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Buildings and Facilities

Finance and Audit subcommittee

The Finance and Audit subcommittee is pleased to provide this report on its activities and the financial performance of the Association in 2022. The roles and responsibilities of this subcommittee are provided in regulation 31.2.

For the last 2 COVID-19 pandemic affected years, the Finance and Audit subcommittee has advised Council of The Graduate Union on the necessary actions and controls required to navigate the interruptions to business as usual. The key result areas of the strategic priority of ‘well-managed finances and mitigated risk’ progressed forward, delivering an unqualified audit report and favourable financial position at year end.

The 2020 and 2021 years were severely impacted by Victorian lockdowns and Australia’s ongoing border closure. These impacts greatly affected the ability for students to travel and reside at Graduate House. The lockdowns and border closures ceased in mid-December 2021 allowing new residents to commence their stay at Graduate House from January 2022. Furthermore, the number of enquiries for accommodation for the entire 2022 year increased. The Action Plan prepared late 2021 allowed the subcommittee to work with the executive and operational teams to maximise all revenue opportunities while closely managing operations spend.

Well-rehearsed scenario modelling and forecasting systems and processes of previous years were put to the test on a continuing series of best-case and worst-case scenarios. Through this, a representative budget was produced. This guided decisions around key actions required to increase occupancy levels and replenish staff levels to complement increased activity throughout 2022.

The subcommittee continued working with the Council and the executive to steer the Associations’ finances back to pre-pandemic levels by year end. As a result, the outlook remains positive – a full return of residents, member re-engagement and strong demand for meeting and event bookings.

The Association’s borrowings saw Bank Australia extend interest-only payments for 2022 until April 2023. Furthermore, interest-only quarterly payments for the National Australia Bank (NAB) facility continued. Notwithstanding, interest expenses rose in line with repeat interest rate rises implemented by the Reserve Bank of Australia.

Auditor

At the Annual General Meeting held on the 26th May 2022, Mr Wayne Tarrant of JTP Assurance was appointed as the Auditor for the independent audit of the financial year ending 31st December 2022.

Financial Performance

For the year ending 31st December 2022, the Association delivered a net deficit of $125,982, compared to the deficit of $494,463 in 2021.

Operating revenue in 2022 totalled $2.569M, $1.359M (112%) higher than the result for 2021 ($1,210M). The primary sources of revenue were accommodation ($1.580M) and catering ($0.890M). These two sources were respectively $1.077M (214%) and $0.538M (153%) higher than the 2021 year. Donation revenue totalled $70,709, a 45% reduction from the previous year. Investment income of $33,546, a 56% shortfall compared with the 2021. An unrealised loss in market value of investments (reported separately) reached $82,786 (2021: gain of $67,323).

Total operating expenses of $2.964M were 33% higher compared to the 2021 year ($2.225M). With the exception of professional fees and depreciation (which both decreased by 1%) all remaining expense line items were higher than the 2021 year: employment expenses by 15%, catering by 148%, interest and bank fees by 44%, repairs and maintenance by 57%, rates and government taxes by 33%, utilities expenses by 38%, communication expenses by 33% and insurance expenses by 36%.

Cash Flow from Operating Activities in 2022 was negative (-$29,998), yet $651,742 greater than the

2021 year. Positive Cash Flow from Investing Activities of $37,261 was mainly due to investment income generated by the Association’s managed funds investments (though overall fund value decreased), Cash Flow from Financing Activities totalled $24,823 reflecting funds drawn down from the Association’s loan facilities. Cash and Cash Equivalents increased by $32,096 to $176,675 at year end.

Total Property, Plant and Equipment was valued at $39.757M in 2022, a slight decrease in value of $6,820 compared to 2021 ($39.764M). Total Equity decreased by $126,082 (-0.4%) to $28.566M (2021: $29.692M).

Operating Income

A breakdown of operating income is shown in the pie chart below. Revenue from donations and bequests is not illustrated.

I thank the members of the subcommittee for 2022 — Leo Santalucia (Co-Vice-Chairperson), Rhys Watson (Co-Vice-Chairperson), Phillip Cobbin, Vincent Mirabelli, Nicholas Quinn, Keith Ryall, Jane Tisdall, Lawrence Grima (from May 2022) as well as our accountant, Kay Gulenc, our auditor, Wayne Tarrant from JTP Assurance, and the dedicated and hardworking Management and Operations team.

Cr Muan Lim Chairperson of the Finance and Audit subcommittee