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Financial Statements

Content of the Notes to the Financial Statements

Content of the Notes to the Financial Statements

Statement by Members, Executive Director and Director, Strategy and Operations

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Cash Flow Statement

Overview

Note 1: Summary of Significant Accounting Policies

Note 2: Events After the Reporting Period

Financial Performance

Note 3: Expenses

Note 4: Own-Source Revenue

Financial Position

Note 5: Financial Assets

Note 6: Non-Financial Assets

Note 7: Payables

People and Relationships

Note 8A: Employee Provisions

Note 8B: Key Management Personnel Remuneration

Other Information

Note 9: Other Provisions

Note 10: Financial Instruments

Managing Uncertainties

Note 11: Contingencies

Note 12: Related Party Disclosures

Note 13: Sydney Harbour Foundation Management Ltd

Note 14: Sydney Harbour Conservancy

Statement by Members, Executive Director and Director, Strategy and Operations

Sydney Harbour Federation Trust and its Consolidated Entities

Statement by Members, Executive Director and Director, Strategy and Operations

In our opinion, the attached financial statements for the year ended 30 June 2020 comply with subsection 42(2) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and are based on properly maintained financial records as per subsection 41(2) of the PGPA Act.

In our opinion, at the date of this statement, there are reasonable grounds to believe that the Sydney Harbour Federation Trust will be able to pay its debts as and when they become due and payable.

This Statement is made in accordance with a resolution of the members.

Joseph Carrozzi signature Signature of the Chairman of the Harbour Trust Joseph Carrozzi.

Signed,
Joseph Carrozzi
Chair
17 September 2020

Mary Darwell signature Signature of the Executive Director of the Harbour Trust Mary Darwell.

Signed,
Mary Darwell
Executive Director
17 September 2020

Justin Bock signature Signature of the Director, Strategy & Operations, Justin Bock.

Signed,
Justin Bock
Director, Strategy and Operations
17 September 2020

Statement of Comprehensive Income

Statement of Comprehensive Income

for the year ended 30 June 2020

Statement of Comprehensive Income

2020

2019

Original
Budget

NET COST OF SERVICES

Notes

$’000

$’000

$’000

Expenses

Employee benefits

3A

7,521

6,846

7,500

Suppliers

3B

9,968

10,047

10,505

Depreciation and amortisation

3C

3,030

2,662

3,090

Finance costs

3D

4

-

-

Impairment loss/(reversal) on financial instruments

3E

373

(76)

-

Write-down and impairment of assets

3F

60

(18)

-

Total expenses

20,956

19,461

21,095

LESS:

OWN-SOURCE INCOME

Own-source revenue

Revenue from contracts with customers

4A

2,398

3,315

3,583

Fees and fines

4B

208

216

308

Interest

4C

532

1,234

873

Rental income

4D

11,734

13,282

13,929

Other revenue

4E

964

182

8

Total own-source revenue

15,836

18,229

18,701

Gains

Sale of assets

4F

-

24

-

Total gains

-

24

-

Total own-source income

15,836

18,253

18,701

(Deficit) on continuing operations

(5,120)

(1,208)

(2,394)

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Change in asset revaluation reserve

66,032

-

-

Total other comprehensive income

66,032

-

-

Total comprehensive income/(loss)

60,912

(1,208)

(2,394)

The above statement should be read in conjunction with the accompanying notes.

Statement of Financial Position

Statement of Financial Position

as at 30 June 2020

Statement of Financial Position

2020

2019

Original
Budget

Notes

$’000

$’000

$’000

ASSETS

Financial Assets

Cash and cash equivalents

5A

8,001

3,236

3,439

Investments

5B

22,094

39,230

30,313

Trade and other receivables

5C

710

797

661

Total financial assets

30,805

43,263

34,413

Non-Financial Assets

Land and buildings

6A

321,721

286,273

290,490

Infrastructure, plant and equipment1

6B

45,500

31,617

33,108

Heritage and collections

6C

53,197

29,405

30,694

Intangibles

6D

436

436

293

Inventories

6G

89

90

100

Other non-financial assets

6H

195

77

100

Total non-financial assets

421,138

347,898

354,785

Total Assets

451,943

391,161

389,198

LIABILITIES

Payables

Suppliers

7A

661

2,192

2,150

Other payables

7B

4,939

5,296

4,667

Total payables

5,600

7,488

6,817

Interest bearing liabilities

Leases

7C

355

-

-

Total interest bearing liabilities

355

-

-

Provisions

Employee provisions

8A

1,460

1,178

1,163

Other provisions

9

-

579

-

Total provisions

1,460

1,757

1,163

Total Liabilities

7,415

9,245

7,980

Net Assets

444,528

381,916

381,218

EQUITY

Contributed equity

279,435

277,735

279,435

Reserves

161,535

95,503

95,503

Retained surplus

3,558

8,678

6,280

Total Equity

444,528

381,916

381,218

1.Right-of-use assets are included in the following line item: Infrastructure, plant and equipment.

The above statement should be read in conjunction with the accompanying notes.

Statement of Changes in Equity

Statement of Changes in Equity

for the year ended 30 June 2020

Statement of Changes in Equity

Retained Surplus

Asset Renewal Reserve

Asset Revaluation Reserve

Contributed Equity

Total Equity

2020

2019

Budget

2020

2019

Budget

2020

2019

Budget

2020

2019

Budget

2020

2019

Budget

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

Opening balance

Balance carried forward from previous year

8,678

9,886

8,674

5,331

5,331

5,331

90,172

90,172

90,172

277,735

277,735

277,735

381,916

383,124

381,912

Asset Renewal Reserve

Transfer to Retained Surplus

Transfer (from) Retained Surplus

Total asset renewal reserve

Comprehensive income

Other comprehensive income

66,032

66,032

(Deficit)/Surplus for the year

(5,120)

(1,208)

(2,394)

(5,120)

(1,208)

(2,394)

Total comprehensive income

(5,120)

(1,208)

(2,394)

66,032

60,912

(1,208)

(2,394)

Transactions with owners

Equity injection - Appropriations

1,700

1,700

1,700

1,700

Total transactions with owners

1,700

1,700

1,700

1,700

Closing balance as at 30 June

3,558

8,678

6,280

5,331

5,331

5,331

156,204

90,172

90,172

279,435

277,735

279,435

444,528

381,916

381,218

The above statement should be read in conjunction with the accompanying notes.

Accounting Policy

Equity Injections
Amounts appropriated which are designated as equity injections for a year (less any formal reductions) and Departmental Capital Budget are recognised directly in contributed equity in that year.

