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Notes to and forming part of the financial statements

Notes to and forming part of the financial statements

Overview

Overview

Objectives of the Australian Trade and Investment Commission

The Australian Trade and Investment Commission (Austrade) is an Australian Government controlled entity. It is a not-for-profit entity.

Austrade is the Australian Government’s international trade, education and investment promotion agency. It also has responsibility for tourism policy and research where the Government’s focus is on international tourism. The objective of Austrade is to contribute to Australia’s economic prosperity by helping Australian businesses, education institutions, associations, and governments as they develop international markets, win productive foreign investment, promote international education, and strengthen the Australian tourism industry.

Austrade is structured to meet the following outcomes:

Outcome 1: Contribute to Australia’s economic prosperity by promoting Australia’s export and other international economic interests through the provision of information, advice and services to business, associations, institutions and government; and

Outcome 2: The protection and welfare of Australians abroad through timely and responsive consular and passport services in specific locations overseas.

The continued existence of Austrade in its present form and with its present programs is dependent on Government policy and on continuing funding by Parliament for Austrade's administration and programs.

Austrade's activities contributing toward these outcomes are classified as either departmental or administered. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by Austrade in its own right. Administered activities involve the management or oversight by Austrade, on behalf of the Government, of items controlled or incurred by the Government.

Austrade conducts the following administered activities on behalf of the Government:

  • Export Market Development Grants Scheme (EMDG);
  • Australian Tropical Medicine Commercialisation Grants (ATMC); and
  • Free Trade Agreement Training Provider Grants (FTA-TP).

Austrade in 2019-20 commenced the following Administered activities on behalf of the Government:

  • International Freight Assistance Mechanism Grants (IFAM);
  • Supporting Australia’s Exhibiting Zoos and Aquariums Grants; and
  • National Tourism Icons Program Grants.

Austrade in 2019-20 provided the administration of the Regional Tourism Bushfire Recovery Grant (RTBR) on behalf of Tourism Australia. Expenses and revenue for this program are not reported by Austrade, refer to Tourism Australia.

The Basis of Preparation

The Basis of Preparation

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

The financial statements have been prepared in accordance with:

  • the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
  • 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. The financial statements are presented in Australian dollars.

Use of judgements and estimates

Use of judgements and estimates

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of Austrade’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

Information about estimates and assumptions that have the most significant impacts on the amounts recorded in the financial statements is included in the following notes:

  • Note 4.3. Administered – Other Provisions;
  • Note 6.1. Employee Provisions; and
  • Note 7.4. Fair Value Measurement.

No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period.

COVID-19

COVID-19

Austrade has been impacted by the COVID-19 pandemic with staff in Australia and at overseas posts working from home. Austrade as a result of the Government response to COVID-19 has new Administered grant programs for the International Freight Assistance Mechanism Grants (IFAM) and Supporting Australia’s Exhibiting Zoos and Aquariums Grants. Management, in conjunction with external independent advisors, have assessed the impact of the current economic uncertainty on the financial statements. Austrade at various stages returned 12 Trade Commissioners/Senior Trade Commissioners to Australia to work remotely, of which 5 have since returned to post. Austrade has concluded that COVID-19 has not had a material impact on balances or transactions in the financial statements other than increased Administered activity relating to the new programmes delivered.

New Australian Accounting Standards

New Australian Accounting Standards

All new standards and/or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period.

Standard/ Interpretation

Application date for Austrade

Nature of impending change/s in accounting policy and likely impact on initial application

AASB 16 Leases

1 July 2019

AASB 16 became effective on 1 July 2019.

This new standard has 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.

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 of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

AASB 15 Revenue from Contracts with Customers

/ AASB 2016-8 Amendments to Australian Accounting

Standards – Australian Implementation Guidance for Not-for-Profit Entities and AASB 1058 Income of Not-For-Profit Entities

1 July 2019

AASB 15, AASB 2016-8 and AASB 1058 became effective 1 July 2019.

AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. 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 Austrade 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 (NFP) 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 Austrade to further its objectives, and where volunteer services are received.

The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

Application of AASB 15 Revenue from Contracts with Customers / AASB 1058 Income of Not-For-Profit Entities

Austrade adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application 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 the various applicable AASBs and related interpretations.

Under the new income recognition model Austrade 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), Austrade applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, Austrade shall consider whether AASB 1058 applies.

In relation to AASB 15, Austrade elected to apply the new standard to all new and uncompleted contracts from the date of initial application. Austrade is required to aggregate the effect of all of the contract modifications that occur before the date of initial application.

Austrade has assessed the majority of services delivered to be considered from contracts with customers, adoption of AASB 15 and AASB 1058 had no impact on the financial statements.

AASB 16 Leases

AASB 16 Leases

Austrade adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application 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.

Austrade 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.

AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. Austrade 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;
  • Rely 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
  • Apply 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, Austrade 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, Austrade recognises right-of-use assets and lease liabilities for most leases. However, Austrade 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, Austrade recognised right-of-use assets and lease liabilities in relation to leases of office space, which had previously been classified as operating leases.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using the Austrade’s incremental borrowing rate as at 1 July 2019. Austrade’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 1.04%.

The right-of-use assets were measured as follows:

a) Office space: measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

b) All other leases: the carrying value that would have resulted from AASB 16 being applied from the commencement date of the leases, subject to the practical expedients noted above.

Impact on Transition of AASB 16

Departmental

1 July 2019

$'000

Right-of-use assets - property, plant and equipment

105,081

Lease liabilities

(105,081)

Retained earnings1

(2,761)

1. Retained earnings is from the reversal of 2018-19 straight-lining of lease payments ($2m previously disclosed in Trade creditors and accruals) and Lease incentives ($0.7m previously disclosed in Other payables).

The following table reconciles the Departmental minimum lease commitments disclosed in the 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:

1 July 2019

Minimum operating lease commitment at 30 June 2019

60,012

Plus: leases through DFAT not taken up as commitments in 2018-19

45,371

Undiscounted lease payments

105,383

Less: effect of discounting using the incremental borrowing rate as at the date of initial application

(302)

Lease liabilities recognised at 1 July 2019

105,081

Taxation

Taxation

Austrade is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Austrade also pays various in-country taxes applicable to its overseas operations.

Reporting of Administered Activities

Reporting of Administered Activities

Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the administered schedules and related notes.

Except where otherwise stated, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

Foreign Currency

Foreign Currency

Transactions denominated in a foreign currency are translated to Australian currency using the exchange rate at the date of the transaction. At reporting date, foreign currency receivables and payables or assets and liabilities are translated at the exchange rates current as at that date. All exchange gains and losses are recognised as revenues or expenses, as appropriate.

Austrade's operating budget funding for overseas activities is adjusted for any differences in realised foreign exchange transactions during the year against rates set at Budget by the Department of Finance. Adjustments are generally made to the Appropriation Bills in the current or following year.

Revenue from Government

Revenue from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when Austrade gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

Events After the Reporting Period

Events After the Reporting Period

There was no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of Austrade in either Departmental or Administered.

1. Departmental Financial Performance

1.1 Expenses

2020

2019

$'000

$'000

Note 1.1A: Employee Benefits

Wages and salaries

113,822

105,697

Superannuation

Defined contribution plans

2,156

4,772

Defined benefit plans

8,822

5,584

Leave and other entitlements

22,099

23,333

Separation and redundancies

3,670

4,176

Fringe benefits tax

8,050

6,512

Total employee benefits

158,619

150,074

Accounting Policy

Accounting policies for employee related expenses are contained in the People and Relationships section.

2020

2019

$'000

$'000

Note 1.1B: Suppliers

Goods and services supplied or rendered

Contractors, consultants and service providers

18,600

17,468

Non-lease property related costs

7,907

6,115

Publicity and promotions

9,134

9,110

Communications and information technology

6,595

6,086

Travel and related expenses

4,759

8,210

Tradestart payments

2,095

2,826

Office costs

4,743

4,358

Other operating costs

1,937

2,450

Total goods and services supplied or rendered

55,770

56,623

Services rendered

55,770

56,623

Total goods and services supplied or rendered

55,770

56,623

Other suppliers

Operating lease rentals1

-

25,261

Workers compensation expenses

367

319

Short-term and low value leases

1,366

-

Total other suppliers

1,733

25,580

Total suppliers

57,503

82,203

1. Austrade 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.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1C, 3.2, 3.3B and 3.4A.

Accounting Policy

Short-term leases and leases of low-value assets

Austrade has elected not to recognise right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less and leases of low-value assets (less than $10,000). Austrade often has short-term transition arrangements for overseas locations. Austrade recognises the lease payments associated with these leases as an expense over the lease term.

Security deposits in relation to overseas property leases are payable to Austrade on the termination of individual leases. These deposits are classified as current or non-current receivables as appropriate.

2020

2019

$'000

$'000

Note 1.1C: Finance Costs

Unwinding of discount

987

49

Total finance costs

987

49

1. Austrade 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.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 3.2, 3.3B and 3.4A.

1.2 Own-Source Revenue and Gains

2020

2019

$'000

$'000

Note 1.2A: Revenue from Contracts with Customers

Sales of goods and rendering of services

23,398

24,436

Total revenue from contracts with customers

23,398

24,436

Disaggregation of revenue from contracts with customers

Austrade has disaggregate revenue from contracts with customers into categories to enable users of financial statements to understand the nature, amount, timing and uncertainty of income and cash flows.

