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7. Budgetary Reports and Explanations of Major Variances

7.1 Budgetary Reports

The following tables provide a comparison between the 2019-20 Portfolio Budget Statements (PBS) budget and the final financial outcome in the 2019-20 financial statements. The Budget is not audited.

Variances are considered to be ‘major’ based on the following criteria:

  • the variance between budget and actual is greater than 10%; and
  • the variance between budget and actual is greater than 2% of the relevant category (Income, Expenses and Equity totals); or
  • an item below this threshold but is considered important for the reader’s understanding or is relevant to an assessment of the discharge of accountability and to an analysis of performance of the Corporation.

7.1A Statement of Comprehensive Income for the year ended 30 June 2020

Actual

Budget estimate

Original1

Variance2

2020

2020

2020

Notes

$'000

$'000

$'000

NET COST OF SERVICES

Expenses

Employee benefits

7.2(vi)

143,168

138,766

4,402

Suppliers

7.2(i)

168,977

182,891

(13,914)

Depreciation and Amortisation

7.2(i)

27,952

12,018

15,934

Program inventory amortisation

64,340

62,682

1,658

Finance costs

7.2(i)

1,061

-

1,061

Impairment loss on financial instruments

2

-

2

Write-down and impairment of other assets

199

-

199

Foreign exchange losses

37

-

37

Total expenses

405,736

396,357

9,379

Less:

Own-source revenue

Revenue from contracts with customers

7.2(ii)

115,362

101,932

13,430

Term deposit interest income

1,680

2,600

(920)

Rental income

1,342

1,370

(28)

Royalties from program rights

1,686

800

886

Other revenue

328

94

234

Total Own-Source Income

120,398

106,796

13,602

Net cost of services

285,338

289,561

(4,223)

Revenue from Government

290,054

290,054

-

Surplus on continuing operations

4,716

493

4,223

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation reserve

(64)

-

(64)

Items subject to subsequent reclassification to net cost of services

(Loss) / gain on cash flow hedging instruments

(240)

-

(240)

Total other comprehensive income

(304)

-

(304)

Total comprehensive income

4,412

493

3,919

1. The Corporation's original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the Corporation's 2019-20 PBS).

2. Between the actual and original budgeted amounts for 2020. Explanations of major variances are provided further below.

7.1B Statement of Financial Position as at 30 June 2020

Actual

Budget estimate

Original1

Variance2

2020

2020

2020

$'000

$'000

$'000

ASSETS

Financial assets

Cash and cash equivalents

7.2 (ii), 7.2 (iv)

18,926

8,129

10,797

Trade and other receivables

7.2 (vii)

20,145

25,250

(5,105)

Term investments

7.2 (ii), 7.2 (iv)

28,586

7,003

21,583

Total financial assets

67,657

40,382

27,275

Non-financial asset

Land

7.2 (i),7.2 (iii)

48,500

42,725

5,775

Buildings

7.2 (i),7.2 (iii)

53,472

43,577

9,895

Plant and equipment

7.2 (i)

85,833

20,412

65,421

Computer software

11,825

16,399

(4,574)

Other intangibles

9,319

9,319

-

Inventories

7.2 (iv)

72,526

81,564

(9,038)

Other non-financial assets

7.2 (i)

17,180

25,110

(7,930)

Total non-financial assets

298,655

239,106

59,549

Total assets

366,312

279,488

86,824

LIABILITIES

Payables

Trade creditors and accruals

7.2 (v)

17,804

22,874

(5,070)

Other payables

7.2 (v)

17,064

12,352

4,712

Total Payables

34,868

35,226

(358)

Interest bearing liabilities

Lease liabilities

7.2 (i)

73,958

-

73,958

Total interest bearing liabilities

73,958

-

73,958

Provision

Employee provision

7.2 (vi)

30,803

27,050

3,753

Other provision

1,031

703

328

Total provisions

31,834

27,753

4,081

Total liabilities

140,660

62,979

77,681

Net assets

225,652

216,509

9,143

Equity

Contributed equity

110,403

110,403

-

Reserves

7.2 (i), 7.2 (iii)

81,450

75,639

5,811

Retained surplus

33,799

30,467

3,332

Total equity

225,652

216,509

9,143

1. The Corporation's original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the Corporation's 2019-20 PBS).

2. Between the actual and original budgeted amounts for 2020. Explanations of major variances are provided further below.

7.1C Statement of Changes in Equity for the year ended 30 June 2020

Contributed equity

Asset revaluation reserve

Hedge reserve

Retained surplus

Total equity

Actual

Budget estimate

Actual

Budget estimate

Actual

Budget estimate

Actual

Budget estimate

Actual

Budget estimate

Original1

Variance2

Original1

Variance2

Original1

Variance2

Original1

Variance2

Original1

Variance2

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

2020

Notes

$’000

$'000

$'000

$’000

$'000

$'000

$’000

$’000

$’000

$'000

$'000

$'000

$’000

$'000

$'000

Opening balance

Balance carried forward from previous year

110,403

110,403

-

81,373

75,215

6,158

653

424

229

30,197

29,974

223

222,626

216,016

6,610

Adjustment on initial application of AASB 16

7.2 (i)

-

-

-

-

-

-

-

-

-

(1,386)

-

(1,386)

(1,386)

-

(1,386)

Adjusted opening balance

110,403

110,403

-

81,373

75,215

6,158

653

424

229

28,811

29,974

(1,163)

221,240

216,016

5,224

Comprehensive income

Surplus for the year

-

-

-

-

-

-

-

-

-

4,716

493

4,223

4,716

493

4,223

Other comprehensive income

Asset revaluation

7.2 (iii)

-

-

-

(64)

