Objectives of Australian Nuclear Science and Technology Organisation

Australian Nuclear Science and Technology Organisation (ANSTO) is a not-for-profit Australian Government Corporate Commonwealth Entity. ANSTO’s strategic objectives, as set out in its current Corporate Plan, are:

• Putting people first: Equipping and empowering our people to respond to the growing nuclear science and technology needs of Australia and the world;
• World class science and technology outcomes: Creating innovative solutions to complex problems and providing new insights into our world;
• Strategic management of landmark and national infrastructure: Realising opportunities, serving users and creating value;
• Nuclear expertise and advice: Providing expert, science and technology based advice and services to support Australia’s nuclear policy; and
• Nuclear business and innovation: Providing services and products to our customers that benefit the broader community.

In the 2019-20 Portfolio Budget Statement ANSTO has only one outcome as reflected below:

Outcome 1: Improved knowledge, innovative capacity and healthcare through nuclear based facilities, research, training, products, services and advice to Government, industry, the education sector and the Australian population.

ANSTO’s activities contributing towards the outcome are classified as departmental. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by ANSTO in its own right. The continued existence of ANSTO in its present form and with its present programs is dependent on Government policy and on continuing funding by Parliament for the entity’s administration and programs.

Reference to ANSTO means ANSTO and its controlled entities except in Notes 1.1E and 6.2.

Basis of Preparation of the Financial Statements

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.

The financial statements have been prepared:

1. having regard to the provisions of the Australian Nuclear Science and Technology Organisation (ANSTO) Act 1987 (as amended); and
2. in accordance with:

i.Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) (as amended) for reporting periods ending on or after 1 July 2017; and

ii.Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. Where necessary the comparative information for the preceding financial year has been reclassified to achieve consistency in disclosure with current financial year amounts.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

The financial statements were authorised for issue by the Board of Directors on 13 October 2020.

Foreign currency

Transactions denominated in a foreign currency are converted to Australian currency at the rate of exchange prevailing at the date of the transaction. At reporting date, amounts receivable and payable in foreign currency are translated to Australian currency at the exchange rate prevailing at that date and any exchange differences are brought to account in the Statement of Comprehensive Income. ANSTO does not enter into speculative forward exchange contracts.

Principles of consolidation

The consolidated financial statements incorporate the financial statements of ANSTO and the entities it controls. Control is achieved when ANSTO has all of the following:

• power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• the ability to use its power to affect its returns.

Consolidation of a subsidiary begins when ANSTO obtains control over the subsidiary and ceases when they lose control of the subsidiary. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Profit or loss and each component of other comprehensive income are attributed to the owners of the entity and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the entity and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to ANSTO.

Significant accounting judgements and estimates

In the process of applying the accounting policies listed in this note, management has made a number of judgements and applied estimates and assumptions to future events. Information regarding judgements and estimates which are material to the financial statements are found in the following notes:

• Notes 2.2A and 5.3: Property, plant and equipment fair value measurement and useful lives;
• Note 2.3C: Decommissioning provision phasing of work and discounted cash flow assumptions; and
• Note 2.2B: Recoverable amount of the intangible asset relating to intellectual property and fair value of the associated liability.

Apart from these assumptions and estimates no other accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next accounting period.

Decommissioning provision discount rate - prior period error

In the calculation of the decommissioning provision as at 30 June 2019, and previous years, cash flows were discounted using the rate of 5% from the Standard Parameters made available by the Department of Finance. This has been identified as an error in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. The discount rate which most closely aligned with the time pattern of the provision should have been used. A recalculation of the decommissioning provision using a sliding yield (1%-5%) based on the timing of projected cash flows resulted in the decommissioning provision as at 30 June 2019 being understated by $268,746,000, of which $176,321,000 related to FY19 and $92,425,000 related to the period prior to FY19.

As this occurred in prior periods the following restatements have been made to the comparatives:

A further unrelated restatement has been made in the Consolidated Statement of Cash Flows. Refer to section 6 for further explanation.

The impact of the prior period errors on the parent entity are shown in Note 6.2.

