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Financial position

This section analyses AMSA's assets used to conduct its operations and the operating liabilities incurred as a result.

Note 2.1: Financial assets

Note 2.1: Financial Assets

2020

2019

$’000

$’000

Note 2.1A: Trade and other receivables

Goods and services receivable

58

425

Department of Infrastructure, Transport, Regional Development and Communications - levies receivable

6,057

3,598

Other receivables

GST receivable from the Australian Taxation Office

3,132

4,355

Interest

353

814

Other

270

1,940

Total trade and other receivables (gross)

9,870

11,132

Less impairment allowance for goods and services

(13)

(86)

Total trade and other receivables (net)

9,857

11,046

Accounting Policy

Trade receivables and other receivables that are held for the purpose of collecting the contractual cash flows where the cash flows are solely payments of principal and interest, that are not provided at below-market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

Note 2.2: Non-Financial Assets

Note 2.2A: Reconciliation of the opening and closing balances of property, plant, equipment and intangibles

Plant and equipment

Computer software1

Land

Buildings

Total

$’000

$’000

$’000

$’000

$’000

As at 1 July 2019

Gross book value

2,825

10,974

119,122

39,211

172,132

Accumulated depreciation, amortisation and impairment

-

-

-

(16,188)

(16,188)

Total 1 July 2019

2,825

10,974

119,122

23,023

155,944

Recognition of right-of-use assets on initial application of AASB 16

3,766

42,071

98,306

-

144,143

Adjusted total 1 July 2019

6,591

53,045

217,428

23,023

300,087

Additions

By purchase

-

179

11,207

-

11,386

Internally developed

-

-

-

3,425

3,425

Right-of-use assets

23

692

691

-

1,406

Revaluations recognised in other comprehensive income

-

(73)

1,028

-

955

Depreciation

-

Depreciation and amortisation

-

(657)

(12,573)

(4,004)

(17,234)

Depreciation on right-of-use assets

(356)

(8,420)

(12,472)

-

(21,248)

Other movements (reclassification)

-

-

(66)

66

-

Other movements of right-of-use assets

2

63

1,377

-

1,442

Write-down and disposal of assets

-

(195)

(2,532)

(1,178)

(3,905)

Total 30 June 2020

6,260

44,634

204,088

21,332

276,314

Total represented by:

Gross book value

6,616

52,820

213,491

37,667

310,594

Accumulated depreciation, amortisation and impairment

(356)

(8,186)

(9,403)

(16,335)

(34,280)

Total 30 June 2020

6,260

44,634

204,088

21,332

276,314

Carrying amount of right-of-use assets included in total above

3,435

34,406

91,726

-

129,567

1. The carrying amount of computer software, which is held at cost, included $888,000 (2019: $466,000) purchased software and $20,444,000 (2019: $22,557,000) internally generated software.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1A, 1.1B, 1.2B, 2.4A.

No indicators of impairment were found for property, plant and equipment and computer software.

No property, plant, equipment or intangibles are expected to be sold or disposed of within the next 12 months.

Revaluations of non-financial assets

An independent valuer has revalued the net book values of the property, plant and equipment owned by AMSA (excluding right-of-use assets) as at 30 June 2020 for financial reporting purposes.

Revaluation movement of $Nil for land (2019: decrement of $125,000), decrement of $73,000 for buildings on freehold land (2019: decrement of $317,000), and a increment of $1,028,000 for plant and equipment (2019: decrement of $1,249,000) were recognised in the asset revaluation reserve by asset class and included in the equity section of the statement of financial position.

Contractual commitments for the acquisition of property, plant, equipment and computer software assets

2020

2019

$'000

$'000

Plant and equipment

4,167

2,737

Computer software

4,105

5,950

Total contractual commitments for the acquisition of property, plant, equipment and computer software

8,272

8,687

AMSA's capital commitments are predominantly for the purchase of aids to navigation, infrastructure requirements and the development of software systems. Commitments are GST inclusive where relevant.

