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Notes to and forming part of the financial statements

Overview

Objectives of the CSIRO and its Subsidiaries (the Group)

CSIRO is an Australian Government controlled not‐for‐profit entity and is classified as a Corporate Commonwealth entity under the Public Governance, Performance and Accountability Act 2013. CSIRO is a research enterprise that aims to deliver great science and innovative solutions for industry, society and the environment.

CSIRO is structured to meet the following outcome:
Provide innovative scientific and technological solutions to national challenges and opportunities to benefit industry, the environment and the community, through scientific research and capability development, services and advice.

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

The Basis of Preparation

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

CSIRO and the Group’s Consolidated Financial Statements have been prepared in accordance with:

  • Public Governance, Performance and Accountability (Financial Reporting Rule) 2015 (FRR) for reporting periods ending on or after 1 July 2015; 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 impacts of Coronavirus (“COVID‐19”) have been assessed by CSIRO and it is not expected to have a material impact on CSIRO operations or its ability to meet its objectives.

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

Key Judgements and Estimates

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

  • Note 3.1 Employee Provisions
  • Note 4.3 Fair Value Measurement

CSIRO has a provision (under provisions) for remediation costs required at a remote and other CSIRO locations, based on estimates provided by internal and external qualified experts. The provision is predominantly based on externally provided costings, with additional amounts derived from comparable remediation works. The provision is based on the scope of work as it currently stands as at 30 June 2020. As remediation works progress, the scope and costs may be subject to change. The work is expected to take several years to reach completion. Provisions for remediation also includes a provision for the makegood costs at leased CSIRO sites which is based on rates provided by an expert valuer.

Consolidation

The consolidated financial statements comprise the financial statements of the CSIRO and its subsidiaries (referred to as ‘the Group’). The subsidiaries of CSIRO are the Science and Industry Endowment Fund (SIEF), the CSIRO Chile Research Fundación (Fundación), National ICT Australia (NICTA), the Innovation Fund and the US Office. WLAN Services Pty Ltd (WLAN) was deregistered in 2019. Refer to: 3.6 Related Party Disclosures.

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by CSIRO as at 30 June 2020 and the results of the controlled entities for the year then ended. Subsidiaries are consolidated from the date on which control is obtained through to the date on which control ceases. The Group applies consistent accounting policies and the effects of all transactions and balances between the entities are eliminated in full. The non‐controlling interest in the results and equity of subsidiaries is shown separately in the statement of comprehensive income, statement of financial position and statement of changes in equity of the consolidated Group.

Foreign Currency Translation

The functional currency of CSIRO and its Australian subsidiaries is Australian dollars. The Group has three overseas subsidiary entities, the Fundación and the US Office entities. On consolidation, those entities:

  • Assets and liabilities are translated into Australian dollars at the rate of exchange prevailing at the reporting date; and
  • The statement of comprehensive income is translated at average exchange rate.

The exchange rate differences arising are recognised in the net cost of services.

New Australian Accounting Standards

All new, revised and/or amending standards and/or interpretations that were issued prior to the signing of these statements and applicable to the current reporting period were adopted by CSIRO. This includes the following new standards:

Standard/Interpretation

Nature of change in accounting policy, transitional provisions, and adjustment to 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

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

ASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and Interpretation 13 Customer Loyalty Programmes. 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.

ASB 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 the entity 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.

AASB 16 Leases

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.

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

CSIRO 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. It is presented as previously reported under the applicable standards and related interpretations.

Under the new income recognition model CSIRO first determines 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), CSIRO applies the general AASB 15 principles to
determine the appropriate revenue recognition. If these criteria are not met, CSIRO considers whether AASB 1058 applies.

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

In terms of AASB 1058, CSIRO 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.

The impact on transition is summarised below:

Consolidated 1 July 2019 $'000

CSIRO 1 July 2019 $'000

Impact on Transition of AASB 15

Assets

Contract assets

661

661

Total assets

661

661

Liabilities

Contract liabilities

351

2,269

Total liabilities

351

2,269

Total adjustment recognised in retained earnings

1,012

2,930

Set out below are the amounts by which each financial statement line item is affected as at and for the year ended 30 June 2020 as a result of the adoption of AASB 15 and AASB 1058. The table shows amounts prepared under AASB 15 and AASB 1058, compared to what the amounts would have been had AASB 15 and AASB 1058 not been adopted, for both the Consolidated Group, and CSIRO only:

Consolidated

CSIRO

AASB 15 / AASB 1058

Previous AAS

Increase / (decrease)

AASB 15 / AASB 1058

Previous AAS

Increase / (decrease)

$'000

$'000

$'000

$'000

$'000

$'000

Transitional Disclosure

Expenses

Employee benefits

0

0

0

0

0

0

Suppliers

0

3,941

(3,941)

0

3,941

(3,941)

Total Expenses

0

3,941

(3,941)

0

3,941

(3,941)

Revenue

Revenue from contracts with customers

1,937

3,716

(1,779)

1,937

3,716

(1,779)

Grant income

0

0

0

292

25

267

Total Revenue

1,937

3,716

(1,779)

2,229

3,741

(1,512)

Net (cost of)/contribution by services

1,937

(225)

2,162

2,229

(200)

2,429

Assets

Contract assets

899

1,823

(924)

899

1,823

(924)

Total Assets

899

1,823

(924)

899

1,823

(924)

Liabilities

Contract liabilities

0

0

0

0

0

0

Other Payables

217

181

36

1,869

181

1,688

Total Liabilities

217

181

36

1,869

181

1,688

Retained earnings

682

1,642

(960)

(970)

1,642

(2,612)

Application of ASSB 16 Leases

CSIRO adopted AASB 16 using the modified retrospective approach. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.

CSIRO elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the group relied on its assessment made in applying AASB 117. 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. CSIRO applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:

  • 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, CSIRO 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, CSIRO recognises right‐of‐use assets and lease liabilities for most leases. However, CSIRO 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, CSIRO recognised right‐of‐use assets and lease liabilities in relation to land and buildings and plant and equipment, which had previously been classified as operating leases. The lease liabilities were measured at the present value of the remaining lease payments, discounted using CSIRO’s incremental borrowing rate based on zero coupon yields as prescribed by the Department of Finance at 1 July 2019. The weighted‐average rate applied was 1.00%.

The right‐of‐use assets were measured at an amount equal to the lease liability, adjusted by the amount of any prepaid lease payments. The total Consolidated and CSIRO impact on transition is summarised below:

Consolidated

CSIRO

1 July 2019 $'000

1 July 2019 $'000

CSIRO & Consolidated entities

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

133,600

131,821

Prepayments

(6,204)

(5,757)

Lease liabilities

127,396

126,064

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

Minimum operating lease commitment at 30 June 2019

132,606

131,415

Less: short-term leases not recognised under AASB 16

(591)

(591)

Less: low value leases not recognised under AASB 16

(5,463)

(5,361)

Less: GST on minimum operating lease commitment at 30 June 2019

(10,344)

(10,344)

Less: other adjustments

(6,163)

(6,266)

Plus: effect of extension options reasonably certain to be exercised

20,917

20,917

Undiscounted lease payments

130,962

129,771

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

(3,566)

(3,707)

Lease liabilities recognised at 1 July 2019

127,396

126,064

Taxation

In accordance with Section 53 of the Science and Industry Research Act 1949, CSIRO is exempt from all forms of Australian taxation except the fringe benefits tax (FBT) and the goods and services tax (GST). The Group pays applicable taxes in overseas countries.

Revenues, expenses, assets and liabilities are recognised net of GST except:

  • where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
  • for receivables and payables.

The SIEF is exempt from income tax in Australia. WLAN and the Innovation Fund entities are subject to all applicable taxes in Australia. The Fundación is subject to all applicable taxes in Chile. The US Office is subject to taxes in the United States. NICTA is exempt from income tax however NICTA’s subsidiaries (including NICTA IPR Pty Ltd) are subject to applicable taxes in Australia.

Events after the Reporting Period

At the time of completion of these financial statements, the Group is not aware of any significant events occurring after the reporting date.

Future Events

CSIRO is exploring future commercial opportunities for the Ginninderra Field Station, a 701 hectare area of land which CSIRO owns in north Canberra. Due to rapid urban growth in the surrounding area, the site has become under‐utilised and the field station requires relocation to a more rural setting. As part of its focus on exploring the future possibilities for this site, CSIRO has successfully requested the National Capital Authority (NCA) to include the site as ‘Urban Area’ on the General Policy Plan for Metropolitan Canberra in the National Capital Plan draft Amendment 86. The Amendment became effective in November 2016.

This initial step in rezoning the land has allowed CSIRO to explore avenues to divest the Ginninderra land in a commercially beneficial way. The CSIRO proposes to divest Ginninderra east via a conditional sale. External advice has indicated that a sale would be more attractive to potential developers than partnering with the CSIRO in a joint venture development. The conditions on the sale are necessary to meet community expectations that the land will be developed with a significant componenet of science and sustainability. As this progresses, it is expected that there will be a material increase in the recorded value of the Ginninderra land.

1. Financial Performance

1.1 Expenses

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 1.1A: Employee Benefits

Wages and salaries

594,433

563,969

590,762

561,042

Superannuation

Defined contribution plans

53,661

22,764

53,661

22,764

Defined benefit plans

43,933

73,413

43,839

73,281

Leave and other entitlements

96,659

111,294

96,468

111,213

Separation and redundancies

11,538

(4)

11,538

(4)

Gross employee benefits

800,224

771,436

796,268

768,296

Less

Capitalised labour

(3,701)

(6,403)

(3,701)

(6,403)

Employee cost recovery from subsidiary companies

(1,921)

(1,864)

(216)

(1,864)

Total employee benefits

794,602

763,169

792,351

760,029

Accounting policy

Accounting policy for employee related expenses is contained in 3. People and Relationships.

Note 1.1B: Suppliers

Goods supplied

91,264

103,314

91,037

102,827

Services rendered

333,672

336,828

328,513

338,568

Total goods and services supplied or rendered

424,936

440,142

419,550

441,395

Other suppliers

Property lease rental1

0

33,896

0

33,429

Other operating lease rentals1

0

5,631

0

5,631

Short-term lease rentals2

4,902

0

4,811

0

Low value leases

0

0

0

0

Workers compensation expenses

3,582

3,285

3,558

3,263

Total other suppliers

8,484

42,812

8,369

42,323

Total Suppliers

433,420

482,954

427,919

483,718

1CSIRO 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.

