint GP arrangement has commenced. A GP clinic in Deans Marsh was trialled, and the Hospital shares a Director of Medical Services with other health services in Colac, Winchelsea, Timboon, Terang, Mortlake and Apollo Bay. This Director of Medical Services will coordinate credentialing of medical staff and provide objective and independent overview of clinical governance and safety.

The Board is very mindful of the fact that no collaboration can alter the name, identity, heritage and community connections of Lorne Community Hospital.

Lorne Community Hospital continues to be a good place to work, or to be treated. The Hospital is committed to a diverse

and inclusive working environment for our staff and to a staff culture that reflects this approach in all patient/consumer interactions.

The Safety and Clinical Governance Committee, chaired with great insight by Vicki Hammond, oversees a very robust clinical governance system which supports transparency and disclosure, and encourages learning from mistakes.

At the end of the reporting year Gary Allen stood down from the Board after four years of service, having made a very significant contribution across many areas but especially in ensuring that the Hospital maintains its community focus.

The current Board has continued the policy of recent Boards to pursue a modest annual operating surplus in order to build and maintain a capital reserve fund. Consequently, the financial accounts show an operating surplus for the year of about $225,000, maintaining an unbroken run of operating surpluses since 2013. Because of the constantly changing landscape of both public and private sector healthcare, and the seemingly continuous changes in funding arrangements by both state and federal governments, annual operating surpluses are not necessarily sustainable and remain a year-to-year proposition. Both the Board and Management understand the imperative for imaginative pursuit of income streams outside of annual government grants.

Occupancy of the Aged-Care unit approximated 100% throughout the year, but income from the Dialysis unit fell and the painfully slow allocation of federal government Home Care Packages saw our LCH at Home service grow more slowly than anticipated. The GP practice and Community House are business units of the Hospital and both showed financial growth.

I acknowledge the roles of the Finance and Audit Committee chaired by Ray Jacobsen, and the Hospital’s Business Manager

Board of Management Report 2018



Michael Markham, in adroitly managing the Hospital’s financial affairs.

Capital funds amassed over recent years enabled the Hospital to purchase a residential apartment in Lorne in December 2017. The purchase is part of a Board strategy to build a sustainable medical workforce in Lorne and from the start of 2019 the apartment will be used solely for GP accommodation, thereby guaranteeing that there is always at least one Hospital doctor resident in Lorne.

In the year, the Hospital CEO Kate Gillan was named among the Top 50 Women in the Public Sector, and Jason Phieler, NUM Acute Care, was honoured by the Victorian Hospital Association with its Excellence in Leadership Award. Kate expertly supports the Board and encourages and guides its vision and direction.

The Board appreciates and thanks the community members and organisations who support the Hospital. The Lorne Op-Shop, staffed by so many hard-working but wonderfully cheerful members, is our pre-eminent benefactor and again in 2017-18 it generously supported big and small Hospital

projects. Other Volunteers contribute to the Hospital through acts of kindness and projects that significantly improve the quality of life of our aged-care residents. The Murray to Moyne cycling team rode again in April to fundraise for our health promotion projects. Lorne, and its Hospital, are fortunate to have such a giving community.

I thank my fellow Board members, CEO Kate Gillan, and the Hospital’s dedicated staff, for ensuring that Lorne Community Hospital was again successful in the reporting year ending June 30, 2018.

Dr Damien P Smith AMChairmanBoard of Management



Key Financialand Service Performance Reporting

ACTIVITY AND FUNDING

Cash management Target 2017-18 actualsCreditors <60 days 32

Debtors <60 days 20

Funding Type – Acute Admitted 2017-18 Activity AchievementWIES Public 32.58

WIES Private 33.56

Total PPWIES (Public and Private) 66.14

WIES DVA 5.46

WIES Renal 9.28

WIES TOTAL 80.88

CONSULTANCIES

June Current Month FTE June YTD FTELabour Category 2017 2018 2017 2018

Nursing 24.00 24.00 24.00 24.00

Administration and Clerical 13.00 14.00 13.00 14.00

Hotel and Allied Services 8.00 11.00 8.00 11.00

Ancillary (Allied Health) 6.00 4.00 6.00 4.00

Total 51.00 53.00 51.00 53.00

WORKFORCE STATISTICS

Details of consultancies (under $10,000).

In 2017-18 Lorne Community Hospital engaged 21 consultancies where the total fees payable to the consultants were less than $10,000. The total expenditure incurred during 2017-18 in relation to these consultancies is $63,847 (excl. GST).

Details of consultancies (over $10,000).

In 2017-18 there were 2 consultancies where the total fees payable to the consultants were $10,000 or greater. The total expenditure incurred during 2017-18 in relation to these consultancies is $63,923 (excl. GST).

Details of individual consultancies can be viewed at https://lch.org.au/services/our-services/

PERFORMANCE PRIORITIES

Operating Result Target 2015-16 actuals

Annual Operating Result ($m) ($0.059) ($0.319)

Operating Result Target 2017-18 actuals

Annual Operating Result ($m) 0.00 0.23

DETAILS OF ICT EXPENDITURE

Total Total = A + B A B BAU ICT Expenditure Non-BAU ICT Expenditure Operational Expenditure Capital Expenditure

$ 365,200 $ - $ - $ -

STATEMENT OF OCCUPATIONAL HEALTH AND SAFETYLorne Community Hospital is committed to ensuring a safe and healthy work environment and improving the health, safety and welfare of all employees, volunteers, contractors and visitors. LCH’s Occupational Health and Safety (OH&S) Policy outlines this commitment, which is supported by our OH&S Management Framework. LCH demonstrates this commitment to constantly improving OH&S by developing, implementing and monitoring work systems to ensure safe practices, developing and maintaining an OH&S policy framework, providing written procedures and guidelines to ensure safe work systems, monitoring, measuring and comparing OH&S performance and training and educating of all staff, OH&S representatives and volunteers.



Vision and PurposeIt gives me great pleasure to present the executive report for the 2018 financial year. This has been a year of significant consideration for our future, especially in the key strategic priorities of ‘providing great healthcare’ and ‘achieving business sustainability’. With increased demands and industry complexity, it is more important than ever to ensure we are able to sustain and grow our services while maintaining full compliance administratively. Since May 2017 when the CEO role became a shared role across both Lorne Community Hospital and Otway Health, the Board of Management has been undertaking a diligence process about what type of partnership would provide the best support structure into the future. This deliberation continues through 2018 and involves a great deal of community consultation.

As always, the Board has at its core the vision to provide great care for our community, a purpose that continues to drive our commitment and passion. This vision is underpinned by our values of respect, accountability and integrity – values that form the basis of a strong culture, creating a great place to work.

Great Care FrameworkThe ‘Great Care Framework’ was developed in 2016 and outlines what it means to deliver a consumer-centred, high quality experience for the LCH consumer every time. The care is personal, effective, connected and safe and the model articulates how everyone contributes to great care – from the Board to the frontline.

Andrea Russell, Clinical Services Manager has led her team this year to particularly focus and embed truly personal care within our health service.

With each of our service areas being required to undertake an external accreditation process, quality review stays at the

forefront of our mind. This year the national safety and quality service standards survey was conducted in September 2017

with all standards fully met.

Clinical and other Services An integrated approach is taken to ensure all services are streamlined to meet best practice care including aged care, acute, urgent care, community care, allied health, GP and primary care and health promotion. The medical practice, acquired in 2015, has continued to grow and thrive. Dr Dave Mullen, Principal GP, has supported the clinical team

Executive Report

Lorne CommunityHospital



of Senior GPs, GP Registrars and Practice Nurses to deliver exemplary and contemporary care. Supporting our community members who have or are at risk of having a chronic disease such as diabetes, respiratory or cardiac disease has been a high priority with the Health coaching approach being highly successful. LCH is the lead agency in the region for this program and oversees the activity and health outcomes at both Otway Health and Colac Area Health.

Dr Dave Mullen and Mandy Farelly, Practice Manager have both supported Otway Health in the acquisition and effective operations of the Apollo Bay General Practice. This partnership approach to supporting our neighboring GP and health service has been of critical importance in enabling the vision of providing sustainable integrated primary care right down the coast.

The Lorne Community House has continued to thrive under the auspice arrangement with LCH and greater partnership with the Apollo Bay Neighborhood House is in its early stages.

LCH at Home, providing all types of care and services into the home, was launched in 2017. This service has consolidated under the leadership of Julie Walter, Integrated Care Coordinator and is now working closely with Otway Health to grow and expand, setting the structure to provide enhanced in-home services to the communities right along the great ocean coast.

Financial PerformanceThis financial year has proved more difficult as industry changes and reforms impact. A small surplus has been generated due to a focus on strong financial controls and waste minimization and a number of longer term measures are being explored to ensure we maintain business sustainability.

The organisation is very fortunate to have the support of so many individuals groups and organisations who assist through fundraising donations to ensure the health service can provide for community need in areas where we are not otherwise funded. Thank you to all contributors - your support is greatly appreciated and used wisely.

Major ProjectsOver recent years, major capital projects have included:

• Staff accommodation

• Air conditioning system replacement

• Aged Care refurbishment.

We have been so fortunate to have had wonderful community support to enable these projects to be undertaken and we are enjoying having them all complete and operational.

The new aged care facility has provided a contemporary space, much more suited to new models of care such as the Montessori model, one that is premised on providing optimal

Annual Report 2013/14 11



independence and autonomy for our residents. This model was implemented at both Otway Health and LCH and has transformed the aged care experience.

StaffOne of our key strengths is the dedication and commitment of our workforce and the vast experience they bring to their work – ensuring we are able to provide ‘great care for our community’. Thank you to all of our staff in all areas of work and particularly the senior staff who provide leadership and experience to guide the high standards of care delivered.

A very important focus is placed on training and education, as staff are required to have a broad depth and breadth of clinical capability to meet the needs of the health service. Significant investment is made to ensure skills are developed and maintained and staff feel confident and competent in their roles. Thank you to our senior staff who lead, deliver and access support to provide a high standard of training and support for our team.

Community PartnershipCommunity partnership is very important in meeting the health needs of our community and we continue to grow strong partnerships with our local schools, shires, health services, community services and many more. The Community Liaison Committee leads our thinking on

ensuring our planning and service provision meets the needs of our communities. Thank you for your ongoing commitment andinvolvement. This year has seen a stronger partnership with Otway Health, our neighboring health service at Apollo Bay, just 45 minutes down the Great Ocean Road. Over the past few years we have partnered with a number of projects including the Drug and Alcohol Telehealth Program, funded through Better Care Victoria, Bushfire recovery efforts at Wye River and various shared employment roles. It is exciting to be continuing a discussion about enhancing that partnership into the future.

Future Directions

With an exciting future mapped out in the 2016-2020 strategic plan and the active discussions about greater partnership the organisation has a contemporary vision to work toward. The focus on providing locally accessible, whole of life health care that is enabled by technology in a sustainable way will set up the foundation for a stimulating journey. The core of all this is the simple vision ‘to provide great care for our community’. We are inspired by the privilege we have to work with the community to ensure this transpires.

Kate Gillan Chief Executive Officer



The Lorne Community and Hospital Auxiliary (Op Shop) have continued to again support the Hospital with donated equipment and even a pool of funds for spoiling our residents with activities and treats. All much appreciated!

In the past year staff have suggested numerous items of equipment for the volunteers of the Op Shop to fund. In the past year some major items funded have included an OCT machine to expand the Optometry services the Hospital can offer, a stationary bike for the gym, new mattresses and a $50,000 annual appeal donation.

The Lorne Spinners Murray to Moyne team celebrated a milestone in this year’s fundraising event with Harri Muller completing his tenth ride raising funds for the Hospital. Harri along with team captain Ed Babington have been an integral part of the team for a number of years bringing not only their riding skills but fundraising, enthusiasm and an amazing community spirit.

The Hospital’s Annual Appeal brings all sectors of our community together to raise funds towards the extra services, equipment and programs that are not covered by government funding.

For the 2018 Annual Appeal the Hospital’s clinical staff were asked to identify two needs; one need with immediate impact, and one need with long-term impact. Our community has donated funds that have allowed us to purchase a portable resus monitor. To provide great care in our urgent care department this flexible bedside monitor meets changing patient acuity and care area needs, as well as maintaining all functions during intra-hospital transport. Staff are thrilled to be granted important life-saving equipment.

Donations were also directed towards our Active Community Fund. Keeping our community active is one of the Hospital’s key goals. Funds raised from the 2018 Annual Appeal are going directly towards our active services, such as increasing community exercise classes, activities, education and our gymnasium expansion.

We sincerely thank you.

Katy KennedyFundraising Coordinator

Recognition of Donors and Major Fundraising

2017-2018 Fundraising Income2018 Annual Appeal $122,489

2017 Annual Appeal $18,730

2018 Murray to Moyne $25,182

General Donations $32,065

Lorne Op Shop Contributions included: OCT Machine $35,000

Stationary Bike $2,300

Hire Equipment $1,328

Mattresses x5 $2,390

Bariatric Bed $14,708

Suspension Training Kit $180

Cardiac Probe $8,500

24 hr ambulatory blood pressure monitor $3,900

Invisa Beam Monitors x4 $6,123



Attestation on Data Integrity I, Kate Gillan certify that the Lorne Community Hospital has put in place appropriate internal controls and processes to ensure that reported data reasonably reflects actual performance. The Lorne Community Hospital has critically reviewed these controls and processes during the year.

Kate Gillan Chief Executive OfficerLorne, Victoria 24 June 2018

Attestation for compliance with the Ministerial Standing Direction 3.7.1 - Risk Management Framework and ProcessesI, Kate Gillan certify that the Lorne Community Hospital has complied with the Ministerial Direction 3.7.1 - Risk Management Framework and Processes. The Lorne Community Hospital Audit Committee has verified this.


Attestation for Compliance with the Australian/New Zealand Risk Management StandardI, Kate Gillan certify that the Lorne Community Hospital has risk management processes in place consistent with the AS/NZS ISO 31000:2009 (or an equivalent designated standard) and an internal control system is in place that enables the executive to understand, manage and satisfactorily control risk exposures. The CEO verifies this assurance and that the risk profile of the Lorne Community Hospital has been critically reviewed within the last 12 months.


Attestation on Compliance with Health Purchasing Victoria (HPV) HealthPurchasing Policies Compliant

I, Kate Gillan certify that Lorne Community Hospital has put in place appropriate internal controls and processes to ensure that it has complied with all requirements set out in the HPV Health Purchasing Policies including mandatory HPV collective agreements as required by the Health Services Act 1988 (Vic) and has critically reviewed these controls and processes during the year.


Attestation on Financial Management Compliance.

I, Dr Damien Smith certify that Lorne Community Hospital has complied with the applicable Standing Directions of the Minister for Finance under the Financial Management Act 1994 and Instructions.

Dr Damien Smith AMChairman – Board of Management Lorne, Victoria 24 June 2018

Conflict of InterestI, Kate Gillan, certify that Lorne Community Hospital has put in place appropriate internal controls and processes toensure that it has complied with the requirements ofhospital circular 07/2017 Compliance reporting in healthportfolio entities (Revised) and has implemented a‘Conflict of Interest’ policy consistent with the minimumaccountabilities required by the VPSC. Declarationof private interest forms have been completed by allexecutive staff within Lorne Community Hospital and members of the board, and all declared conflicts have been addressed and are being managed. Conflict of interest is a

Compliance Requirements



standard agenda item for declaration and documentingat each executive board meeting.