Asset Renewal Reserve
Asset Renewal Reserve - see Note 6E Accounting Policy for Non-Financial Assets.

Asset Revaluation Reserve
During the 2020 year, the Harbour Trust identified three additional parcels of land under its control adjacent to Markham Close, Mosman. The fair value of these additional parcels ($400,000) is reflected in the Asset Revaluation Reserve adjustment.

Cash Flow Statement

Cash Flow Statement

for the year ended 30 June 2020

Cash Flow Statement

2020

2019

Original Budget

Notes

$’000

$’000

$’000

OPERATING ACTIVITIES

Cash received

Sales of goods and rendering of services

3,119

3,300

3,583

Rent income

10,836

13,033

13,595

Interest

27

49

873

Other revenue

52

288

308

Net GST received

502

387

-

Total cash received

14,536

17,057

18,359

Cash used

Employees benefits

(7,130)

(7,104)

(7,441)

Suppliers

(11,341)

(9,230)

(10,567)

Interest payments on lease liabilities

(4)

-

-

Total cash used

(18,475)

(16,334)

(18,008)

Net cash from/(used by) operating activities

(3,939)

723

351

INVESTING ACTIVITIES

Cash received

Proceeds from sale of assets

-

24

-

Investments

17,644

11,171

4,857

Total cash received

17,644

11,195

4,857

Cash used

Purchase of property, plant and equipment

(10,624)

(12,084)

(6,900)

Total cash used

(10,624)

(12,084)

(6,900)

Net cash from/(used by) investing activities

7,020

(889)

(2,043)

FINANCING ACTIVITIES

Cash received

Contributed equity

1,700

-

1,700

Total cash received

1,700

-

1,700

Cash used

Principal payments of lease liabilities

(16)

-

-

Total cash used

(16)

Net cash from financing activities

1,684

-

1,700

Net increase/(decrease) in cash held

4,765

(166)

8

Cash and cash equivalents at the beginning
of the reporting period

3,236

3,402

3,431

Cash and cash equivalents at the end
of the reporting period

5A

8,001

3,236

3,439

The above statement should be read in conjunction with the accompanying notes.

Note 1: Summary of Significant Accounting Policies

Overview

Note 1: Summary of Significant Accounting Policies

1.1 Objectives of Sydney Harbour Federation Trust (the ‘Harbour Trust’)

The Harbour Trust is an Australian Government Corporate Entity. It is a not-for-profit entity.

The Harbour Trust is structured to meet one outcome:

Outcome 1: Enhanced appreciation and understanding of the natural and cultural values of Sydney for all visitors, through the remediation, conservation and adaptive re-use of, and access to, Harbour Trust lands on Sydney Harbour.

Section 66 of the Sydney Harbour Federation Trust Act 2001 provides for the repeal of the Harbour Trust’s enabling legislation as soon as practicable after the end of 19 September 2033. The continued existence of the Harbour Trust in its present form and with its present programs is dependent on Government policy.

1.2 Impact of COVID-19

The impact of COVID-19 has been significant for the Harbour Trust. Generating the majority of revenue from leasing and accommodation activities, both the restrictions put in place and the prevailing economic climate have meant that a substantial decline in revenue has been experienced. Through this period, the Harbour Trust has sought to aid our tenants through the provision of rental assistance, where eligible. This has meant the Harbour Trust has had to seek to reduce costs and access cash reserves invested in term deposits to ensure liquidity.

During the year, in response to both the Independent Review into the Harbour Trust and the COVID-19 pandemic, a decision of Government authorised the Harbour Trust to access up to $23.0m in cash reserves to fund the Trust’s rent assistance program and priority Capital works, and provide operating liquidity.

1.3 Extension to Trust life

The Government commissioned an Independent Review of the Harbour Trust during 2019-20 to explore options for the future of the Harbour Trust and the management of the sites under its control. The Independent Review found that the end date for the Harbour Trust in 2033 negatively impacted the Harbour Trust’s ability to “plan for the effective remediation and management of “ the Harbour Trust’s sites. It recommended that the Harbour Trust remain an ongoing entity and that Section 66 of the Sydney Harbour Federation Trust Act 2001 be repealed. The Government is working with the Harbour Trust to take forward this recommendation.

1.4 Basis of Preparation of the Financial Statements

The financial statements are required by section 42 of the Public Governance, Performance and Accountability Act 2013 and are General Purpose Financial Statements.

The financial statements have been prepared in accordance with:

  1. Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
  2. Australian Accounting Standards and Interpretations, Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (“AASB”) that apply for the reporting period.
  3. The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.
  4. The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.
  5. Unless an alternative treatment is specifically required by an Accounting Standard or the FRR, assets and liabilities are recognised in the Statement of Financial Position when and only when it is probable that future economic benefits will flow to the Harbour Trust or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under executory contracts are not recognised unless required by an Accounting Standard.
  6. Liabilities and assets that are unrecognised are reported in the schedule of commitments or the schedule of contingencies.
  7. Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the statement of comprehensive income when, and only when, the flow, consumption or loss of economic benefits has occurred and can be reliably measured.

Consolidation and associated company

The financial statements show information for the economic entity only; this reflects the consolidated results for the parent entity, the Harbour Trust, and its controlled entities, Sydney Harbour Foundation Management Ltd and Sydney Harbour Conservancy (“Conservancy”). The results of the parent entity do not differ materially from the economic entity and have therefore not been separately disclosed. The Conservancy is a Trust for which Sydney Harbour Foundation Management Ltd (company limited by guarantee) is Trustee (refer to Note 13 & Note 14 for further details).

The accounting policies of the Sydney Harbour Foundation Management Ltd and Conservancy are consistent with those of the Harbour Trust and its assets, liabilities and results have been consolidated with the parent entity accounts in accordance with the Accounting Standards. All internal transactions and balances have been eliminated on consolidation.

1.5 New Accounting Standards

Adoption of new Australian Accounting Standard requirements

No accounting standard has been adopted earlier than the application date as stated in the standard.

All new standards that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material effect on the Harbour Trust’s financial statements.

New Accounting Standards

Standard/ Interpretation

Nature of change in accounting policy, transitional provisions, and adjustment
to financial statements

AASB 15 Revenue from Contracts with Customers / AASB 2016-8 Amendments to Australian Accounting Standards — Australian Implementation Guidance for Not-for-Profit Entities and AASB 1058 Income of Not-For-Profit Entities

AASB 15, AASB 2016-8 and AASB 1058 became effective 1 July 2019. AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and Interpretation 13 Customer Loyalty Programmes. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most of the not-for-profit (NFP) provisions of AASB 1004 Contributions and applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives, and where volunteer services are received.

