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Financial Performance

FSANZ recorded a deficit of $0.799 million for 2019–20, compared to a surplus of $2.461 million in 2018–19. The deficit was expected and planned for and is attributable to additional expenditure related to the implementation of the new accounting standard — AASB 16 Leases, movement in the bond rates on leave provisions, and project expenditure for which revenues were received in a prior year. The increase in expenditure from the implementation of AASB16 comprise depreciation and interest expenses and fit-out lease incentive.

FSANZ did not receive funding to offset the increased expenditure related to the implementation of AASB16 and the movement in the bond rate. FSANZ has obtained approval from the Department of Finance to incur an operating loss of up to $1.000 million in 2019–20.

The notes to the Audited Financial Statements explain the variances. In particular, the commentary on variances to budget highlights specific events that occurred throughout the year that had an impact on results.

Statement of comprehensive income

Income

The total income for 2019–20 was $20.713 million, compared to $23.154 million in 2018–19, a decrease of $2.441 million. The decrease is attributable to project revenues received in the prior year.

Expenditure

Total expenditure for the year was $21.512 million, compared to $20.693 million in 2018–19, an increase of $0.819 million. There was an increase in employee expenses of $1.922 million. The increase is primarily related to the impact on the movement in the bond rate on leave provision balances, salary increases, and additional staff working on projects.

Supplier expenses have decreased from $5.117 million in 2018–19 to $3.074 million in 2019–20 as a result of the implementation of AASB16, which has moved rental expenses from suppliers into non-current assets.

Depreciation expenses have increased from $1.093 million in 2018–19 to $2.242 million in 2019–20 as a result of the implementation of AASB16. AASB 16 requires the capitalisation of rental expenses as Right of Use assets and depreciating those assets over the term of the lease.

Statement of financial position

Assets

Financial assets have increased from $13.8 million in 2018–19 to $14.876 million in 2019–20 as a result of project revenues received during the year from the Department of Health of $0.977 million and the Department of Foreign Affairs of $0.223 million. During the year $3.00 million was moved from cash and cash equivalents into investments — term deposits to maximise interest revenues.

Buildings have increased from $2.773 million in 2018–19, to $11.164 million in 2019–20 as a result of the implementation of AASB16, by the capitalisation of rental expenses into Right of Use assets.

Other payables have increased from $2.489 million in 2018–19 to $4.029 million in 2019–20 as a result of an increase in unearned revenue.

The creation of the asset from the rental expenses has resulted in the creation of a liability classified as interest bearing liabilities of $8.584 million. This liability is also being amortised over the term of the lease.

FSANZ’s detailed financial performance is outlined in the financial statements at Appendix 5.