Building Act 1993 Health services are required to periodically carry out an assessment and report on the condition of their built assets. Recommendations from a Fire Safety Audit and Fire Risk Assessment undertaken in December 2011 have been fully implemented throughout 2017 to upgrade the Lorne Community Hospital to current standards. This will ensure full compliance and assurance that built assets are protected.

Annual Fire Safety Certification is submitted to the Department of Health to verify compliance with maintenance of the essential safety measures. In the process of new construction or modification of the building, the service engages architects, engineers and builders who are registered with the Building Practitioner’s Board. Under this engagement, the health service ensures that all buildings and renovations comply with the Australian Standards and the Building Codes of Australia.

Safe Patient Care Act 2015

Lorne Community Hospital complies with The Safe Patient Care (Nurse to Patient and Midwife to Patient Ratios) Act 2015. Lorne Community Hospital has no matters to report in relation to its obligations under section 40 of the Safe Patient Care Act 2015.

Freedom of Information Act 1982

The Freedom of Information Act 1982 provides the right to obtain information held by Lorne Community Hospital. Requests under the Act are made in writing to the Administration Officer. The Chief Executive Officer is the organisation’s Authorised Officer. The majority of requests received annually are from patients or their authorised representatives for release of medical record information.

In the year ended 30 June 2018, twelve (12) applications for access to documents under the Freedom of Information Act were received.

Employment Practices

Lorne Community Hospital is committed to the principles of merit and equity in the workplace with respect to employment, promotion and opportunity. Selection processes reflect equal opportunity and diversity principles.The organisation recognizes the Public Sector Code of Conduct and actively promotes a positive working environment and values based culture, which includes a code of conduct for staff and volunteers.

Gender Balance Male Female

Board 45% 55%

Senior Staff 30% 70%

National Competition Policy

Lorne Community Hospital complies to the degree applicable with the Competitive Neutrality Policy Victoria.

Victorian Industry Participation Policy Act 2003

The Victorian Government requires public bodies and departments to report on the implementation of the Victorian Industry Participation Policy (VIPP). Lorne Community Hospital is required to report the application of VIPP against any tenders greater than $1 million. During 2017-18 no tenders were let or completed with a value greater than $1 million.

Protected Disclosure Act 2012Lorne Community Hospital has in place appropriate procedures for disclosures in accordance with the Protected Disclosures Act 2012. No protected disclosures were made under the Act in 2017/17.

Carers Recognition Act 2012The Carers Recognition Act 2012 recognises, promotes and values the role of people in care relationships. LCH understands the different needs of persons in care relationships and that care relationships bring benefits to the patients, their carers and to the community. Lorne Community Hospital takes all practicable measures to ensure that its employees, agents and carers have an awareness and understanding of the care relationship principles and this is reflected in our commitment to a model of patient and family centred care and to involving carers in the development and delivery of our services.

Annual Report 2013/14 15



Additional Information Available on Request

Consistent with FRD 22H (Section 6.19) details in respect

of the items listed below have been retained by Lorne

Community Hospital and are available to the relevant

Ministers, Members of Parliament and the public on request

(subject to the freedom of information requirements, if

applicable):

a) Declarations of pecuniary interests have been duly

completed by all relevant officers;

b) Details of shares held by senior officers as nominee

or held beneficially;

c) Details of publications produced by the entity about

itself, and how these can be obtained;

d) Details of changes in prices, fees, charges, rates and

levies charged by the Health Service;

e) Details of any major external reviews carried out on

the Health Service;

f ) Details of major research and development activities

undertaken by the Health Service that are not

otherwise covered either in the Report of Operations

or in a document that contains the financial

statements and Report of Operations;

g) Details of overseas visits undertaken including

a summary of the objectives and outcomes of

each visit;

h) Details of major promotional, public relations and

marketing activities undertaken by the Health

Service to develop community awareness of the

Health Service and its services;

i) Details of assessments and measures undertaken

to improve the occupational health and safety

of employees;

j) General statement on industrial relations within

the Health Service and details of time lost through

industrial accidents and disputes, which is not

otherwise detailed in the Report of Operations;

k) A list of major committees sponsored by the Health

Service, the purposes of each committee and the

extent to which those purposes have been achieved;

l) Details of all consultancies and contractors including

consultants/contractors engaged, services provided,

and expenditure committed for each engagement.



Statement of PrioritiesThe Victorian Government’s priorities and policy directions are outlined in the Victorian Health Priorities Framework 2012–2022. In 2017–18 Lorne Community Hospital will contribute to the achievement of these priorities by:

Goals Strategies Deliverable Outcome

Better Health

A system geared to prevention as much as treatment

Everyone understands their own health and risks

Illness is detected and managed early

Healthy neighbourhoods and communities

Better HealthReduce statewide risks

Build healthy neighbourhoods

Help people to stay healthy

Target health gaps

Build capacity and capability within the service, to enable effective responses to family violence by raising awareness and delivering training to all staff during a month of action (November 2017).

Promote healthy lifestyles by increasing, by 20%, the health promotion activities offered. i.e. walking group delivered by physiotherapist, healthy eating groups delivered by dietician.

Implement the “Coaching for health” project in collaboration with Western Victoria Primary Health Network for people with chronic disease.

Undertake a comprehensive menu review, for both acute and Residential Aged Care involving dietician and consumers.

CompleteFamily violence awareness raising training for all staff delivered at mandatory training days in November 2017.Participating in the regional ‘Strengthening response to family violence’ program.

Complete‘Great tour of Europe’ walking activity program commenced February 2018 and involves aged care residents, staff, Board and community increasing and measuring their steps to progress virtually around Europe.Walking group commenced with Physiotherapist.Annual appeal targets fundraising for physical activity programs.

CompleteHealth coaching implemented and well received in community. All targets met.

CompleteMenu review conducted and recommendations complete.




Better AccessCare is always there when people need it

More access to care in the home and community

People are connected to the full range of care and support they need

There is equal access to care

Better AccessPlan and invest

Unlock innovation

Provide easier access

Ensure fair access

Better CarePut Quality First

Join up care

Partner with patients

Strengthen the workforce

Embed evidence

Mandatory actions against the ‘Target zero avoidable harm’ goal:Develop and implement a plan to educate staff about obligations to report patient safety concerns.

Expand the Lorne Community Hospital at Home services, delivering ten home care packages in the next year.

Increase access to drug and alcohol treatment services for the local community through the implementation of a telehealth model of care.

Pilot, implement and evaluate a digital calendar application project to support older people with dementia at home.

Sponsor two staff to undertake Gay and Lesbian Health Victoria’s HOW2 program which promotes the development of LGBTI inclusive health and human services.

Review the current set of Safety and Quality performance indicators reported to the Board of Management to align with Safer Care Victoria reporting.

CompleteHome care packages established and increasing in number.

CompleteService delivery increased through the employment of a drug and alcohol nurse to case manage clients.

In progressDigital calendar project progressing well with prototype ready for trialing.

Complete

CompleteBetter CareTarget zero avoidable harm

Healthcare that focuses on outcomes

Patients and carers are active partners in care

Care fits together around people’s needs




Develop and implement a plan to educate staff about obligations to report patient safety concerns.

Establish agreements to involve external specialists in clinical governance processes for each major area of activity (including mortality and morbidity review).

In partnership with consumers, identify three priority improvement areas using Victorian Healthcare Experience Survey data and establish an improvement plan for each. These should be reviewed every six months to reflect new areas for improvement in patient experience.

Include reporting of patient safety concerns in mandatory training for all staff.

In collaboration with the newly appointed District Director of Medical Administration, strengthen Lorne Community Hospital staff engagement in mortality and morbidity review processes.

Engage with consumers to improve health literacy resources and safety and quality performance reporting to the community.

Complete

In Progress

In Progress



K:\Admin\Annual Report\AR 2018\Department appendix 2 version.docx

Asset Management Basic Asset Management Plan Full compliance Achieved

Quality and Safety

Key Performance Indicator Target Result Health service accreditation Full Compliance Full Compliance Compliance with cleaning standards Full Compliance Full Compliance Compliance with the Hand Hygiene Australia Program 80% 92% Percentage of healthcare workers immunized for influenza 75% 97% Victorian Healthcare Experience Survey – patient experience

95% positive experience

Full Compliance*

Victorian Healthcare Experience Survey – discharge care 75% very positive response

Full Compliance*

Victorian Healthcare Experience Survey – patient perception of cleanliness

70% Full Compliance*

Adverse Events Number of sentinel events NIL NIL Mortality – number of deaths in low mortality DRGs NIL N/A*

Strong Governance, Leadership and Culture

Key Performance Indicator Target Result People Matter Survey – percentage of staff with a positive response to safety culture questions

80% 99%

People matter survey – percentage of staff with a positive response to the question, “I am encouraged by my colleagues to report any patient safety concerns I may have”.

80% 100%

People matter survey – percentage of staff with a positive response to the question, “Patient care errors are handled appropriately in my work area”.

80% 100%

People matter survey – percentage of staff with a positive response to the question, “My suggestions about patient safety would be acted upon if I expressed them to my manager”.

80% 100%

People matter survey – percentage of staff with a positive response to the question, “The culture in my work area makes it easy to learn from the errors of others”.

80% 98%

People matter survey – percentage of staff with a positive response to the question, “Management is driving us to be a safety-centred organisation”.

80% 98%

People matter survey – percentage of staff with a positive response to the question, “This health service does a good job of training new and existing staff”.

80% 96%


K:\Admin\Annual Report\AR 2018\Department appendix 1 version.docx

People matter survey – percentage of staff with a positive response to the question, “Trainees in my discipline are adequately supervised”.

80% 96%

People matter survey – percentage of staff with a positive response to the question, “I would recommend a friend or relative to be treated as a patient here”.

80% 100%

* Less than 42 responses were received for the period due to the relative size of the Health Service

Financial Sustainability

Key Performance Indicator Target Result Operating result ($m) -0.25 0.23 Trade creditors 60 days 32 days Patient free debtors 60 days 20 days Adjusted current asset ratio 0.7 1.37 Number of days available cash 14 days 257.5

Occupational Violence

Occupational Violence statistics 2017- 2018

Work cover accepted claims with an occupational violence cause per 100 FTE 0 Number of accepted Work cover claims with lost time injury with an occupational violence cause per 1,000,000 hours worked.

0

Number of occupational violence incidents reported. 7 Number of occupational violence incidents reported per 100 FTE 12.2 Percentage of occupational violence incidents resulting in a staff injury, illness or condition

0

Activity and Funding

Funding type – small rural 2017 – 2018 Activity Achievement Small Rural Primary Health (Service Hours) 352 Small Rural Residential Care (Bed Days) 7079 Small Rural HACC PYP (Service Hours) 119 Small Rural CHSP (Service Hours) 5,828





The annual report of the Lorne Community Hospital is prepared in accordance with all relevant Victorian legislation. This index has been prepared to facilitate identification of the Department’s compliance with statutory disclosure requirements.

Note: This Disclosure Index consists of 2 pages, and is not required to be completed by denominational hospitals.

Legislation Requirement Page Reference

Ministerial Directions

Report of Operations

Charter and purpose

FRD 22H Manner of establishment and the relevant Ministers 2

FRD 22H Purpose, functions, powers and duties 3

FRD 22H Initiatives and key achievements 4

FRD 22H Nature and range of services provided 4

Management and structure

FRD 22H Organisational structure 6

Financial and other information

FRD 10A Disclosure index 4

FRD 11A Disclosure of ex-gratia expenses Financials

FRD 21H Responsible person and executive officer disclosures Appendix 3

FRD 22H Application and operation of Protected Disclosure 2012 14

FRD 22H Application and operation of Carers Recognition Act 2012 14

FRD 22H Application and operation of Freedom of Information Act 1982 15

FRD 22H Compliance with building and maintenance provisions of Building Act 1993

14

FRD 22H Details of consultancies over $10,000 9

FRD 22H Details of consultancies under $10,000 9

FRD 22H Employment and conduct principles 14

FRD 22H Information and Communication Technology Expenditure 9

FRD 22H Major changes or factors affecting performance Financials

FRD 22H Occupational violence 9

FRD 22H Operational and budgetary objectives and performance against objectives

9



Legislation Requirement Page Reference

FRD 22H Significant changes in financial position during the year Financials

FRD 22H Additional information available at request Financials

FRD 24C Reporting of office-based environmental impacts 2

FRD 22H Statement on National Competition Policy Financials

FRD 22H Subsequent events Financials

FRD 22H Summary of the financial results for the year 9

FRD 22H Workforce Data Disclosures including a statement on the application of employment and conduct principles

15

FRD 25C Victorian Industry Participation Policy disclosures 15

FRD 29B Workforce Data disclosures 15

FRD 103F Non-Financial Physical Assets Financials

FRD 110A Cash flow statements Financials

FRD 112D Defined Benefit Superannuation Obligations Financials

SD 5.2.3 Declaration in report of operations 2

SD 3.7.1 Risk management framework and processes 14

Other requirements under Standing Directions 5.2

SD 5.2.2 Declaration in financial statements 14

SD 5.2.1(a) Compliance with Australian accounting standards and other authoritative pronouncements

Financials

SD 5.2.1(A) Compliance with Ministerial Directions 15

Legislation

Freedom of Information Act 1982 15

Protected Disclosure Act 2012 15

Carers Recognition Act 2012 15

Victorian Industry Participation Policy Act 2003 15

Building Act 1993 14

Financial Management Act 1994 15

Safe Patient Care Act 2015 15



LORNE COMMUNITY HOSPITAL

FINANCIAL STATEMENTS

FOR THE YEAR ENDED

30th JUNE, 2018

LORNE COMMUNITY HOSPITAL

BOARD MEMBER'S, ACCOUNTABLE OFFICER'S AND

CHIEF FINANCE & ACCOUNTING OFFICER'S DECLARATION

The attached financial statements for Lorne Community Hospital have been prepared in accordance with

Direction 5.2 of the Standing Directions of the Minister for Finance under the Financial Management Act 1994,

applicable Financial Reporting Directions, Australian Accounting Standards including Interpretations, and other

mandatory professional reporting requirements.

We further state that, in our opinion, the information set out in the Comprehensive Operating

Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement, and accompanying

notes forming part of the financial statements, presents fairly the financial transactions during the year

ended 30 June 2018 and financial position of Lorne Community Hospital as at 30 June 2018.

At the time of signing we are not aware of any circumstance which would render any particulars

included in the financial statements to be misleading or inaccurate.

We authorise the attached financial statements for issue on this day.

A Smith M§ K Gillan

Board Member Accountable Officer

Lorne Community Hospital Lorne Community Hospital

27th August, 2018 27th August, 2018

Mr M kham

Chie Finance & Accounting Officer

Lorne Community Hospital

27th August, 2018

Independent Auditor’s Report

To the Board of Lorne Community Hospital

Opinion I have audited the financial report of Lorne Community Hospital (the health service) which

comprises the:

• balance sheet as at 30 June 2018

• comprehensive operating statement for the year then ended

• statement of changes in equity for the year then ended

• cash flow statement for the year then ended

• notes to the financial statements, including significant accounting policies

• board member's, accountable officer's and chief finance & accounting officer's declaration.

In my opinion the financial report presents fairly, in all material respects, the financial position of

the health service as at 30 June 2018 and their financial performance and cash flows for the year

then ended in accordance with the financial reporting requirements of Part 7 of the Financial

Management Act 1994 and applicable Australian Accounting Standards.