The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

AASB 16 Leases

AASB 16 became effective on 1 July 2019.

This new standard has replaced AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases — Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

Application of AASB 15 Revenue from Contracts with Customers / AASB 1058 Income of Not-For-Profit Entities

The Harbour Trust adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under the various applicable AASBs and related interpretations.

Under the new income recognition model the Harbour Trust shall first determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. If an enforceable agreement exists and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), the Harbour Trust applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, the Harbour Trust shall consider whether AASB 1058 applies.

In relation to AASB 15, the Harbour Trust elected to apply the new standard to all new and uncompleted contracts from the date of initial application. The Harbour Trust is required to aggregate the effect of all of the contract modifications that occur before the date of initial application.

In terms of AASB 1058, the Harbour Trust is required to recognise volunteer services at fair value if those services would have been purchased if not provided voluntarily, and the fair value of those services can be measured reliably.

The table below shows the impacts of AASB 15 and AASB 1058 on balances at 1 July 2019:

Impact on transition to AASB15

Impact on Transition

The impact on transition is summarised below:

Departmental

1 July 2019

Liabilities

Unearned revenue

19

Total Liabilities

19

Total impact to retained earnings

(19)

Set out below are the amounts by which each financial statement line item is affected as at and for the year ended 30 June 2020 as a result of the adoption of AASB 15 and AASB 1058. The first column shows amounts prepared under AASB 15 and AASB 1058 and the second column shows what the amounts would have been had AASB 15 and AASB 1058 not been adopted:

Transitional disclosure to AASB15/AASB1058

Transitional disclosure

AASB 15/AASB 1058

Previous AAS

Increase/(decrease)

$’000

$’000

$’000

Expenses

Marketing, Programming & Events

725

-

725

Total Expenses

725

-

725

Revenue

Volunteer services received free of charge

725

-

725

Grants

140

155

(15)

Total Revenue

865

155

710

Net (cost of)/contribution by services

140

155

(15)

Assets

Cash

155

155

-

Total Assets

155

155

-

Liabilities

Unearned Revenue

15

-

15

Total Liabilities

15

-

15

Retained earnings

140

155

(15)

Application of AASB 16 Leases

The Harbour Trust adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.

The Harbour Trust elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.

AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. The Harbour Trust applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:

  Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;

  Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for leases where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date;

  Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under AASB 136 Impairment of assets as at the date of initial application; and

  Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.

As a lessor, there is no change to the treatment or classification of the Harbour Trust’s property leases.

As a lessee, the Harbour Trust previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership.

On adoption of AASB 16, the Harbour Trust recognised a right-of-use asset and lease liability in relation to a lease which had previously been classified as an operating lease.

The lease liability was measured at the present value of the remaining lease payments, discounted using the Entity’s incremental borrowing rate as at 1 July 2019. The Harbour Trust’s incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 1.2%.

The right-of-use asset was measured at:

  1. the carrying value that would have resulted from AASB 16 being applied from the commencement date of the lease, subject to the practical expedients noted above.

Impact on transition

On transition to AASB 16, the Harbour Trust recognised an additional right-of-use asset and an additional lease liability, with the difference impacting earnings. The impact on transition is summarised below:

Impact on transition AASB16 - Right of use Asset

Departmental

1 July 2019

$’000

Right-of-use assets — infrastructure

380

Lease liabilities

364

Impact to earnings

16

The following table reconciles the Departmental minimum lease commitments disclosed in the Harbour Trust’s 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:

Lease liability recognised at 1 July 2019

1 July 2019

$’000

Minimum operating lease commitment at 30 June 2019

391

Undiscounted lease payments

391

Less: effect of discounting using the incremental borrowing rate as at the date of initial application

27

Lease liabilities recognised at 1 July 2019

364

1.6 Significant Accounting Judgements and Estimates

In the process of applying the accounting policies listed in this note, the Harbour Trust has made the following judgements that have the most significant impact on the amounts recorded in the financial statements:

· The fair value of land has been taken to be the market value of similar properties as determined by an independent valuer taking into consideration the restrictions on sale and use imposed by the Sydney Harbour Federation Trust Act 2001. Buildings have been valued using depreciated replacement cost and therefore the valuer has provided an estimate with respect to the replacement cost.

1.6 Significant Accounting Judgements and Estimates — Continued

· The provision held for trade and other receivables is based on overdue receivables greater than 90 days where an arrears agreement has not been finalised or where it has been assessed that the debt is unlikely to be recovered.

No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next reporting period.

1.7 Taxation

The Harbour Trust is exempt from all forms of taxation except Fringe Benefits Tax (“FBT”) and Goods and Services Tax (“GST”).

Revenues, expenses and assets are recognised net of GST:

· Except where the amount of GST incurred is not recoverable from the Australian Taxation Office; and

· Except for receivables and payables.

1.8 Major Budget Variances

The Original Budget figures were reported in the 2019-20 Portfolio Budget Statements published in May 2019. This was subsequently updated during the financial year with the Minister of Finance’s approval. This allowed for an approved operating loss. The Harbour Trust considers a major variance between budget and actuals is greater than 10% and $250,000 of the original estimate or it is considered important for the reader’s understanding.

Explanations of major budget variances

Explanations of major variances

Affected line items (and statement)

The Harbour Trust engaged Jones Lang LaSalle to revalue certain non-financial assets in accordance with its revaluation policy. This has resulted in a revision of the asset’s fair value in Land and buildings, infrastructure, plant and equipment with a corresponding increase in the asset revaluation reserves.

Statement of Financial Position

Land and buildings

Infrastructure, plant and equipment

Heritage and collections

Reserves

Statement of Comprehensive Income

Other comprehensive income

The impact of the COVID19 pandemic has had a pronounced effect on the Harbour Trust’s operating result and cash flows. Reduced revenues, particularly within the Harbour Trust’s commercial leasing business, has resulted in less cash generated from operations combined with the need to apply stringent cost saving measures. To ensure liquidity during this period, term deposit investments have been converted into more readily available cash deposits.

Statement of Comprehensive Income

Revenue from contracts with customers

Fees and fines

Interest

Rental income

(Deficit)/Surplus for the year

Statement of Financial Position

Cash and cash equivalents

Investments

Retained surplus

Cash Flow Statement

Sale of goods and rendering of services

Rental income

Interest

Investments

Note 2: Events After the Reporting Period

Note 2: Events After the Reporting Period

There are no events that have occurred after the reporting period that would have an effect on the Harbour Trust’s 2019-20 financial statements other than those that are already reflected in the financial statements.