2CSIRO has short-term lease commitments of $0.5m as at 30 June 2020.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1C, 1.2C, 2.2A and 2.4A.

Accounting Policy
Research and Development Expenditure and Intellectual Property
All research and development costs, including costs associated with protecting intellectual property (e.g. patents and trademarks), are expensed as incurred.

Short-term leases and leases of low-value assets
The Entity 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 or leases of low-value assets (less than $10,000). The entity recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 1.1C: Finance Costs

Other interest payments

122

0

93

0

Finance leases1

0

1,430

0

1,403

Interest on lease liabilities

2,585

0

2,573

0

Total Finance costs

2,707

1,430

2,666

1,403

1CSIRO 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, 1.2C, 2.2A and 2.4A.

Note 1.1D: Impairment loss on financial instruments

Asset write-downs and impairments from:

Bad debts written off

659

925

659

925

Expected credit loss on trade and other receivables

645

(389)

236

(389)

Total write-downs and impairments on financial instruments

1,304

536

895

536

Note 1.1E: Write-down and impairment of other assets

Asset write-downs and impairments from:

Property, plant and equipment

12,188

13

12,188

13

Total write-down and impairment of other assets

12,188

13

12,188

13

1.2 Revenue and Gains

Own Source Revenue

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 1.2A: Revenue from contracts with customers

Sale of goods

14,494

0

14,494

0

Rendering of services

406,341

0

419,657

0

Royalties and licence fees

28,584

0

28,584

0

Total revenue from contract with customers

449,419

0

462,735

0

Sale of goods and rendering of services1

0

410,432

0

435,475

Total sale of goods and rendering of services

0

410,432

0

435,475

Royalties and licence fees1

0

34,427

0

34,427

Total royalties and licence fees

0

34,427

0

34,427

Disaggregation of revenue from contracts with customers
CSIRO derives its revenue under AASB 15 from two main sources, being the sale of goods and rendering of services and royalties and licence fees. The sale of goods and rendering of services has been disaggregated based on the line of business, with each line providing similar services to CSIRO customers. No disaggregation is available for royalties and licence fees.

Revenue from contracts with customers - line of business:

Impact Science

329,855

342,313

National Facilities and Collections

73,404

73,404

Services and Other

46,160

47,018

449,419

462,735

Accounting Policy

Revenue from contracts with customers

Revenue from the sale of goods is recognised when control has been transferred to the buyer. A contract falls within the scope of AASB 15 when the criteria for accounting for a contract with a customer is met as per paragraph 9 of the standard. Performance obligations are required by an enforceable contract with the satisfaction of these performance obligations either measured over time or a point in time.

Disaggregation

Nature

Timing

Payment Terms

Impact Science

CSIRO conducts and facilitates the uptake of scientific technology solutions to deliver a positive impact on Australia.

Performance obligations are typically satisfied over time, as the customer simultaneously receives and consumes the benefits associated with CSIRO conducting scientific research. The progress towards the completion of a performance obligation are typically measured using either milestones reached or time elapsed. In the absence of an observable output method, an input method is used to measure the progress towards the completion of the performance obligation.

Payment terms are specified in the contract but are generally 30 days after the customer has been billed over time or a point in time.

National Facilities

CSIRO is a provider of a range of specialised laboratories, scientific and testing equipment, and other research facilities. The science-ready facilities are used by Australian and international researchers through application and user-funded arrangements.

Performance obligations are typically satisfied over time, as the customer simultaneously receives and consumes the benefits associated with using the science-ready facilities. The progress towards the completion of a performance obligation are typically measured using the time elapsed method. In the absence of an observable output method, an input method is used to measure the progress towards the completion of the performance obligation.

Payment terms are specified in the contract but are generally 30 days after the customer has been billed over time or a point in time.

Services & Other

CSIRO is a subject matter expert and provides advisory services to a range of customers in addition to education and outreach to Australia.

Performance obligations are satisfied over time or a point in time depending on the services provided. The methods used to measure the progress towards completion of a performance obligation over time or at a point in time is dependent on the services provided.

Payment terms are specified in the contract but are generally 30 days after the customer has been billed over time or a point in time.

Royalties & Licence Fees

CSIRO provides a licence to a customer which gives the customer a right to access or right to use of CSIRO developed Intellectual Property (“IP”).

If the licence provides the customer with the right to access CSIRO IP as it exists through the licence period, performance obligations are satisfied over time as time elapses. If the licence provides the customer with the right to use of CSIRO IP as it exists when the licence is granted, performance obligations are satisfied at a point in time. Control exists when the customer has a present right to payment for the granting of the licence.

Payment terms are specified in the contract but are generally 30 days after the customer has been billed over time or a point in time.

The transaction price is the total amount of consideration to which CSIRO expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts or both.

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 1.2B: Bank and term deposits interest

Bank and term deposits

5,772

13,501

4,251

10,536

Accounting Policy

Interest revenue is recognised using the effective interest method as set out in AASB 9 Financial Instruments.

Note 1.2C: Rental Income

Operating lease

Rental income1

0

10,546

0

10,546

Lease income

9,200

0

9,200

0

Total Rental Income

9,200

10,546

9,200

10,546

Operating Leases

CSIRO has operating lease income receivables from the sub-leasing of offices and scientific research accommodation. The amounts below are GST inclusive.

Maturity analysis of operating lease income receivables

Consolidated

CSIRO

2020

2020

$'000

$'000

Within 1 year

4,175

4,175

One to two years

2,307

2,307

Two to three years

1,625

1,625

Three to four years

1,475

1,475

Four to five years

909

909

More than 5 years

2,119

2,119

Total undiscounted lease payment receivable

12,610

12,610

The above lease disclosure should be read in conjunction with the accompanying notes 1.1B, 1.1C, 2.2A and 2.4A.

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 1.2D: Other revenues

Sale of primary produce

1,044

1,989

1,044

1,989

Donation

4,086

916

4,086

916

Capital contributions

9,349

12,587

9,349

13,805

Education programs and subscriptions

266

347

266

347

Other

19,963

13,122

10,422

8,396

Total other revenues

34,708

28,961

25,167

25,453

Note 1.2E: Foreign exchange gains

Non-speculative gain/(loss)

383

117

(394)

238

Note 1.2F: Gain/(loss) from asset sales

Land and buildings

Proceeds from sale

90,000

0

90,000

0

Carrying value of assets sold

(56,264)

(26)

(56,264)

(26)

Selling expense

(1,375)

(8)

(1,375)

(8)

Net gain/(loss) from sale of land and buildings

32,361

(34)

32,361

(34)

Plant and equipment

Proceeds from sale

399

987

399

987

Carrying value of assets sold

(3,076)

(3,758)

(3,076)

(3,758)

Selling expense

(22)

(42)

(22)

(42)

Net gain/(loss) from sale of plant and equipment

(2,699)

(2,813)

(2,699)

(2,813)

Total losses from asset sales

29,662

(2,847)

29,662

(2,847)

Note 1.2G: Revenue from Government

Appropriations

837,873

834,561

837,873

834,561

Accounting Policy

Other Revenue

Other revenues includes sale of CSIRO publications and products, conferences and ‘pass through’ funding for costs of suppliers and external service providers.

Revenues from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the entity 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. Approprations receivable are recognised at their nominal amounts.

Funding received or receivable from non-corporate Commonwealth entities (appropriated to the non-corporate Commonwealth entity as a corporate Commonwealth entity payment item for payment to this entity) is recognised as Revenue from Government by the corporate Commonwealth entity unless the funding is in the nature of an equity injection or a loan.

Approprations are received from the Australian Government Department of Industry and Science (appropriated to CSIRO as a corporate Commonwealth entity payment item).

1.3 Other Comprehensive Income

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Items that will not be classified to income or loss

Note 1.3A: Changes in asset revaluation reserves

Revaluation of plant and equipment

0

30,943

0

30,943

Revaluation of heritage and cultural assets

0

0

0

0

Net increase/(decrease) in asset revaluation reserves

0

30,943

0

30,943

Items that may be reclassified to income and loss

Note 1.3B: Change in other reserve

Net change in fair value of equity investments

0

(15,272)

0

(5,982)

Net change arising from foreign exchange movements on conversion of subsidiary accounts

(176)

16

0

0

Net increase/(decrease) in other reserve

(176)

(15,256)

0

(5,982)

Accounting Policy

Reserves for equity valuation

Under AASB 9 Financial Instruments, changes in the fair value of CSIRO’s equity investment portfolio assets are recognised through Profit and Loss. Changes in the fair value of the Innovation Fund equity investment portfolio are recognised through Profit and Loss (refer 4.2 Financial Instruments and 4.3 Fair value measurement).

2. Financial Position

This section analyses CSIRO’s assets used to generate financial performance and the operating liabilities incurred as a result. Employee related information is disclosed in the People and Relationships section.

2.1 Financial Assets

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 2.1A: Cash and Cash equivalents

Cash at bank and on hand

371,496

178,936

270,619

118,829

Term deposits

32,000

141,139

32,000

80,000

Total cash and cash equivalents

403,496

320,075

302,619

198,829

The closing balance of Cash does not include amounts held in trust: $7.6m in 2020 and $7.9m in 2019. See note 5.3.

Accounting Policy

Cash is recognised at its nominal value. Cash and cash equivalents includes:

a) cash on hand;

b) demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value; and

c) cash in special accounts.