-

(64)

-

-

-

-

-

-

(64)

-

(64)

(Loss) on cash flow hedging instrument

-

-

-

-

-

-

(240)

-

(240)

-

-

-

(240)

-

(240)

Total comprehensive income

-

-

-

(64)

-

(64)

(240)

-

(240)

4,716

493

4,223

4,412

493

3,919

Transfers between equity components

Transfer of revaluation gain in relation to assets written off during the year

-

-

-

(272)

-

(272)

-

-

-

272

-

272

-

-

-

Total transfers between equity components

-

-

-

(272)

-

(272)

-

-

-

272

-

272

-

-

-

Closing balance as at 30 June

110,403

110,403

-

81,037

75,215

5,822

413

424

(11)

33,799

30,467

3,332

225,652

216,509

9,143

1. The Corporation's original budgeted financial statement that was first presented to parliament in respect of the reporting period (i.e. from the Corporation's 2019-20 PBS).

2. Between the actual and original budgeted amounts for 2020. Explanations of major variances are provided further below.

7.1D Cash Flow Statement for the year ending 30 June 2020

Actual

Budget

estimate

Original1

Variance1

2020

2020

2020

Notes

$'000

$'000

OPERATING ACTIVITIES

Cash received

Receipts from Government

290,054

290,054

-

Sale of goods and rendering of service

7.2 (ii)

134,893

101,195

33,698

Interest

1,711

2,600

(889)

Net GST received

9,527

11,500

(1,973)

Total cash received

436,185

405,349

30,836

Cash used

Employees

(141,914)

(138,067)

(3,847)

Suppliers

7.2 (i),7.2 (iv)

(243,100)

(257,577)

14,477

Interest payments on lease liabilities

7.2 (i)

(1,051)

-

(1,051)

Total cash used

(386,065)

(395,644)

9,579

Net cash from operating activities

50,120

9,705

40,415

INVESTING ACTIVITIES

Cash received

Investments

203,152

160,000

43,152

Total cash received

203,152

160,000

43,152

Cash used

Purchase of plant and equipment

(11,668)

(12,000)

332

Investments

(211,714)

(155,000)

(56,714)

Total cash used

(223,382)

(167,000)

(56,382)

Net cash used by investing activities

(20,230)

(7,000)

(13,230)

FINANCING ACTIVITIES

Cash used

Principal payments of lease liabilities

7.2 (i)

(16,587)

-

(16,587)

Total cash used

(16,587)

-

(16,587)

Net cash by financing activities

(16,587)

-

(16,587)

Net increase in cash held

13,303

2,705

10,598

Cash and cash equivalents at the beginning of the reporting

5,623

5,424

199

Cash and cash equivalents at the end of the reporting

period

18,926

8,129

10,797

1. The Corporation's original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the Corporation's 2019-20 PBS).

2. Between the actual and original budgeted amounts for 2020. Explanations of major variances are provided further below.

7.2 Major Budget Variances for 2020

Explanations of major variances

Affected line items (and statement)

(i)

Adoption of Lease accounting standard

The adoption of the new leasing standard (AASB16) by the whole of government occurred during the 2019-20 financial year. This included the recognition of Right-of-Use asset and liability in the Statement of Financial Position. The change also included the recognition of transitional lease incentives, provisions and straight-lining balances adjusted against opening retained earnings. (Consistent with the whole of government approach, the implementation of AASB16 was not included in the original budget).

Suppliers (Statement of Comprehensive Income); Depreciation (Statement of Comprehensive Income); Finance costs (Statement of Comprehensive Income);

Land and Buildings, Plant and equipment (Statement of Financial Position); Other non-financial assets (Statement of Financial Position); Lease liabilities (Statement of Financial Position); Reserves in Equity (Statement of Financial Position); Suppliers, Borrowing costs and Finance lease payments (Cash Flow Statement)

(ii)

Revenue from contracts with customers

Advertising sales were higher than budget largely due to increased activity and better than budgeted advertising sales revenue. The launch of the SBS World Movies channel in July 2019 and a strong digital performance have contributed to the overall outcome.

Revenue from contracts with customers (Statement of Comprehensive Income); Cash and cash equivalents (Statement of Financial Position); Term investments (Statement of Financial Position); Sale of goods and rendering of services (Cash Flow Statement); Term investments (Statement of Financial Position)

(iii)

Land and Buildings

Increased value of Land and Buildings due to revaluation conducted in June 2019 (This was not included in the original budget, as the budget was prepared prior to the finalisation of the revaluation).

Land and Buildings (Statement of Financial Position); Reserves in Equity (Statement of Financial Position); Asset revaluation reserve (Statement of Changes in Equity)

(iv)

Inventory

Due to COVID-19, overall production activities have been impacted, resulting in a lower level of program inventory.

Cash and cash equivalents (Statement of Financial Position); Term investments (Statement of Financial Position); Inventory (Statement of Financial Position); Suppliers (Cash Flow Statement)

(v)

Payables

Overall Payables reflect a lower level of spend due to COVID-19 and the timing of payments.

Trade creditors and accruals (Statement of Financial Position); Other payables (Statement of Financial Position); Term investments (Statement of Financial Position)

(vi)

Employee provisions

Employee provisions were higher than budget mainly due to adjustments to the discounting of employee provisions associated with reductions in the government bond rate as at 30 June 2019. (The increase in provision was not included in the original budget, as the budget was prepared prior to the finalisation of the adjustments to the bond rate in June 2019).

Employee benefits (Statement of Comprehensive Income); Provisions (Statement of Financial Position)

(vii)

Trade and other receivables

This was due to lower than budgeted revenue at year end.

Trade and other receivables (Statement of Financial Position)