Accounting Policy

Acquisition of assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Non-financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition.

Property, plant and equipment

Asset recognition threshold

Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than $3,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to 'make good' provisions in land, buildings, furniture and fittings and aids to navigation taken up by AMSA where there exists an obligation to make good at the end of any lease term. These costs are included in the value of AMSA’s assets with a corresponding provision for the make good recognised.

Leased right-of-use assets

Leased right-of-use assets are capitalised at the commencement date of the lease and comprise of the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received. These assets are accounted for as separate asset classes to corresponding assets owned outright, but included in the same column in the asset movement table where the corresponding underlying assets would be presented if they were owned.

An impairment review is undertaken for any right-of-use asset that shows indicators of impairment and an impairment loss is recognised against any right-of-use asset that is impaired. Right-of-use assets continue to be measured at cost after initial recognition.

Revaluations

Following initial recognition at cost, property, plant and equipment (excluding right-of-use assets) are carried at latest valuation less subsequent depreciation and impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. An independent valuation is undertaken annually, with a comprehensive valuation undertaken every three years and a desktop valuation undertaken in the other years.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised in the operating result. Revaluation decrements for a class of assets are recognised directly in the operating result except to the extent that they reversed a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

Valuations are performed in accordance with all aspects of the relevant accounting, insurance and valuation framework, which includes (but is not limited to) the FRR (Part 3, Section 17), AASB 13 Fair Value Measurement and AASB 116 Property, Plant and Equipment.

The fair value of assets was measured by the approaches recognised by AASB 13 including the market approach, the current replacement cost approach, with inputs used including adjusted market transactions, current acquisition prices, replacement costs, consumed economic benefits and the obsolescence of the asset. These approaches are consistent with generally accepted valuation methodologies utilised by the valuation profession.

Depreciation

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to AMSA, using, in all cases, the straight-line method of depreciation.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Depreciation rates applying to each type of depreciable asset are based on the following useful lives:

Asset type

2020

2019

Buildings on freehold land

10 to 40 years

10 to 40 years

Plant and equipment

2 to 70 years

2 to 70 years

Leasehold improvements (in plant and equipment)

Lease term (1 to 16 years)

Lease term (4 to 16 years)

The depreciation rates for right-of-use assets are based on the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. Depreciation rates applying to each type of right-of-use asset are based on the following useful lives:

Right-of-use asset type

2020

Land

1 to 83 years

Buildings

1 to 10 years

Plant and equipment

1 to 14 years

Impairment

All assets were assessed for impairment at 30 June 2020. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset's ability to generate future cash flows, and the asset would be replaced if the entity were deprived of the asset, its value in use is taken to be its current replacement cost.

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Heritage assets

Certain aids to navigation assets (such as heritage lighthouses) are primarily held as operational assets rather than being held for cultural, environmental or historical significance value and accounted for in accordance with AASB 116 Property, Plant and Equipment.

Intangibles

AMSA’s intangibles comprise purchased and internally developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Software is amortised on a straight-line basis over its anticipated useful life. The useful life of AMSA’s software is 3 to 13 years (2019: 3 to 15 years).

All software assets were assessed for indications of impairment as at 30 June 2020.

Accounting Judgements and Estimates

In the process of applying the accounting policies listed in this note, the revaluation of property, plant and equipment has been prepared on the basis of significant valuation uncertainty due to the impact of COVID-19.

2020

2019

$’000

$’000

Note 2.2B: Inventories

Inventories held for distribution

4,157

4,123

Total inventories

4,157

4,123

$351,000 of inventory held for distribution was recognised as an expense in 2020 (2019: $203,000).

Accounting Policy

AMSA’s inventory is largely for its own consumption or distribution at nil cost. While AMSA does not ordinarily hold inventory for sale, if sales are made they represent the distribution of inventory at a nominal value.