Major service line:

Service delivery

23,398

24,436

23,398

24,436

Type of customer:

Australian Government entities (related parties)

14,049

12,475

State and Territory Governments

5,319

5,240

Non-government entities

4,030

6,721

23,398

24,436

Timing of transfer of goods and services:

Over time

21,354

21,367

Point in time

2,044

3,069

23,398

24,436

2020

2019

$'000

$'000

Note 1.2B: Other Revenue

Resources received free of charge - audit fees

160

160

Other1

2,073

1,842

Total other revenue

2,233

2,002

1. Other revenue includes staff contributions for rental, refunds from prior years and other minor sources of revenue.

Accounting Policy

Resources Received Free of Charge

Resources received free of charge are recognised as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another non-corporate or corporate Commonwealth entity as a consequence of a restructuring of administrative arrangements.

2. Income and Expenses Administered on Behalf of Government

2.1 Administered – Expenses

2020

2019

$'000

$'000

Note 2.1A: Employee Benefits

Wages and salaries

4,684

4,102

Superannuation

Defined contribution plans

32

233

Defined benefit plans

676

419

Fringe benefits tax

7

10

Other employee expenses

27

25

Total employee benefits

5,426

4,789

Note 2.1B: Suppliers

Goods and services supplied or rendered

Operating expenses EMDG

1,799

1,231

Operating expenses IFAM

33,859

-

Total goods and services supplied or rendered

35,658

1,231

Services rendered

35,658

1,231

Total services rendered

35,658

1,231

Total goods and services supplied or rendered

35,658

1,231

Other suppliers

Operating lease rentals

-

273

Total other suppliers

-

273

Total suppliers

35,658

1,504

Accounting Policy

Operating expenses EMDG

Austrade as per Division 9 paragraph 105 of the Export Market Development Grant Act 1997 can use “in any financial year, no more than 5% of the money appropriated (the appropriated amount) by the Parliament for the purposes of making payments under this Act to be applied in payment of the costs of the administration of this Act”.

Operating expenses IFAM

Austrade as part of the IFAM program have supplier costs paid directly to customers for specialised services.

2020

2019

$'000

$'000

Note 2.1C: Grants

Private sector

Export Market Development Grants

192,796

127,514

Australian Tropical Medicine Commercialisation Grants

-

809

Free Trade Agreement Training Provider Grants

-

656

International Freight Assistance Mechanism Grants

21,092

-

National Tourism Icons Program Grants

1,400

-

Supporting Australia’s Exhibiting Zoos and Aquariums Grants

7,343

-

Total grants

222,631

128,979

Accounting Policy

Grants

Austrade, on behalf of the Government, administers grants relating to the Export Market Development Grants Scheme (EMDG), Free Trade Agreement Training Provider Grants (FTA-TP), Australian Tropical Medicine Commercialisation (ATMC), International Freight Assistance Mechanism Grants (IFAM), National Tourism Icons Grants (ICONS) and Supporting Australia’s Exhibiting Zoos and Aquarium Grants (ZOOS). IFAM, ICONS and ZOOS grants programs all commenced in 2019-20 with the IFAM and ZOOS programmes part of the Government response to COVID-19.

EMDG are brought to account when deemed payable in accordance with the provisions of the Export Market Development Grants Act 1997. However, a provision is also recognised at the end of the financial year for the likely payments arising from grants claims and appeals lodged but not yet finalised based on prior years' payment history.

ATMC, FTA-TP, ICONS and ZOOS grant expenses and liabilities are recognised to the extent that (i) the services required to be performed by the grantee have been performed or (ii) the grant eligibility criteria have been satisfied, but payments due have not been made. When the Government enters into an agreement to make these grants but services have not been performed or criteria satisfied, this is considered a commitment.

IFAM grants program also includes payments for specialised service expenses and liabilities are recognised to the extent that:

(i) the services required to be performed by the grantee have been performed; or

(ii) the grant eligibility criteria have been satisfied, but payments due have not been made.

When the Government enters into an agreement to make these grants but services have not been performed or criteria satisfied, this is considered a commitment.

3. Financial Position

3.1 Financial Assets

2020

2019

$'000

$'000

Note 3.1A: Trade and Other Receivables

Good and services receivables

Goods and services

6,892

5,079

Total goods and services receivables

6,892

5,079

Austrade's Trade and other receivables opening and closing balance of assets and liabilities relates to contracts with customers.

Appropriation receivable

Appropriation receivable

41,380

59,694

Total appropriations receivable

41,380

59,694

Other receivables

GST receivable from the Australian Taxation Office

560

612

Total other receivables

560

612

Total trade and other receivables (gross)

48,832

65,385

Less impairment loss allowance

25

63

Total trade and other receivables (net)

48,807

65,322

Credit terms for goods and services were within 30 days (2019: 30 days).