Basis for Opinion

I have conducted my audit in accordance with the Audit Act 1994 which incorporates the Australian

Auditing Standards. I further describe my responsibilities under that Act and those standards in the Auditor’s Responsibilities for the Audit of the Financial Report section of my report.

My independence is established by the Constitution Act 1975. My staff and I are independent of

the health service 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 my audit of the financial report in Victoria. My staff and I have also fulfilled our 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.

Other

Information The Board of the health service are responsible for the Other Information, which comprises the information in the health service’s annual report for the year ended 30 June 2018, but

does not include the financial report and my auditor’s report thereon.

My opinion on the financial report does not cover the Other Information and accordingly, I do

not express any form of assurance conclusion on the Other Information. However, in connection

with my audit of the financial report, my responsibility is to read the Other Information and in

doing so, consider whether it is materially inconsistent with the financial report or the knowledge

I obtained during the audit, or otherwise appears to be materially misstated. If, based on the

work I have performed, I conclude there is a material misstatement of the Other Information, I

am required to report that fact. I have nothing to report in this regard.

Board’s

responsibilities for the

financial

report

The Board of the health service is responsible for the preparation and fair presentation of the

financial report in accordance with Australian Accounting Standards and the Financial

Management Act 1994, and for such internal control as the Board determines is necessary to

enable the preparation and fair presentation of a financial report that is free from material

misstatement, whether due to fraud or error.

In preparing the financial report, the Board is responsible for assessing the health service’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 it is inappropriate to do so.

Auditor’s

responsibilities

for the audit of

the financial

report

As required by the Audit Act 1994, my responsibility is to express an opinion on the financial report

based on the audit. My objectives for the audit 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 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, 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 my 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 health service’s internal control

• evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by the Board

• conclude on the appropriateness of the Board’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 health service’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 health service 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.

I communicate with the Board regarding, among other matters, the planned scope and timing of the

audit and significant audit findings, including any significant deficiencies in internal control that I

identify during my audit.

MELBOURNE Ron Mak

29 August 2018 as delegate for the Auditor-General of Victoria

2

LORNE COMMUNITY HOSPITAL COMPREHENSIVE OPERATING STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018

Note

Parent Entity

2018 $

Parent Entity

2017 $

Consolidated

2017 $

Revenue from Operating Activities 2.1 7,651,362 6,927,504 6,985,435Revenue from Non-Operating Activities 2.1 261,605 168,054 247,705

Employee Expenses 3.1 (5,074,897) (4,611,935) (4,728,195)Non Salary Labour Costs 3.1 (882,664) (576,498) (576,498)Supplies and Consumables 3.1 (226,432) (203,999) (204,044)Information Technology & Communications 3.1 (676,988) (801,601) (802,681)Repairs & Maintenance 3.1 (148,268) (147,454) (153,490)Food Services 3.1 (87,337) (90,336) (90,556)Other Expenses 3.1 (590,072) (510,391) (529,823)

Net Result Before Capital and Specific Items 226,309 153,344 147,853

Capital Purpose Income 2.1 107,489 447,474 447,474Depreciation 4.4 (640,504) (641,891) (645,390)Finance Costs 3.2 (2,931) (20,096) (20,096)Specific Expenses 3.1, 3.3 (118,171) - -Expenditure for capital purposes 3.1 - (4,690) (4,690)

Net Result after capital and specific items (427,808) (65,859) (74,849)

Other economic flows included in net resultNet gain/(loss) on non-financial assets 2.1 16,529 (453,635) (453,635)

Revaluation of Long Service Leave 549 4,797 4,797

Total other economic flows included in net result 17,078 (448,838) (448,838)

NET RESULT FOR THE YEAR (410,730) (514,697) (523,687)

Other Comprehensive IncomeItems that will not be reclassified to net result Changes in physical asset revaluation surplus 8.1(a) 871,664 - -

Total other comprehensive income 871,664 - -

COMPREHENSIVE RESULT 460,934 (514,697) (523,687)

This Statement should be read in conjunction with the accompanying notes.

LORNE COMMUNITY HOSPITAL BALANCE SHEET AS AT 30 JUNE 2018

Note

Parent Entity 2018

$

Parent Entity 2017

$

Consolidated

2017 $

Current AssetsCash and Cash Equivalents 6.2 3,864,769 2,842,401 2,963,564

Receivables 5.1 346,703 558,358 558,488 Investments and Other Financial Assets 4.1 1,377,284 1,370,972 1,370,972

Prepayments and Other Assets 5.3 58,008 46,584 47,384

Total Current Assets 5,646,764 4,818,315 4,940,408

Non-Current AssetsReceivables 5.1 69,995 91,026 91,026

Property, Plant and Equipment 4.2 17,804,896 17,001,172 17,003,422 Intangible assets 4.4 - 118,171 118,171

Total Non-Current Assets 17,874,891 17,210,369 17,212,619

TOTAL ASSETS 23,521,655 22,028,684 22,153,027

Current LiabilitiesPayables 5.4 552,990 658,134 789,071

Borrowings 6.1 51,716 67,246 67,246Provisions 3.4 1,199,276 1,145,048 1,145,048Other Liabilities 5.2 2,834,088 1,675,117 1,675,117

Total Current Liabilities 4,638,070 3,545,545 3,676,482

Non-Current LiabilitiesBorrowings 6.1 - 81,565 81,565Provisions 3.4 150,863 129,786 129,786

Total Non-Current Liabilities 150,863 211,351 211,351

TOTAL LIABILITIES 4,788,933 3,756,896 3,887,833

NET ASSETS 18,732,722 18,271,788 18,265,194

EQUITYProperty, Plant and Equipment Revaluation Surplus 8.1(a) 8,641,680 7,770,016 7,770,016 Contributed Capital 8.1(b) 2,475,050 2,475,050 2,475,050

Accumulated Surpluses 8.1(c) 7,615,992 8,026,722 8,020,128

TOTAL EQUITY 18,732,722 18,271,788 18,265,194

Commitments 6.3Contingent Assets and Contingent Liabilit ies 7.2


LORNE COMMUNITY HOSPITAL CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018

Note

Parent Entity

2018 $

Parent Consolidated Entity

2017 2017 $ $

Inflows / Inflows / Inflows /CASH FLOWS FROM OPERATING ACTIVITIES (Outflows) (Outflows) (Outflows)

Operating Grants from Government 4,618,508 4,358,167 4,416,098Capital Grants from Government 31,270 157,968 157,968Patient and Resident Fees Received 1,759,475 1,640,397 1,640,397Interest Received 73,586 73,274 73,274

GST (received from)/paid to the ATO (22,333) 24,407 24,407Capital Donations and Bequests Received 202,027 250,242 250,242Other Receipts 1,640,113 992,767 1,072,418

Total Receipts 8,302,646 7,497,222 7,634,804

Employee Expenses Paid (4,939,439) (4,646,147) (4,646,147)

Non Salary Labour Costs (882,664) (576,498) (576,498)Payments for Supplies & Consumables (226,432) (204,044) (204,044)Finance Costs (2,931) (20,096) (20,096)Other Payments (1,851,754) (1,348,960) (1,431,468)Total Payments (7,903,220) (6,795,745) (6,878,253)

NET CASH FLOW FROM/(USED IN) OPERATINGACTIVITIES 8.2 399,426 701,477 756,551

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of Properties, Plant & Equipment (594,967) (1,967,480) (1,967,480)Cash Contributed from Controlled Entity 121,163 - -Proceeds from Sale of Properties, Plant & Equipment 41,182 29,500 29,500Purchase of Investments - 657,823 657,823

NET CASH FLOW FROM/(USED IN) INVESTINGACTIVITIES (432,622) (1,280,157) (1,280,157)

CASH FLOWS FROM FINANCING ACTIVITIESNet movement in borrowings (97,095) (15,963) (15,963)

NET CASH FLOW FROM/(USED IN) INVESTINGACTIVITIES (97,095) (15,963) (15,963)

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS HELD (130,291) (594,643) (539,569)Cash and cash equivalents at beginning of financial year 2,538,256 3,132,899 3,198,988

CASH AND CASH EQUIVALENTS AT END OFFINANCIAL YEAR 6.2 2,407,965 2,538,256 2,659,419


LORNE COMMUNITY HOSPITAL STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018

Property, Plant

and Equipment

Revaluation

Surplus

Contributed

Capital

Accumulated

Surpluses

(Deficits)

Total

Consolidated Note $ $ $ $

Balance at 1 July 2016 7,770,016 2,475,050 8,543,815 18,788,881

Net result for the year 8.1(c) - - (523,687) (523,687)

Balance at 30 June 2017 7,770,016 2,475,050 8,020,128 18,265,194

Property, Plant

and Equipment

Revaluation

Surplus

Contributed

Capital

Accumulated

Surpluses

(Deficits)

Total

Parent Note $ $ $ $

Balance at 1 July 2016 7,770,016 2,475,050 8,541,419 18,786,485

Net result for the year - - (514,697) (514,697)

Balance at 30 June 2017 7,770,016 2,475,050 8,026,722 18,271,788

Net result for the year 8.1(c) - - (410,730) (410,730)Other Comprehensive income for the year 8.1(a) 871,664 - - 871,664Transfer to Accumulated Surplus 15(a) - - - -

Balance at 30 June 2018 8,641,680 2,475,050 7,615,992 18,732,722


Notes to Financial Statements

30 June 2018

BASIS OF PRESENTATION

The financial statements are prepared in accordance with Australian Accounting Standards and relevant FRDs.

These financial statements are presented in Australian dollars and the historical cost convention is used unless a different

measurement basis is specifically disclosed in the note associated with the item measured on a different basis.

The accrual basis of accounting has been applied in preparing these financial statements whereby assets, liabilities, equity,

income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

Consistent with the requirements of AASB 1004 Contributions, contributions by owners (that is contributed capital and its

repayment) are treated as equity transactions and, therefore, do not form part of the income and expenses of the hospital.

Additions to net assets which have been designated as contributions by owners are recognised as contributed capital. Other transfers

that are in the nature of contributions to or distributions by owners have also been designated as contributions by owners.

Transfers of net assets arising from administrative restructurings are treated as distributions to or contribution by owners. Transfer of

net liabilities arising from administrative restructurings are treated as distribution to owners.

Revisions to accounting estimates are recognised in the period in which the estimate is revised and also future periods that are affected

by the revision. Judgements and assumptions made by management in applying the application of AASB that have significant effect on

the financial statements and estimates are disclosed in the notes under the heading: 'Significant judgement or estimates'.

NOTE 1 : SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These annual financial statements represent the audited general purpose financial statements for Lorne Community Hospital for the period ending 30 June 2018. The purpose of the report is to provide users with information about

the Lorne Community Hospitals' stewardship of resources entrusted to it.

(a) Statement of compliance

These financial statements are general purpose financial statements which have been prepared in accordance with the FinancialManagement Act 1994, and applicable Australian Accounting Standards (AASs), which include interpretations issued by the AustralianAccounting Standards Board (AASB). They are presented in a manner consistent with the requirements of AASB 101 Presentationof Financial Statements.

The financial statements also comply with relevant Financial Reporting Directions (FRDs) issued by the Department of Treasury and Finance, and relevant Standing Directions (SDs) authorised by the Minister for Finance.

The Lorne Community Hospital is a not-for profit entity and therefore applies the additional AUS paragraphs applicable to "not-for-profit"

Health Services under the AAS's.

The annual financial statements were authorised for issue by the Board of Lorne Community Hospital on 27th August 2018.

(b) Reporting Entity The financial statements includes all the controlled activities of Lorne Community Hospital.

Its principal address is: Albert Street Lorne, VIC 3232

A description of the nature of Lorne Community Hospital's operations and its principal activities is included in the report of operations, which does not form part of these financial statements.


Notes to Financial Statements

30 June 2018

NOTE 1 : SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(c) Basis of accounting preparation and measurement These financial statements are presented in Australian Dollars, the functional and presentation currency of the Health

Service.

All amounts shown in the financial statements have been rounded to the nearest dollar, unless otherwise stated. Minor discrepancies in tables between totals and sum of components are due to rounding.

The Health Service operates on a fund accounting basis and maintains three funds: Operating, Specific Purpose and Capital Funds.

The financial statements, except for cash flow information, have been prepared using the accrual basis of accounting.

Under the accrual basis, items are recognised as assets, liabilities, equity, income or expenses when they satisfy the definitions and recognition criteria for those items, that is they are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

Judgements, estimates and assumptions are required to be made about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. The estimates and associated assumptions are based on professional judgements derived from historical experience and various experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Revisions to accounting estimates are recognised in the period in which the estimate is revised and also in future periods that are affected by the revision. Judgements and assumptions made by management in the application of AASBs that have significant effects on the financial statements and estimates relate to:

• The fair value of land, buildings and plant and equipment (refer to Note 4.2 Property, Plant and Equipment); • Superannuation expense (refer to Note 3.5 Superannuation); and

• Employee benefit provisions are based on likely tenure of existing staff, patterns of leave claims, future salary movements and future discount rates (refer to Note 3.4 Employee Benefits in the Balance Sheet).

Goods and Services Tax (GST) Income, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable

from the Australian Taxation Office (ATO). In this case the GST payable is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST

recoverable from, or payable to, the ATO is included with other receivables or payables in the Balance Sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the ATO, are presented as operating cash flow.

Commitments and contingent assets and liabilities are presented on a gross basis.

Lorne Community Hospital Notes to Financial Statements

30 June 2018

NOTE 1 : SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(d) Principles of Consolidation These statements are presented on a consolidated basis for the 2017 financial year only, in accordance with AASB 10 ConsolidatedFinancial Statements:

• The consolidated financial statements of Lorne Community Hospital include all reporting entities controlled by Lorne Community Hospital as at 30 June 2017; and

• The consolidated financial statements exclude bodies of Lorne Community Hospital that are not controlled by Lorne Community Hospital, and therefore are not consolidated.

• Control exists when Lorne Community Hospital has the power to govern the financial and operating policies of a Health Service so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The consolidated financial statements include the audited financial statements of the controlled entities listed in note 8.8.

• The parent entity is not shown separately in the notes.

Where control of an entity is obtained during the financial period, its results are included in the comprehensive operating statement from the date on which control commenced. Where control ceases during a financial period, the entity's results are included for that

part of the period in which control existed. Where dissimilar accounting policies are adopted by entities and their effect is considered material, adjustments are made to ensure consistent policies are adopted in these financial statements.

Entities consolidated into Lorne Community Hospital reporting entity for 2017 include;

• The Lorne Figtree Community House Inc.

Effective 21st May 2018, the Lorne Figtree Community House Incorporated was wound up and unincorporated. All assets and

liabilities were transferred to Lorne Community Hospital on the 1st July 2017. As a result, the 2018 financial statements are presented as parent entity results only, as these reflect transactions of the entity as a whole.

Intersegment Transactions Transactions between segments within Lorne Community Hospital have been eliminated to reflect the extent of Lorne Community Hospital's

operations as a group.

(e) Jointly Controlled Operation

Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. In respect of any interest in joint operations, Lorne Community Hospital recognises in the financial statements:

• its assets, including its share of any assets held jointly; • any liabilities including its share of liabilities that it had incurred; • its revenue from the sale of its share of the output from the joint operation; • its share of the revenue from the sale of the output by the operation; and

• its expenses, including its share of any expenses incurred jointly.