Note 3: Expenses

Note 3: Expenses

Note 3A: Employee Benefits

2020

2019

$’000

$’000

Note 3A: Employee benefits

Wages and salaries

6,449

6,034

Superannuation

Defined contribution plans

573

529

Defined benefit plans

109

106

Leave and other entitlements

324

118

Separation and redundancies

55

50

Other employee costs

11

9

Total employee benefits

7,521

6,846

Accounting Policy

Accounting policies for employee related expenses is contained in the People & Relationships section (Note 8A).

Note 3B: Suppliers

2020

2019

Note 3B: Suppliers

$’000

$’000

Goods and services supplied or rendered

Corporate overheads

1,169

1,728

Marketing, Programming and Events

1,240

686

Management of Environment

921

1,193

Site Maintenance and Planning

4,238

4,407

Security

883

778

Accommodation management

348

590

Property management

1,163

544

Total goods and services supplied or rendered

9,962

9,926

Goods supplied

495

636

Services rendered

9,467

9,290

Total goods and services supplied or rendered

9,962

9,926

Other supplier expenses

Workers compensation premiums

6

121

Total other supplier expenses

6

121

Total supplier expenses

9,968

10,047

During the year ended 30 June 2020, the Harbour Trust has provided resources free of charge to the Sydney Harbour Foundation Management Limited amounting to $6,718 (2019: $6,706), and to the Conservancy amounting to nil (2019: nil).

Accounting Policy

The Harbour Trust has elected not to recognise right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less and leases of low-value assets (less than $10,000). The Harbour Trust recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term which is representative of the pattern of benefits derived from the leased assets.

Note 3C: Depreciation and amortisation

2020

2019

$’000

$’000

Note 3C: Depreciation and amortisation

Depreciation:

Infrastructure, plant and equipment

1,610

1,261

Buildings

1,355

1,351

Total depreciation

2,965

2,612

Amortisation:

Intangibles:

Purchased computer software

65

50

Total amortisation

65

50

Total depreciation and amortisation

3,030

2,662

Note 3D: Finance Costs

2020

2019

$’000

$’000

Note 3D: Finance Costs

Right-of-use asset1

4

-

Total finance costs

4

-

1.The Harbour Trust has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

Note 3E: Impairment loss on financial instruments

2020

2019

$’000

$’000

Note 3E: Impairment loss on financial instruments

Impairment on trade and other receivables

373

(76)

Total impairment on financial instruments

373

(76)

Note 3F: Write-down and impairment on other assets

2020

2019

$’000

$’000

Note 3F: Write-down and impairment on other assets

Obsolete stock written-off

6

(18)

Trade receivables written-off

54

-

Total impairment on other assets

60

(18)

The financial asset write-down is in relation to the impairment allowance associated with the Harbour Trust’s trade debtors. It primarily relates to rent relief granted to tenants affected by COVID-19 and an assessment of further rent relief that may be provided to additional tenants subject to the Harbour Trust’s rent relief assessment process.

Note 4: Own-Source Income

Note 4: Own-Source Income

Note 4A, 4B, 4C, 4D

2020

2019

$’000

$’000

Note 4A: Revenue from contracts with customers

Sale of goods

28

48

Rendering of services

2,370

3,267

Total revenue from contracts with customers

2,398

3,315

Disaggregation of revenue from contracts with customers

Major product / service line:

Service delivery

2,370

3,267

Sales of inventory

28

48

2,398

3,315

Type of customer:

Non-government entities

2,398

3,315

2,398

3,315

Timing of transfer of goods and services:

Point in time

2,398

3,315

2,398

3,315

Note 4B: Fees and fines

Penalty Infringement Notices

208

216

Total fees and fines

208

216

Note 4C: Interest

Term Deposits

508

1,186

Operating bank accounts

24

48

Total interest

532

1,234

Note 4D: Rental income

Property rentals and short-term hire

11,734

13,282

Total rental income

11,734

13,282

The Harbour Trust manages a portfolio of commercial tenancies and residential properties across its various sites.
Rental income from operating leases is recognised on a straight-line basis over the lease term. AASB 16 does not change how a lessor accounts for leases.

Maturity analysis of operating lease income receivables

Maturity analysis of operating lease income receivables:

2020

$’000

Within 1 year

7,522

One to two years

5,123

Two to three years

3,357

Three to four years

2,816

Four to five years

2,308

More than 5 years

6,762

Total undiscounted lease payments receivable

27,888

Note 4E: Other revenue

2020

2019

$’000

$’000

Note 4E: Other revenue

DA Fees, Liquor Licences, Donations

99

182

Grants — Department of Industry, Innovation and Science

140

-

Resources received free of charge — Volunteer Services

725

-

Total other revenue

964

182

Volunteer Services

The Harbour Trust engages volunteers who assist the Harbour Trust in delivering on its objectives.

Volunteers perform a variety of roles including visitor services, tour guides, public speaking, restoration and gardening services, oral history, events and other administrative roles to assist Harbour Trust staff.

Accounting Policy

On the initial recognition of volunteer services as an asset or an expense, the Harbour Trust recognises any related amounts in accordance with the relevant standard. The Harbour Trust recognises the excess of the fair value of the volunteer services over the recognised related amounts as income immediately in the income statement.

Note 4F: Sale of assets

2020

2019

$’000

$’000

Note 4F: Sale of assets

Infrastructure, plant and equipment

Proceeds from sale

-

24

Net gain/(loss) from sale of assets

-

24

Note 4G: Unsatisfied obligations

The liability for unsatisfied obligations is represented on the Statement of Financial Position as Other Payables and is disclosed in Note 7B as unearned revenue.

Accounting Policy

Revenue
Revenue from contracts with customers

Revenue from contracts with customers is recognised when:

  The contract is approved and the parties are committed to perform their respective obligations;

  Each party’s rights are identifiable;

  Payment terms are identifiable;

  The contract has commercial substance; and

  It is probable that the consideration under the contract is collectable.

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:

  The amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and

  The probable economic benefits associated with the transaction will flow to the Harbour Trust. The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

The transaction price is the total amount of consideration to which the Harbour Trust expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. All unrealised performance obligations under revenue contracts with customers have an original expected duration of 1 year or less.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at the end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

Fees & Fines

Fees & Fines include infringement penalties issued under the Sydney Harbour Federation Trust Act 2001

Public Governance, Performance and Accountability (Charging for Regulatory Activities) Order 2017 - Section 6 Definition:

approved regulatory charging activity means an activity provided by a corporate Commonwealth entity:

(a) that has Australian Government policy approval; and

(b) for which there is statutory authority to charge.

