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2. Departmental Financial Position

This section analyses the Treasury 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

2018

2017

$’000

$’000

Note 2.1A: Cash and cash equivalents

Cash on hand or on deposit

640

1,250

Total cash and cash equivalents

640

1,250

Note 2.1B: Trade and other receivables

Appropriations receivable

58,612

51,526

Goods and services receivables

4,360

4,091

Net GST receivable from the ATO

1,909

902

Total trade and other receivables (net)

64,881

56,519

All receivables are current assets.

Receivables (net) are aged as follows:

Not overdue

62,557

54,927

Overdue by

0 to 30 days

2,096

373

31 to 60 days

38

447

61 to 90 days

120

772

More than 90 days

70

-

Total trade and other receivables (net)

64,881

56,519

Credit terms for goods and services were within 30 days (2017: 30 days).

Accounting Policy

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest methods less impairment. Interest is recognised by applying the effective interest rate. Collectability of debts is reviewed regularly throughout the year and at balance date. Provisions are made when collection of the debt is judged to be less rather than more likely. Credit terms are net 30 days (2017: 30 days).

Impairment of financial assets

Financial assets are assessed for impairment at the end of each reporting period. No indicators of impairment were identified for assets as at 30 June 2018.

2.2 Non-Financial Assets

Note 2.2A: Reconciliation of the opening and closing balances of property, plant and equipment and computer software (2017-18)

Reconciliation of the opening and closing balances of property, plant and equipment and computer software for 2018

Buildings — leasehold improvements

Plant and equipment

Computer software internally developed

Computer software purchased

Total

$’000

$’000

$’000

$’000

$’000

As at 1 July 2017

Gross book value

16,159

7,851

17,155

11,425

52,590

Accumulated depreciation / amortisation and impairment

-

-

(11,053)

(7,723)

(18,776)

Total value as at 1 July 2017

16,159

7,851

6,102

3,702

33,814

Additions

3,449

5,108

3,821

580

12,958

Purchased

3,449

5,108

-

580

9,137

Internally developed - in use

-

-

3,821

-

3,821

Asset class transfers

-

1,290

-

(1,290)

-

Revaluations and impairments recognised in other comprehensive income

190

130

-

-

320

Depreciation and amortisation

(2,007)

(2,902)

(2,111)

(1,858)

(8,878)

Disposals

(1,116)

(235)

(1,318)

-

(2,669)

From write-down and impairment of assets

(645)

(214)

(1,318)

-

(2,177)

From restructuring

(471)

(21)

-

-

(492)

Total as at 30 June 2018

16,675

11,242

6,494

1,134

35,545

Total as at 30 June 2018 represented by:

Gross book value

18,277

13,250

20,976

9,673

62,176

Fair value

16,990

9,100

-

-

26,090

At cost

-

-

20,331

9,673

30,004

Under construction

1,287

4,150

645

-

6,082

Accumulated depreciation / amortisation and impairment

(1,602)

(2,008)

(14,482)

(8,539)

(26,631)

Total as at 30 June 2018

16,675

11,242

6,494

1,134

35,545

No indicators of impairment were found for land and buildings or plant and equipment. Several intangibles were identified as being obsolete as at 30 June 2018. Accordingly, an impairment loss was recognised for these assets at year-end.

No significant non-financial assets are expected to be sold or disposed within the next 12 months.

All revaluations are independent and are conducted in accordance with the revaluation policy stated at Note 7.4.

The fair value of land and buildings, and property, plant and equipment has been taken to be the market value of similar properties or depreciated replacement value as determined by an independent valuer.

Contractual commitments1 for the acquisition of property, plant and equipment and intangible assets.

Commitments are payable as follows:

2018

2017

$’000

$’000

Within 1 year

192

2,353

Between 1 to 5 years

-

698

Total commitments

192

3,051

  1. Commitments are GST inclusive where relevant.

Accounting Policy

Acquisition of assets

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

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.

Asset recognition threshold

Purchases of building — leasehold improvements and computer software purchased are recognised initially at cost in the balance sheet, 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).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to restoration provisions in property leases taken up by the Treasury where there exists an obligation to restore the property to its original condition. These costs are included in the value of the Treasury’s leasehold improvements with a corresponding provision for the restoration recognised.

Revaluations

Following initial recognition at cost, buildings — leasehold improvements and plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets. A fair value review was undertaken by an independent valuer at 30 June 2018 who confirmed that the carrying amount of non-financial assets has not materially changed since the last full revaluation in 2016-17.

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

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

Depreciation and Amortisation

Depreciable property, plant and equipment assets are writtenoff to their estimated residual values over their estimated useful lives to the Treasury using, in all cases, the straightline method of depreciation. Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate. Software is amortised on a straight-line basis.

Depreciation rates applying to each class of depreciable assets are based on the following useful lives:

2018

2017

Buildings - leasehold improvements

1.75-25 years

1.75 -25 years

Plant and equipment:

Plant and equipment

3-10 years

3-10 years

Motor vehicles

4 years

4 years

Office equipment

5 years

5 years

Computer software

3-5 years

3-5 years

 

Impairment

All assets were assessed for impairment at 30 June 2018. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs 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 Treasury were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

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

Intangibles

The Treasury’s intangible assets comprise internally developed and purchased software for internal use. These assets are carried at cost less accumulated amortisation and any accumulated impairment losses.

All software assets were assessed for indications of impairment as at 30 June 2018, including the impact of factors such as project cessation and platform changes. This has resulted in an impairment expense of $1.318 million for intangible assets (2017: nil).

Accounting Judgement and Estimates

The fair value of buildings — leasehold improvements and plant and equipment has taken to be the market value of similar properties or depreciated replacement value as determined by an independent valuer.

2018

2017

$’000

$’000

Note 2.2B: Prepayments

Prepayments

4,644

5,631

Total other non-financial assets

4,644

5,631

Prepayments

No more than 12 months

3,750

3,583

More than 12 months

894

2,048

Total prepayments

4,644

5,631

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

2.3 Payables

2018

2017

$’000

$’000

Note 2.3A: Suppliers

Trade creditors and accruals

11,326

10,127

Total suppliers

11,326

10,127

Settlement was usually made within 30 days.

Note 2.3B: Other payables

Salaries and wages

776

722

Superannuation

140

131

Other creditors

386

(147)

Unearned income

2,261

1,777

Total other payables

3,563

2,483

Other payables are expected to be settled in no more than 12 months.

Accounting Policy

Financial liabilities

Other financial liabilities include trade creditors and accruals 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). Settlement is usually made net 30 days.

2.4 Other Provisions

Provision for restoration

Total

$’000

$’000

Carrying amount 1 July 2017

3,440

3,440

Additional provisions made

133

133

Amounts used

-

-

Amounts reversed

(58)

(58)

Amounts transferred due to restructure

(91)

(91)

Unwinding of discount or change in discount rate

84

84

Closing balance 30 June 2018

3,508

3,508

2018

2017

$’000

$’000

Provision for restoration expected to be settled

No more than 12 months

51

388

More than 12 months

3,457

3,052

Total provisions for restoration

3,508

3,440

The Treasury has six (2017: five) lease agreements containing provisions to restore the premises to their original condition at the conclusion of the lease. The Treasury has made a provision to reflect the present value of this obligation. The value of the provision has been estimated by an independent valuer based on occupied floor space as per the leasing agreements.