Lorne Community Hospital is a Member of the Southwest Alliance of Rural Health Joint Venture and

retains joint control over the arrangement, which it has classified as a joint operation (refer to Note 8.10)

Lorne Community Hospital Notes to the Financial Statements

30 June 2018

NOTE 2: FUNDING DELIVERY OF OUR SERVICES

Lorne Community Hospital's overall objective is to provide quality health services that support and enhance the wellbeing of all Victorians. Lorne Community Hospital is predominantly funded by accrual based grant funding for the provision of outputs. The hospital also receives income from the supply of services.

Structure 2.1 Analysis of revenue by source


30 June 2018

NOTE 2.1: ANALYSIS OF REVENUE BY SOURCE Admitted Patients

2018

RAC

2018

Aged Care 2018

Primary Health

2018Other 2018

TOTAL

2018Parent $ $ $ $ $ $

Government Grants 2,405,882 1,610,989 393,707 130,806 73,449 4,614,833Indirect Contributions by Department of Health and Human Services

(7,877) (6,912) (1,125) (161) - (16,075)

Patient & Resident Fees 77,881 653,464 64,461 - 971,413 1,767,219

Other Revenue from Operating Activities 150,961 96,845 20,027 507,371 510,181 1,285,385

Total Revenue from Operating Activities 2,626,847 2,354,386 477,070 638,016 1,555,043 7,651,362

Interest 27,524 24,154 3,932 562 3,406 59,578Other Revenue from Non-Operating Activities 94,726 90,327 13,532 3,442 - 202,027

Total Revenue from Non-Operating Activities 122,250 114,481 17,464 4,004 3,406 261,605

Capital Purpose Income - - - - 59,787 59,787Capital Grants - - - - 31,270 31,270Capital Interest - - - - 16,432 16,432

Total Capital Purpose Income - - - - 107,489 107,489

Net gain/(loss) on non-financial assets - - - - 16,529 16,529

TOTAL REVENUE 2,749,097 2,468,867 494,534 642,020 1,682,467 8,036,985

Admitted Patients

2017

RAC

2017

Aged Care 2017

Primary Health

2017 Other 2017

TOTAL

2017 Consolidated $ $ $ $ $ $

Government Grants 2,335,491 1,495,674 366,014 228,467 60,452 4,486,098Indirect Contributions by Department of Health and Human Services

(15,551) (13,647) (2,222) (317) - (31,737)

Patient & Resident Fees 186,983 522,056 101,507 - 817,884 1,628,430

Other Revenue from Operating Activities 58,204 45,351 13,270 112,917 672,902 902,644

Total Revenue from Operating Activities 2,565,127 2,049,434 478,569 341,067 1,551,238 6,985,435

Interest 19,819 17,392 2,831 404 1,513 41,959Other Revenue from Non-Operating Activities 87,349 84,136 12,478 1,783 20,000 205,746

Total Revenue from Non-Operating Activities 107,168 101,528 15,309 2,187 21,513 247,705

Capital Purpose Income - - - - 263,343 263,343Capital Grants - - - - 157,968 157,968

Capital Interest - - - - 26,163 26,163

Total Capital Purpose Income - - - - 447,474 447,474

Net gain/(loss) on non-financial assets - - - - (453,635) (453,635)

TOTAL REVENUE 2,672,295 2,150,962 493,878 343,254 1,566,590 7,226,979

The Department of Health and Human Services makes certain payments on behalf of the Health Service. These amounts have been brought to account in determining the operating result for the year by recording them as revenue and expenses.


30 June 2018

NOTE 2.1: ANALYSIS OF REVENUE BY SOURCE (Continued) Revenue Recognition Income is recognised in accordance with AASB 118 Revenue and is recognised as to the extent that it is probable that the economic benefits will flow to Lorne Community Hospital and the income can be reliably measured at fair value. Unearned income at reporting date is reported as income received in advance.

Amounts disclosed as revenue are, where applicable, net of returns, allowances and duties and taxes.

Government Grants and other transfers of income (other than contributions by owners) In accordance with AASB 1004 Contributions, government grants and other transfers of income (other than contributions by owners are recognised as income when the Lorne Community Hospital gains control of the underlying assets irrespective of whether conditions are imposed on the Lorne Community Hospital's use of the contributions.

Contributions are deferred as income in advance when the Lorne Community Hospital has a present obligation to repay them and the present obligations can be reliably measured.

Indirect Contributions from the Department of Health and Human Services • Insurance is recognised as revenue following advice from the Department of Health and Human Services. • Long Service Leave (LSL) - Revenue is recognised upon finalisation of movements in LSL liability in line with the

arrangements set out in the Metropolitan Health and Aged Care Services Division Hospital Circular 04/2017.

Patient and Resident Fees Patient fees are recognised as revenue on an accrual basis.

Private Practice Fees Private Practice fees are recognised as revenue at the time invoices are raised.

Revenue from commercial activities Revenue from commercial activities such as provision of meals to external users is recognised on an accrual basis.

Donations and Other Bequests Donations and bequests are recognised as revenue when received. If donations are for a special purpose, they may be appropriated to a surplus, such as specific restricted purpose surplus.

Interest Revenue Interest revenue is recognised on a time proportionate basis that takes in account the effective yield of the financial asset.

Sale of investments The gain/loss on the sale of investments is recognised when the investment is realised.

Other Income Other income includes recoveries, sundry sales and minor facility charges.


30 June 2018

NOTE 2.1: ANALYSIS OF REVENUE BY SOURCE (Continued) Category Groups Lorne Community Hospital has used the following category groups for reporting purposes for the current and previous financial years.

• Admitted Patient Services (Admitted Patients) comprises all acute and subacute admitted patient services, where services are delivered in public hospitals.

• Aged Care comprises a range of in home, specialist geriatric, residential care and community based programs and support services, such as Home and Community Care (HACC) that are targeted to older people, people with a disability, and their carers.

• Primary, Community and Dental Health comprises a range of home based, community based, community, primary health and dental services including health promotion and counselling, physiotherapy, speech therapy, podiatry and occupational therapy and a range of dental health services.

• Residential Aged Care including Mental Health (RAC incl. Mental Health) referred to in the past as psychogeriatric residential services, comprises those Commonwealth-licensed residential aged care services in receipt of supplementary funding from the department under the mental health program. It excludes all other residential services funded under the mental health program, such as mental health funded community care units (CCUs) and secure extended care units (SECs).

• Other Services not reported elsewhere - (Other) comprises services not separately classified above, including: Public Health Services including laboratory testing, blood borne viruses / sexually transmitted infections clinical services, Kooris liaison officers, immunisation and screening services, drugs services including drug withdrawal, counselling and the needle and syringe program, Disability services including aids and equipment and flexible support packages to people with a disability, Community Care programs including sexual assault support, early parenting services, parenting assessment and skills development, and various support services. Health and Community Initiatives also falls in this category group.


30 June 2018

NOTE 3: THE COST OF DELIVERING SERVICES

This section provides an account of the expenses incurred by the hospital in delivering services and outputs. In Note 2, the funds that enable the provision of services were disclosed and in this note the cost associated with provision of services are recorded.

Structure 3.1 Analysis of expenses by source 3.2 Finance Costs 3.3 Specific Expenses 3.4 Provisions 3.5 Superannuation


30 June 2018

NOTE 3.1: ANALYSIS OF EXPENSE BY SOURCE

Parent

Admitted Patients

2018 $

RAC

2018 $

Aged Care 2018

$

Primary Health 2018

$

Other 2018

$

TOTAL

2018 $

Employee Expenses 1,779,241 1,901,358 681,849 179,567 532,882 5,074,897 Other Operating Expenses

Non Salary Labour Costs 187,116 4,761 29,037 204,641 457,109 882,664Supplies and Consumables 64,776 91,651 34,755 (1,061) 36,311 226,432

Information Technology & Communications 186,852 166,776 27,794 5,257 290,309 676,988

Repairs & Maintenance 70,886 62,922 9,879 3,465 1,116 148,268Food Services 39,927 38,196 7,708 1,497 9 87,337

Other Expenses 215,851 205,653 41,579 56,731 70,258 590,072

Total Expenditure from Operating Activities 2,544,649 2,471,317 832,601 450,097 1,387,994 7,686,658

Depreciation & Amortisation (refer note 4.4) 313,847 275,417 44,835 6,405 - 640,504Finance Costs (refer note 3.2) - - - - 2,931 2,931

Specific Expense (refer note 3.3) - - - - 118,171 118,171

Total Other Expenses 313,847 275,417 44,835 6,405 121,102 761,606

TOTAL EXPENSES 2,858,496 2,746,734 877,436 456,502 1,509,096 8,448,264

Admitted Patients

2017

RAC

2017

Aged Care 2017

Primary Health 2017

Other 2017

TOTAL

2017 Consolidated $ $ $ $ $ $

Employee Expenses 1,599,829 1,732,770 603,936 220,311 571,349 4,728,195

Other Operating ExpensesNon Salary Labour Costs 243,490 33,089 20,773 761 278,385 576,498Supplies and Consumables 69,591 92,509 34,605 213 7,126 204,044Information Technology & Communications 160,347 140,712 25,327 4,352 471,943 802,681

Repairs & Maintenance 72,517 63,359 10,033 7,454 127 153,490Food Services 42,695 39,506 7,116 1,072 167 90,556

Other Expenses 249,290 193,264 47,700 24,955 14,614 529,823

Total Expenditure from Operating Activities 2,437,759 2,295,209 749,490 259,118 1,343,711 7,085,287

Depreciation & Amortisation (refer note 4.4) 316,241 277,518 45,177 6,454 - 645,390Expenditure for Capital Purposes - - - - 4,690 4,690Finance Costs (refer note 3.2) - - - - 20,096 20,096

Total Other Expenses 316,241 277,518 45,177 6,454 24,786 670,176

TOTAL EXPENSES 2,754,000 2,572,727 794,667 265,572 1,368,497 7,755,463

Note 3.1 Expense Recognition Expenses are recognised as they are incurred and reported in the financial year to which they relate.


30 June 2018

NOTE 3.1: ANALYSIS OF EXPENSE BY SOURCE (Continued) Employee expenses Employee expenses include:

• Wages and salaries; • Annual leave; • Sick leave; • Long service leave; and • Superannuation expenses • Workcover premiums

Grants and Other Transfers These include transactions such as: grants, subsidies and personal benefit payments made in cash to individuals.

Other operating expenses Other operating expenses generally represent the day-to-day running costs incurred in normal operations and include:

• Supplies and Consumables - Supplies and service costs which are recognised as an expense in the reporting period in which they are incurred. The carrying amounts of any inventories held for distribution are expensed when distributed.

• Fair value of assets, services and resources provided free of charge or for nominal consideration - Contributions of resources provided free of charge or for nominal consideration are recognised at control over them.

Net Gain / (Loss) on Non-Financial Assets Net gain / (loss) on non-financial assets and liabilit ies includes realised and unrealised gains and losses as follows:

• Revaluation gain/ (losses) of non-financial physical assets (Refer to Note 4.2 Property, Plant and Equipment) • Net gain/(loss) on disposal of Non-Financial Assets

Any gain or loss on the disposal of non-financial assets is recognised at the date of disposal.

Net gain/ (loss) on financial instruments Net gain/ (loss) on financial instruments includes:

• realised and unrealised gains and losses from revaluations of financial instruments at fair value; • impairment and reversal of impairment for financial instruments at amortised cost refer to

Note 4.1 Investments and other financial assets; and • disposals of financial assets and derecognition of financial liabilities

Other gains/(losses) from other economic flows

Other gains/(losses) include:• the revaluation of the present value of the long service leave liability due to changes in the bond rate

movements, inflation rate movements and the impact of changes in probability factors; and • transfer of amounts from the reserves to accumulated surplus or net result due to disposal or derecognition

or reclassification.

Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.


30 June 2018

NOTE 3.2: FINANCE COSTS Parent Consol'd2018 2017

$ $

Finance Charges on Finance Leases 2,931 20,096

TOTAL FINANCE COSTS 2,931 20,096

Finance costs are recognised as expenses in the period in which they are incurred.

Finance costs include: - finance charges in respect of finance leases recognised in accordance with AASB 117 Leases.

NOTE 3.3: SPECIFIC EXPENSES Parent Consol'd2018 2017

$ $

Write-down of Intangible Assets 118,171 -

TOTAL SPECIFIC EXPENSES 118,171 -

NOTE 3.4: EMPLOYEE BENEFITS IN THE BALANCE SHEET Parent Consol'd2018 2017

Current Provisions $ $Employee Benefits (i) Accrued salaries & wages and accrued days off - unconditional and expected to be settled wholly within 12 months (ii) 222,494 199,446

Annual Leave - unconditional and expected to be settled wholly within 12 months (ii) 286,829 288,377- unconditional and expected to be settled wholly after 12 months (iii) 48,862 48,161

Long Service Leave - unconditional and expected to be settled wholly within 12 months (ii) 50,000 50,000- unconditional and expected to be settled wholly after 12 months (iii) 441,369 412,298

1,049,554 998,282Provisions related to employee benefit on-costs- unconditional and expected to be settled wholly within 12 months (ii) 106,271 105,564- unconditional and expected to be settled wholly after 12 months (iii) 43,451 41,202

149,722 146,766Total Current Provisions 1,199,276 1,145,048

Non-Current ProvisionsEmployee Benefits (i) 136,311 117,676Provisions related to employee benefit on-costs 14,552 12,110Total Non-Current Provisions 150,863 129,786

Total Provisions 1,350,139 1,274,834

Parent Consol'd(a) Employee Benefits and Related On-Costs 2018 2017

$ $Current Employee Benefits and Related On-CostsAnnual Leave Entitlements 431,362 432,452Accrued Salaries and Wages 179,041 147,950Accrued Days Off 21,684 7,836Unconditional Long Service Leave Entitlements 545,420 513,150Other - SWARH 21,769 43,660Non-Current Employee Benefits and Related On-CostsConditional Long Service Leave Entitlements (ii) 146,842 122,203Other - SWARH 4,021 7,583Total Employee Benefits and Related On-Costs 1,350,139 1,274,834

Notes:(i) Provisions for employee benefits consist of amounts for annual leave and long service leave accrued by employees, not including on-costs.(ii) The amounts disclosed are nominal amounts (iii) The amounts disclosed are discounted to present values


30 June 2018

NOTE 3.4: EMPLOYEE BENEFITS IN THE BALANCE SHEET (Continued)

(b) Movements in provisions Parent Consol'd2018 2017

Movement in Long Service Leave: $ $Balance at start of year 635,353 623,525 Provision made during the year- Revaluations (549) (4,797) - Expense Recognising Employee Service 97,576 62,690 Settlement made during the year (40,118) (46,065)

Balance at end of year 692,262 635,353

Employee Benefit Recognition Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave for services rendered to the reporting date as an expense during the period the services are delivered.

Provisions Provisions are recognised when the Health Service has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a liability is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.

Employee benefits This provision arises for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave for services rendered to the reporting date.

Salaries and Wages, Annual Leave and Accrued Days Off Liabilities for wages and salaries, annual leave and accrued days off are all recognised in the provision for employee benefits as ‘current liabilities’, because the health service does not have an unconditional right to defer settlements of these liabilities.

Depending on the expectation of the timing of settlement, liabilities for wages and salaries, annual leave and are measured at: • Undiscounted value – if the health service expects to wholly settle within 12 months; or • Present value – if the health service does not expect to wholly settle within 12 months.