To satisfy the requirements of the Public Governance, Performance and Accountability (Charging for Regulatory Activities) Order 2017 - Section 7 (d) measure, assess and document financial and non-financial performance of the regulatory activity, the Harbour Trust has incurred expenses of $22,204 (2019: $6,826) pertaining to this approved regulatory charging activity.

Interest

Interest revenue is recognised using the effective interest method as set out in AASB 139 Financial Instruments: Recognition and Measurement.

Rental income

Rental revenue for operating leases is recognised on a straight line basis over the term of the lease, except when an alternative basis is more representative of the pattern of service rendered through the provision of the leased premises. Lease incentives offered under operating leases are amortised on a straight line basis in the profit or loss over the life of the lease.

Grants

A government grant is not recognised until there is reasonable assurance that the entity will comply with the conditions attaching to it, and that grant will be received. Government grants are rarely gratuitous. The entity earns them through compliance with their conditions and meeting the envisaged obligations.

Government grants shall be recognised in the Statement of Comprehensive Income on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate.

Resources received free of charge

Resources received free of charge are recognised as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature.

Gains

Sale of assets

Gains from disposal of non-current assets are recognised when control of the asset has transferred to the buyer.

Note 5: Financial Assets

Note 5: Financial Assets

Note 5A & 5B

2020

2019

$’000

$’000

Note 5A: Cash and cash equivalents

Cash at bank

8,000

3,235

Cash on hand

1

1

Total cash

8,001

3,236

Note 5B: Investments

Term Deposits

22,094

39,230

Total investments

22,094

39,230

Cash at bank and investments include reserves from the sale of the Markham Close properties ($23 million). A decision of Government approved the use of these funds to finance the Harbour Trust’s COVID-19 related rent assistance program, priority capital works projects and to provide operating liquidity.

The $22.094 million is in short term deposits readily convertible to cash.

Accounting Policy

Cash and cash equivalents include cash on hand and demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash is recognised at its nominal amount.

Note 5C: Trade and other receivables

2020

2019

$’000

$’000

Note 5C: Trade and other receivables

Goods and Services

Goods and services

1,042

630

Total receivables for goods and services

1,042

630

Other receivables

Interest receivable

1

4

Other receivables

405

528

Total other receivables

406

532

Total trade and other receivables (gross)

1,448

1,162

Less impairment allowance account

(738)

(365)

Total trade and other receivables (net)

710

797

Accounting Policy

Loans and receivables

Trade receivables, loans and other receivables that are held for the purpose of collecting the contractual cash flows
where cash flows are solely payments of principal and interest, that are not provided at below-market interest rates,
are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.
The Harbour Trust has no loans. Interest is recognised by applying the effective interest rate.

All receivables are expected to be recovered in no more than 12 months.

Receivables for Goods & Services

Credit terms are net 30 days (2019: 30 days).

Accounting Policy

Impairment of financial assets

Financial assets are assessed for impairment at each reporting period.

Financial assets held at amortised cost -

If there is objective evidence that an impairment loss has been incurred for loans and receivables or held to maturity investments held at amortised cost, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate.
The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.

Note 6: Non-Financial Assets

Note 6: Non-Financial Assets

Note 6A: Land and buildings

2020

2019

$’000

$’000

Note 6A: Land and buildings

Freehold land

- at fair value

244,942

198,885

Total freehold land

244,942

198,885

Buildings on freehold land:

- at fair value

76,779

92,691

- accumulated depreciation

-

(5,303)

Total buildings on freehold land

76,779

87,388

Total land and buildings

321,721

286,273

The Harbour Trust has completed the majority of decontamination works to its current sites. The cost of the remaining decontamination and remediation works has been taken into account in arriving at the fair values.

No land or buildings are expected to be sold or disposed of within the next 12 months.

Note 6B: Infrastructure, plant and equipment

2020

2019

$’000

$’000

Note 6B: Infrastructure, plant and equipment

Infrastructure, plant and equipment:

- at fair value

49,809

38,717

- Right-of-use assets

380

-

- accumulated depreciation

(4,689)

(7,100)

Total infrastructure, plant and equipment

45,500

31,617

No indicators of impairment were found for infrastructure, plant and equipment (“IPE”). No IPE is expected to be sold or disposed of within the next 12 months.

Note 6C: Heritage and collections

2020

2019

$’000

$’000

Note 6C: Heritage and collections

Heritage assets:

- at fair value

53,197

29,405

Total heritage and collections

53,197

29,405

No heritage assets or collections are expected to be sold or disposed of within the next 12 months.

Valuations were conducted by an independent valuer (Jones Lang LaSalle) in 2020.

Revaluation increments of $47,619,564 for land, $828,352 for buildings on freehold land, $10,213,536 for infrastructure and $7,371,025 for heritage were credited to the asset revaluation reserve by asset class and included in the non-financial assets section of the Consolidated Statement of Financial Position.

Management undertook an internal desktop valuation in 2020 for plant & equipment which indicated that there were no material movements in depreciated replacement value of assets.

The Lightkeepers and Deputy Lightkeepers cottages at Macquarie Lightstation have not been included in the valuation of buildings as they are assigned to private individuals on 125 year lease terms.

The Lightkeepers cottage lease ends on 17th February 2119 and for the Deputy Lightkeepers cottage lease on 5th November 2116.

All revaluations were conducted in accordance with the revaluation policy stated at Note 6E.

Note 6D: Intangibles

2020

2019

$’000

$’000

Note 6D: Intangibles

Computer software at cost:

Purchased – in use

976

911

Total computer software

976

911

Accumulated amortisation

(540)

(475)

Total intangibles

436

436

No intangibles are expected to be sold or disposed of within the next 12 months. No indicators of impairment were found for intangible assets.

Note 6E: Analysis of infrastructure, plant, equipment and intangibles

TABLE A – Reconciliation of the opening and closing balances of infrastructure, plant, equipment and intangibles (2019-20)

Note 6E: Analysis of infrastructure, plant, equipment and intangibles

Land

Buildings on Freehold Land

Total Land & Buildings

Infrastructure, Plant & Equipment

Heritage & Collections

Intangibles

Total

$’000

$’000

$’000

$’000

$’000

$’000

$’000

As at 1 July 2019

Gross book value

198,885

92,691

291,576

38,717

29,405

911

360,609

Accumulated depreciation/amortisation

-

(5,303)

(5,303)

(7,100)

-

(475)

(12,878)

Total as at 1 July 2019

198,885

87,388

286,273

31,617

29,405

436

347,731

Recognition of Right-of-use asset on initial
application of AASB16

380

380

Adjusted Total as at 1 July 2019

198,885

87,388

286,273

31,997

29,405

436

348,111

Additions:

