Home' Annual Report : Annual Report 2014 Contents INCOME STATEMENT
The 2014 financials reflected a strong operating
performance across the organisation delivering an operating
surplus before tax of $3.8m (2013: $2.3m) and an overall
comprehensive income of $4.7m (after tax, defined benefit,
FX and unrealised gain on investment s) (2013: $5.8m).
overall revenue increased by $4m or 2.5 per cent during
2014. Continued grow th in membership and CPA Program
sales were the key drivers behind this result, with revenue
from our training and development products continuing at
The organisation ended the year with more than 150,000
members. This strong result was driven by new member
grow th and member retention levels in excess of 2013.
The increase in member numbers has resulted in higher
membership revenue of $2.3m or 3.3 per cent. Revenue
from education, training and development was also higher.
Expenditure before tax was $2.6m or 1.7 per cent higher
than 2013. The increases were driven by our investment
in new initiatives such as a brand refresh, and further
investment in expanding our digital communication
channels. Depreciation costs were also higher in 2014 as
we had the first full year depreciation expenditure for the
completion of property upgrades and the implementation of
our new core business systems, including membership CRM,
multi-currency gateway and corporate website.
In assessing its income tax liability, CPA Australia applies the
principles of mutuality to revenues and expenses. Revenue
in the form of member receipts represents mutual income
and is not subject to income tax. E xpenses associated with
such mutual activities are not tax deduc tible for income
tax purposes. All other receipts and payments to, or made
by, CPA Australia are classified for income tax purposes in
accordance with income tax legislation.
CPA Australia’s tax expense for 2014 is $0.5m. This is
at tributable to a taxable gain for 2014 largely due to
higher non-mutual income received from the organisation’s
investment portfolio in the form of franking credits and the
deferred tax liability in relation to the unrealised gains that
currently exist at balance date in relation to the investment
por tfolio. It is expected that CPA Australia will continue to
operate on a tax mutual basis.
DISCUSSION AND ANALYSIS OF
THE FINANCIAL RESULTS 2014
Subscription fees, where a foreign currency option is
available, are reviewed and adjusted if required on a weekly
basis to reflect exchange rate movements. Foreign currency
cash holdings are also limited to the requirements for the
funding of local operations to minimise CPA Australia’s
exposure to fluc tuations in exchange rates. The depreciation
of the Australian dollar against the currencies where
substantial cash is held contributed to a foreign exchange
loss of $0.4m for the full year.
CPA Australia’s cash flow and liquidity remained strong
in 2014. overall cash and cash equivalent s increased by
$21m, net cash flows from operating activities for the year
were $28.4m. The net increase in cash and cash equivalents
was due to an increase in our investment portfolio and
capital purchases during 2014. In real terms, the operating
cash balance is $53.9m (when subscriptions and other
income received in advance are excluded from cash and
equivalents), plus other financial assets.
CPA Australia’s investment por tfolio continues to per form
strongly returning $4m in revenue and an unrealised
capital gain of $1.3m in 2014. This is directly due to the
performance of the Australian equity market.
CPA Australia’s balance sheet continues to strengthen
with net assets increasing by $4.7m or 6.8 per cent, which
is attributable to the surplus delivered in 2014 and the
unrealised capital gain in our investment por tfolio.
Cash and cash equivalents have increased by $21m which is
due to the timing of payments by members renewing their
subscriptions being ahead of last year and a reduc tion in
investment on property, plant and equipment and intangible
assets compared with 2013.
Trade and other receivables are $1m higher. All
outstanding revenue is expected to be received early in
Other current assets are $0.2m higher than the prior year
due to higher prepaid expenses.
Non-current other financial assets are higher than 2013
by $7.6m which is directly attributable to an increase in
investments expected to be held for greater than one year
and unrealised gains in the portfolio during 2014.
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