Note 2.1B: Trade and other receivables

Goods and services receivable

Goods and services

56,292

65,729

55,581

65,269

Statutory receivables

0

5,764

0

4,311

Interest

491

1,282

63

488

Contract assets1

31,853

0

31,853

0

Other receivables

1,399

3,965

3,120

2,863

Total trade and other receivables (gross)

90,035

76,740

90,617

72,931

Less: expected credit loss allowance for trade and other receivables

(1,090)

(445)

(681)

(445)

Total trade and other receivables (net)

88,945

76,295

89,936

72,486

Trade and other receivables (gross) aged as follows

Not overdue

76,620

61,763

77,202

57,954

Overdue by

0 to 30 days

6,460

11,790

6,460

11,790

31 to 60 days

2,620

1,126

2,620

1,126

61 to 90 days

1,589

770

1,589

770

More than 90 days

2,746

1,291

2,746

1,291

Total receivables (gross)

90,035

76,740

90,617

72,931

1Contract assets are associated with services that have been transferred to the customer by CSIRO but there are remaining services to be performed in order to invoice the customer.

Reconciliation of expected credit loss allowance

Opening balance

445

834

445

834

Increase /(decrease) recognised in net surplus

645

(389)

236

(389)

Closing balance

1,090

445

681

445

Accounting Policy

Trade and Other Receivables

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance. Collectability of debts is reviewed on an ongoing basis and allowances are made before collectability of the debt is no longer probable and before the loss is incurred. All trade and other receivables are expected to be recovered in no more than 12 months.

Impairment of Financial Assets

Financial assets are assessed for impairment at the end of each reporting period. Where there is objective evidence that an impairment loss has been incurred for loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 2.1C: Other Investments

Listed companies

13,063

9,188

13,063

9,188

Unlisted companies

98,828

57,236

84,941

46,735

Innovation Fund

183,723

70,472

70,587

60,503

Uniseed Investment

8,876

8,909

8,876

8,909

Total investments

304,490

145,805

177,467

125,335

Accounting Policy

CSIRO has investments in a number of unlisted start-up companies over which it does not have significant influence or control. These companies have been established for the purpose of commercialisation of CSIRO’s intellectual property. CSIRO also has some investments in companies which have been listed on the Australian Stock Exchange and in the Uniseed trust. CSIRO, as part of the National Innovation and Science Agenda, has also established and invested in an Innovation Fund to invest in the development of early stage technology opportunities. Refer to Note 3.6 Related Party Disclosures for more information.

CSIRO’s other investments are accounted for in accordance with AASB 9 Financial Instruments and AASB 10 Consolidated Financial Statements. See 4.2 Financial Instruments and 4.3 Fair value measurement for further information.

2.2 Non-Financial Assets

Note 2.2A: Reconciliation of the opening and closing balances of Land and Buildings, Plant and Equipment and Intangibles

(a) Reconciliation of the opening and closing balances of Land and Buildings, Plant and Equipment and Intangibles for 2020 - Consolidated

Land

Buildings

Total land and buildings

Plant and equipment

Heritage and cultural

Intangibles

Total

$’000

$’000

$’000

$’000

$’000

$’000

$’000

As at 1 July 2019

Gross book value

386,600

2,674,812

3,061,412

1,294,098

13,997

56,366

4,425,873

Accumulated depreciation and amortisation

0

(1,497,250)

(1,497,250)

(730,756)

(9,534)

(39,626)

(2,277,166)

Net book value as at 1 July 2019

386,600

1,177,562

1,564,162

563,342

4,463

16,740

2,148,707

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

0

132,168

132,168

1,432

0

0

133,600

Adjusted total as at 1 July 2019

386,600

1,309,730

1,696,330

564,774

4,463

16,740

2,282,307

Additions:

By purchase

0

34,449

34,449

69,159

0

(1,578)

102,030

Right-of-use assets

0

224

224

1,510

0

0

1,734

Assets first recognised through a gain in net cost of services

0

0

0

0

0

0

0

Reclassification

0

271

271

(1,928)

0

1,657

0

Revaluations recognised in other comprehensive income

0

0

0

0

0

0

0

Impairments recognised in net cost of services

0

(11,779)

(11,779)

0

0

(409)

(12,188)

Write-offs and impairments on right-of-use assets recognised in net cost of services

0

0

0

0

0

0

0

Depreciation expense

0

(67,824)

(67,824)

(70,572)

0

(2,592)

(140,988)

Depreciation on right-of-use assets

0

(41,157)

(41,157)

(685)

0

0

(41,842)

Total depreciation and amortisation

0

(108,981)

(108,981)

(71,257)

0

(2,592)

(182,830)

Disposals

0

(2,265)

(2,265)

(2,907)

0

(167)

(5,339)

Disposals of Right-of-Use Assets

0

0

0

(148)

0

0

(148)

Other movements

(8,500)

(89,489)

(97,989)

(20)

0

(1)

(98,010)

Other movements of right-of-use assets

8,500

89,489

97,989

0

0

0

97,989

Net book value as at 30 June 2020

386,600

1,221,649

1,608,249

559,183

4,463

13,650

2,185,545

Net book value as at 30 June 2020 represented by:

Gross book value

386,600

2,817,200

3,203,800

1,341,527

13,997

52,628

4,611,952

Accumulated depreciation and amortisation

0

(1,595,551)

(1,595,551)

(782,344)

(9,534)

(38,978)

(2,426,407)

Total as at 30 June 2020

386,600

1,221,649

1,608,249

559,183

4,463

13,650

2,185,545

Carrying amount of right-of-use assets

8,500

180,724

189,224

2,109

0

0

191,333

(b) Reconciliation of the opening and closing balances of Land and Buildings, Plant and Equipment and Intangibles for 2020 - CSIRO

Land

Buildings

Total land and buildings

Plant and equipment

Heritage and cultural

Intangibles

Total

$’000

$’000

$’000

$’000

$’000

$’000

$’000

As at 1 July 2019

Gross book value

386,600

2,674,812

3,061,412

1,293,251

13,997

56,366

4,425,026

Accumulated depreciation and amortisation

0

(1,497,250)

(1,497,250)

(730,108)

(9,534)

(39,626)

(2,276,518)

Net book value as at 1 July 2019

386,600

1,177,562

1,564,162

563,143

4,463

16,740

2,148,508

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

0

130,389

130,389

1,432

0

0

131,821

Adjusted total as at 1 July 2019

386,600

1,307,951

1,694,551

564,575

4,463

16,740

2,280,329

Additions

By purchase

0

34,449

34,449

69,028

0

(1,578)

101,899

Right-of-use assets

0

224

224

1,510

0

0

1,734

Assets first recognised through a gain in net cost of services

0

0

0

0

0

0

0

Reclassification

0

271

271

(1,928)

0

1,657

0

Revaluations recognised in other comprehensive income

0

0

0

0

0

0

0

Impairments recognised in net cost of services

0

(11,779)

(11,779)

0

0

(409)

(12,188)

Write-offs and impairments on right-of-use assets recognised in net cost of services

0

0

0

0

0

0

0

Depreciation expense

0

(67,824)

(67,824)

(70,436)

0

(2,592)

(140,852)

Depreciation on right-of-use assets

0

(40,696)

(40,696)

(685)

0

0

(41,381)

Total depreciation and amortisation

0

(108,520)

(108,520)

(71,121)

0

(2,592)

(182,233)

Disposals

0

(2,265)

(2,265)

(2,907)

0

(167)

(5,339)

Disposals of Right-of-Use Assets

0

0

0

(148)

0

0

(148)

Other movements

(8,500)

(89,489)

(97,989)

0

0

(1)

(97,990)

Other movements of right-of-use assets

8,500

89,489

97,989

0

0

0

97,989

Net book value as at 30 June 2020

386,600

1,220,331

1,606,931

559,009

4,463

13,650

2,184,053

Net book value as at 30 June 2020 represented by:

Gross book value

386,600

2,815,421

3,202,021

1,340,678

13,997

52,628

4,609,324

Accumulated depreciation and amortisation

0

(1,595,090)

(1,595,090)

(781,669)

(9,534)

(38,978)

(2,425,271)

Total as at 30 June 2020

386,600

1,220,331

1,606,931

559,009

4,463

13,650

2,184,053

Carrying amount of right-of-use assets

8,500

179,406

187,906

2,109

0

0

190,015

Valuation of non-financial assets

All valuations were conducted in accordance with the revaluation policy at 4.3 Fair value measurement.

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Contractual commitments for fixed assets:

Capital commitments comprise outstanding payments for buildings under construction and commitments for purchase of plant and equipment. Commitments are reported inclusive of GST.

Land and buildings

25,751

15,797

25,751

15,797

Plant and equipment

12,999

4,170

12,999

4,170

Total commitments payable

38,750

19,967

38,750

19,967

Within 1 year

29,638

18,535

29,638

18,535

Between 1 to 5 years

7,464

1,432

7,464

1,432

More than 5 years

1,648

0

1,648

0

Total commitments payable

38,750

19,967

38,750

19,967

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. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost or for nominal considerations are initially recognised as assets and revenues at their fair value at the date of acquisition. Property, plant and equipment which are purchased from contract research funds and where the control and subsequent sale proceeds are refunded to contributors under the terms of the agreements, are expensed during the year of purchase.

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 CSIRO as separate asset classes to corresponding assets owned outright, but included in the same column as where the corresponding underlying assets would be presented if they were owned.

On initial adoption of AASB 16 CSIRO 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. Leased ROU assets continue to be measured at cost after initial recognition in CSIRO, GGS and Whole of Government financial statements.

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, 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).

Revaluations

Following initial recognition at cost, property, plant and equipment, including assets under finance leases are carried at fair value less accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure the carrying amount of assets do not differ materially from the assets’ fair value as at reporting date. The regularity of valuation depends upon the volatility of movements in the market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under 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 surplus or deficit. Revaluation decrements for a class of assets are recognised directly through the statement of comprehensive income except to the extent that they reverse a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount.

Fair value for each class of asset is determined as follows:

  • Land, which will continue to be used for research activity, is valued by independent valuers at fair value (highest and best use). Highest and best use is determined from the perspective of market participants. An entity’s current use of a non-financial asset is presumed to be its highest and best use unless market or other factors suggest otherwise. Land underwent a full revaluation as at 30 June 2018 by Jones Lang LaSalle (JLL).
  • Buildings and leasehold improvements, which will continue to be used for research activities, are valued by independent valuers at fair value (highest and best use). Building valuations include plant, fit-outs, fixtures and fittings, which form an integral part of buildings. Buildings underwent a full revaluation as at 30 June 2018 by JLL.
  • Plant and equipment which will continue to be used for research activities are valued by independent valuers at fair value (highest and best use). Plant and equipment assets were revalued as at 30 June 2019 by JLL.
  • Properties held for sale are valued at the lower of its carrying amount and fair value less costs to sell. An assessment is undertaken annually of any properties held for sale.
  • Heritage and cultural assets are valued by independent valuers at their depreciated replacement cost. Heritage assets underwent a full revaluation as at 30 June 2018 by JLL.