Purchase

840

8,042

8,882

450

313

96

9,741

Revaluations and impairments recognised in other comprehensive income

47,620

828

48,448

10,214

7,370

-

66,032

Reclassification

(2,403)

(18,124)

(20,527)

4,449

16,109

(31)

-

Depreciation/amortisation expense

-

(1,355)

(1,355)

(1,585)

-

(65)

(3,005)

Depreciation on right-of-use asset

-

-

-

(25)

-

-

(25)

Disposals/write-down

-

-

-

-

-

-

-

Total as at 30 June 2020

244,942

76,779

321,721

45,500

53,197

436

420,854

Total as at 30 June 2020 represented by:

Gross book value

244,942

76,779

321,721

50,189

53,197

976

426,083

Accumulated depreciation/amortisation

-

-

-

(4,689)

-

(540)

(5,229)

244,942

76,779

321,721

45,500

53,197

436

420,854

Carrying amount of right-of-use assets

-

-

-

355

-

-

355

A detailed assessment of WIP balances was undertaken upon completion of the Sub Base Platypus Stage 1B Project. In allocating the project cost across specific assets in the asset register, a number of assets were reclassified as Heritage or Infrastructure assets.

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 authority’s accounts immediately prior to the restructuring.

Property, Plant and Equipment

Asset Recognition Threshold

Purchases of infrastructure, plant and equipment are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $2,000, 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.

Fair Value and Revaluations

Fair value for each class of asset equals the total of the most recent revalued amounts and capital expenditure
at cost subsequent to the last valuation.

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

Fair value of each class of asset

Asset Class

Fair value measured at

Land

Market appraisal

Buildings exc Leasehold improvements

Depreciated replacement cost

Leasehold improvements

Depreciated replacement cost

Infrastructure, plant and equipment

Depreciated replacement cost

Heritage and cultural assets

Market appraisal

Following initial recognition at cost, infrastructure, plant and equipment are carried at fair value less 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 board resolved that a full independent valuation would be completed every 5 years due to the infrequent market sales of open space lands.

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.

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 Commonwealth lessees 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.

On initial adoption of AASB 16 the Harbour Trust has adjusted the ROU assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial application, an impairment review is undertaken for any right of use lease 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 after initial recognition in Commonwealth agency, GGS and Whole of Government financial statements.

Depreciation

Depreciable infrastructure, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Harbour Trust 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:

Depreciation rates based on useful lives

2020

2019

Buildings on freehold land

10 to 125 years

10 to 125 years

Infrastructure

5 to 50 years

5 to 50 years

Plant and equipment

3 to 20 years

3 to 20 years

The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in Note 3C.

The depreciation rates for ROU assets are based on the commencement 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 2020. 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 Harbour Trust were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

An item of infrastructure, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Heritage and Collection Assets

The Harbour Trust owns and manages buildings, monuments and structures that have significant heritage and cultural value (with an aggregated fair value of $53.197m (2019: $29.405m)). The Harbour Trust has classified them as heritage and collection assets as they were primarily used for purposes that relate to their cultural significance. The Harbour Trust has adopted appropriate curatorial and preservation policies for these heritage assets and the items are deemed to have indefinite useful lives and hence are not depreciated. The Harbour Trust’s curatorial and preservation policies are publicly available within the Harbour Trust’s Management Plans at www.harbourtrust.gov.au/en/corporate/planning.

Asset Renewal Reserve

The Harbour Trust established an asset renewal reserve in 2012-13 to set aside funds for the future asset renewal of its significant asset base. Prior to 2017-18, the asset renewal reserve was being supplemented at the end of each financial year by an amount equivalent to the minimum 100% of the annual depreciation expense, subject to a review of the asset renewal plans. In 2017-18 the reserve funds were drawn down to fund $2.918 million of major capital renewal works. However, comparable to the 2018-19 financial year, in this current 2019-20 financial year, there has been no transfer from the Harbour Trust’s accumulated results to a general equity reserve, due to the Board approved deficit result and the budgeted deficit for the 2020-21 financial year. These deficits were approved by the Minister for Finance.

Intangibles

The Harbour Trust’s intangibles comprise software purchased externally for internal use. These assets are carried at cost less accumulated amortisation and impairment losses.

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the Harbour Trust’s software is 3 to 7 years (2019: 3 to 7 years). All software assets were assessed for indications of impairment as at 30 June 2020.

Note 6F: Fair Value Measurements, Valuation Techniques and Inputs Used

The following table provides an analysis of assets that are measured at fair value.

The different levels of the fair value hierarchy are defined below.

Level 1: Quoted prices (unadjusted) in active markets for identical assets that the entity can access at measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.

Level 3: Unobservable inputs for the asset.

Fair value measurements

Measurements

Fair Value Level

2020

2019

$’000

$’000

Non-financial assets

Land

244,942

198,885

Level 3

Buildings

76,779

87,388

Level 3

Infrastructure, plant and equipment

45,500

31,617

Level 3

Heritage and collections

53,197

29,405

Level 3

Total non-financial assets

420,418

347,295

Note 6G: Inventories

2020

2019

$’000

$’000

Note 6G: Inventories

Finished goods at cost

89

90

Total inventories

89

90

During the 2020 year no inventory held for distribution was recognised as an expense (2019: nil).

Accounting Policy

Inventories held for sale are valued at the lower of cost and net realisable value and consist of externally produced clothing, merchandise and publications.

Inventories acquired at no cost or nominal consideration are initially measured at current replacement cost at the date of acquisition.

Note 6H: Other non-financial assets

2020

2019

$’000

$’000

Note 6H: Other non-financial assets

Lease incentives

190

52

Prepayments

5

25

Total other non-financial assets

195

77

Other non-financial assets expected to be settled:

No more than 12 months

59

49

More than 12 months

136

28

Total other non-financial assets

195

77

Note 7: Payables

Note 7A: Suppliers

2020

2019

$’000

$’000

Note 7A: Suppliers

Trade creditors

661

2,166

Contract retentions

-

26

Total supplier payables

661

2,192

Supplier payables expected to be settled:

No more than 12 months

661

2,192

More than 12 months

-

-

Total supplier payables

661

2,192

Settlement is usually made within 30 days.

Note 7B: Other Payables

2020

2019

$’000

$’000

Note 7B: Other Payables

Salaries and wages

112

55

Accrued expenses/suppliers

458

504

Bonds and security deposits

1,425

1,371

Grants

-

112

Unearned revenue

2,944

3,254

Total Other Payables

4,939

5,296

The Harbour Trust also holds 47 bank guarantees (2019: 48) as security for tenants on long term leases. The total value of those bank guarantees is $2.535 million (2019: $2.128 million).

