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 2020, 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:
- Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB)
- the Corporations Act 2001
- 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.
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 $19.5 billion loan facility with the Commonwealth Government is due to be repaid by 30 June 2024 and has a fixed interest rate of 3.96% per annum. As at 30 June 2020, $19.46 billion has been drawn down from this facility. The Group’s current liabilities exceed its current assets by $2,952 million as at 30 June 2020.
As outlined in the Corporate Plan 2020-23, the Commonwealth Government agreed to allow NBN Co to acquire private sector long-term debt. During the year, NBN Co entered into facility agreements with the private sector to secure $6.1 billion of private sector debt for a period of five years.
At the date of signing the Financial Report the debt funding that is available through the aforementioned Commonwealth Government loan facility, combined with the Company’s ability to access to up to $6.1 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.
Certain reclassifications have been made to comparative balances to conform to the current year presentation following the Group’s adoption of AASB 16.
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 16 Leases from 1 July 2019, 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
Determination of useful lives of property, plant and equipment
Estimation of percentage of completion for assets under construction
Estimation of liabilities for construction claims
Determination of useful lives for intangible assets
Determination of fair value less costs of disposal when considering impairment
Determination of whether a contract contains a lease
Determination of the net present value of a lease
Determination of lease term