a. Cash and cash equivalents

The consolidated entity's exposure to interest rate risk is discussed in note 3.

Included in cash in operating accounts are amounts advanced to the Company and to ASC AWD Shipbuilder Pty Ltd, a subsidiary within the consolidated entity, by the Commonwealth of Australia (CoA) for the purposes of funding the working capital requirements of the ISSC and AWD projects respectively. The amounts advanced have certain contractual restrictions placed on the use of these funds. The funds maintained may only be applied to direct project expenditure incurred and claims for reimbursement from the CoA. The amount that exceeds the value of the direct project expenditure incurred and unbilled as at balance date is defined as restricted cash. At 30 June 2020, the balance of restricted cash was $9.6 million (2019: nil).

b. Trade and other receivables

Amounts recognised in profit or loss

The write-downs of receivables to net realisable value recognised during the year ended 30 June 2020 amounted to $1.0 million (2019: $0.9 million).

c. Borrowings

Government advance

Government advance represents the working capital advance provided by the CoA under both the ISSC and ABTIA.

ISSC advance

At 30 June 2020, the balance is $32.0 million (June 2019: $32.0 million). The advance paid by the CoA is in Australian dollars.

It can only be used for the reimbursement of payments by the Company for direct project costs incurred for the ISSC activities.

The interest income from this advance funding will be deducted against the reimbursement claim of direct project costs.

ABTIA advance

At 30 June 2020, the balance is $34.0 million (June 2019: $33.8 million). Advances paid by the CoA are both in Australian and foreign currencies and are required to be separately maintained in a CoA interest bearing account.

Funds advanced can only be used for the reimbursement of payments by ASC AWD Shipbuilder Pty Ltd, a subsidiary within the consolidated entity, for direct project costs incurred for the AWD project.

All interest and expenses that accumulate in the separate bank accounts, in relation to funds advanced, accrues to the benefit of the CoA. This advance is repayable on demand when certain criteria have been met or if the ABTIA is terminated.

ABTIA requires regular review of the advance amount which may be increased or decreased after consideration by the CoA as to the working capital requirements of the AWD project.

Term loan

The term loan is an interest free 99 year loan to ASC Pty Ltd from the Department of Manufacturing Industry, Small Business and Regional Development (SA), for expenditure on capital items and to assist with site development costs.

The term loan to ASC Pty Ltd has been discounted to its fair value of $133,700 in total for the year ended 30 June 2020 (2019: $3,200) under AASB 139 Financial Instruments: Recognition and Measurement.

As per note 1(a)(ii), the Group implemented AASB 116 Leases effective 1 July 2019. The Group leases various property, plant and equipment in South and Western Australia. A significant portion of the leases are long term in nature and are in support of the Collins Class submarine maintenance activities.