Other payables expected to be settled:

2020

2019

$’000

$’000

Other payables expected to be settled:

No more than 12 months

3,065

2,951

More than 12 months

1,874

2,345

Total Other Payables

4,939

5,296

Accounting Policy

Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. Financial liabilities are recognised and derecognised upon trade date.

Other financial liabilities

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

Note 7C: Leases

2020

2019

Interest Bearing Liabilities

$’000

$’000

Note 7C: Leases

Right-of-use asset1

355

-

Total Leases

355

-

1.The Entity has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

Accounting Policy

Refer Note 1.5 for accounting policy on leases.

Note 8A: Employee provisions

People and Relationships

Note 8A: Employee provisions

2020

2019

$’000

$’000

Note 8A: Employee provisions

Leave

1,460

1,178

Total employee provisions

1,460

1,178

Accounting policy

Employee Benefits

Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been settled.

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of the reporting period are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

Superannuation

Certain employees of the Harbour Trust are members of the Commonwealth Superannuation Scheme (“CSS”), the Public Sector Superannuation Scheme (“PSS”) or the PSS Accumulation Plan (“PSSap”).

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes.

The Harbour Trust makes employer contributions to the employee superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government.

Employer superannuation contributions for employees who are not members of the CSS or PSS are expensed in the financial statements. There is no residual liability in respect of these contributions. The Harbour Trust accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting. The average sick leave taken in future years by employees of the Harbour Trust is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the Harbour Trust’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and Redundancy

Provision is made for separation and redundancy benefit payments. The Harbour Trust recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Note 8B: Key Management Personnel Remuneration

Note 8B: Key Management Personnel Remuneration

Note 8B: Key Management Personnel Remuneration

2020

2019

$

$

Note 8B: Key Management Personnel Remuneration

Short-term employee benefits:

Base salary

420,774

444,618

Other benefits and allowances

55,165

66,587

Total short-term employee benefits

475,939

511,205

Post-employment benefits:

Superannuation

62,800

64,756

Total post-employment benefits

62,800

64,756

Other long-term benefits:

Annual leave accrued

19,127

16,505

Long-service leave

8,007

4,905

Total other long-term benefits

27,134

21,410

Total key management personnel remuneration

565,873

597,371

  • Figures shown in this table are in single whole dollar values.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. The Harbour Trust has determined the key management personnel to be the Board members and Executive Director. Key management personnel remuneration is reported in the table above.

Pursuant to Section 43 of the Sydney Harbour Federation Trust Act 2001, the Trust sets the conditions of employment for the Executive Director, but must first seek advice from the Australian Government Remuneration Tribunal in respect of remuneration and allowances. The Executive Director’s remuneration was approved by resolution of the Trust on 19 September 2019 consistent with advice from the Tribunal following the Tribunal’s meeting on 20 June 2019. The package includes a performance component awarded at the discretion of the Trust. This component was waived for 2019-20 in response to the COVID-19 pandemic.

Trust members’ remuneration was also waived for the April 2020 to June 2020 period.

The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio minister. The Portfolio minister’s remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the Harbour Trust.

The total number of key management personnel that are included in the above table is 9 individuals (2019: 9 individuals). The total number includes both Trust member and key management remuneration.

Note 9: Other Provisions

Other Information

Note 9: Other Provisions

Note 9: Other Provisions

2020

2019

$’000

$’000

Other provisions

Provision for remediation — Sub Base Platypus

-

497

Provision for obsolete stock

-

82

Total other provisions

-

579

Other provisions are expected to be settled in:

No more than 12 months

-

579

More than 12 months

-

-

Total other provisions

-

579

Other Provisions: Movements in relation to 2020

Movements in relation to 2020

Other Provisions $’000

Total
$’000

As at 1 July 2019

579

579

Amounts used

(579)

(579)

Total as at 30 June 2020

-

-

Other Provisions: Movements in relation to 2019

Movements in relation to 2019

Other Provisions $’000

Total
$’000

As at 1 July 2018

597

597

Amounts used

(18)

(18)

Total as at 30 June 2019

579

579

In accordance with the Memorandum of Understanding between the Harbour Trust and the Department of Defence signed on 5 June 2009, the Harbour Trust was entitled to claim variations from the Department of Defence above those funds provided to date for additional decontamination costs incurred by the Trust in relation to Sub Base Platypus to date.

As at 30 June 2020, all costs incurred by the Harbour Trust have been finalised and no variations are to be claimed for decontamination costs.

Note 10: Financial Instruments

Note 10: Financial Instruments

Note 10A Categories of financial instruments

2020

2019

$’000

$’000

10A Categories of financial instruments

Financial assets at amortised cost

Investments

22,094

39,230

Cash at bank

8,000

3,235

Cash on hand

1

1

Receivables for goods and services

1,042

630

Interest receivable

1

4

Other receivables

405

528

Total financial assets at amortised cost

31,543

43,628

Financial Liabilities

Financial liabilities measured at amortised cost

Trade creditors

661

2,166

Contract retentions

-

26

Salaries and wages

112

55

Accrued expenses/suppliers

458

504

Bonds and security deposits

1,425

1,371

Total financial liabilities measured at amortised cost

2,656

4,122

Accounting Policy

Financial assets

With the implementation of AASB 9 Financial Instruments for the first time in 2019, the entity classifies its financial assets in the following categories:

a) financial assets at fair value through profit or loss;

b) financial assets at fair value through other comprehensive income; and

c) financial assets measured at amortised cost.

The classification depends on both the entity’s business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when the entity becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are transferred upon trade date.

Comparatives have not been restated on initial application.

Financial Assets at Amortised Cost

Financial assets included in this category need to meet two criteria:

1. the financial asset is held in order to collect the contractual cash flows; and

2. the cash flows are solely payments of principal and interest (SPPI) on the principal outstanding amount.

Amortised cost is determined using the effective interest method.

Effective Interest Method

Income is recognised on an effective interest rate basis for financial assets that are recognised at amortised cost.

Financial Assets at Fair Value Through Other Comprehensive Income (FVOCI)

Financial assets measured at fair value through other comprehensive income are held with the objective of both collecting contractual cash flows and selling the financial assets and the cash flows meet the SPPI test.

Any gains or losses as a result of fair value measurement or the recognition of an impairment loss allowance is recognised in other comprehensive income.

Financial Assets at Fair Value Through Profit or Loss (FVTPL)

Financial assets are classified as financial assets at fair value through profit or loss where the financial assets either doesn’t meet the criteria of financial assets held at amortised cost or at FVOCI (i.e. mandatorily held at FVTPL) or may be designated.

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset.