Accounting Policy

Financial assets and liabilities are measured at fair value. In practice this means that receivables are measured at their nominal amounts, less any allowance for impairment losses. Provisions are made when collection of the debt is judged to be less rather than more likely.

Financial Assets

Trade receivables, loans 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.

3.2 Non-Financial Assets

Note 3.2A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles for 2017

Reconciliation of the opening and closing balances of property, plant and equipment and intangibles for 2020

Buildings - leasehold improvements

ROU Buildings - leasehold improvements

Plant and equipment

Computer software1

Other intangibles2

Total

$’000

$’000

$’000

$’000

$’000

$’000

As at 1 July 2019

Gross book value

17,381

-

8,991

60,788

30,425

117,585

Accumulated depreciation and impairment

-

-

-

(52,711)

(8,758)

(61,469)

Total as at 1 July 2019

17,381

-

8,991

8,077

21,667

56,116

Recognition of right-of-use (ROU) asset on initial application of AASB 16

-

105,081

-

-

-

105,081

Adjusted total as at 1 July 2019

17,381

105,081

8,991

8,077

21,667

161,197

Additions

Purchase or internally developed

1,317

-

2,980

9,036

6,722

20,055

Depreciation and amortisation

(5,129)

-

(2,885)

(2,672)

(3,269)

(13,955)

Depreciation on right-of-use assets

-

(26,559)

-

-

-

(26,559)

Disposals

Other

(227)

-

(717)

(16)

-

(960)

Other movements

124

-

2

-

(1)

125

Total as at 30 June 2020

13,466

78,522

8,371

14,425

25,119

139,903

Total as at 30 June 2020 represented by

Gross book value

18,622

105,081

11,103

67,979

37,147

239,932

Accumulated depreciation, amortisation and impairment

(5,156)

(26,559)

(2,732)

(53,554)

(12,028)

(100,029)

Total as at 30 June 2020

13,466

78,522

8,371

14,425

25,119

139,903

Carrying amount of right-of-use assets

-

78,522

-

-

-

78,522

1. The carrying amount of computer software included $1.9 million (2019: $2.5 million) of purchased software and $7.1 million (2019: $6.5 million) of internally generated software.

2. Other intangibles comprise capital costs in connection with the Tourism International Visitor Survey and National Visitor Survey.

3. Disposals are the gross disposal figure and are not adjusted for cost of sales.

Accounting Policy

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. 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, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.

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 $5,000 ($3,500 for computer equipment), 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 makegood, an estimate of the cost of dismantling and removing the item and restoring the site on which it is located where there is a reasonable prospect that this will be required.

Lease Right-of-Use (ROU) Assets

Leased ROU 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

by Commonwealth lessees as separate asset classes to corresponding assets owned outright.

On initial adoption of AASB 16 Austrade has adjusted the ROU assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial application, an impairment review is undertaken for any right-of-use lease asset that shows indicators of impairment and an impairment loss is recognised against any right-of-use lease asset that is impaired. Lease ROU assets continue to be measured at cost after initial recognition in Commonwealth agency, General Government Sector and Whole of Government financial statements.

Revaluations

Following initial recognition at cost, property, plant and equipment (excluding ROU assets) are carried at fair value (or an amount not materially different from fair value) less subsequent accumulated depreciation and accumulated 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. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets. In 2019, revaluations were conducted by Colliers International for leasehold improvements and Pickles Valuation Services for the majority of items of plant and equipment. The remaining items of plant and equipment are subject to management valuation using market-based evidence. No revaluations were conducted in 2020.

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 reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit 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.

Depreciation

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to Austrade 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 class of depreciable asset are based on the following useful lives:

2020

2019

Leasehold improvements

Lease term or assessed life

Lease term or assessed life

Plant and equipment

3 to 10 years

3 to 10 years

The depreciation rates for ROU assets are based on the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term.

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 Austrade were deprived of the asset, its value in use is taken to be its depreciated 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.

Restoration Provisions

Provisions for restoration represent restoration obligations in respect of information and communications technology equipment. This specifically relates to the costs of removing and disposing of information and communication technology equipment at overseas posts. The provisions are the best estimate of the present value of the expenditure required to settle the restoration obligations at reporting date, based on current security and legal requirements and technology. The amount of the provision for future restoration costs is capitalised as a Plant and Equipment asset and amortised over the asset’s life.

Intangibles

Austrade's intangibles comprise internally developed and purchased software for internal use and other intellectual property. Other intellectual property comprises databases, still and moving images and website resources. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Intangible asset development projects in progress, where future economic benefits are assessed as probable, are recognised progressively as assets and measured at cost. Amortisation begins when the asset is first put into use or held ready for use.

Intangible assets are amortised on a straight-line basis over their anticipated useful life. The useful lives of Austrade's intangibles are 3 to 10 years (2019: 3 to 10 years). All intangible assets were assessed for indications of impairment as at 30 June 2020.