Impact of COVID-19

The COVID-19 pandemic has developed in 2020. Measures taken by various governments to contain the virus have affected economic activity, particularly through social distancing and the closing of borders. ANSTO have taken a number of measures to monitor and mitigate the effect of COVID-19, such as safety and health measures for our people (such as social distancing and working from home) and securing the supply of materials that are essential to our production process.

At this stage, the impact on ANSTO and its results has not been significant and based on experience to date this is expected to remain the case. The impact of the measures taken by government and ANSTO as a result of COVID-19 have resulted in a net decrease in ANSTO’s liquidity in FY20 of $10.9 million. The current estimate of the impact in FY21 is $11.7 million. The liquidity impacts are primarily driven from the loss of revenue due to both closure of borders and changes in shift patterns to protect staff and secure production.

Adoption of new Australian Accounting Standard requirements

In the current year, ANSTO adopted all new and revised Australian Accounting Standards issued by the Australian Accounting Standards Board that are mandatorily effective for accounting periods that ended on 30 June 2020.

ANSTO has initially applied AASB 15 Revenue from Contracts with Customers, AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities, AASB 1058 Income of Not-For-Profit Entities and AASB 16 Leases from 1 July 2019 except when accounting for the ANSTO subsidiaries, ANSTO Nuclear Medicine Pty Ltd (ANM) and PETTECH Solutions Pty Ltd, who have adopted AASB 15 from 1 July 2018 in accordance with the standard. There has been no material effect on ANSTO's financial statements for the year ended 30 June 2020.

AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced AASB 118 Revenue, AASB 111 Construction Contracts and related interpretations. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most of the not-for-profit provisions of AASB 1004 Contributions and applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives, and where volunteer services are received.

ANSTO has adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application, where applicable, is recognised in retained earnings at the date of initial application. Accordingly, the information presented for 2019 has not been restated i.e. it is presented, as previously reported, under AASB 118, AASB 111 and related interpretations. Additionally, the disclosure requirements in AASB 15 and AASB 1058 have not generally been applied to comparative information.

Under the new income recognition model ANSTO shall first determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. If an enforceable agreement exists and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), ANSTO applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, ANSTO shall consider whether AASB 1058 applies.

In terms of AASB 1058, ANSTO is required to recognise volunteer services at fair value if those services would have been purchased if not provided voluntarily, and the fair value of those services can be measured reliably.

In the comparative period, revenue was measured at the fair value of the consideration received or receivable. Revenue from the sale of goods was recognised when the significant risks and rewards of ownership had been transferred to the customer, recovery of the consideration was probable, the associated costs and possible return of goods could be estimated reliably, there was no continuing management involvement with the goods and the amount of revenue could be measured reliably. Revenue from rendering of services was recognised in proportion to the stage of completion of the work performed at the reporting date. On application of AASB 15 there has been no financial impact to the recognition of ANSTO’s revenue streams or the opening balance of retained earnings.

AASB 16 replaced AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases—Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

Adoption of new Australian Accounting Standard requirements

AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is less than $5,000. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained.

ANSTO has adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application, where applicable, is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.

ANSTO elected to apply the practical expedient to not reassess whether a contract is, or contains, a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.

As a result of implementing AASB 16 one building operating lease with a Right of Use value of $3.853 million has been capitalised in the consolidated financial statements, the lease currently lasts until 2045. Details of the Right of Use assets between group entities are contained in Note 6.2.

AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. ANSTO applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:

• Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
• Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for leases where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date;
• Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under AASB 136 Impairment of assets as at the date of initial application; and
• Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.

As a lessee, ANSTO previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, ANSTO recognises right-of-use assets and lease liabilities for most leases. However, ANSTO has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12 months or less.

On adoption of AASB 16, ANSTO recognised right-of-use assets and lease liabilities in relation to leases of buildings which had previously been classified as operating leases.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using ANSTO’s incremental borrowing rate as at 1 July 2019. ANSTO’s incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 1.007%.

At the date of authorisation of the financial statements, there were no Standards and Interpretations in issue but not yet effective.