Impairment of Financial Assets

Financial assets are assessed for impairment at the end of each reporting period based on Expected Credit Losses, using the general approach which measures the loss allowance based on an amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12-month expected credit losses if risk has not increased.

The simplified approach for trade, contract and lease receivables is used. This approach always measures the loss allowance as the amount equal to the lifetime expected credit losses.

A write-off constitutes a derecognition event where the write-off directly reduces the gross carrying amount of the financial asset.

Financial liabilities

Financial liabilities are classified as either financial liabilities “at fair value through profit or loss” or other financial liabilities. Financial liabilities are recognised and derecognised upon “trade date”.

Financial Liabilities at Fair Value Through Profit or Loss

Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Financial Liabilities at Amortised Cost

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

Note 10B Net Gains or Losses on Financial Assets

2020

2019

$’000

$’000

10B Net Gains or Losses on Financial Assets

Financial assets at amortised cost

Interest revenue (see note 4C)

532

1,234

Net gain on financial assets at amortised cost

532

1,234

Financial assets at fair value through profit or loss

Impairment of receivables (see note 5C)

373

(76)

Net loss on financial assets at fair value through profit or loss

373

(76)

Note 10C Net Gains or Losses on Financial Liabilities

There was no net income or expense from financial liabilities for the year ended 30 June 2020 (2019 - Nil).

Note 10D Fair value of financial instruments

FINANCIAL ASSETS

Fair
value
2020
$’000

Fair
value
2019
$’000

Cash at bank

8,000

3,235

Cash on hand

1

1

Investments

22,094

39,230

Receivables for goods and services

709

793

Interest receivable

1

4

Total

30,805

43,263

Note 10D Fair value of financial instruments

FINANCIAL LIABILITIES

Fair
value
2020
$’000

Fair
value
2019
$’000

Trade creditors

661

2,166

Contract retentions

-

26

Salaries and wages

112

55

Accrued expenses/suppliers

458

504

Bonds and security deposits

1,425

1,371

Total

2,656

4,122

Note 11: Contingencies

Note 11: Schedule of Contingencies

There were no contingent assets or liabilities required to be disclosed as at 30 June 2020 (2019 - Nil).

Accounting Policy

Contingent Liabilities and Contingent Assets are not recognised in the Statement of Financial Position but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset or represent an existing liability or asset in respect of which settlement is not probable or the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

Note 12: Related Party Disclosures

Related party relationships

The Harbour Trust is an Australian Government controlled entity. Related parties to this entity are its members, key management personnel (“KMP”) including the Portfolio Minister and Executive and other Australian Government entities including the Department of the Environment.

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.

The following transactions with related parties occurred during the financial year:

  The Harbour Trust has a commercial tenancy agreement with an individual related to the Chair. The transaction occurred at arms length and was managed through the Tenant Selection Committee in accordance with the Harbour Trust Leasing Policy. The Chair declared the interest at the time of the application, and had no involvement in the Tenant Selection Committee process nor the decision.

The Harbour Trust transacts with other Australian Government controlled entities consistent with normal day-to-day business operations provided under normal terms and conditions. These are not considered individually significant to warrant separate disclosure as related party transactions.

Note 13: Sydney Harbour Foundation Management Ltd

Note 13: Sydney Harbour Foundation Management Ltd

As disclosed at Note 1 “Consolidation and associated company”, the Sydney Harbour Foundation Management Ltd, a company limited by guarantee, is the Trustee for the Conservancy, and was established on 8 December 2009 and is controlled by the Harbour Trust. The Company was originally incorporated on 8 December 2009 as an Australian Government corporation limited by guarantee at that time for the specific purpose of serving as trustee for the Conservancy. The Company’s constitution was amended on 26 June 2019 to clarify that the object of the Company is to benefit the Harbour Trust. The company changed its name from Sydney Harbour Conservancy Ltd to Sydney Harbour Foundation Management Ltd with effect from 15 July 2019.

The objective of the Company is to benefit the Sydney Harbour Federation Trust.

The cash position of the Company is as follows:

Cash position of the Sydney Harbour Foundation Management Ltd

2020

2019

$

$

OPERATING ACTIVITIES

Cash received

Donations

-

-

Grants

28,000

112,000

Total cash received

28,000

112,000

Cash used

Suppliers

-

-

Total cash used

-

-

Net cash from operating activities

28,000

112,000

INVESTING ACTIVITIES

Net cash from/(used by) investing activities

-

-

FINANCING ACTIVITIES

Cash received

Funds received for SHFT

-

-

Total cash received

-

-

Cash used

Fund transferred to SHFT

(140,000)

-

Total cash used

(140,000)

-

Net cash from/(used by) financing activities

(140,000)

-

Net increase/(decrease) in cash held

(112,000)

112,000

Cash and cash equivalents at the beginning of the reporting period

112,000

-

Cash and cash equivalents at the end of the reporting period

-

112,000

  • Figures shown in this table are in single whole dollar values.

Note 14: Sydney Harbour Conservancy

Note 14: Sydney Harbour Conservancy

As disclosed at Note 1 “Consolidation and associated company”, the Conservancy, a Trust for which the Sydney Harbour Foundation Management Ltd is Trustee, was established on 10 December 2009 and is controlled by the Harbour Trust.

The objectives of the Conservancy are to:

  Preserve the natural environmental value of the Harbour Trust sites including activities such as weed and feral animal control, waste minimisation, revegetation of native flora, protection of native biodiversity, the conservation of habitat, soil stabilisation and erosion control;

  Encourage and promote enjoyment of recreation and activity within natural surrounds of Harbour Trust sites;

  Recognise and appreciate the natural and historical significance of Harbour Trust sites; and

  Provide information, education and research about the natural environment.

The cash position of the Conservancy is as follows:

Cash position of the Conservancy

2020

2019

OPERATING ACTIVITIES

$

$

Cash received

Donations

-

-

Grants

-

-

Total cash received

-

-

Cash used

Suppliers

(110)

(150)

Total cash used

(110)

(150)

Net cash from/(used by) operating activities

(110)

(150)

INVESTING ACTIVITIES

Net cash from/(used by) investing activities

-

-

FINANCING ACTIVITIES

Cash received

Funds received for Trustee company

-

-

Total cash received

-

-

Cash used

Funds transferred to Trustee company

-

(70,000)

Total cash used

-

(70,000)

Net cash from/(used by) financing activities

-

(70,000)

Net increase/(decrease) in cash held

(110)

(70,150)

Cash and cash equivalents at the beginning of the reporting period

6,967

77,117

Cash and cash equivalents at the end of the reporting period

6,857

6,967

  • Figures shown in this table are in single whole dollar values.