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Non-Financial Assets

2.2A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment, and Intangibles

Buildings

Leasehold Improvements

Property, plant, and equipment

Heritage and cultural

Intangibles/
Computer Software

Total

$’000

$’000

$’000

$’000

$’000

$’000

As at 1 July 2020

Gross book value

40,970

18,602

13,319

22,029

7,727

102,647

Accumulated depreciation and impairment

(2,083)

(1,900)

(2,441)

-

(5,899)

(12,323)

Total as at 1 July 2020

38,887

16,702

10,878

22,029

1,828

90,324

Additions

Purchase

-

-

3,093

-

374

3,467

At cost - transfer from inventory

-

-

-

181

-

181

Disposals

-

-

(6)

-

-

(6)

Revaluation recognised in Other Comprehensive Income

-

-

-

(22)

-

(22)

Accumulated depreciation on disposal

-

-

6

-

-

6

Depreciation expense

-

(1,890)

(1,707)

-

(538)

(4,135)

Depreciation on right-of-use assets

(2,083)

-

-

-

-

(2,083)

Total as 30 June 2021

36,804

14,812

12,264

22,188

1,664

87,732

Net book value as of 30 June 2021 represented by:

Gross book value

40,970

18,602

16,406

22,188

8,101

106,267

Accumulated depreciation & impairment losses

(4,166)

(3,790)

(4,142)

-

(6,437)

(18,535)

Net book value 30 June 2021

36,804

14,812

12,264

22,188

1,664

87,732

Carrying amount of right-of-use assets included above

36,804

-

786

-

-

1

Land, buildings and property, plant and equipment that met the definition of a heritage and cultural item were disclosed in the heritage and cultural asset category.

An annual assessment was undertaken internally to determine whether there were any indicators of impairment for property, plant and equipment, heritage and cultural, computer software, and other intangible classes. No indication of impairment was found.

No property, plant and equipment and intangibles are expected to be sold or disposed in next 12 months

2

Revaluations of non-financial assets


No revaluation has been undertaken for the Property, Plant and Equipment asset class therefore there is no increment or decrement for this class in 2021.


Heritage and cultural assets were valued by an independent appraiser as at 30 June 2021 (RHAS) (2020: RHAS). The revaluation decreased the fair value by $0.022 million (2020: $0.185 million decrement) with an equivalent impact on the Asset Revaluation Reserve for 2021.

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 agency’s accounts immediately prior to the restructuring.

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 (2020: $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 ‘make good’ provisions in property leases taken up by the Mint where there exists an obligation to restore the property to its original condition. These costs are included in the value of the Mint’s leasehold improvements with a corresponding provision for the ‘make good’ recognised.

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 the Mint 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. Every year an impairment review is undertaken for any right of use asset that shows indicators of impairment and an impairment loss is recognised against any right of use lease asset that is impaired. Lease ROU assets continue to be measured at cost less accumulated depreciation and impairment after initial recognition.

Revaluations

Fair values for each class of asset are determined as shown below:

Asset Class Leasehold improvements Property, plant and equipment Heritage and cultural

Fair Value measured at Depreciated replacement cost Depreciated replacement cost Market selling price

Following initial recognition at cost, property plant and equipment (excluding ROU assets) 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. Generally, the Mint obtains third party independent valuations on a cyclical basis as follows: - leasehold improvements and property, plant and equipment: every 3 years; and - heritage and cultural assets annually. JLL carried out an independent valuation as at 30 June 2019. During the intervening financial years, the Mint carries any property, plant and equipment assets at the depreciated carrying amount as this is considered to be materially consistent with the most recent independent fair value assessment. 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 asset 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 restated to the revalued amount.

Depreciation

Depreciable property, plant and equipment (PP&E) assets are written-off to their estimated residual values over their estimated useful lives to the Mint using, in all cases, the straight-line 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.

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

Asset Class

Leasehold improvements PP&E - Office equipment PP&E - Factory machinery

2021

Shorter of life of lease and asset useful life 2-5 years 10-20 years

2020

Shorter of life of lease and asset useful life 2-5 years 10-20 years

The depreciation rates for ROU assets are based on the commencment date to the earlier of the end of the useful life of the ROU asset or the end of the lease term.