In addition to independent valuations conducted, CSIRO makes an internal assessment at balance date considering any major events, market changes or indicators of impairment that may impact on fair value. Jones Lang LaSalle (JLL) was engaged to undertake a materiality review of CSIRO’s land and buildings and plant and equipment assets and also perform a desktop valuation of the Ginninderra land asset as at 30 June 2020, outside of the three-year full valuation cycle, in consideration of the potential impacts of COVID-19 on the fair value of assets. After undertaking qualitative, quantitative and uncertainty analyses for the asset classes, JLL are of the opinion that there are no significant material differences between the carrying amounts and fair values for the CSIRO’s assets. JLL note that their valuation is subject to significant valuation uncertainty, considering that the outbreak of COVID-19 may potentially result in market uncertainty and volatility. The potential impact on the market (if any) is unknown at this stage, until the wider/global situation can be controlled. The extent of the impact on asset vales will be mixed across the various market sectors, not only limited to the actual sale/transaction process but may extend considerably beyond the normal sale period, depending on the nature, market sector and size of the property.

Depreciation and Amortisation

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives using, in all cases, the straight-line method of depreciation. Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease. Land is not depreciated.

Depreciation/amortisation 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:

Buildings on freehold land: 40 to 80 years

Leasehold improvements: Lease term

Buildings under lease: Lease term

Passenger vehicles: 7 years

Agricultural and transport equipment: 8 to 20 years

Computing equipment: 2 to 5 years

Scientific equipment: 5 to 20 years

Furniture and office equipment: 5 to 15 years

Workshop equipment: 20 to 25 years

Research vessel: 25 years

Australia telescope: 15 to 58 years

Heritage and cultural assets: Indefinite

Impairment

All assets were assessed for impairment as at 30 June 2020. Where indicators 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 to sell 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 depreciated replacement cost.

There was no impairment recognised for the year ended 30 June 2020 with the exception of impairments disclosed in Note 1.1E.

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 and Cultural Assets

Heritage and cultural items include buildings of historical or cultural significance. CSIRO has classified them as heritage and cultural assets as they are primarily used for purposes that relate to their cultural significance and original purpose. Heritage and cultural assets are stored and managed in ways to preserve their heritage and cultural value over time. Where conservation and preservation activities, specified in an asset's Heritage Management Plan, demonstrate that an asset will be maintained for an indefinite period, these items are considered to have indefinite useful lives and therefore, not subject to depreciation. Copies of the Heritage Management Plans may be obtained by contacting enquiries [at] csiro.au.

Intangibles

Intangibles are internally developed and acquired software for internal use. These assets are carried at cost, less accumulated amortisation and impairment losses, except where the estimated cost of software is less than the $250,000 threshold and expensed in the year of acquisition. Software are amortised on a straight-line basis over their anticipated useful lives. The useful lives are 2 to 10 years (2019: 2 to 10 years). All software assets were assessed for indications of impairment as at 30 June 2020.

CSIRO does not recognise its internally generated intellectual property as an asset on the Balance Sheet as it does not meet the recognition and measurement requirements under AASB 138 Intangible Assets. CSIRO's Intellectual property includes patents, inventions, trademarks, plant breeder's rights and registered designs.

Properties Held for Sale

Properties which are expected to be recovered primarily through sale rather than through continuing use are classified as ‘properties held for sale’. Immediately before classification, the properties are remeasured in accordance with the Group’s accounting policies. Thereafter, at reporting date the properties are measured at the lower of their carrying amount and fair value less cost to sell.

Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognised in the Statement of Comprehensive Income.

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 2.2B: Investment properties

Reconciliation of the opening and closing balances of investment properties

As at 1 July

52,072

49,697

52,072

49,697

Net gain/(loss) from fair value adjustments

(2,699)

2,375

(2,699)

2,375

Total as at 30 June

49,373

52,072

49,373

52,072

No indicators of impairment were identified for investment properties.

Accounting Policy

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value. Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the year in which they arise.

Where an investment property is acquired at no cost or for nominal cost, its cost is deemed to be its fair value as at the date of acquisition.

Investment properties are derecognised either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or losses on disposal of an investment property are recognised in profit or loss in the year of disposal.

Investment properties were valued as at 30 June 2020 by JLL and they are of the opinion that there are no significant material differences between the carrying amounts of investment properties and fair value. JLL note that their valuation is subject to significant valuation uncertainty in the current environment, considering that the outbreak of COVID-19 may potentially result in market uncertainty and volatility. The potential impact on the market (if any) is unknown at this stage, until the wider/global situation can be controlled. The extent of the impact on asset values will be mixed across the various market sectors, not only limited to the actual sale/transaction process but may extend considerably beyond the normal sale period, depending on the nature, market sector and size of the property. Revaluation increments are recorded as a gain or loss in the Statement of Comprehensive Income. Rental income from investment properties is included in the lease income disclosed in Note 1.2 The Basis of Preparation and was $3.8m for 2020 (2019:$3.6m). Operating costs that are recoverable amounted to $1.15m (2019: $1.1m).

Note 2.2C: Other non-financial assets

Contract research work in progress - at cost

0

30,413

0

30,413

Other prepayments

18,748

19,647

18,803

19,739

Total other non-financial assets

18,748

50,060

18,803

50,152

In accordance with AASB 15 CSIRO recognises contract assets (refer Note 2.1 Financial Assets). As the modified retrospective approach was applied on adoption of the new standard, the comparative information presented for 2019 is not restated. No indicators of impairment were identified for other non-financial assets.

2.3 Payables

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 2.3A: Suppliers

Suppliers payable

54,220

72,519

51,319

72,695

Contract liabilities1

160,801

0

158,881

0

Refund liabilities

0

0

0

0

Total

215,021

72,519

210,200

72,695

1Contract liabilities are associated with consideration that has been received from the customer but services are yet to be performed by CSIRO.

Note 2.3B: Other Payables

Accrued salaries and wages

12,267

7,195

12,153

7,167

Contract research revenue received in advance

0

131,008

0

131,008

Other revenue received in advance

0

5,294

0

6,728

Other creditors and accrued expenses

142

8,105

956

336

GST payable to ATO

5,387

0

5,492

0

Payment to the Commonwealth

0

0

0

0

Total other payables

17,796

151,602

18,601

145,239

Accounting Policy

Accounting policy for contract revenue received in advance is contained in Note 1.2 Revenue and Gains.

2.4 Interest Bearing Liabilities

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 2.4A: Leases

Lease liabilities

Buildings

114,620

0

113,251

0

Plant and equipment

2,120

0

2,120

0

Finance leases1

0

27,337

0

27,337

Total Leases

116,740

27,337

115,371

27,337

1CSIRO 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 cash outflow for leases for the year ended 30 June 2020 was $39.9m for Consolidated and $39.5m for CSIRO.

Accounting Policy

Refer to the Overview section for accounting policy on leases.

Note 2.4B: Deposits

Deposits represent monies held on behalf of third parties. If the amounts are not spent for their specified purpose they will be returned to the third party.

Total deposits held are:

22,508

23,310

25,588

27,364

3. People and Relationships

This section describes a range of employment and post employment benefits provided to our people and our relationship with other key people.

3.1 Employee Provisions

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 3.1A: Employee Provisions

Annual leave

67,101

61,274

66,917

61,150

Long service leave

182,621

167,810

182,621

167,810

Severance pay

8,036

7,419

8,036

7,419

Redundancies

5,155

1,995

5,155

1,995

Total employee provisions

262,913

238,498

262,729

238,374

Accounting Policy

Liabilities for short-term employee benefits (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of the end of the reporting period are measured at their nominal amounts. The nominal amount is calculated with regard to the rate expected to be paid on settlement of the liability.

Other long-term employee benefit liabilities are measured at the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.

Leave

The liability for employee benefits includes provisions for annual leave, long service leave and severance payments. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will apply at the time the leave is taken, including the 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 at 30 June 2020 for long service leave and annual leave has been determined by the short hand method and reference to the work of the Australian Government Actuary (AGA). 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. A CSIRO plan of termination is binding when the following criteria are met:

  • actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made;
  • the plan identifies the number of employees whose employment is to be terminated; and
  • the plan established the termination benefits that employees will receive.

Superannuation

Employees of CSIRO are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), or the PSS accumulation plan (PSSap). 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 by the Department of Finance as an administered item.

CSIRO makes employer contributions to the employee superannuation schemes at rates determined by an actuary to be sufficient to meet the cost to the Government of the superannuation entitlements of the Group’s employees. CSIRO accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June 2020 represents outstanding contributions for the financial year.

3.2 Key Management Personnel Information

(a) Key Management Personnel Remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of CSIRO, directly or indirectly, including any director of CSIRO. Those key management personnel along with their remuneration are reported in table below.