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

Property, plant, equipment and intangible assets commitments are primarily contracts for purchases of leasehold improvements, computer software and other intellectual property.

2020

2019

$'000

$'000

Commitments are payable as follows:

Within 1 year

5,497

6,682

Between 1 to 5 years

2,871

9,476

Total commitments

8,368

16,158

There were no impairment losses on buildings (2019: nil) to be recognised in other comprehensive income.

No buildings are expected to be sold or disposed of within the next 12 months, other than in the normal course of business operations.

No plant and equipment or intangibles are expected to be sold or disposed of within the next 12 months, other than in the normal course of business operations.

Note 3.2B: Other Non-Financial Assets

Prepayments - property leases

-

6,059

Prepayments - other

3,324

3,688

Total other non-financial assets

3,324

9,747

No indicators of impairment were found for other non-financial assets.

3.3 Payables

2020

2019

$'000

$'000

Note 3.3A: Suppliers

Trade creditors and accruals

12,143

16,720

Total suppliers

12,143

16,720

Settlement was usually made within 30 days (2019: 30 days).

Accounting Policy

Trade creditors and accruals are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced) and measured at their nominal amounts, being the amounts at which they will be settled.

Note 3.3B: Other Payables

Salaries and wages

3,190

2,911

Lease incentive1

-

867

Prepayments received/unearned income

2,287

3,549

Other

15

51

Total other payables

5,492

7,378

1. Austrade 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.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 3.2, and 3.4A.

3.4 Interest Bearing Liabilities

Note 3.4A: Leases

Finance leases1

73,787

-

Total leases

73,787

-

1. Austrade 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.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 1.1C, 3.2 and 3.3B.

Accounting Policy

Refer Overview section for accounting policy on leases.

3.5 Other Provisions

2020

2019

$'000

$'000

Note 3.5A: Other Provisions

Provision for restoration

3,842

2,747

Total other provisions

3,842

2,747

Provision for restoration

Total

$’000

$’000

As at 1 July 2019

2,747

2,747

Additions

816

816

Other movements

279

279

Total as at 30 June 2020

3,842

3,842

Austrade currently has 19 (2019: 15) agreements for the leasing of premises that have provisions requiring Austrade to restore the premises to their original condition at the conclusion of the lease. Austrade has made a provision to reflect the estimated present value of this obligation where it is considered probable that the clauses in the leases will be enforced by landlords. It is Austrade’s experience that this only applies to a small number of leases.

4. Assets and Liabilities Administered on Behalf of Government

This section analyses assets used to conduct operations and the operating liabilities incurred as a result, which Austrade does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

4.1 Administered – Financial Assets

2020

2019

$'000

$'000

Note 4.1A: Trade and Other Receivables

Other receivables

Trade and other receivables

2,498

97

Total other receivables

2,498

97

Total trade and other receivables (gross)

2,498

97

Less impairment loss allowance

-

-

Total trade and other receivables (net)

2,498

97

Other receivables are with entities external to the Australian Government. Credit terms were within 30 days (2019: 30 days).

4.2 Administered – Payables

2020

2019

$'000

$'000

Note 4.2A: Suppliers

Trade creditors and accruals

519

192

IFAM creditors and accruals

15,838

-

Other creditors

2

2

Total suppliers

16,359

194

Note 4.2B: Grants

Private sector:

ATMC grants payable

-

856

FTA-TP grants payable

216

608

IFAM grants payable

18,924

-

ZOOS grants payable

1,850

-

Total grants

20,990

1,464

Note 4.2C: Other Payables

Salaries and wages

68

34

Total other payables

68

34

4.3 Administered – Other Provisions

2020

2019

$'000

$'000

Note 4.3A: Grants Provisions

Provision for EMDG grants

4,691

4,064

Total grants provisions

4,691

4,064

Provision for
grants

Total

$’000

$’000

As at 1 July 2019

4,064

4,064

Additional provisions made

627

627

Amounts used

-

-

Amounts reversed

-

-

Total as at 30 June 2020

4,691

4,691

Accounting Judgements and Estimates

The liability for grants lodged and payable under the EMDG Scheme but not yet determined has been estimated by reference to payment histories in previous years.

The liability for grant appeals lodged under the EMDG Scheme but not yet finalised has been estimated by reference to successful appeals histories in previous years.