Long Service Leave (LSL) Liability for LSL is recognised in the provision for employee benefits.

Unconditional LSL is disclosed in the notes to the financial statements as a current liability, even where the health service does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months. An unconditional right arises after a qualifying period.

The components of this current LSL liability are measured at: • Undiscounted value – if the health service expects to wholly settle within 12 months; and • Present value – if the health service does not expect to settle a component of this current liability within 12 months.

Conditional LSL is disclosed as a non-current liability. Any gain or loss following revaluation of the present value of non-current LSL liability is recognised as a transaction, except to the extent that a gain or loss arises due to changes in estimations e.g. bond rate movements, inflation rate movements and changes in probability factors which are then recognised as other economic flows.

Termination benefits Termination benefits are payable when employment is terminated before the normal retirement date or when an employee decides to accept an offer of benefits in exchange for the termination of employment.

On-Costs related to employee expense Provision for on-costs, such as payroll tax, workers compensation and superannuation are recognised separately from provisions for employee benefits.


30 June 2018

NOTE 3.5: SUPERANNUATION Paid Contributions Outstanding Contributions

Fund for the year at Year End2018 2017 2018 2017

$ $ $ $Defined Benefit Plans: HESTA 2,488 3,132 - -Defined Contribution Plans: Health Super / HESTA / Other 421,542 393,823 - -Total 424,030 396,955 - -

Employees of the Health Service are entitled to receive superannuation benefits and the Health Service contributes to both defined benefit and defined contribution plans. The defined benefit plan(s) provides benefits based on years of service and final average salary.

Defined contribution superannuation plans In relation to defined contributions (i.e. accumulation) superannuation plans, the associated expense is simply the employer contributions that are paid or payable in respect of employees who are members of these plans during the reporting period. Contributions to defined contribution superannuation plans are expensed when incurred.

Defined benefit superannuation plans The amount charged to the comprehensive operating statement in respect of defined benefit superannuation plans represents the contributions made by the Health Service to the superannuation plans in respect of the services of current Health Service staff during reporting period. Superannuation contributions are made to the plans based on the relevant rules of each plan, and are based upon actuarial advice.

Lorne Community Hospital does not recognise any defined benefit liability in respect of the plan(s) because the entity has no legal or constructive obligation to pay future benefits relating to its employees; its only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance discloses the State's defined benefits liabilities in its disclosure for administered items.

However superannuation contributions paid or payable for the reporting period are included as part of employee benefits in the comprehensive operating statement of the Health Service.

The name, details and amounts that have been expensed in relation to the major employee superannuation funds and contributions made by Lorne Community Hospital are disclosed above.


30 June 2018

NOTE 4: KEY ASSETS TO SUPPORT SERVICE DELIVERY

The hospital controls infrastructure and other investments that are utilised in fulfilling its objectives and conducting its activities. They represent the key resources that have been entrusted to the hospital to be utilised for delivery of those outputs.

Structure 4.1 Investments and other financial assets 4.2 Property, plant & equipment 4.3 Depreciation and amortisation 4.4 Intangible Assets


30 June 2018

NOTE 4.1: INVESTMENTS AND OTHER FINANCIAL ASSETS Parent Consol'd2018 2017

CURRENT $ $Loans and ReceivablesTerm DepositAust. Dollar Term Deposits > 90 days (i) 1,377,284 1,370,972TOTAL CURRENT INVESTMENTS AND OTHER FINANCIAL ASSETS 1,377,284 1,370,972

Represented by:Hospital Investments - -Refundable Accommodation Deposits 1,377,284 1,370,972

TOTAL OTHER ASSETS 1,377,284 1,370,972

(i) Term deposits under 'investments and other financial assets' class include only term deposits with maturity greater than 90 days.

Note 4.1 Investment Recognition Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs.

Investments are classified as available-for-sale financial assets.

Lorne Community Hospital classifies its other financial assets between current and non-current assets based on the Board of Management’s intention at balance date with respect to the timing of disposal of each asset. The Health Service assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.

Lorne Community Hospital investments must comply with Standing Direction 3.7.2 - Treasury and Investment Risk Management.

All financial assets, except those measured at fair value through the Comprehensive Operating Statement are subject to annual review for impairment.

Derecognition of financial assets A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

• the rights to receive cash flows from the asset have expired; or • the Health Service retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full

without material delay to a third party under a 'pass through' arrangement; or • the Health Service has transferred its rights to receive cash flows from the asset and either:

(a) has transferred substantially all the risks and rewards of the asset; or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control

of the asset.

Where the Lorne Community Hospital has neither transferred nor retained substantially all the risks and rewards or transferred control, the asset is recognised to the extent of the Lorne Community Hospital's continuing involvement in the asset.

Impairment of financial assets At the end of each reporting period, the Health Service assesses whether there is objective evidence that a financial asset or group of financial assets is impaired. All financial instrument assets, except those measured at fair value through the Comprehensive Income Statement, are subject to annual review for impairment.

Where the fair value of an investment in an equity instrument at balance date has reduced by 20 percent or more than its cost price or where its fair value has been less than its cost price for a period of 12 or more months, the financial asset is treated as impaired.

In order to determine an appropriate fair value as at 30 June 2018 for its portfolio of financial assets, the Health Service used the market value of investments held provided by the portfolio managers.

The above valuation process was used to quantify the level of impairment (if any) on the portfolio of financial assets as at year end.


30 June 2018

NOTE 4.2: PROPERTY, PLANT AND EQUIPMENT (a) Gross carrying amount and accumulated depreciation

Land

Parent 2018

$

Consol'd 2017

$

- Land at Fair Value 6,420,664 5,405,000

Total Land 6,420,664 5,405,000

Buildings- Buildings Under Construction at Cost 16,851 2,500- Buildings at Cost - 2,622,764- Buildings at Fair Value 12,509,856 9,531,125

Less Accumulated Depreciation (1,697,575) (1,217,909)

Total Buildings 10,829,132 10,938,480

Plant and Equipment- Plant and Equipment at Fair Value 639,247 1,879,884

Less Accumulated Depreciation (239,347) (1,462,322)

Total Plant and Equipment 399,900 417,562

Medical Equipment- Medical Equipment at Fair Value 211,370 786,458

Less Accumulated Depreciation (103,097) (682,757)

Total Medical Equipment 108,273 103,701

Leased Assets- Computers and Communication 46,927 317,860

Less Accumulated Depreciation - (179,181)

Total Leased Assets 46,927 138,679

TOTAL PROPERTY, PLANT AND EQUIPMENT 17,804,896 17,003,422

(b) Reconciliations of the carrying amounts of each class of Plant and MedicalLand Buildings Equipment Equipment Leased

Assets$ $ $ $ $ $Balance at 1 July 2016 5,405,000 10,132,327 377,981 84,385 164,774 16,164,467

Additions - 1,704,256 148,528 47,248 67,448 1,967,480Disposals - (447,984) (35,151) - - (483,135)Depreciation Expense (Note 4) - (450,119) (73,796) (27,932) (93,543) (645,390)

Balance at 1 July 2017 5,405,000 10,938,480 417,562 103,701 138,679 17,003,422

Additions 144,000 370,318 94,535 40,552 - 649,405SWARH Alliance - - - - (54,438) (54,438)Disposals - - (24,653) - - (24,653)Revaluation Increments 871,664 - - - - 871,664Depreciation Expense (Note 4) - (479,666) (87,544) (35,980) (37,314) (640,504)

Balance at 30 June 2018 6,420,664 10,829,132 399,900 108,273 46,927 17,804,896

Land and buildings carried at valuation An independent valuation of the Health Service's land and buildings was performed by the Valuer-General Victoria to determine

the fair value of the land and buildings. The valuation, which conforms to Australian Valuation Standards, was determined by reference to the amounts for which assets could be exchanged between knowledgeable willing parties in an arm's length transaction. The valuation was based on independent assessments. The effective date of the valuation was 30 June 2014.

In compliance with FRD 103F, in the year ended 30 June 2018, Lorne Community Hospital management conducted an annual assessment of the fair value of land and buildings and leased buildings. To facilitate this, management obtained from the Department of Treasury and Finance the Valuer General Victoria indices for the financial year ended 30 June 2018.

The latest indices required a managerial revaluation in 2018. The indexed value was then compared to individual assets written down book value as at 30 June 2018 to determine the change in their fair values. The Department of Health and Human Services approved a managerial revaluation of land ($871,664).

There was no material financial impact on change in fair value of buildings for the year ended 30 June 2018.


30 June 2018

NOTE 4.2: PROPERTY, PLANT AND EQUIPMENT

(c) Fair value measurement hierarchy for assets Parent

Land at fair value

Carrying amount as

at 30 June

2018

Fair value measurement at end of

reporting period using: Level 1 (i) Level 2 (i) Level 3 (i)

Specialised land 6,420,664 - - 6,420,664

Total of land at fair value 6,420,664 - - 6,420,664

Buildings at fair valueSpecialised buildings 10,829,132 - - 10,829,132

Total of building at fair value 10,829,132 - - 10,829,132

Plant and equipment at fair valuePlant equipment and vehicles at fair value - Plant and equipment 218,332 - - 218,332

- Motor Vehicles 181,568 - - 181,568

Total of plant, equipment and vehicles at fair value 399,900 - - 399,900

Medical equipment at fair value- Medical Equipment 108,273 - - 108,273

Total medical equipment at fair value 108,273 - - 108,273

Leased assets at fair value- Leased Assets 46,927 - - 46,927

Total leased assets at fair value 46,927 - - 46,927

(i) Classified in accordance with the fair value hierarchy, see Note 4.2(d)

17,804,896 - - 17,804,896

There have been no transfers between levels during the period.

Land at fair value

Consolidated

Carrying amount as

at 30 June

2017

Fair value measurement at end of reporting period using:

Level 1 (i) Level 2 (i) Level 3 (i)

Specialised land 5,405,000 - - 5,405,000

Total of land at fair value 5,405,000 - - 5,405,000

Buildings at fair valueSpecialised buildings 10,938,480 - - 10,938,480

Total of building at fair value 10,938,480 - - 10,938,480

Plant and equipment at fair valuePlant equipment and vehicles at fair value

- Plant and equipment 235,994 - - 235,994- Motor Vehicles 181,568 - - 181,568

Total of plant, equipment and vehicles at fair value 417,562 - - 417,562

Medical equipment at fair value- Medical Equipment 103,701 - - 103,701

Total medical equipment at fair value 103,701 - - 103,701

Leased assets at fair value- Leased Assets 138,679 - - 138,679

Total leased assets at fair value 138,679 - - 138,679

17,003,422 - - 17,003,422

Note

(i) Classified in accordance with the fair value hierarchy, see Note 4.2(d)There have been no transfers between levels during the period.


30 June 2018

NOTE 4.2: PROPERTY, PLANT AND EQUIPMENT (Continued) (d) Reconciliation of Level 3 fair value

30 June 2018 Land Buildings

Plant and equipment

Medical equipment Leased assets

Parent $ $ $ $ $

Opening Balance 5,405,000 10,938,480 417,562 103,701 138,679Purchases (sales) 144,000 370,318 69,882 40,552 (54,438)Transfers in (out) of Level 3 - - - - -

Gains or losses recognised in net result - Depreciation - (479,666) (87,544) (35,980) (37,314)

Items recognised in other comprehensive income - Revaluation 871,664 - - - -

6,420,664 10,829,132 399,900 108,273 46,927


Plant and Medical30 June 2017 Land Buildings equipment equipment Leased assetsConsolidated $ $ $ $ $

Opening Balance 5,405,000 10,132,327 377,981 84,385 164,774Purchases (sales) - 1,256,272 113,377 47,248 67,448Transfers in (out) of Level 3 - - - - -

Gains or losses recognised in net result - Depreciation - (450,119) (73,796) (27,932) (93,543)

5,405,000 10,938,480 417,562 103,701 138,679


e) Fair Value Determination

Asset Class Examples of types assets Expected fair value level Likely valuation approach Significant inputs (Level 3

only) Specialised land (Crown/Freehold)

- Land subject to restriction as to use and/or sale - Land in areas where there is not an active market

Level 3 Market approach Community Service Obligation Adjustments

Specialised Buildings (a) Specialised buildings with limited alternative uses and/or substantial customisation eg. Hospitals

Level 3 Depreciated replacement cost approach

- Cost per square metre - Useful life

Vehicles If there is no active resale market Level 3 Market approach n.a.Plant and equipment Specialised items with limited

alternative uses and/or substantial customisation

Level 3 Depreciated replacement cost approach

- Cost per unit - Useful life

(a) AASB 13 Fair Value Measurement provides an exemption for not for profit public sector entities from disclosing the sensitivity analysis relating to ‘unrealised gains/(losses) on non-financial assets’ if the assets are held primarily for their current service potential rather than to generate net cash inflows.

Initial Recognition Items of property, plant and equipment are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment loss. Where an asset is acquired for no or nominal cost, the cost is its fair value at the date of acquisition. Assets transferred as part of a merger/machinery of government change are transferred at their carrying amounts.

The cost of a leasehold improvement is capitalised as an asset and depreciated over the shorter of the remaining term of the lease or the estimated useful life of the improvements.

The initial cost for non-financial physical assets under finance lease (refer to Note 6.1) is measured at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease.

Crown land is measured at fair value with regard to the property’s highest and best use after due consideration is made for any legal or physical restrictions imposed on the asset, public announcements or commitments made in relation to the intended use of the asset.

Theoretical opportunities that may be available in relation to the asset(s) are not taken into account until it is virtually certain that any restrictions will no longer apply. Therefore, unless otherwise disclosed, the current use of these non-financial physical assets will be their highest and best uses.

Land and buildings are recognised initially at cost and subsequently measured at fair value less accumulated depreciation and accumulated impairment loss.


30 June 2018

NOTE 4.2: PROPERTY, PLANT AND EQUIPMENT (Continued) Subsequent Measure Consistent with AASB 13 Fair Value Measurement, Lorne Community Hospital determines the policies and procedures for both recurring property, plant and equipment fair value measurements, in accordance with the requirements of AASB 13 and the relevant FRDs.

All property, plant and equipment for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy.

For the purpose of fair value disclosures, Lorne Community Hospital has determined classes of assets on the basis of the nature, characteristics and risks of the asset and the level of the fair value hierarchy as explained above.

For the purpose of fair value disclosures, the Health Service has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

In addition, the Health Service determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Valuer-General Victoria (VGV) is Lorne Community Hospital’s independent valuation agency.

The estimates and underlying assumptions are reviewed on an ongoing basis.

Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Consideration of highest and best use (HBU) for non-financial physical assets Judgements about highest and best use must take into account the characteristics of the assets concerned, including restrictions on the use and disposal of assets arising from the asset’s physical nature and any applicable legislative/contractual arrangements.

In accordance with paragraph AASB 13.29, Health Services can assume the current use of a non-financial physical asset is its HBU unless market or other factors suggest that a different use by market participants would maximise the value of the asset. Therefore, an assessment of the HBU will be required when the indicators are triggered within a reporting period, which suggest the market participants would have perceived an alternative use of an asset that can generate maximum value. Once identified, Health Services are required to engage with VGV or other independent valuers for formal HBU assessment.