CSIRO Key Management Personnel

Short Term Benefits

Post Employment Benefits

Other Long Term Benefits

Termination Benefits

Total Remuneration

Base Salary

Performance Payment

Other Benefits and Allowances

Super-annuation Contributions

Long Service Leave

Other Long Term Benefits

Position

$

$

$

$

$

$

$

$

Marshall, Larry

Chief Executive

772,059

196,313

25,495

21,972

34,082

0

0

1,049,921

Zielke, Judi

Chief Operating Officer

441,406

15,972

-

68,958

16,965

0

0

543,301

Mayfield, Peter

Executive Director - Environment, Energy & Resources

484,929

26,475

18,114

61,344

22,610

0

0

613,472

Hill, Anita1

Executive Director - Future Industries

238,603

23,700

10,322

38,138

16,741

0

0

327,504

Zipper, Marcus1

Executive Director - Future Industries

138,805

0

7,125

9,613

6,473

0

0

162,016

Williams, David

Executive Director - Digital, National Facilities and Collections

406,311

25,485

19,130

21,972

29,395

0

0

502,293

Total remuneration for CSIRO Key Management Personnel

2,482,113

287,945

80,186

221,997

126,266

0

0

3,198,507

CSIRO Subsidiary Key Management Personnel

Jimenez, Orlando

Fundacion CEO

255,866

0

9,193

0

0

0

0

265,059

Total remuneration for Fundacion

255,866

0

9,193

0

0

0

0

265,059

Total Consolidated Remuneration for Key Management Personnel

2,737,979

287,945

89,379

221,997

126,266

0

0

3,463,566

1During the reporting period ended 30 June 2020, CSIRO had five executives who meet the definition of key management personnel. All were employed for the full financial year, with the exception of Anita Hill, whose term as Executive Director ended 2 February 2020, and Marcus Zipper, whose term began 3 February 2020. Consolidated figures include the remuneration of the Fundacion CEO Orlando Jimenez. This note has been prepared on an accrual basis for substantive and long term acting senior management personnel during the period. Remuneration details for the non-executive members of the CSIRO Board are disclosed at note 3.4.

Performance payment amounts represent estimated amounts based on the contract amount allowable. Actual performance payments are decided by the Board following the end of financial year.

(b) Senior Executive Staff Remuneration

Short Term Benefits

Post Employment Benefits

Other Long Term Benefits

Average Termination Benefits

Average Total Remuneration

Average Base Salary

Average Performance Payment

Average Other Benefits and Allowances

Average Super-annuation Contributions

Average Long Service Leave

Average Other Long Term Benefits

$

$

$

$

$

$

$

$

104,619

10,977

4,795

13,043

4,498

0

0

137,932

218,757

11,527

17,448

26,169

8,878

0

0

282,779

224,548

20,691

19,687

33,865

8,787

0

0

307,578

237,366

16,887

17,159

44,727

17,173

0

0

333,312

283,866

16,770

0

51,964

16,080

0

0

368,680

294,690

13,108

16,781

38,441

15,013

0

0

378,033

305,620

21,882

17,448

51,085

10,740

0

0

406,775

335,778

0

42,715

47,176

5,262

0

0

430,931

During the reporting period ended 30 June 2020, CSIRO had twenty executives who meet the definition of senior executive staff. This note has been prepared on an accrual basis for substantive and long term acting senior management personnel during the period. Base Salary includes annual leave accrued in the period. Performance payment amounts represent estimated amounts based on the contract amount allowable. Actual performance payments are decided by the Board following the end of financial year.

(c) Remuneration of highly paid staff

Remuneration of other highly paid staff

Short Term Benefits

Post Employment

Other Long Term Benefits

Average Termination Benefits

Average Total Remuneration

Remuneration Band

Number of Highly Paid Staff

Average Base Salary

Average Performance Payment

Average Other Benefits and Allowances

Average Super-annuation
Contributions

Average Long Service Leave

Average Other Long Term Benefits

$

$

$

$

$

$

$

$

$225,001 - $245,000

72

176,541

2,722

4,760

31,376

8,782

0

9,643

233,824

$245,001 - $270,000

62

182,458

5,073

10,329

30,329

15,473

0

10,862

255,124

$270,001 - $295,000

26

205,602

11,281

16,783

34,873

8,814

0

5,066

282,419

$295,001 - $320,000

8

189,340

10,594

14,148

30,936

19,856

0

37,944

302,818

$320,001 - $345,000

1

290,117

0

0

21,972

8,386

0

0

320,475

$345,001 - $370,000

10

244,862

11,453

15,926

33,909

15,604

0

33,681

355,435

$370,001 - $395,000

5

261,864

15,812

23,359

28,668

11,552

0

40,757

382,012

$395,001 - $420,000

2

295,400

17,695

17,448

53,214

13,734

0

0

397,491

$420,001 - $445,000

1

126,882

0

0

22,784

77,916

0

203,450

431,032

$445,001 - $470,000

1

346,889

57,000

0

46,673

11,450

0

0

462,012

Base salary includes annual leave accrued in the period.

Performance payment amounts represent estimated amounts based on the contract amount allowable. Actual performance payments are decided by the Board following the end of financial year.

3.3 Remuneration of Auditors

Consolidated

CSIRO

2020

2019

2020

2019

$

$

$

$

Amounts received or due and receivable by the Group's auditors for:

Audit of the financial statements

378,909

327,759

255,000

215,000

Audit of projects

0

10,709

0

0

378,909

338,468

255,000

215,000

The Group’s auditor (except for the Fundacion) is the Australian National Audit Office (ANAO) who has appointed RSM to assist with the assignment since 2015-16. The Fundacion is audited by Ernst & Young Chile, who conduct both financial statement and project audits for the Fundación.

3.4 Remuneration of Board Members

Short Term Benefits

Post employment benefits

Base Salary

Other benefits and allowances

Super Contributions

Total 2019-20 Remuneration

Name

Position

Term

$

$

$

$

Michele Allan

Board member

05/05/16 - 04/05/19; 05/05/19 - 04/05/24

70,717

8,195

7,498

86,410

Drew Clarke

Board member

24/08/17 - 23/08/22

70,717

8,195

7,498

86,410

Edwina Cornish

Board member

26/11/15 - 25/11/20

70,717

8,195

7,498

86,410

Kathryn Fagg

Board member

02/08/18 - 01/08/23

70,717

6,820

7,366

84,903

Shirley In't Veld

Deputy Chairman

28/06/12 - 27/06/15; 28/06/15 - 27/06/20

104,784

0

9,955

114,739

David Knox

Board member

05/05/16 - 04/05/19; 05/05/19 - 04/05/24

70,717

8,373

7,514

86,604

Tanya Monro

Board member

25/02/16 - 24/02/21

0

0

0

0

Peter Riddles

Board member

24/04/14 - 23/04/17; 24/04/17 - 23/04/22

70,717

16,568

8,293

95,578

David Thodey

Chairman

15/10/15 - 14/10/20

141,433

0

13,437

154,870

Total remuneration for CSIRO Board Members

670,519

56,346

69,059

795,924

CSIRO Subsidiary Board Members (Chile Fundacion)

Claudia Bobadilla

Board Member

15/3/17-15/3/22

33,130

0

0

33,130

Maria Del Rosario Navarro

Board Member

13/9/19-13/9/24

32,649

0

0

32,649

Total remuneration for CSIRO Subsidiary Board Members (Chile Fundacion)

65,779

0

0

65,779

Total Consolidated Remuneration for CSIRO Group

736,298

56,346

69,059

861,703

The remuneration of the Chief Executive Officer, who is also a CSIRO Board Member is reported under Note 3.2 Key Management Personnel Information.

3.5 Meetings of the Board and Board Committees

During the financial year 2019-20, 9 Board meetings (4 out of session), 5 Board Audit & Risk Committee meetings, 4 Board People & Safety Committee meetings and 4 Board Science Excellence Committee Meetings were held. The number of meetings attended by each of the Board members was as follows:

Board member

CSIRO Board

CSIRO Board Audit & Risk Committee

CSIRO Board People and Safety Committee

CSIRO Board Science Excellence Committee

Number eligible to attend as a member

Number attended

Number eligible to attend as a member

Number attended

Number eligible to attend as a member

Number attended

Number eligible to attend as a member

Number attended

Michele Allan

9

8

5

5

0

1

4

4

Edwina Cornish

9

9

5

5

0

3

4

4

Shirley In't Veld

9

7

5

5

4

4

0

0

David Knox

9

8

0

0

4

4

4

4

Tanya Monro

9

6

0

0

4

3

4

2

Kathryn Fagg

9

8

4

5

4

4

0

3

Peter Riddles

9

9

5

5

0

1

4

4

David Thodey

9

9

0

5

0

4

0

4

Drew Clarke

9

9

5

5

4

4

0

4

Larry Marshall

9

9

0

5

0

4

0

4

3.6 Related Party Disclosures

(a) Controlled Entities
SIEF was established under the Science and Industry Endowment Act 1926. The principal activity of the SIEF Trust is to provide assistance to persons engaged in scientific research and in training of students in scientific research. The SIEF Trustee is the CSIRO Chief Executive and SIEF is a wholly controlled entity. The SIEF’s separate financial statements are reported in the CSIRO Annual Report.

The Fundación was established in October 2013. The Fundación is a controlled entity governed by a Board in accordance with the Constitution of the Fundación. The Fundación is working with industry and leading Chilean Universities to develop cutting-edge technologies to reduce the environmental impact of mining and increase productivity.

NICTA is Australia’s ICT Research Centre of Excellence and undertakes internationally recognised research in partnership with industry, government and researchers to create national benefit and wealth for Australia. NICTA is the parent entity of NICTA IPR Pty Ltd and a small number of minor proprietary limited companies that exist to hold intellectual property and commercialise research. CSIRO obtained full control of NICTA on 28 August 2015, when the members of the NICTA Board resolved to adopt a revised company constitution which provided CSIRO with effective control over NICTA.