5. Funding

5.1 Appropriations

Note 5.1A: Annual Appropriations ('Recoverable GST exclusive')

Annual Appropriations for 2020

Annual Appropriation1

Adjustments to appropriations2

Total appropriation

Appropriation applied in 2020 (current and prior years)

Variance3

$'000

$'000

$'000

$'000

$'000

Departmental

Ordinary annual services

208,768

22,417

231,185

252,253

(21,068)

Capital Budget

14,116

-

14,116

15,945

(1,829)

Other services

Equity injections

3,000

-

3,000

2,274

726

Total departmental

225,884

22,417

248,301

270,472

(22,171)

Administered items

Ordinary annual services

Administered items

168,650

-

168,650

165,023

3,627

Total administered

168,650

-

168,650

165,023

3,627

1. In 2019-20, nil appropriation was withheld under section 51 of the PGPA Act.

2. PGPA Act section 74 receipts were $22.417 million.

3. Departmental and Administered Capital Budgets are appropriated through Appropriation Acts (No.1, 3, and 5). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts. The variance in Ordinary annual services is a combination of the reduction of the Appropriation receivable and the loss in the Statement of Comprehensive Income. The variance in the Capital Budget was unspent 2018-19 Capital Budget rolled forward into 2019-20.

Note 5.1A: Annual Appropriations ('Recoverable GST exclusive') (continued)

Annual Appropriations for 2019

Annual Appropriation1

Adjustments to appropriations2

Total appropriation

Appropriation applied in 2019 (current and prior years)

Variance3

$'000

$'000

$'000

$'000

$'000

Departmental

Ordinary annual services

205,535

26,812

232,347

227,797

4,550

Capital Budget

14,135

-

14,135

12,044

2,091

Other services

Equity

1,731

-

1,731

148

1,583

Total departmental

221,401

26,812

248,213

239,989

8,224

Administered

Ordinary annual services

Administered items

140,871

-

140,871

139,454

1,417

Total administered

140,871

-

140,871

139,454

1,417

1. In 2018-19, nil appropriation was withheld under section 51 of the PGPA Act.

2. PGPA Act section 74 receipts were $26.812 million.

3. Departmental and Administered Capital Budgets are appropriated through Appropriation Acts (No.1, 3, and 5). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.

Note 5.1B: Unspent Annual Appropriations ('Recoverable GST exclusive')

2020

2019

$'000

$'000

Departmental

Appropriation Act (No. 2) 2016-17

-

3

Supply Act (No. 2) 2016-17

-

540

Appropriation Act (No.1) 2017-18

-

49,240

Appropriation Act (No. 1) 2018-19 - Capital Budget (DCB)

-

1,829

Appropriation Act (No. 3) 2018-19

3,849

3,849

Appropriation Act (No. 2) 2018-19

1,360

1,387

Appropriation Act (No. 4) 2018-19

330

330

Appropriation Act (No. 1) 2019-20

19,176

-

Appropriation Act (No. 3) 2019-20

7,297

-

Supply Act (No. 1) 2019-20

1,698

-

Appropriation Act (No. 2) 2019-20

286

-

Appropriation Act (No. 4) 2019-20

468

-

Cash and cash equivalents

9,575

3,505

Total departmental

44,039

60,683

Administered

Appropriation Act (No. 1) 2018-19

-

5,723

Appropriation Act (No. 1) 2019-20

3,430

-

Cash and cash equivalents

650

-

Total administered

4,080

5,723

Note 5.1C: Special Appropriations ('Recoverable GST exclusive')

Authority

Appropriation applied

2020

2019

$'000

$'000

Special Appropriation - Assistance for Severely Affected Regions1

65,590

-

Total special appropriations applied

65,590

-

1. Special Appropriation - Assistance for Severely Affected Regions (Special Appropriation) was part of the Government response to COVID-19 (Coronavirus Economic Response Package Act 2020).

5.2 Special Accounts

Services for Other Entities and Trust Moneys1

2020

2019

$'000

$'000

Balance brought forward from previous period

128

128

Increases

Other receipts

-

-

Total increases

-

-

Available for payments

128

128

Decreases

Departmental

Payments made

-

-

Total departmental

-

-

Administered

Payments made

-

-

Balance returned to the Official Public Account

-

-

Total administered

-

-

Total decreases

-

-

Total balance carried to the next period

128

128

Balance represented by:

Cash held in the Official Public Account

128

128

Total balance carried to the next period

128

128

1. Appropriation: Public Governance, Performance and Accountability Act 2013 section 78.

Establishing Instrument: PGPA Act Determination (Austrade SOETM Special Account 2018).

Purpose: To disburse amounts temporarily held on trust, and to disburse amounts in connection with services performed on behalf of other entities.

6. People and relationships

6.1 Employee Provisions

2020

2019

$'000

$'000

Note 6.1A: Employee Provisions

Leave

28,422

27,292

Separations and redundancies

10,612

13,586

Total employee provisions

39,034

40,878

Note 6.1B: Administered - Employee Provisions

Leave

2,012

2,032

Total employee provisions

2,012

2,032

Accounting Policy

Liabilities for short-term employee benefits and termination benefits expected within twelve months of the end of reporting period are measured at their nominal amounts.

Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

Leave

The liability for employee benefits includes provision for annual leave and long service leave.

