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A. About this report

NBN Co Limited (NBN Co, the Company or the parent entity) is an unlisted public company incorporated and domiciled in Australia. It is a company limited by shares and is wholly-owned by the Commonwealth of Australia. The Financial Report, comprising of the consolidated financial statements, notes to the consolidated financial statements and Directors’ declaration, for the year ended 30 June 2019, includes the Company and its subsidiaries (together referred to as the NBN Co Group or the Group).

NBN Co is a for-profit entity for the purpose of preparing the Financial Report.

Basis of preparation
This general purpose financial report has been prepared in accordance with:

  1. Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB)
  2. the Corporations Act 2001
  3. the Public Governance, Performance and Accountability Act 2013 (PGPA Act)

The consolidated financial statements comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The Financial Report has been prepared on a going concern basis and in accordance with the historical cost convention and does not take into account changing money values or fair values of assets unless otherwise stated.

The Company is incorporated under the Corporations Act 2001 and is subject to (inter alia) the National Broadband Network Companies Act 2011 and the PGPA Act.

Going concern
The Directors are of the view that the Commonwealth Government will continue to operate in accordance with the policy objectives as set out in the Statement of Expectations as issued by the Shareholder Ministers to NBN Co on 24 August 2016.

The Group’s current liabilities exceeded its current assets by $2,086 million as at 30 June 2019. The Financial Report has been prepared on a going concern basis, which contemplates the continuity of normal operations and the availability of the $19.5 billion loan facility agreed with the Commonwealth Government on 22 December 2016 (as amended and restated by the facility agreement signed on 26 March 2019).

During the period the Commonwealth Government agreed to extend the tenor of its loan by three years (from 30 June 2021 to 30 June 2024) and to allow NBN Co to access up to $2 billion of private sector debt. The terms for the private sector debt are subject to the approval of the Commonwealth Government.

At the date of signing the Financial Report the debt funding that is available through the aforementioned loan facility, combined with the Company’s intention to access up to $2 billion of private sector debt is sufficient to meet the net cash flow forecasts of the Group for at least twelve months from the date of this report.

Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Group’s functional currency. The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191 and in accordance with that Instrument, all financial information presented in Australian dollars has been rounded to the nearest million unless otherwise stated.

Comparative figures
Certain reclassifications have been made to comparative balances to conform to the current year presentation following the Group’s adoption of AASB 15.

Significant accounting policies
Accounting policies are selected and applied in a manner that ensures that the resulting financial information satisfies the concepts of relevance and reliability. With the exception of the adoption of AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers from 1 July 2018, the Group has consistently applied the accounting policies to all periods presented in these consolidated financial statements.

Significant accounting policies are contained in the notes to the financial statements to which they relate and Note H8.

Significant accounting estimates and judgements
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. Estimates and judgements which are material or have the potential to be material to the Financial Report are found in the following notes:

Accounting estimates and judgements

Notes

Determination of useful lives of property, plant and equipment

C3

Estimation of percentage of completion for assets under construction

C3

Estimation of liabilities for construction claims

C3

Determination of useful lives of intangible assets

C4

Determination of fair value less costs of disposal when considering impairment

C5

Finance lease determination

C8