CSIRO has established an Innovation Fund with Commonwealth funding support to invest in the development of early stage technology opportunities from the public research sector, to increase their translation into commercial opportunities to be taken up by Australian industry. The Fund has been established through a structure of entities whose purpose is to manage and operate the Fund. At 30 June 2020 a second Innovation Fund is in the process of being established, with new entities established but not yet operational in the 2019-20 year. The entities that comprose the Innovation Fund are:

  • CSIRO Innovation Fund 1, LP is an incorporated limited partnership formed under the Partnership Act 1892 (NSW). It is registered by Innovation and Science Australia as an Early Stage Venture Capital Limited Partnership (ESVCLP). It was established in January 2017.
  • CSIRO Management Partnership Pty LP is an incorporated limited partnership formed under the Partnership Act 1892 (NSW). It was established in January 2017 as a Venture Capital Management Partnership and acts as the General Partner of the CSIRO Innovation Fund 1, LP.
  • CSIRO General Partner 2 Pty Ltd was established in December 2016 and is a small proprietary company limited by shares, which are solely held by CSIRO. This company acts as the general partner of CSIRO Management Partnership Pty LP.
  • CSIRO Fund of Funds, LP is an incorporated limited partnership formed under the Partnership Act 1892 (NSW) and is registered by Innovation and Science Australia as an Australian Venture Capital Fund of Funds. It was established in May 2016.
  • CSIRO General Partner Pty Ltd was established in May 2016 and is a small proprietary company limited by shares, which are solely held by CSIRO. It acts as the general partner of CSIRO Fund of Funds LP. It also acts as the trustee of CSIRO Innovation Holding Trust that was established in July 2018.
  • CSIRO Financial Services Pty Ltd was established in December 2015 and is a small proprietary company limited by shares, which are solely held by CSIRO. The company has been issued an Australian Financial Services License by ASIC and acts as Manager of CSIRO Innovation Fund 1, LP.
  • CSIRO Innovation Services Pty Ltd was established in October 2016 and is a small proprietary company limited by shares, which are solely held by CSIRO. It acts as trustee of a discretionary trust established to distribute some returns from CSIRO Innovation Fund 1, LP, and as trustee of a unit trust established to distribute some returns form CSIRO Innovation Follow-on Fund 1.
  • CSIRO Innovation Holding Trust is a trust established in July 2018 to distribute returns from CSIRO Innovation Fund 1, LP according to an agreed distribution policy administered by CSIRO Innovation Services Pty Ltd.
  • CSIRO Follow-on Services Pty Ltd was established in April 2018 and is a small proprietary company limited by shares, which are solely held by CSIRO. It serves as trustee of the CSIRO Innovation Follow-on Fund 1, a managed investment trust.
  • CSIRO Innovation Follow On Fund 1 was established October 2018 and is structured as a Managed Investment Trust, formed to provide follow-on investment to companies supported by CSIRO Innovation Fund 1, LP.
  • CSIRO Innnovation Fund Discretionary Trust was established in January 2017 to hold and distribute some of the returns from CSIRO Innovation Fund 1, LP according to an agreed distribution policy administered by CSIRO Innovation Services Pty Ltd.
  • CSIRO Follow-on Sponsor Trust was established in June 2019 for the purpose of distributing carried interest from the CSIRO Innovation Follow-on Fund 1.
  • CSIRO Innovation Fund 2, LP is an incorporated limited partnership formed under the Partnership Act 1892 (NSW). It is registered by Innovation and Science Australia as an Early Stage Venture Capital Limited Partnership (ESVCLP). It was established in March 2020.
  • CSIRO Follow-on Services 2 Pty Ltd was established in March 2020 to serve as trustee of CSIRO Innovation Follow-on Fund 2, which is yet to be established and will be setup as a managed investment trust.
  • CSIROGP Fund 2 Pty Ltd was established in March 2020 to serve as the General Partner of CSIRO Innovation Fund 2, LP.
  • CSIRO Management Partnership 2, LP was established in March 2020 for the purposes of distributing some of the returns from CSIRO Innovation Fund 2, LP.
  • CSIRO Custodial Services Pty Ltd was established in April 2020 for the purpose of providing custodial services under an Australian Financial Services Licence to the Innovation Fund entities.

All of the above Innovation Fund related companies are under the sole control of the CSIRO as at 30 June 2020. The above entities (with the exception of CSIRO Financial Services Pty Ltd; CSIRO Innovation Services Pty Ltd; and CSIRO Custodial Services Ptd Ltd) sit outside the General Government Sector.

CSIRO USA LLC and CSIRO Innovations LLC were established in February 2017 to support the establishment of a CSIRO presence in the United States. Both entities are incorporated within Delaware and are wholly controlled by the CSIRO.

(b) Related party relationships

The entity is an Australian Government controlled entity. Related parties to this entity are the Board, Key Management Personnel including 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 the entity, it has been determined that there are no related party transactions to be separately disclosed.

4. Managing Uncertainties

This section analyses how CSIRO manages financial risk within its operating environment.

4.1 Contingent Assets and Liabilities

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Quantifiable Contingencies

Contingent assets

Insurance claims

15,958

2,123

15,958

2,123

Bank guarantees received from suppliers

5,237

4,879

5,237

4,879

Contingent revenue (equity instrument)

0

500

0

0

Total contingent assets

21,195

7,502

21,195

7,002

Contingent liabilities

Estimated legal claims

6,000

6,000

6,000

6,000

Total contingent liabilities

6,000

6,000

6,000

6,000

Total net contingent asset/(liability)

15,195

1,502

15,195

1,002

A natural disaster (hailstorm) occurred on 20th January 2020 impacting the CSIRO Black Mountain site and operations. At 30 June 2020 the insurance claim for business interruption and costs incurred had not been settled and no monies had been received. Included in the above insurance claims contingent asset amount is $13.9m for the hailstorm claim.

Depending on the materiality of risks involved with certain commercial transactions, CSIRO has requested bank guarantees where necessary to mitigate risks, notably where substantial advance payments were made.

In June 2019, the Commonwealth Director of Public Prosecutions filed four charges in the Magistrates’ Court of Victoria, alleging the Commonwealth Scientific and Industrial Research Organisation failed in its duties under the Work Health and Safety Act 2011 in relation to an incident that occurred in a Melbourne research facility in 2017. If found to be guilty, each charge carries a maximum penalty of $1,500,000.

Unquantifiable contingencies

As disclosed in the Overview Note, a financial provision for the estimated costs in restoring and decontaminating land where a legal or constructive obligation has arisen has been recognised on the Statement of Financial Position. For cases where there is no legal or constructive obligation, the potential costs have not been assessed and are unquantifiable contingencies. CSIRO has no other identified unquantifiable contingencies to report.

Accounting Policy

Contingent liabilities and contingent assets are not recognised in the Statement of Financial Position. They may arise from uncertainty as to the existence of a liability or asset, or represent a liability or asset 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.

4.2 Financial Instruments

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 4.2A: Categories of financial instruments

Financial Assets

Financial assets at fair value through profit or loss

Investments

304,490

75,333

177,467

64,832

Total financial assets at fair value through profit and loss

304,490

75,333

177,467

64,832

Financial assets at fair value through other comprehensive income

Investments - Innovation Fund

0

70,472

0

60,503

Total financial assets at fair value through other comprehensive income

0

70,472

0

60,503

Financial assets at amortised cost

Cash at bank

371,496

178,936

270,619

118,829

Term deposits

32,000

141,139

32,000

80,000

Receivable for goods and services

56,292

65,729

55,581

65,269

Other receivables

1,890

5,247

3,183

3,351

Total financial assets at amortised cost

461,678

391,051

361,383

267,449

Total financial assets

766,168

536,856

538,850

392,784

Financial Liabilities

Financial liabilities measured at amortised cost

Trade creditors

215,021

72,519

210,200

72,695

Research revenue received in advance

0

131,008

0

131,008

Other creditors

17,796

20,594

18,601

14,231

Lease liabilities

116,740

27,337

115,371

27,337

Deposits

22,508

23,310

25,588

27,364

Total financial liabilities at amortised cost

372,065

274,768

369,760

272,635

Total financial liabilities

372,065

274,768

369,760

272,635

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 4.2B: Net income and expense from financial assets

Financial assets at amortised cost

Interest revenue

5,772

13,501

4,251

10,536

Impairment expense

(1,304)

(536)

(895)

(536)

Net gain from financial assets at amortised cost

4,468

12,965

3,356

10,000

Investments assets at fair value through profit or loss

Fair value changes

101,503

14,660

43,915

(1,497)

Net gain/(loss) from investment assets at fair value through profit or loss

101,503

14,660

43,915

(1,497)

Net gain/(loss) on financial assets

105,971

27,625

47,271

8,503

Accounting Policy

Financial Assets

The entity classifies its financial assets under AASB 9 Financial Instruments 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 both the entity's business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when the entity 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 don'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. CSIRO values it’s equity investment portfolio in listed companies, unlisted companies and in Uniseed Trust as FVTPL. CSIRO Innovation Fund values it’s equity investment portfolio in unlisted companies as FVTPL.

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 de-recognition event where the write off directly reduces the gross carrying amount of the financial asset.

Financial liabilities

Financial liabilities are classified as either 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.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

4.3 Fair value measurement

Note 4.3A: Fair value measurement

Fair value measurements at the end of the reporting period

2020

2019

$'000

$'000

Financial assets

Other investments

304,490

145,805

Total financial assets

304,490

145,805

Non-financial assets

Land

386,600

386,600

Buildings

1,221,649

1,177,562

Plant and equipment

559,183

563,342

Investment properties

49,373

52,072

Properties held for sale

5,200

59,200

Heritage and cultural

4,463

4,463

Total non-financial assets

2,226,468

2,243,239

Financial liabilities

Lease liabilities

116,740

27,337

Deposits

22,508

23,310

Total financial liabilities

139,248

50,647

The above disclosure represents the consolidated financial position of the Group.

Significant Accounting Judgements and Estimates

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

  • Properties classified as ‘properties held for sale’ are measured at the lower of the carrying amount and fair value less costs to sell (level 1 inputs), ‘investment properties’ has been taken to be the market value (level 2 inputs), of similar properties as determined by an independent valuer;
  • The fair value of land which will continue to be used for research activities, and buildings held for specialised purposes and where there is no readily available market price has been taken to be Fair Value- Highest and Best Use (level 3 inputs), as determined by an independent valuer;
  • The fair value of plant and equipment has been taken to be Fair Value – Highest and Best Use (level 2 and 3 inputs) as they mainly comprise of specialised research equipment. Fair value is determined by an independent valuer; and
  • The fair value of listed companies is assessed at market value (level 1 inputs); whereas unlisted companies and commercial vehicles are assessed at fair value using the best information available (level 1 and 3 inputs). For investments in unlisted companies where there is no readily available market pricing, the fair value has been determined by applying valuation techniques in line with the generally accepted valuation guidelines 'International Private Equity and Venture Capital Valuation Guidelines (IPEV).' Where recent transactions for the unlisted companies' equity have taken place, these equity transaction prices are used to value CSIRO's investment. For unlisted companies that have not had any recent equity transactions, other IPEV valuation techniques are used such as discounted cash flows and share of net assets. Investments in special purpose entities are either valued at cost of share of net realisable assets since a reliable estimate of fair value cannot be established. These entities have been set up primarily to gain access to research facilities/networks, or to provide services to owners. Hence, there is not 'active market' for these equity investments.