Inventory is valued at cost, adjusted for any loss of service potential. Inventory acquired at no cost or at nominal consideration is initially measured at current replacement cost at the date of acquisition.

Note 2.3: Payables

Note 2.3: Payables

Note 2.3A: Suppliers

Trade creditors and accruals

21,632

28,559

Operating lease rentals1

-

7,653

Total supplier payables

21,632

36,212

1. AMSA has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

Settlement was usually made within 30 days.

Note 2.3B: Other payables

Salaries and wages

991

1,135

Superannuation

145

433

Separations and redundancies

642

-

Contract liabilities

957

-

Unearned income1

-

193

Other

138

165

Total other payables

2,873

1,926

1. AMSA has applied AASB 15 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 118.

Note 2.4: Interest Bearing Liabilities

Note 2.4: Interest Bearing Liabilities

Note 2.4A: Leases

Finance leases1

-

1,216

Lease liabilities

128,156

-

Total leases

128,156

1,216

1. AMSA has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

Total cash outflow for leases for the year ended 30 June 2020 was $21,490,000.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1A, 1.1B, 1.2B, 2.2A.

Accounting Policy

Refer to Overview section for accounting policy on leases.

Note 2.5: Other Provisions

Note 2.5: Other provisions

Other provisions

Pollution incidents

Restoration

Lead paint

Asbestos

Total

$’000

$’000

$’000

$’000

$’000

As at 1 July 2019

27,117

8,517

10,819

2,365

48,818

Additional provisions

-

2,927

2,943

277

6,147

Amounts used

(15,669)

(34)

(1,751)

(321)

(17,775)

Amounts reversed

(11,448)

(89)

(5)

(673)

(12,215)

Other movements

-

96

58

14

168

Total as at 30 June 2020

-

11,417

12,064

1,662

25,143

Provision for pollution incidents

Under Australia’s National Plan for Maritime Environmental Emergencies, AMSA is responsible for reimbursement of the direct clean-up costs arising from an oil pollution incident that cannot be recovered from the polluter. AMSA makes these reimbursements to agencies that have incurred costs in relation to responding to ship-sourced pollution incidents. These payments are made from either reserve funds or by adjusting the Protection of the Sea Levy accordingly to recover any reimbursements made or due to be made.

In relation to the provision for ship-sourced pollution incident which was reported last year, AMSA completed the clean-up operation during 2019-20 with the remaining amount of the provision reversed. There was no further obligation in relation to this incident, however the recovery of the costs incurred by AMSA is reported in Note 5.2 as a contingent asset. AMSA does not have a constructive obligation in relation to any pollution incidents which have occurred during 2019-20.

Provision for restoration

AMSA has an obligation contained in leases or legislation for the making good to 16 property leases and 177 aids to navigation sites to their original condition at the conclusion of the lease. AMSA has therefore made a provision to reflect the present value of this obligation.

Provision for lead paint and asbestos removal

AMSA has a constructive obligation to undertake treatment and removal work in relation to lead paint and asbestos contaminants located at various aids to navigation sites. AMSA has therefore made a provision to reflect the present value of this obligation.

Accounting Policy

Where AMSA has a present obligation, either legal or constructive, it determines an estimate of that obligation in accordance with Australian Accounting Standard AASB 137 Provisions, Contingent Liabilities and Contingent Assets by determining a range of possible outcomes from which a sufficiently reliable estimate of the obligation can be made.

In determining an estimate of the obligation AMSA considers reliable available information, advice from independent experts, experience with similar incidents and AMSA’s reasonable expectation of the probability of occurrence.

Accounting Judgements and Estimates

In the process of applying the accounting policies listed in this note, AMSA has made the following judgements that have the most significant impact on the amounts recorded in the financial statements.

Provision for lead paint and asbestos removal

The uncertainty in determining the provision arises due to the number of assumptions used in determining estimates, the judgement required by management and the possibility of identifying new sites, or new areas within existing sites with lead paint or asbestos contamination.