These indicators, as a minimum, include: External factors:

• Changed acts, regulations, local law or such instrument which affects or may affect the use or development of the asset; • Changes in planning scheme, including zones, reservations, overlays that would affect or remove the restrictions

imposed on the asset’s use from its past use; • Evidence that suggest the current use of an asset is no longer core to requirements to deliver a Health Service’s service obligation; • Evidence that suggests that the asset might be sold or demolished at reaching the late stage of an asset’s life cycle.

Valuation hierarchy Health Services need to use valuation techniques that are appropriate for the circumstances and where there is sufficient data available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy.

Identifying unobservable inputs (level 3) fair value measurements

Level 3 fair value inputs are unobservable valuation inputs for an asset or liability. These inputs require significant judgement and assumptions in deriving fair value for both financial and non-financial assets.

Unobservable inputs shall be used to measure fair value to the extent that relevant observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. However, the fair value measurement objective remains the same, i.e., an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability. Therefore, unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk.

Assumptions about risk include the inherent risk in a particular valuation technique used to measure fair value (such as a pricing risk model) and the risk inherent in the inputs to the valuation technique. A measurement that does not include an adjustment for risk would not represent a fair value measurement if market participants would include one when pricing the asset or liability i.e., it might be necessary to include a risk adjustment when there is significant measurement uncertainty. For example, when there has been a significant decrease in the volume or level of activity when compared with normal market activity for the asset or liability or similar assets or liabilities, and the Health Service has determined that the transaction price or quoted price does not represent fair value.


30 June 2018

NOTE 4.2: PROPERTY, PLANT AND EQUIPMENT (Continued) Identifying unobservable inputs (level 3) fair value measurements (Continued) A Health Service shall develop unobservable inputs using the best information available in the circumstances, which might include the Health Service’s own data. In developing unobservable inputs, a Health Service may begin with its own data, but it shall adjust this data if reasonably available information indicates that other market participants would use different data or there is something particular to the Health Service that is not available to other market participants. A Health Service need not undertake exhaustive efforts to obtain information about other market participant assumptions. However, a Health Service shall take into account all information about market participant assumptions that is reasonably available. Unobservable inputs developed in the manner described above are considered market participant assumptions and meet the object of a fair value measurement.

Specialised land and specialised buildings The market approach is also used for specialised land and specialised buildings although is adjusted for the community service obligation (CSO) to reflect the specialised nature of the assets being valued. Specialised assets contain significant, unobservable adjustments; therefore these assets are classified as Level 3 under the market based direct comparison approach.

The CSO adjustment is a reflection of the valuer’s assessment of the impact of restrictions associated with an asset to the extent that is also equally applicable to market participants. This approach is in light of the highest and best use consideration required for fair value measurement, and takes into account the use of the asset that is physically possible, legally permissible and financially feasible. As adjustments of CSO are considered as significant unobservable inputs, specialised land would be classified as Level 3 assets.

For the health services, the depreciated replacement cost method is used for the majority of specialised buildings, adjusting for the associated depreciation. As depreciation adjustments are considered as significant and unobservable inputs in nature, specialised buildings are classified as Level 3 for fair value measurements.

An independent valuation of the Health Service’s specialised land and specialised buildings was performed by the Valuer-General Victoria. The valuation was performed using the market approach adjusted for CSO. The effective date of the valuation is 30 June 2014.

In 2018 a managerial valuation was carried out in accordance with FRD 103F to revalue land and buildings to its fair value.

Vehicles The Health Service acquires new vehicles and at times disposes of them before completion of their economic life. The process of acquisition, use and disposal in the market is managed by the Health Service who set relevant depreciation rates during use to reflect the consumption of the vehicles. As a result, the fair value of vehicles does not differ materially from the carrying value (depreciated cost).

Plant and equipment Plant and equipment is held at carrying value (depreciated cost). When plant and equipment is specialised in use, such that it is rarely sold other than as part of a going concern, the depreciated replacement cost is used to estimate the fair value. Unless there is market evidence that current replacement costs are significantly different from the original acquisition cost, it is considered unlikely that depreciated replacement cost will be materially different from the existing carrying value.

There were no changes in valuation techniques throughout the period to 30 June 2018.

For all assets measured at fair value, the current use is considered the highest and best use.

Revaluations of Non-current Physical Assets Non-Current physical assets are measured at fair value and are revalued in accordance with FRD 103F Non-current physical assets. This revaluation process normally occurs at least every five years, based upon the asset's Government Purpose Classification but may occur more frequently if fair value assessments indicate material changes in values. Independent valuers are used to conduct these scheduled revaluations and any interim revaluations are determined in accordance with the requirements of the FRDs. Revaluation increments or decrements arise from differences between an asset's carrying value and fair value.

Revaluation increments are recognised in 'other comprehensive income' and are credited directly to the asset revaluation surplus except that, to the extent that an increment reverses a revaluation decrement in respect of that same class of asset previously recognised as an expense in net result, the increment is recognised as income in the net result.

Revaluation decrements are recognised in 'other comprehensive income' to the extent that a credit balance exists in the asset revaluation surplus in respect of the same class of property, plant and equipment.

Revaluation increases and revaluation decreases relating to individual assets within an asset class are offset against one another within that class but are not offset in respect of assets in different classes.

Revaluation surplus is not transferred to accumulated funds on derecognition of the relevant asset.

In accordance with FRD 103F Lorne Community Hospital's non-current physical assets were assessed to determine whether revaluation of the non-current physical assets was required.

Parent 2018

$

Consol'd 2017

$

479,666 450,119 87,544 73,79635,980 27,93237,314 93,543

640,504 645,390

640,504 645,390


30 June 2018

NOTE 4.3: DEPRECIATION AND AMORTISATION

Depreciation Buildings Plant and Equipment Medical Equipment Leased Assets

Total Depreciation

TOTAL DEPRECIATION

Depreciation All infrastructure assets, buildings, plant and equipment and other non-financial physical assets that have finite useful lives are depreciated (i.e. excludes land assets held for sale, and investment properties). Depreciation is generally calculated on a straight-line basis at rates that allocate the asset’s value, less any estimated residual value over its estimated useful life (refer AASB 116 Property, Plant and Equipment).

Amortisation Amortisation is the systematic allocation of the depreciable amount of an asset over its useful life. If a Health Service has items such as patents, trademarks, computer software or development expenses that are being capitalised, these should be included under ‘Intangible Assets’ (refer AASB 138 Intangible Assets) and amortised.

The following table indicates the expected useful lives of non-current assets on which the depreciation charges are based.

2018 2017 Buildings - Structure Shell Building Fabric Up to 60 years Up to 60 years - Site Engineering Services and Central Plant Up to 40 years Up to 40 years Central Plant - Fit Out Up to 25 years Up to 25 years - Trunk Reticulated Building Systems Up to 40 years Up to 40 years Plant and Equipment Up to 15 years Up to 15 years Medical Equipment Up to 15 years Up to 15 years Computers and Communication Up to 15 years Up to 15 years Furniture and Fittings Up to 15 years Up to 15 years Motor Vehicles Up to 7 years Up to 7 years Leasehold Improvements Up to 10 years Up to 10 years

As part of the buildings valuation, building values were separated into components and each component assessed for its useful life which is represented above.

Intangible produced assets with finite lives are depreciated as an expense on a systematic basis over the asset's useful life.

NOTE 4.4: INTANGIBLE ASSETS Parent Consol'd2018 2017

$ $ Goodwill - Medical Practice - 118,171

Total Intangible Assets - 118,171

Intangible assets represent identifiable non-monetary assets without physical substance such as patents, trademarks, and computer software and development costs (where applicable).

Intangible assets are initially recognised at cost. Subsequently, intangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to the Health Service.

Expenditure on research activities is recognised as an expense in the period on which it is incurred.


30 June 2018

NOTE 5: OTHER ASSETS AND LIABILITIES

This section sets out those assets and liabilities that arose from the hospital's operations.

Structure 5.1 Receivables 5.2 Other liabilities 5.3 Prepayments and other assets

5.4 Payables

Parent 2018

$

2,834,088

Consol'd 2017

$

1,675,117

2,834,088 1,675,117

1,456,804 304,1451,377,284 1,370,972

2,834,088 1,675,117


30 June 2018

NOTE 5.1: RECEIVABLES Parent Consol'd2018 2017

CURRENT $ $ContractualPatient Fees 48,584 40,840Other Debtors 194,815 483,162Accrued Investment Income 4,731 2,307Less Alowance for Doubtful Debts

Other Debtors (5,000) (10,000)

243,130 516,309StatutoryGST Receivable 97,248 42,179Grants Receivable - Department of Health and Human Services 6,325 -

103,573 42,179

TOTAL CURRENT RECEIVABLES 346,703 558,488

NON CURRENTStatutoryLong Service Leave - Department of Health and Human Services 69,995 91,026

TOTAL NON-CURRENT RECEIVABLES 69,995 91,026

TOTAL RECEIVABLES

(a) Movement in the allowance for doubtful debts

416,698 649,514

Balance at beginning of year (10,000) (10,000)Amounts written off during the year - -Increase/(Decrease) in allowance recognised in net result 5,000 -Balance at end of year (5,000) (10,000)

Receivables consist of: - Contractual receivables, which includes of mainly debtors in relation to goods and services, loans to third parties, accrued investment income, and finance lease receivables; and - Statutory receivables, which includes predominantly amounts owing from the Victorian Government and Goods and Services Tax ("GST") input tax credits recoverable.

Receivables that are contractual are classified as financial instruments and categorised as loans and receivables. Statutory receivables are recognised and measured similarly to contractual receivables (except for impairment), but are not classified as financial instruments because they do not arise from a contract.

Receivables are recognised initially at fair value and subsequently measured at amortised cost, using the effective interest rate method, less any accumulated impairment.

In assessing impairment of statutory (non-contractual) financial assets, which are not financial instruments, professional judgement is applied in assessing materiality using estimates, averages and other computational methods in accordance with AASB 136 Impairment of Assets.

Trade debtors are carried at nominal amounts due and are due for settlement within 30 days from the date of recognition.

Doubtful debts Receivables are assessed for bad and doubtful debts on a regular basis. Those bad debts considered as written off by mutual consent are classified as a transaction expense. Bad debts not written off by mutual consent and the allowance for doubtful debts are classified as other economic flows in the net result.

NOTE 5.2: OTHER LIABILITIES

CURRENT Monies Held in Trust* - Refundable Accommodation Deposits

TOTAL CURRENT

* Total Monies Held in Trust Represented by the following assets: Cash Assets (refer to Note 6.2) Investments and other Financial Assets (refer to Note 4.1) TOTAL OTHER LIABILITIES


30 June 2018

NOTE 5.3: PREPAYMENTS AND OTHER NON-FINANCIAL ASSETS Parent Consol'd2018 2017

$ $CURRENTPrepayments 55,718 46,910Other - SWARH 2,290 474

TOTAL OTHER ASSETS 58,008 47,384

Other non-financial assets include prepayments which represent payments in advance of receipt of goods or services or that part of expenditure made in one accounting period covering a term extending beyond that period.

NOTE 5.4: PAYABLES Parent Consol'd 2018 2017

CURRENT $ $ContractualTrade Creditors 186,981 86,947Accrued Expenses 30,064 54,232Other Payables 228,006 642,293

445,051 783,472StatutoryGST Payable 38,335 5,599PAYG Payable 59,604 -Department of Health and Human Services 10,000 -

107,939 5,599TOTAL PAYABLES 552,990 789,071

Payables consist of: • contractual payables, classified as financial instruments and measured at amortised cost. Accounts payable represents

liabilities for goods and services provided to the Department prior to the end of the financial year that are unpaid; and • statutory payables, that are recognised and measured similarly to contractual payables, but are not classified as

financial instruments and not included in the category of financial liabilities at amortised cost, because they do not arise from contracts.

Note 5.4 (a): Maturity analysis of financial liabilities as at 30 June The following table discloses the contractual maturity analysis for the Health Service’s financial liabilities. For interest rates applicable to each class of liability refer to individual notes to the financial statements.

2018 - Parent

Carrying Amount

$

Nominal Amount

$

Less than 1 Month

$

Maturity Dates1 - 3 3 Months Months - 1 Year

$ $

1 - 5 Years

$Financial LiabilitiesAt amortised costPayables 445,051 445,051 445,051 - - -Borrowings 51,716 51,716 - - 51,716 -Other Financial Liabilities 2,834,088 2,834,088 - - 2,834,088 -

Total Financial Liabilities 3,330,855 3,330,855 445,051 - 2,885,804 -

2017 - ConsolidatedFinancial LiabilitiesAt amortised costPayables 783,472 783,472 783,472 - - -Borrowings 148,811 148,811 - - 67,246 81,565Other Financial Liabilities (i) 1,675,117 1,675,117 - - 1,675,117Total Financial Liabilities 2,607,400 2,607,400 783,472 - 1,742,363 81,565

(i) Ageing analysis of financial liabilities excludes the types of statutory financial liabilities (i.e. GST payable)


30 June 2018

NOTE 6: HOW WE FINANCE OUR OPERATIONS

This section provides information on the sources of finance utilised by the hospital during its operations, along with interest expenses (the cost of borrowings) and other information related to financing activities of the hospital.

This section includes disclosures of balances that are financial instruments (such as borrowings and cash balances). Note: 7.1 provides additional, specific financial instrument disclosures.

Structure 6.1 Borrowings 6.2 Cash and cash equivalents 6.3 Commitments for expenditure


30 June 2018

NOTE 6.1: BORROWINGS

Current Australian Dollar Borrowings

Parent 2018

$

Consol'd 2017

$

– Finance Lease Liability (i) 51,716 67,246Total Australian Dollar Borrowings

Total Current 51,716 67,246

Non-CurrentAustralian Dollar Borrowings– Finance Lease Liability - 81,565Total Australian Dollar Borrowings

Total Non-Current - 81,565

Total Borrowings 51,716 148,811

(i) Secured by the assets leased. Finance leases are effectively secured as the rights to the leased assets revert to the lessor in the event of default.

Finance costs of the Health Service incurred during the year are accounted for as follows: Amount of finance costs recognised as expenses 2,931 20,096Amount of investment revenue earned on borrowed funds that has been deducted from the finance costs incurred

(c) Maturity analysis of borrowings

Nil Nil

Please refer to Note 5.4 for the ageing analysis of borrowings.(d) Defaults and breaches During the current and prior year, there were no defaults and breaches of any of the borrowings.

(e) Finance lease liabilities Minimum future leasepayments (i)

Parent Consol'd2018 2017

Other finance lease liabilities payable (ii) $ $Not longer than one year 54,690 71,113Longer than one year but not longer than five years - 86,255Longer than five years - -

Minimum future lease payments 54,690 157,368Less future finance charges 2,974 8,557Present value of minimum lease payments 51,716 148,811

Included in the financial statements as:Current borrowings lease liabilities 51,716 67,246Non-current borrowings lease liabilities - 81,565

51,716 148,811

(i) Minimum future lease payments include the aggregate of all base payments and any guaranteed residual. (ii) Other finance lease liabilities include obligations that are recognised on the balance sheet; the future payments related to operating and lease commitments

are disclosed in Note 6.3. The weighted average interest rate implicit in leases is 5.75% (2017 5.75%)

Finance leases Entity as lessee Finance leases are recognised as assets and liabilities at amounts equal to the fair value of the lease property or, if lower, the present value of the minimum lease payment, each determined at the inception of the lease. The lease asset is accounted for as a non-financial physical asset and is depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Minimum lease payments are apportioned between reduction of the outstanding lease liability, and the periodic finance expense which is calculated using the interest rate implicit in the lease, and charged directly to the comprehensive operating statement.