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including Austrade’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by using the shorthand method as at 30 June 2020. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and Redundancy

Provision is made for separation and redundancy benefit payments. Austrade recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

For employees engaged overseas, liabilities for separation entitlements are calculated in accordance with local employment conditions.

Superannuation

Australian-based staff of Austrade are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), or the PSS accumulation plan (PSSap), or other superannuation funds held outside the Australian Government.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes.

Austrade makes employer contributions to the employees' defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. Austrade accounts for the contributions as if they were contributions to defined contribution plans.

For employees engaged overseas, Austrade pays employer contributions to meet its superannuation obligations, which vary according to local employment conditions.

The liability for superannuation recognised as at 30 June represents outstanding contributions.

6.2 Key Management Personnel Remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of Austrade, directly or indirectly, including any director (whether executive or otherwise) of Austrade. Austrade has determined the key management personnel to be the Chief Executive Officer, Deputy Chief Executive Officers, Chief Operating Officer, Chief Innovation Officer and General Manager International. Key management personnel remuneration is reported in the table below:

2020

2019

$'000

$'000

Short-term employee benefits

2,503

1,522

Post-employment benefits

265

170

Other long-term benefits

135

33

Termination benefits

355

-

Total key management personnel remuneration expenses1

3,258

1,725

The total number of key management personnel included in the above table is 6 (2019: 4). This includes acting arrangements in key management positions for greater than 90 days. Following a review of personnel in 2020 having authority and responsibility for planning, directing and controlling the activities of Austrade against AASB 124 Related Party Disclosures, the key management personnel were increased from 4 to 6.

1. The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio Minister. The Portfolio Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by Austrade.

6.3 Related Party Transactions

Related party relationships:

Austrade is an Australian Government controlled entity. Key Management Personnel include the Portfolio Minister and Executive, and other Australian Government entities.

Transactions with related parties:

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.

Significant transactions with related parties can include:

  • the payments of grants or loans;
  • purchases of goods and services;
  • asset purchases, sales transfers or leases;
  • debts forgiven; and
  • guarantees.

Giving consideration to relationships with related entities, and transactions entered into during the reporting period by Austrade, it has been determined from obtaining disclosures of related parties from key management personnel and cross-checks for transactions within Austrade’s financial systems that there are no related party transactions to be separately disclosed.

7. Managing Uncertainties

7.1 Contingent Assets and Liabilities

Note 7.1A: Contingent Liabilities and Assets

Claims for damages or costs

Total

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Contingent liabilities

Balance from previous period

(2,745)

-

(2,745)

-

New contingent liabilities recognised

150

(2,745)

150

(2,745)

Obligations expired

2,669

-

2,669

-

Liabilities realised

76

-

76

-

Total contingent liabilities

150

(2,745)

150

(2,745)

Quantifiable Contingencies

The above table contains 4 contingent liability disclosures in 2020 (2019: 1).

Significant Remote Contingencies

Austrade has provided bank guarantees for a total of $0.212 million (2019: $0.211 million) in relation to property leases ($0.13m EUR). These were not included in the above table.

Accounting Policy

Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote. Administered contingencies are determined on a case-by-case basis.

Note 7.1B: Administered Contingent Assets and Liabilities

Claims for damages or costs

Total

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Contingent liabilities

Balance from previous period

(3,459)

(2,854)

(3,459)

(2,854)

New contingent liabilities recognised

(3,205)

(3,116)

(3,205)

(3,116)

Re-measurement

645

76

645

76

Liabilities realised

1,173

528

1,173

528

Obligations expired

2,347

1,907

2,347

1,907

Total contingent liabilities

(2,499)

(3,459)

(2,499)

(3,459)

Net contingent assets/(liabilities)

(2,499)

(3,459)

(2,499)

(3,459)

7.2 Financial Instruments

Note 7.2A: Categories of Financial Instruments

2020

2019

$'000

$'000

Financial Assets

Financial assets at amortised cost:

Cash and cash equivalents

9,575

3,505

Trade and other receivables

48,807

65,322

Less: Appropriation receivable

(41,380)

(59,694)

Total

17,002

9,133

Total financial assets

17,002

9,133

Financial Liabilities

Financial liabilities at amortised cost:

Suppliers

12,143

16,720

Other payables

5,492

7,378

Total

17,635

24,098

Total financial liabilities

17,635

24,098

Accounting Judgements and Estimates

Financial Assets

Under AASB 9 Financial Instruments, Austrade classifies its financial assets in the following categories:

a) financial assets at fair value through profit or loss;

b) financial assets at fair value through other comprehensive income; and

c) financial assets measured at amortised cost.

The classification depends on Austrade's business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when Austrade becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are transferred upon trade date.

Financial Assets at Amortised Cost

Financial assets included in this category need to meet two criteria:

1. the financial asset is held in order to collect the contractual cash flows; and

2. the cash flows are solely payments of principal and interest (SPPI) on the principal outstanding amount.