No accounting assumptions and 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.

5. Other information

5.1 Aggregate Assets and Liabilities

Consolidated

CSIRO

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Note 5.1A: Aggregate Assets and Liabilities

Assets expected to be recovered in:

No more than 12 months

516,389

505,630

416,558

380,667

More than 12 months

2,540,828

2,347,849

2,412,313

2,327,180

Total assets

3,057,217

2,853,479

2,828,871

2,707,847

Liabilities expected to be settled in:

No more than 12 months

350,743

261,732

346,086

256,896

More than 12 months

324,692

292,554

326,860

295,133

Total liabilities

675,435

554,286

672,946

552,029

5.2 Cooperative Research Centres (CRCs)

All CRCs have been classified as joint operations as the purpose is for the pursuit of collaborative scientific research where participants share in the scientific outcomes and outputs of the CRCs. In the event that CRC research results in a move to commercialisation, a separate legal entity is established and the CSIRO’s share of the new entity is treated either as subsidiary, joint venture or associate in the Statement of Financial Position as appropriate.

CRC grants provide successful applicants with access to grant funds for up to 10 years for collaborations from industry, research and community sectors to solve industry problems and improve the competitiveness, productivity and sustainability of the Australian industries. CRC-P grants support short term industry-led collaborations to develop important new technologies, products and services that deliver tangible outcomes.

CSIRO’s total cash and in-kind contribution (e.g. staff and use of assets) to CRCs from its own resources was $15.2 million and to CRC-Ps $3.2 million. Contributions made by CSIRO are expensed as incurred and these are included in the Statement of Comprehensive Income.

CSIRO was a participant in the following CRCs during 2019-20:

Name of CRC

Scheduled Termination Date

Alertness Safety & Productivity CRC (Alertness CRC)

30-Jun-20

Autism CRC

30-Jun-21

Bushfire and Natural Hazards CRC (BNHCRC)

30-Jun-21

Cancer Therapeutics CRC (CTX)

30-Jun-20

Contamination Assessment & Remediation of the Environment CRC (CRC Care)

30-Jun-20

CRC for Developing Northern Australia: Establishing eye screening services

30-Jun-21

CRC for Developing Northern Australia: Northern Australia aquaculture industry situational analysis study

30-Apr-20

CRC for Developing Northern Australia: Northern Australian beef sector industry situational analysis study

30-Apr-20

Cyber Security CRC

01-Dec-24

Innovative Manufacturing CRC (IMCRC)

30-Jun-22

MinEx CRC

30-Jun-28

Optimising Resource Extraction (CRC ORE)

30-Jun-21

Rail Manufacturing CRC

30-Jun-20

SmartSat CRC

30-Jun-26

Future Battery Industries CRC

30-Jun-25

Blue Economy CRC

30-Jun-29

CO2 CRC

11-Dec-20

CSIRO was a participant in the following CRC-Ps during 2019-20:

Name of CRC-P

Scheduled Termination Date

CRC-P Automating data collection and analytics in underground mines using drones and AI

31-Dec-21

CRC-P Implementing intelligent automated reporting in radiology practice

30-Jun-21

CRC-P Kapunda In-Situ Copper and Gold Field Recovery Trial

31-Dec-20

CRC-P Long-life alloy components for efficient hydrometallurgical processing

31-Dec-20

CRC-P Optimal scheduling of air conditioning systems with renewable energy and thermal storage

30-Jun-21

CRC-P Oventus (targeted therapy for sleep apnoea)

20-Dec-19

CRC-P Smart Sensor & Deep Learning Behavioural Engine for Personalised Health Monitoring

31-Mar-22

CRC-P Smart tools for agronomic crop insights using Machine learning (ML) and Artificial Intelligence (AI)

01-Jan-22

CRC-P Transforming joint surgery rehabilitation with artificial intelligence in telehealth

19-Jul-21

Developing Northern Australia: Developing sustainable cropping systems for cotton, grains and fodder

01-Oct-20

Developing Northern Australia: New pastures to increase livestock productivity across the north

30-Sep-20

CRC-P A novel process for producing battery grade nickel and cobalt sulphates

30-Sep-21

CRC-P Future-proofing the salmon farming industry in the face of climate warming

31-Mar-23

CRC-P Privacy-Preserving Analytics for the Education Technology Industry

14-Aug-22

CRC-P Using AI and a hybrid ESS solution to fully integrate solar generation into the distribution system

31-Aug-22

CRC-P Development of a new commercial-scale process for producing high purity graphite (>99.95%)

31-Dec-21

Accounting Policy

Joint Operations – Cooperative Research Centres (CRCs)

The primary source of funding for CRCs is from the Australian Government and funding is progressively drawn down over the life of the CRCs and distributed to participants, including CSIRO and universities, for research and development purposes. CSIRO’s contributions to the CRCs are expensed as incurred and funds received from CRCs are recognised as revenue to the extent that work has been performed in the Statement of Comprehensive Income. CSIRO has been a participant in 17 CRCs and 16 CRC-Ps during the financial year.

5.3 Monies Held in Trust

2020

2019

$'000

$'000

Monies held in trust represented by cash, deposits and investments for the benefit of the Group which are not included in the Statement of Financial Position are:

The Sir Ian McLennan Achievement for Industry Award - established to award outstanding contributions by the Group's scientists and engineers to national development.

366

422

The Elwood and Hannah Zimmerman Trust Fund - established to fund weevil research and the curation of the Australian National Insect Collection (ANIC) weevil collection.

4,933

5,069

The Schlinger Trust - established to research the taxonomy, biosystematics, general biology and biogeography of Australasian Diptera conducted by the Australian National Insect Collection.

2,273

2,371

Total monies held in trust as at 30 June

7,572

7,862

McLennan

Zimmerman

Schlinger

Total

Summary of movements:

$'000

$'000

$'000

$'000

Balance as at 1 July 2019

422

5,069

2,371

7,862

Adjustments

0

0

0

0

Interest and distribution adjustments

(18)

113

35

130

Expenditure in the period

(38)

(249)

(133)

(420)

Balance as at 30 June 2020

366

4,933

2,273

7,572

5.4 Collections

CSIRO is the custodian of several collections used for scientific research. These collections have been established over time and document an extensive range of Australian flora and fauna species. The collections are irreplaceable, bear scientific and historical value and are not reliably measurable in monetary terms. Therefore, CSIRO has not recognised them as an asset in its financial statements.

The main collections held by CSIRO are:

  • Australian National Herbarium (ANH) – With a focus on the Australian flora and that of neighbouring regions such as New Guinea and the Pacific, the ANH has over 1 million herbarium specimens, with additional holdings at the Australian Tropical Herbarium (ATH) in Cairns, Queensland. The ANH collections include the Dadswell Memorial Wood Collection and comprehensive holdings of a number of groups, including cryptogams, eucalypts and orchids.
  • Australian National Insect Collection (ANIC) – Specialising in Australian terrestrial invertebrates, ANIC houses over 12 million specimens and is the world’s largest collection of Australian insects, as well as groups such as mites, spiders, earthworms, nematodes and centipedes. ANIC is an important research collection used by CSIRO researchers, university staff, and students, and scientists from Australian and international research organisations.
  • Australian National Wildlife Collection (ANWC) – Specialising in terrestrial vertebrates, ANWC contains specimens of most species of Australian mammals, birds, reptiles, and amphibians. It is particularly rich in specimens of birds from New Guinea. ANWC is a valuable asset for biologists engaged in biodiversity research. Its research library holds 60,000 recordings of wildlife sounds, more than a thousand tissue samples, and the egg collections from more than 300 bird species.
  • Australian National Fish Collection (ANFC) – Specialising in marine fishes, the ANFC contains almost 150,000 specimens representing more than 3,000 species from the Indo-Pacific region. It is an invaluable resource for biodiversity and biogeographic research on Australian and Indo-Pacific fishes. Its major strengths are sharks, rays, and deep-water fishes. It also contains a large collection of images and radiographs of Australian fishes.
  • Australian Tree Seed Centre (ATSC) – The ATSC is managed as a collection and research centre for Australian native tree species. For over 50 years the centre has been collecting, researching and supplying quality, fully documented tree seed to both domestic and overseas customers. Collections of seed are sourced from wild populations and genetically improved seed from our domestication and improvement programs.
  • Australian National Algae Culture Collection (ANACC) – The ANACC consists of more than 300 microalgae species and is a resource for research on algal diversity, distribution, richness, and taxonomic relationships, including those of economic importance and environmental concern. Aligned with the collection is the National Algae Supply Service, which provides microalgae strains as starter cultures to industry, research, organisations and educational institutions in over 70 countries.

6. Budgetary Reports and Explanations of Major Variances

The following provides a comparison of the original budget as presented in the 2019-20 Portfolio Budget Statements to the actual outcome reported for 2019-20. The intention of this variance analysis is to provide the reader with information relevant to assessing the performance of CSIRO, including the accountability for the resources entrusted to it.