Lorne Community Hospital has received such approval prior to 30 June 2018, in a joint letter for all Health Services impacted by finance leases either directly or via a Jointly Controlled entity. The specific values approved for Lorne Community Hospital total $594,991.

Borrowings All borrowings are initially recognised at fair value of the consideration received, less directly attributable transaction costs. The measurement basis subsequent to initial recognition depends on whether the Health Service has categorised its borrowings as either, financial liabilities designated at fair value through profit or loss, or financial liabilities at amortised cost. Any difference between the initial recognised amount and the redemption value is recognised in net result over the period of the borrowings using the effective interest method.


30 June 2018

NOTE 6.2: CASH AND CASH EQUIVALENTS For the purposes of the cash flow statement, cash assets includes cash on hand and in banks, and short-term deposits which are readily convertible to cash on hand, and are subject to an insignificant risk of change in value, net of outstanding bank overdrafts. Parent Consol'd

2018 2017$ $

Cash on Hand 3,239 2,093 Cash at Bank 3,861,530 2,961,471

TOTAL CASH AND CASH EQUIVALENTS 3,864,769 2,963,564

Represented by:Cash for Health Service Operations (as per cash flow statement) 2,407,965 2,659,419Monies Held in Trust 1,456,804 304,145

TOTAL CASH AND CASH EQUIVALENTS 3,864,769 2,963,564

Cash and cash equivalents recognised on the balance sheet comprise cash on hand and cash at bank, deposits at call and highly liquid investments with an original maturity of three months or less, which are held for the purpose of meeting short term cash commitments rather than for investment purposes, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value.

For cash flow statement presentation purposes, cash and cash equivalents include bank overdrafts, which are included as liabilities on the balance sheet.

NOTE 6.3: COMMITMENTS FOR EXPENDITURE

Capital expenditure commitmentsThere are no capital expenditure commitments at the end of the financial year


30 June 2018

NOTE 7: RISKS, CONTINGENCIES & VALUATION UNCERTAINTIES

The hospital is exposed to risk from its activities and outside factors. In addition, it is often necessary to make judgements and estimates associated with recognition and measurement of items in the financial statements. This section sets out financial instrument specific information, (including exposures to financial risks) as well as those items that are contingent in nature or require a higher level of judgement to be applied, which for the hospital is related mainly to fair value determination.

Structure 7.1 Financial instruments 7.2 Contingent assets and contingent liabilities


30 June 2018

NOTE 7.1: FINANCIAL INSTRUMENTS Financial Risk Management Objectives and Policies Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Due to the nature of Lorne Community Hospital's activities, certain financial assets and financial liabilities arise under statute rather than a contract. Such financial assets and financial liabilities do not meet the definition of financial instruments in AASB 132 Financial Instruments: Presentation.

(a) Financial instruments: categerisation

Contractual financial assets -

loans and receivables

Contractual financial

liabilities at amortised cost Total

2018 - Parent $ $ $

Contractual Financial AssetsCash and cash equivalents 3,864,769 - 3,864,769Receivables- Trade Debtors 48,584 - 48,584- Other Receivables 199,546 - 199,546Other Financial Assets- Term Deposits 1,377,284 - 1,377,284

Total Financial Assets (i) 5,490,183 - 5,490,183

Financial LiabilitiesPayables - 445,051 445,051Borrowings - 51,716 51,716Other Liabilities - 2,834,088 2,834,088Total Financial Liabilities(ii) - 3,330,855 3,330,855

Contractual financial assets -

loans and receivables

Contractual financial

liabilities at amortised cost Total

2017 - Consolidated $ $ $

Contractual Financial AssetsCash and cash equivalents 2,963,564 - 2,963,564Receivables- Trade Debtors 40,840 - 40,840- Other Receivables 485,469 - 485,469Other Financial Assets- Term Deposits 1,370,972 - 1,370,972

Total Financial Assets (i) 4,860,845 - 4,860,845

Financial LiabilitiesPayables - 783,472 783,472Borrowings 148,811 148,811Other Liabilities - 1,675,117 1,675,117

Total Financial Liabilities(ii) - 2,607,400 2,607,400

(i) The carrying amount excludes statutory receivables (i.e. GST Receivable and DHHS Receivable) and statutory payables (i.e. Revenue in advance and DHHS payable).


30 June 2018

NOTE 7.1: FINANCIAL INSTRUMENTS (Continued) Categories of financial instruments Loans and receivables Loans and receivables are financial instrument assets with fixed and determinable payments that are not quoted on an active market. These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial measurement, loans and receivables are measured at amortised cost using the effective interest method, less any impairment.

Loans and receivables category includes cash and deposits (refer to Note 6.2), term deposits with maturity greater than three months, trade receivables, loans and other receivables, but not statutory receivables.

Financial Liabilities at Amortised Cost Initially recognised on the date they are originated. They are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest bearing liability, using the effective interest rate method. The Health Service recognises the following liabilities in this category:

- payables (excluding statutory payables); -borrowings (including finance lease liabilities).

Derecognition of financial assets A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

- the rights to receive cash flows from the asset have expired; or - the Health Service retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass through’ arrangement; or - the Health Service has transferred its rights to receive cash flows from the asset and either:

- has transferred substantially all the risks and rewards of the asset; or - has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred

control of the asset. Where the Health Service has neither transferred nor retained substantially all the risks and rewards or transferred control, the asset is recognised to the extent of the Health Service’s continuing involvement in the asset.

Impairment of financial assets At the end of each reporting period, the Health Service assesses whether there is objective evidence that a financial asset or group of financial assets is impaired. All financial instrument assets, except those measured at fair value through profit or loss, are subject to annual review for impairment.

The allowance is the difference between the financial asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. In assessing impairment of statutory (non-contractual) financial assets, which are not financial instruments, professional judgement is applied in assessing materiality using estimates, averages and other computational methods in accordance with AASB 136 Impairment of Assets.

Reclassification of financial instruments Subsequent to initial recognition and under rare circumstances, non-derivative financial instruments assets that have not been designated at fair value through profit or loss upon recognition, may be reclassified out of the fair value through profit or loss category, if they are no longer held for the purpose of selling or repurchasing in the near term.

Financial instrument assets that meet the definition of loans and receivables may be reclassified out of the fair value through profit and loss category into the loans and receivables category, where they would have met the definition of loans and receivables had they not been required to be classified as fair value through profit and loss. In these cases, the financial instrument assets may be reclassified out of the fair value through profit and loss category, if there is the intention and ability to hold them for the foreseeable future or until maturity.

Available-for sale financial instrument assets that meet the definition of loans and receivables may be classified into the loans and receivables category if there is the intention and ability to hold them for the foreseeable future or until maturity.

Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised as an ‘other economic flow’ in the comprehensive operating statement.

NOTE 7.2: CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Contingent assets and contingent liabilities are not recognised in the Balance Sheet, but are disclosed by way of note and, if quantifiable, are measured at nominal value. Contingent assets and contingent liabilities are presented inclusive of GST receivable or payable respectively.

As at 30 June 2018 Lorne Community Hospital has no knowledge of any contingent assets or liabilities. (Nil for 30 June 2017).


30 June 2018

NOTE 8: OTHER DISCLOSURES

This section includes additional material disclosures required by accounting standards or otherwise, for the understanding of this financial report.

Structure 8.1 Equity 8.2 Reconciliation of net result for the year to net cash inflow/(outflow) from operating activities 8.3 Responsible persons disclosures 8.4 Remuneration of Executives 8.5 Related parties 8.6 Remuneration of auditors 8.7 AASBs issued that are not yet effective 8.8 Controlled Entities 8.9 Events occuring after balance sheet date 8.10 Jointly Controlled Operations 8.11 Alternative presentation of comprehensive operating statement 8.12 Economic Dependency


30 June 2018

NOTE 8.1: EQUITY Parent Consol'd 2018 2017

(f)Surpluses $ $

Property, Plant and Equipment Revaluation Surplus (1)

Balance at beginning of the reporting period 7,770,016 7,770,016Revaluation Increment/(Decrement)- Land 871,664 -- Buildings - -

Balance at the end of the reporting period 8,641,680 7,770,016

Represented by: - Land 5,974,364 5,102,700- Buildings 2,667,316 2,667,316

8,641,680 7,770,016

(1) The property, plant and equipment asset revaluation surplus arises on the revaluation of property, plant and equipment.

(g) Contributed CapitalBalance at the beginning of the reporting period 2,475,050 2,475,050Capital Contribution received from Victorian Government - -

Balance at the end of the reporting period

(h) Accumulated Surpluses/(Deficits)

2,475,050 2,475,050

Balance at the beginning of the reporting period 8,020,128 8,543,815Net Result for the Year (410,730) (523,687)

Balance at the end of the reporting period 7,609,398 8,020,128

Total Equity at end of financial year 18,726,128 18,265,194

Contributed CapitalConsistent with Australian Accounting Interpretation 1038 Contributions by Owners Made to Wholly-Owned Public Sector Entities andFRD 119A Contributions by Owners, appropriations for additions to the net asset base have been designated as contributed capital. Other transfers that are in the nature of contributions or distributions, that have been designated as contributed capital are also treated as contributed capital.

Transfers of net assets arising from administrative restructurings are treated as contributions by owners. Transfers of net liabilities arising from administrative restructures are to go through the comprehensive operating statement.

Property, plant and equipment revaluation surplus The asset revaluation surplus is used to record increments and decrements on the revaluation of non-current physical assets.

NOTE 8.2: RECONCILIATION OF NET RESULT FOR THE YEAR TO NET CASH INFLOW / (OUTFLOW) FROM OPERATING ACTIVITIES Parent Consol'd

2018 2017$ $

NET RESULT FOR THE YEAR (410,730) (523,687)

Non-cash movements: Depreciation 640,504 645,390Debt Forgiveness from Controlled Entity 6,594 -Impairment of Intangible Assets 118,171 -Provision for Doubtful Debts (5,000) -

Movements included in Investing and Financing activities: Net (Gain)/Loss from disposal of Non Financial Physical Assets (16,529) 453,635

Movements in Assets and Liabilities: Change in Operating Assets and Liabilities

(Increase)/Decrease in Receivables 237,816 29,309(Increase)/Decrease in Other Assets (10,624) 30,701Increase/(Decrease) in Payables (236,081) 113,952Increase/(Decrease) in Employee Benefits 75,305 77,251Increase/(Decrease) in Other Liabilities - (70,000)

NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 399,426 756,551

$260,153 $181,829


30 June 2018

NOTE 8.3: RESPONSIBLE PERSON DISCLOSURES In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the following disclosures are made regarding responsible persons for the reporting period.

Per iod Responsible Ministers:The Honourable Jill Hennessy MLA Minister for Health, Minister for Ambulance Services The Honourable Martin Foley, Minister for Housing, Disability and Ageing, Minister for Mental Health

Governing Boards Dr Damien Smith Dr Ian Brown Mr Gary Allen Mr Greg Aimers Mr Ray Jacobson Ms Deborah McSephney Ms Kelli Nicola-Richmond Ms Margaret Cartledge Ms Megan Clark Ms Sue Guinness Ms Vicki Hammond

Accountable Officers Ms Kate Gillan

Remuneration of Responsible Persons The number of Responsible Persons are shown in their relevant income bands:

1/7/2017 - 30/6/2018 1/7/2017 - 30/6/2018

1/7/2017 - 30/6/2018 1/7/2017 - 30/6/2018 1/7/2017 - 30/6/2018 1/7/2017 - 30/6/2018 1/7/2017 - 30/6/2018 1/7/2017 - 30/6/2018 1/7/2017 - 30/6/2018 1/7/2017 - 30/6/2018 1/7/2017 - 30/6/2018 1/7/2017 - 30/6/2018 1/7/2017 - 30/6/2018

1/7/2017 - 30/6/2018

2018 2017 Income Band $ $$0 - $9,999 11 12 $180,000 - $189,999 0 1 $260,000 - $269,999 1 0 Total Numbers 12 13

Total remuneration received or due and receivable by Responsible Persons from the reporting entity amounted to:

Ms Kate Gillan has been contracted to Otway Health to provide Chief Executive Officer services during the reporting period. Ms Gillan remains a full time employee of Lorne Community Hospital and Otway Health reimbursed the Hospital $127,273 for these services.

Amounts relating to Governing Board Members and Accountable Officer are disclosed in the Health Service's controlled entities financial statements. Amounts relating to Responsible Ministers are reported within the Department of Parliamentary Services' Financial Report as disclosed in Note 8.5.


30 June 2018

NOTE 8.4: REMUNERATION OF EXECUTIVES Remuneration of executive officers The number of executive officers, other than Ministers and Accountable Officers, and their total remuneration during the reporting period are shown in the table below. Total annualised employee equivalent provides a measure of full time equivalent executive officers over the reporting period.

Remuneration comprises employee benefits in all forms of consideration paid, payable or provided in exchange for services rendered, and is disclosed in the following categories.

Short-term employee benefits include amounts such as wages, salaries, annual leave or sick leave that are usually paid or payable on a regular basis, as well as non-monetary benefits such as allowances and free or subsidised goods or services.

Post-employment benefits include pensions and other retirement benefits paid or payable on a discrete basis when employment has ceased.

Other long-term benefits include long service leave, other long-service benefit or deferred compensation.

Termination benefits include termination of employment payments, such as severance packages.

Share-based payments are cash or other assets paid or payable as agreed between the health service and the employee, provided specific vesting conditions, if any, are met.

Remuneration of executive officers Total Remuneration 2018 2017

$ $ Short-term employee benefits 131,585 - Post-employment benefits 11,196 - Other long-term benefits 4,185 - Termination benefits - - Share-based payments - -Total Remuneration 146,966 -Total Number of executives 1 -Total annualised employee equivalent (AEE) 0.95 -

Notes: (i) The total number of executive officers includes persons, other than Ministers and Accountable Officers, who may meet the

definition of Key Management Personnel (KMP) of the entity under AASB 124 Related Party Disclosures. The Health Service does not consider any executive officers meet the definition of KMP.

(ii) Annualised employee equivalent is based on the time fraction worked over the reporting period. This is calculated as the total number of days the employee is engaged to work during the week by the total number of full-time working days per week (this is generally five full working days per week).


30 June 2018

NOTE 8.5: RELATED PARTIES The hospital is a wholly owned and controlled entity of the State of Victoria. Related parties of the hospital include:

• all key management personnel and their close family members; • all cabinet ministers and their close family members; and • Jointly Controlled Operation - A member of the Southwest Alliance of Rural Health; and • all hospitals and public sector entities that are controlled and consolidated into the whole of state consolidated financial statements.

KMPs are those people with the authority and responsibility for planning, directing and controlling the activities of the Health Service and its controlled entities, directly or indirectly.

The Board of Directors and the Accountable Officer of Lorne Community Hospital and it's controlled entities are deemed to be KMPs.

Entity KMPs Position Title Lorne Community Hospital Dr Damien Smith Chair of the Board Lorne Community Hospital Dr Ian Brown Board Member Lorne Community Hospital Mr Gary Allen Board Member Lorne Community Hospital Mr Greg Aimers Board Member Lorne Community Hospital Mr Ray Jacobson Board Member Lorne Community Hospital Ms Deborah McSephney Board Member Lorne Community Hospital Ms Kelli Nicola-Richmond Board Member Lorne Community Hospital Ms Margaret Cartledge Board Member Lorne Community Hospital Ms Megan Clark Board Member Lorne Community Hospital Ms Sue Guinness Board Member Lorne Community Hospital Ms Vicki Hammond Board Member Lorne Community Hospital Ms Kate Gillan Chief Executive Officer

The compensation detailed below excludes the salaries and benefits the Portfolio Ministers receive. The Minister’s remuneration and allowances is set by the Parliamentary Salaries and Superannuation Act 1968, and is reported within the Department of Parliamentary Services’ Financial Report.