Amortised cost is determined using the effective interest method.

Effective Interest Method

Income is recognised on an effective interest rate basis for financial assets that are recognised at amortised cost.

Financial Assets at Fair Value Through Other Comprehensive Income (FVOCI)

Financial assets measured at fair value through other comprehensive income are held with the objective of both collecting contractual cash flows and selling the financial assets and the cash flows meet the SPPI test.

Any gains or losses as a result of fair value measurement or the recognition of an impairment loss allowance is recognised in other comprehensive income.

Financial Assets at Fair Value Through Profit or Loss (FVTPL)

Financial assets are classified as financial assets at fair value through profit or loss where the financial assets either doesn't meet the criteria of financial assets held at amortised cost or at FVOCI (i.e. mandatorily held at FVTPL) or may be designated.

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset.

Impairment of Financial Assets

Financial assets are assessed for impairment at the end of each reporting period based on Expected Credit Losses, using the general approach which measures the loss allowance based on an amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12-month expected credit losses if risk has not increased.

The simplified approach for trade, contract and lease receivables is used. This approach always measures the loss allowance as the amount equal to the lifetime expected credit losses.

A write-off constitutes a derecognition event where the write-off directly reduces the gross carrying amount of the financial asset.

Financial Liabilities

Under AASB 9 Financial Instruments, Austrade classifies its financial liabilities ‘at fair value through profit or loss’ or other financial liabilities. Financial liabilities are recognised and derecognised upon “trade date”.

Financial Liabilities at Fair Value Through Profit or Loss

Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Financial Liabilities at Amortised Cost

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis. Liabilities are recognised to the extent that the goods and services have been received (and irrespective of having been invoiced).

7.3 Administered - Financial Instruments

2020

2019

$'000

$'000

Note 7.3A: Categories of Financial Instruments

Financial assets at amortised cost

Cash and cash equivalents

650

-

Trade and other receivables

2,498

97

Total financial assets at amortised cost

3,148

97

Financial Liabilities

Financial liabilities measured at amortised cost

Trade and other payables

16,359

194

Grants payables

20,990

1,464

Other payables

68

34

Total financial liabilities measured at amortised cost

37,417

1,692

7.4 Fair Value Measurement

Note 7.4A: Fair Value Measurement

Fair value measurements at the end of the reporting period

2020

2019

$'000

$'000

Non-financial assets1

Leasehold improvements2

13,466

15,878

Plant and equipment3

8,371

8,991

Total non-financial assets

21,837

24,869

Total fair value measurements of assets in the Statement of Financial Position

21,837

24,869

1. The highest and best use of all non-financial assets are the same as their current use.

2. Leasehold improvements excludes ROU assets.

3. Comprises IT assets, motor vehicles and furniture and fittings.

Accounting Judgements and Estimates

The fair value of leasehold improvements has been taken to be the depreciated replacement cost as determined by an independent valuer by reference to the gross replacement cost (refer Accounting policy note 3.2A).

The fair value of plant and equipment has been determined by reference to the market value of similar assets.

8. Other information

8.1 Aggregate Assets and Liabilities

2020

2019

$'000

$'000

Note 8.1A: Aggregate Assets and Liabilities

Assets expected to be recovered in:

No more than 12 months

61,307

68,827

More than 12 months

140,302

65,863

Total assets

201,609

134,690

Liabilities expected to be settled in:

No more than 12 months

55,128

44,251

More than 12 months

79,170

23,472

Total liabilities

134,298

67,723

Note 8.1B: Administered - Aggregate Assets and Liabilities

Assets expected to be recovered in:

No more than 12 months

3,148

97

More than 12 months

-

-

Total assets

3,148

97

Liabilities expected to be settled in:

No more than 12 months

42,611

6,195

More than 12 months

1,509

1,593

Total liabilities

44,120

7,788

8.2 Restatement and Comparative Figures

Note 8.2A: Restatement and comparative figures

Austrade identified an error in its 2018-19 financial statements after a detailed review of all leasing contracts for the implementation of AASB 16. Makegood had not been taken up for any leased properties, the comparative figures have been corrected and carried through to the 2019-20 statements (refer note 3.5A).
Items were restated as follows:

Previously Reported

Adjustment

After Reclassification

2019

2019

2019

$'000

$'000

$'000

Statement of Comprehensive Income

Depreciation and amortisation

12,704

1,195

13,899

Finance costs

-

49

49

Total

12,704

1,244

13,948

Statement of Financial Position

Buildings

15,878

1,503

17,381

Other provision

-

(2,747)

(2,747)

Total

15,878

(1,244)

14,634

Statement of Changes in Equity

(Deficit) for the period

(9,930)

(1,244)

(11,174)

Total

(9,930)

(1,244)

(11,174)