Impairment

All assets were assessed for impairment at 30 June 2021 (2020: all assets were assessed for impairment). 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 Mint were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

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

The Mint holds the following heritage and cultural assets:

- National Coin Collection which comprises coins. As there is an active market for these coins, the National Coin Collection is subject to revaluation by independent valuers to ensure that they remain at a fair value; and

- Other collectable items which includes associated minting products. These items are held at fair value and are subject to revaluation by independent valuers in line with Mint policy.

These assets are classified as heritage and cultural assets as they are Sovereign assets and are primarily retained for purposes that relate to their cultural significance. The Mint has adopted appropriate curatorial and preservation policies for these assets and they are deemed to have indefinite useful lives and hence are not depreciated. The Mint's curatorial and preservation policies are publicly available at: https://www.ramint.gov.au/national-coin-collection-preservation.

Intangible software assets

The Mint's intangibles comprise purchased and internally developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the Mint's software are from 2 to 5 years (2020: 2 to 5 years).

All software assets were assessed for indications of impairment as at 30 June 2021. No indication of impairment was found.

Accounting Judgements and Estimates

Fair value of non-financial assets

The fair value of the National Coin Collection has been taken to be the market value of similar items as determined by an independent valuer. Due to the nature of these items, they may in fact realise more or less in the market.

Estimation of useful lives of assets

The Mint determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life of intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, and technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Building ROU

Currently, the Mint has a building lease until 2029 with an option to extend the current lease for 10 years. The Mint determines that for the foreseeable future, the current building lease extension options for an extra 10 years will be exercised until 2039, therefore the Mint will remain in the current premises in order to continue operations. For the purpose of ROU life calculation, the lease term is taken to be up until 2039.

2021

2020

$’000

$’000

2.2B: Inventories

Raw materials

27,191

41,855

Work in progress

13,255

16,161

Finished goods

19,767

14,700

Bill and Hold Inventory - Numismatic Coin

(545)

(545)

Total inventories held for sale

59,668

72,171

During 2021, inventory to the value of $5.435m was written off (2020: $2.062m).

During 2021, $66.736m of inventory held for sale was recognised as cost of goods sold (2020: $56.531m).

Unless disposed of in accordance with regular business practices, all inventory is expected to be sold or consumed in the next 12 months.

None of the current bill-and-hold inventory was transferred to the customer during 2021.

Accounting Policy

Inventories held for sale are valued at the lower of cost and net realisable value. Costs incurred in bringing each item of inventory to its present location and condition are assigned as follows: - Costs of Purchase - purchase price and other costs directly attributable to the acquisition of raw materials; - Costs of Conversion - direct labour and production costs incurred in converting materials into finished goods; and - Recognition as an expense - the inventory carrying amount is recognised as an expense in the period in which the related revenue is recognised.

Bill and Hold Inventory

A bill-and-hold arrangement is a contract under which the Mint bills a customer for a product but the Mint retains physical possession of the product until it is transferred to the customer at a point in time in the future. The following criteria must be met:

- the reason for the bill-and-hold arrangement must be substantive (for example, the customer has requested the arrangement);

- the product must be identified separately as belonging to the customer;

- the product currently must be ready for physical transfer to the customer; and

- the Mint cannot have the ability to use the product or to direct it to another customer.

Accounting Judgements and Estimates

Valuation of inventory and allocation of labour and production costs

The technique for inventory cost measurement is the standard weighted average cost method.

The rates used to attribute conversion costs (labour and production) are determined by reference to management budgeted estimates of costs and normal production level for the year. Management’s budget cost estimates was based on management’s forecast of 2021 Mint’s direct and indirect production cost in prior year. The normal production level was estimated based on 2021 estimated available capacity in prior year and planned production for 2021.

Net realisable value of inventory

The Mint has written down a portion of finished goods inventory to its expected net realisable value during the year. The net realisable value represents the expected recovery of the value of the metal if unsold coins are expected to be scrapped, less the costs the Mint expects to incur in realising this value. The actual value recovered may differ from the amount estimated in these financial statements due to changes in metal prices, or if the costs of scrapping are different to management's expectations.