Parent Consol'd2018 2017

COMPENSATION $ $Short term employee benefits 233,185 161,628Post-employment benefits 19,661 15,191Other long-term benefits 7,306 5,010Termination benefits 0 0Total 260,152 181,829

(i)Total remuneration paid to KMPs employed as a contractor during the reporting period through accounts payable has been reported under short-term employee benefits. (ii)KMPs are also reported in Note 8.3 Responsible Persons or Note 8.4 Remuneration of Executives.

Significant transactions with government-related entities Lorne Community Hospital received funding from the Department of Health and Human Services of $3,270,233 (2017: $3,390,938).

Expenses incurred by the Health Service in delivering services and outputs are in accordance with Health Purchasing Victoria requirements. Goods and services including procurement, diagnostics, patient meals and multi-site operational support are provided by other Victorian Health Service Providers on commercial terms.

Professional medical indemnity insurance and other insurance products are obtained from a Victorian Public Financial Corporation.

Treasury Risk Management Directions require the Health Service to hold cash (in excess of working capital) and investments, and source all borrowings from Victorian Public Financial Corporations.

Transactions with key management personnel and other related parties Given the breadth and depth of State government activities, related parties transact with the Victorian public sector in a manner consistent with other members of the public e.g. stamp duty and other government fees and charges. Further employment of processes within the Victorian public sector occur on terms and conditions consistent with the Public Administration Act 2004 and Codes of Conduct and Standards issued by the Victorian Public Sector Commission. Procurement processes occur on terms and conditions consistent with the Victorian Government Procurement Board requirements.

Outside of normal citizen type transactions with the Department of Health and Human Services, all other related party transactions that involved KMPs and their close family members have been entered into on an arm's length basis. Transactions are disclosed when they are considered material to the users of the financial report in making and evaluation decisions about the allocation of scare resources.

There were no related party transactions with Cabinet Ministers required to be disclosed in 2018. There were no related party transactions required to be disclosed for Lorne Community Hospital Board of Directors and Executive Directors in 2018.

NOTE 8.6: REMUNERATION OF AUDITORS Parent Consol'd2018 2017

Victorian Auditor-General's Office $ $Audit or review of financial statement 9,000 8,500

9,000 8,500


30 June 2018

NOTE 8.7: AASBs ISSUED THAT ARE NOT YET EFFECTIVE Certain new Australian accounting standards have been published that are not mandatory for the 30 June 2018 reporting period. DTF assesses the impact of all these new standards and advises the Lorne Community Hospital of their applicability and early adoption where applicable.

As at 30 June 2018, the following standards and interpretations had been issued by the AASB but were not yet effective. They become effective for the first financial statements for reporting periods commencing after the stated operative dates as detailed in the table below. Lorne Community Hospital has not and does not intend to adopt these standards early.

Topic Key Requirements Effective date

Impact on financial statements

AASB 9 Financial Instruments The key changes introduced by AASB 9 include simplified requirements for the classification and measurement of financial assets, a new hedge accounting model and a revised impairment loss model to recognise expected impairment losses earlier, as opposed to the current approach that recognises impairment only when incurred.

01-Jan-18 The assessment has identified the amendments are likely to result in earlier recognition of impairment losses and at more regular intervals. The initial application of AASB 9 is not expected to significantly impact the financial position however there will be a change to the way financial instruments are classified and new disclosure requirements.

AASB 2014-1 Amendments to Australian Accounting Standards [Part E Financial Instruments]

Amends various AASs to reflect the AASB’s decision to defer the mandatory application date of AASB 9 to annual reporting periods beginning on or after 1 January 2018, and to amend reduced disclosure

01-Jan-18 This amending standard will defer the application period of AASB 9 to the 2018-19 reporting period in accordance with the transition requirements.

AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9

Amends various AAS's to incorporate the consequential amendments arising from the issuance of AASB 9.

01-Jan-18 The assessment has indicated there will be no significant impact for the public sector.

AASB 15 Revenue from Contracts with Customers

The core principle of AASB 15 requires an entity to recognise revenue when the entity satisfies a performance obligation by transferring a promised good or service to a customer. Note that amending standard AASB 2015-8 Amendments to Australian Accounting Standards - Effective Date of AASB 15 has deferred the effective date of AASB 15 to annual reporting periods beginning on or after 1 January 2018, instead of 1 January 2017.

01-Jan-18 The changes in revenue recognition requirements in AASB 15 may result in changes to the timing and amount of revenue recorded in the financial statements. The standard will also require additional disclosures on service revenue and contract modifications.

AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15

Amends the measurement of trade receivables and the recognition of dividends as follows: - Trade receivables that do not have a significant financing component, are to be measured at their transaction price at initial recognition. - Dividends are recognised in the profit and loss only when: * the entity's right to receive payment of the dividend is established; * it is probable the economic benefits associated with the dividend will flow to the entity; and * the amount can be measured reliably.

01/01/2018 except amendments to AASB 9 (Dec 2009) and AASB 9 (Dec 2010) apply from 1 Jan 2018

The assessment has indicated there will be no significant impact for the public sector.

AASB 2015-8 Amendments to Australian Accounting Standards - Effective Date of AASB 15

This Standard defers the mandatory effective date of AASB 15 from 1 January 2017 to 1 January 2108

01-Jan-18 The amending standard will defer the application period of AASB 15 for for-profit entities to the 2018-19 reporting period in accordance with the transition requirements.


30 June 2018

NOTE 8.7: AASBs ISSUED THAT ARE NOT YET EFFECTIVE (Continued)



AASB 2016-3 Amendments to Australian Accounting Standards - Clarifications to AASB 15

This Standard amends AASB 15 to clarify the requirements on identifying performance obligations, principal versus agent considerations and the timing of recognising revenue from granting a licence. The amendments require: - A promise to transfer to a customer a good or service that is 'distinct' to be recognised as a separate performance obligation; - For items purchased online, the entity is a principal if it obtains control of the good or service prior to transferring to the customer; and - For licences identified as being distinct from other goods or services in a contract, entities need to determine whether the licence transfers to the customer over time (right to use) or at a point in time (right to access).

01-Jan-18

The assessment has indicated there will be no significant impact for the public sector, other than the impact identified for AASB 15 above.

AASB 2016-7 Amendments to Australian Accounting Standards - Deferral of AASB 15 for Not-for-Profit-Entities

This Standard defers the mandatory effective date of AASB 15 for not-for-profit-entities from 1 January 2018 to 1 January 2109.

01-Jan-19

The amending standard will defer the application period of AASB 15 for not-for-profit entities to the 2019-20 reporting period.

AASB 2016-8 Amendments to Australian Accounting Standards - Australian Implementation Guidance for Not-for- Profit-Entities

AASB 2016-8 inserts Australian requirements and authoritative implementation guidance for not-for-profit- entities into AASB 9 and AASB 15. This Standard amends AASB 9 and AASB 15 to include requirements to assist not-for-profit entities in applying the respective standards to particular transactions and events.

01-Jan-19

This standard clarifies the application of AASB 15 and AASB 9 ina not-for-profit context. The areas within these standards that are amended for not-for-profit application include: AASB 9 - Statutory receivables are recognised and measured similarly to

financial assets. AASB 15 - The "customer" does not need to be the recipient of goods and/or services; - The "contract" could include an arrangement entered into under the direction of another party; - Contracts are enforceable if they are enforceable by legal or "equivalent means"; - Contracts do not have to have commercial substance, only economic substance; and - Performance obligations need to be "sufficiently specific" to be able to apply AASB 15 to these transactions.

AASB 16 Leases The key changes introduced by AASB 16 include the recognition of operating leases (which are currently not recognised) on balance sheet.

01-Jan-19

The assessment has indicated that most operating leases, with the exception of short term and low value leases will come on to the balance sheet and will be recognised as right of use assets with a corresponding lease liability. In the operating statement, the operating lease expense will be replaced by depreciation expense of the asset and an interest charge. There will be no change for lessors as the classification of operating and finance leases remains unchanged.


30 June 2018

NOTE 8.7: AASBs ISSUED THAT ARE NOT YET EFFECTIVE (Continued)



AASB 1058 Income of Not-for-Profit- AASB 1058 standard will replace the majority of income 01-Jan- The current revenue recognition for grants is to recogniseEntities recognition in relation to government grants and

other types of contributions requirements relating to public sector not-for-profit entities, previously in AASB 1004 Contributions.

The restructure of administrative arrangement will remain under AASB 1004 and will be restricted to government entities and contributions by owners in a public sector context.

AASB 1058 establishes principles for transactions that are not within the scope of AASB 15, where the consideration to acquire an asset is significantly less than fair value to enable not-for-profit entities to further their objective.

revenue up front upon receipt of the funds.This may change under AASB 1058, as capital grants for the construction of assets will need to be deferred. Income will be recognised over time, upon completion and satisfaction of performance obligations for assets being constructed, or income will be recognised at a point in time for acquisition of assets.

The revenue recognition for operating grants will need to be analysed to establish whether the requirements under other applicable standards need to be considered for recognition of liabilities (which will have the effect of deferring the income associated with these grants). Only after that analysis would it be possible to conclude whether there are any changes to operating grants.

The impact on current revenue recognition of the changes is the phasing and timing of revenue recorded in the profit and loss statement.

The following accounting pronouncements are also issued but not effective for the 2017-18 reporting period. At this stage, the preliminary assessment suggests they may have insignificant impacts on public sector reporting.

• AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment Transactions • AASB 2016-6 Amendments to Australian Accounting Standards – Applying AASB 9 Financial Instruments with AASB 4 Insurance Contracts • AASB 2017-1 Amendments to Australian Accounting Standards – Transfers of Investment Property, Annual Improvements

2014-2016 Cycle and Other Amendments • AASB 2017-3 Amendments to Australian Accounting Standards – Clarifications to AASB 4 • AASB 2017-4 Amendments to Australian Accounting Standards – Uncertainty over Income Tax Treatments • AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB

128 and Editorial Corrections • AASB 2017-6 Amendments to Australian Accounting Standards – Prepayment Features with Negative Compensation • AASB 2017-7 Amendments to Australian Accounting Standards – Long-term Interests in Associates and Joint Ventures • AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015 – 2017 Cycle • AASB 2018-2 Amendments to Australian Accounting Standards – Plan Amendments, Curtailment or Settlement

NOTE 8.8: CONTROLLED ENTITIES

Name of Entity Country of Incorporation Equity Holding 2018 2017

The Lorne Figtree Community House Inc. Australia 0% 100%

The Lorne Figtree Community House Inc., was wound up effective 21st May, 2018. All assets and liabilities were transferred to Lorne Community Hospital as at 1 July 2017.

NOTE 8.9: EVENTS OCCURRING AFTER THE BALANCE SHEET DATE Assets, liabilities, income or expenses arise from past transactions or other past events. Where the transactions result from an agreement between the Health Service and other parties, the transactions are only recognised when the agreement is irrevocable at or before the end of the reporting period.

Adjustments are made to amounts recognised in the financial statements for events which occur between the end of the reporting period and the date when the financial statements are authorised for issue, where those events provide information about conditions which existed at the reporting date. Note disclosure is made about events between the end of the reporting period and the date the financial statements are authorised for issue where the events relate to conditions which arose after the end of the reporting period that are considered to be of material interest.

There have been no material events which have occurred subsequent to the reporting date which require further disclosure.


30 June 2018

NOTE 8.10: JOINTLY CONTROLLED OPERATIONS

Name of Entity Principal Activity Ownership Interest

2018 2017 % %

South West Alliance of Rural Health (SWARH) Information Technology

Lorne Community Hospital's interest in assets employed in the above jointly controlled operations and assets is detailed below. The amounts are included in the financial statements and consolidated financial statements under their respective asset categories:

1.39

2018

2.55

2017Summarised Balance Sheet: $ $Current AssetsCash and Cash Equivalents 101,656 133,436Receivables 26,026 469,338Prepayment and other assets 1,145 -Inventories 1,145 474

Total Current Assets 129,972 603,248

Non Current Assets Property, Plant and Equipment 7,071 13,312Leased Assets 46,927 138,679Intangible Assets 260 720

Total Non Current Assets 54,258 152,711Total Assets 184,230 755,959

Current LiabilitiesPayables 83,128 537,342Borrowings 51,717 67,246Employee Provisions 21,769 43,660

Total Current Liabilities 156,614 648,248

Non Current LiabilitiesBorrowings 0 81,564Employee Provisions 4,020 7,583

Total Non Current Liabilities 4,020 89,147Total Liabilities 160,634 737,395

Net Assets 23,596 18,564

Lorne Community Hospital's interest in revenues and expenses resulting from jointly controlled operations and assets is detailed below:

Revenues Operating Activities 324,444 576,074Non Operating Activities 2,036 -Total Revenue 326,480 576,074

Expenses Employee Benefits 109,156 164,689Maintenance Contract and IT Support 70,249 200,549Operating Lease Costs 2,231 11,671Other Expenses from Ordinary Activities 99,463 90,077Total Expenses 281,099 466,986

Net Result Before Capital and Specific Items 45,381 109,088

Capital Purpose Income 8,419 12,646Finance Costs (2,935) (20,096)Impairment of Non Financial Assets - (1,708)Depreciation (37,370) (93,543)

13,495 6,387

Other Economic Flows included in the resultRevaluation of Long Service Leave 74 980

Net Result 13,569 7,367

Contingent Liabilities and Capital CommitmentsThere are no known contingent assets or liabilities for South West Alliance of Rural Health as at the date of this report.

The financial results included for SWARH are unaudited at the date of signing the financial statements.


30 June 2018

NOTE 8.11: ALTERNATIVE PRESENTATION OF COMPREHENSIVE OPERATING STATEMENT

Grants

Parent 2018

$

Consol'd 2017

$

Operating 4,598,758 4,454,361Capital 31,270 157,968

Interest 76,010 68,122Sales of goods and services 1,767,219 1,628,430Other 1,547,199 1,371,733

Revenue from Transactions 8,020,456 7,680,614

Employee expenses 5,074,897 4,728,195Depreciation 640,504 645,390Other operating expenses 2,729,932 2,361,782Finance Costs - Other 2,931 20,096

Expenses from Transactions 8,448,264 7,755,463

Net result from transactions - Net Operating Balance (427,808) (74,849)

Other economic flows included in net resultNet gain/ (loss) on sale of non-financial assets 16,529 (453,635)Other gains/ (losses) from other economic flows included in net result 549 4,797

Total Other Economic flows included in Net Result 17,078 (448,838)

NET RESULT FOR THE YEAR (410,730) (523,687)

This alternative presentation reflects the format required for reporting to the Department of Treasury and Finance, which differs to the disclosures of certain transactions, in particular revenue and expenses, in the hospital's annual report.

NOTE 8.12: ECONOMIC DEPENDENCY The Health Service is dependent on the Department of Health and Human Services for the majority of it revenue used to operate the entity.At the date of this report, the Board of Directors has no reason to believe the Department will not continue to support the Health Service.

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