Statement of Comprehensive Income

for the period ended 30 June 2020

Consolidated

Actual

Original Budget

Variance

2020

2020

2020

$'000

$'000

$'000

NET COST OF SERVICES

Expenses

Employee benefits

794,602

778,993

(15,609)

Suppliers

433,420

495,889

62,469

Depreciation and amortisation

182,830

159,351

(23,479)

Finance leases

2,707

3,380

673

Impairment loss on financial instruments

1,304

0

(1,304)

Write-down and impairment of other assets

12,188

0

(12,188)

Loss on revaluation of investment properties

2,700

0

(2,700)

Total expenses

1,429,751

1,437,613

7,862

Own-Source Income

Own-source revenue

Revenue from contracts with customers

449,419

478,248

(28,829)

Royalties and licence fees

0

38,611

(38,611)

Bank and term deposits interest

5,772

8,131

(2,359)

Rental income

9,200

6,100

3,100

Other revenues

34,708

17,936

16,772

Total own-source revenue

499,099

549,026

(49,927)

Gains

Gain/(loss) on foreign exchange - non speculative

383

0

383

Gain/(loss from equity investments and intellectual property

2,032

0

2,032

Gain/(loss) from asset sales

29,662

6,000

23,662

Gain on valuation of equity investments

101,503

0

101,503

Total gains

133,580

6,000

127,580

Total own-source income

632,679

555,026

77,653

Net cost of services

(797,072)

(882,587)

85,515

Revenue from Government

837,873

839,151

(1,278)

Surplus on continuing operation

837,873

839,151

(1,278)

Surplus/(Deficit)

40,801

(43,436)

84,237

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation reserves

0

0

0

Items subject to subsequent reclassification to net cost of services

Changes in other reserves

(176)

0

(176)

Total other comprehensive income

(176)

0

(176)

Total comprehensive income/(loss)

40,625

(43,436)

84,061

Statement of Financial Position

as at 30 June 2020

Consolidated

Actual

Original Budget

Variance

2020

2020

2020

$'000

$'000

$'000

ASSETS

Financial Assets

Cash and cash equivalents

403,496

283,420

120,076

Trade and other receivables

88,945

91,151

(2,206)

Other investments

304,490

127,495

176,995

Total financial assets

796,931

502,066

294,865

Non-Financial Assets

Land and buildings

1,608,249

1,601,934

6,315

Plant and equipment

559,183

514,092

45,091

Heritage and cultural

4,463

4,463

0

Intangibles

13,650

18,173

(4,523)

Investment properties

49,373

49,697

(324)

Inventories

1,420

1,440

(20)

Other non-financial assets

18,748

44,295

(25,547)

Total non-financial assets

2,255,086

2,234,094

20,992

Properties held for sale

5,200

0

5,200

Total assets

3,057,217

2,736,160

321,057

LIABILITIES

Payables

Suppliers

215,021

89,578

(125,443)

Other payables

17,796

143,032

125,236

Total payables

232,817

232,610

(207)

Interest Bearing Liabilities

Leases

116,740

0

(116,740)

Deposits

22,508

0

(22,508)

Total Interest bearing liabilities

139,248

80,664

(139,248)

Provisions

Employee provisions

262,913

224,807

(38,106)

Provision for remediation

40,457

21,000

(19,457)

Total provisions

303,370

245,807

(57,563)

Total liabilities

675,435

559,081

(197,018)

Net assets

2,381,782

2,177,079

124,039

EQUITY

Contributed equity

310,954

310,954

0

Asset revaluation reserves

1,523,229

1,492,334

30,895

Other reserves

(203)

(203)

Retained surplus

455,993

373,791

82,556

Non-controlling interest

91,809

91,455

Total equity

2,381,782

2,177,079

204,703

Statement of Changes in Equity

for the period ended 30 June 2020

Retained earnings

Asset revaluation reserve

Other reserves

Contributed equity/capital

Non-controlling interest

Total equity

Actual

Original Budget

Variance

Actual

Original Budget

Variance

Actual

Original Budget

Variance

Actual

Original Budget

Variance

Actual

Original Budget

Variance

Actual

Original Budget

Variance

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

Opening balance

435,198

417,227

17,971

1,523,229

1,492,286

30,943

(27)

48

(75)

300,954

300,954

0

39,839

0

39,839

2,299,193

2,210,515

88,678

Adjustment on initial application of AASB15/AASB 1058

(1,012)

(1,012)

Adjustment on initial application of AASB 16

Adjusted opening balance

434,186

417,227

17,971

1,523,229

1,492,286

30,943

(27)

48

(75)

300,954

300,954

0

39,839

0

39,839

2,298,181

2,210,515

88,678

Comprehensive income

Other comprehensive income

0

0

0

0

0

0

(176)

0

(176)

0

0

0

0

0

0

(176)

0

(176)

Surplus/(deficit) for the period

22,161

(43,436)

65,597

0

0

0

0

0

0

0

0

0

18,640

0

18,640

40,801

(43,436)

84,237

Total comprehensive income

22,161

(43,436)

65,597

0

0

0

(176)

0

(176)

0

0

0

18,640

18,640

40,625

(43,436)

84,061

Other Movements

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

-

Contributions by owners

Equity injection

0

0

0

0

0

0

0

0

0

10,000

10,000

0

32,976

0

32,976

42,976

10,000

32,976

Contributions by owners – other

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

-

Closing balance

456,347

373,791

83,568

1,523,229

1,492,286

30,943

(203)

48

(251)

310,954

310,954

0

91,455

0

72,815

2,381,782

2,177,079

205,715

Cash Flow Statement

for the period ended 30 June 2020

Consolidated

Actual

Original Budget

Variance

$'000

$'000

$'000

OPERATING ACTIVITIES

Cash received

Receipts from Government

837,873

839,151

(1,278)

Sale of goods and rendering of services

573,857

521,373

52,484

Interest

6,563

7,985

(1,422)

Net GST received

21,203

(719)

21,922

Deposits

0

0

0

Other

0

17,936

(17,936)

Total cash received

1,439,496

1,385,726

53,770

Cash used

Employees

765,251

777,017

11,766

Suppliers

520,701

496,452

(24,249)

Interest payments on lease liabilities

2,585

0

(2,585)

Finance costs

122

2,680

2,558

Deposits

799

0

799

Other

0

5,000

(5,000)

Total cash used

1,289,458

1,281,149

(16,711)

Net cash from operating activities

150,038

104,577

37,059

INVESTING ACTIVITIES

Cash received

Proceeds from sales of property, plant and equipment

90,547

67,300

23,247

Proceeds from sales of equity investments and intellectual property

6,842

0

6,842

Total cash received

97,389

67,300

30,089

Cash used

Purchase of property, plant and equipment

103,765

179,291

75,526

Equity investments

61,907

10,000

(51,907)

Other selling costs

1,397

0

(1,397)

Total cash used

167,069

189,291

22,222

Net cash used in investing activities

(69,680)

(121,991)

52,311

FINANCING ACTIVITIES

Cash received

Contributed equity

42,976

10,000

32,976

Other

0

45,000

(45,000)

Total cash received

42,976

55,000

(12,024)

Cash used

Finance leases

0

4,485

4,485

Principal payments of lease liabilities

39,913

0

(39,913)

Total cash used

39,913

4,485

(35,428)

Net cash from financing activities

3,063

50,515

(47,452)

Net increase in cash held

83,421

33,101

41,918

Cash and cash equivalents at the beginning of the reporting period

320,075

320,075

0

Cash and cash equivalents at the end of the reporting period

403,496

353,176

41,918

Explanation of Major Variances

Australian Accounting Standard AASB 1055 Budgetary Reporting requires variance explanations of major variances between the original budget as presented in the 2019-20 Portfolio Budget Statements and the actual outcome as reported in these financial statements. CSIRO considers that major variances are those greater than 10% of the original estimate and that are relevant to an assessment of the discharge of accountability and to an analysis of the performance of the entity. Variances below this threshold are not included unless considered significant by their nature.

It should be noted that the original budget was prepared before the 2018-19 actual figures were known. As a consequence the opening balance of the 2019-20 Statement of Financial Position needed to be estimated and in some cases, variances between 2019-20 actuals and budget numbers can be, at least in part, attributed to unanticipated movements in the prior period figures. Variances attributable to factors which would not reasonably have been identifiable at the time of the budget preparation, such as the revaluation of plant and equipment and investment properties, sale of equity investments, and impairment of assets, have not been included as part of the explanation.

The Budget is not audited.

Statement of Comprehensive Income

Depreciation and amortisation expense is above budget and Suppliers expense is below budget due to the application of AASB 16 Leases effective 1 January 2019. The budget estimates were updated to reflect this standard in the subsequent budget rounds.

Own source revenue is lower than budget due to the impact of the Coronavirus (“COVID-19”) on CSIRO and customers, as well as other unforeseen project delays which have impacted CSIRO’s ability to meet milestones.

Royalties and licence fees have been reclassified to revenue from contracts with customers on application of AASB 15 Revenue from Contracts with Customers.

Net gains are higher than budget due to the sale of the former site at Highett, Victoria exceeding expectations, and the increased value of the equity portfolio for both CSIRO and the CSIRO Innovation Fund.

Statement of Financial Position

Cash and cash equivalents are higher than budget due to the difference in basis of preparation between the PBS and the financial statements relating to the Innovation Fund investment. The Portfolio Budget Statements are prepared on the basis of only including General Government Sector (GGS) entities, whereas the Financial Statements for CSIRO include the results of CSIRO and all controlled entities, regardless of whether they are within the GGS or not. Therefore, there is a difference in the accounting treatment between the two, resulting in the budget containing the Innovation Fund investment as an Investment Accounted for using the Equity Method, while the Financial Statements account for this investment in the consolidation as Cash and cash equivalents held by a controlled entity.

Other investments are higher than budget due to the acquisition of a number of shares not foreseen at the time of preparing the budget, an increase in the valuation of the share portfolio, and the difference in basis of preparation between the PBS and the financial statements relating to the Innovation Fund investment.

Other non-financial assets are lower than budget as revenue contracts that are currently in the work-in-progress stage have been reclassified to Trade and other receivables on application of AASB 15 Revenue from Contracts with Customers.

Suppliers payable is higher and Other payables is lower than budget as contract liabilities associated with consideration received by the customer where services are yet to be performaned by CSIRO have been reclassified between the two categories on application of AASB 15 Revenue from Contracts with Customers.

Interest bearing liabilities are higher than budget due to the application of AASB 16 Leases , effective 1 January 2019. The budget estimates were updated to reflect this standard in the subsequent budget rounds.

The higher balance for Employee provisions is due to the decrease in the long-term government bond rate used to discount expected future employee benefit payments, as well as higher end of year leave balances than forecasted.

Provision for remediation is higher than budget reflecting higher than expected make-good, waste removal and site remediation costs.

Retained Surplus is higher than budgeted as the operating result for 2019-20 was positive in comparison to the budgeted loss.

The Non-controlling interest balance is higher than budget due to the difference in basis of preparation between the PBS and the financial statements relating to the Innovation Fund investment.

Cash Flow Statement

Variances relating to cash flows are a reflection of the factors detailed under Statement of Comprehensive Income and Statement of Financial Position.