Docklands Studios Melbourne Pty Ltd
ABN 28 101 578 303
Annual Report 30 June 2015 This page is intentionally blank Docklands Studios Melbourne Pty Ltd
Contents of the Annual Report
Introduction 4
Acronyms / Abbreviations 4
Corporate Information 5
Directors’ Report 6
Five year financial summary 12
Auditor's Independence Declaration 13
Directors’ declaration 14
Accountable officer’s and chief finance officer’s declaration 15
Comprehensive operating statement 16
Balance sheet 17
Statement of changes in equity 18
Cash flow statement 19
Notes to the financial statements Note 1. Summary of significant accounting policies 20 Note 2. Income from transactions 28 Note 3. Expenses from transactions 28 Note 4. Other economic flows included in net result 29 Note 5. Cash and deposits 29 Note 6. Receivables 29 Note 7. Property, plant and equipment 30 Note 8. Intangible assets 33 NoteIntangibl 9. Other non-financial assets 34 Note 10. Payables 34 Note 11. Provisions 35 Note 12. Superannuation 36 Note 13. Issued capital 36 Note 14. Number of shares 36 Note 15. Reserves 37 Note 16. Commitments for expenditure 37 Note 17. Contingent assets and contingent liabilities 37 Note 18. Financial instruments 38 Note 19. Cash flow information 43 Note 20. Responsible persons 43 Note 21. Remuneration of auditors 44 Note 22. Subsequent events 44 Note 23. Segment information 44 Note 24. Glossary of terms and style conventions 44
Auditor-General's Report 47
3 Docklands Studios Melbourne Pty Ltd
Introduction
This is the Annual Report of Docklands Studios Melbourne Pty Ltd ACN 101 578 303 (the Company) for 2015. The Company is a private unlisted company incorporated in Australia on 2nd August 2002 with a reporting date of 30 June.
The Annual Report has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards and when relevant with the requirements of Standing Direction 4.2 of the Financial Management Act 1994 and applicable Financial Reporting Directions.
A description of the nature of the Company’s operation and its principal activities is included in the Directors' Report.
For enquiries in relation to the Annual Report please call: + 61 3 8327 2000, or email to: [email protected] visit our website: http://www.dsmelbourne.com
Acronyms / Abbreviations
DSM Docklands Studios Melbourne Pty Ltd. ACN 101 578 303 The owner of the film studio assets.
AAS Australian Accounting Standards
AASB Australian Accounting Standards Board
DEDJTR Department of Economic Development, Jobs, Transport and Resources
FMA Financial Management Act 1994, Victoria
FRD Financial Reporting Directions issued by the Minister for Finance
GST Goods and Services Tax
IFRS International Financial Reporting Standards
VAGO Victorian Auditor-General’s Office
State The Crown in right of the State of Victoria
4 Docklands Studios Melbourne Pty Ltd
Corporate Information
ABN 28 101 578 303 ACN 101 578 303
Directors E. Eldridge Chair A. Fletcher-Nicholls D. Clark
Company Secretary V. Pythas
Registered Office and Principal Place of Business 476 Docklands Drive Docklands, Victoria, 3008 Australia Phone: + 61 3 8327 2000
Shareholder State of Victoria
Solicitors Keelins Lawyers Level 4, 459 Little Collins Street Melbourne, Victoria, 3000 Australia
Bankers Westpac Banking Corporation 509 Toorak Road Toorak, Victoria, 3142 Australia
Treasury Corporation of Victoria Level 12, 1 Collins Street Melbourne, Victoria, 3000 Australia
Auditors Victorian Auditor-General’s Office Level 24, 35 Collins Street Melbourne, Victoria, 3000 Australia
Internal Auditors McLean Delmo Bentleys Chartered Accountants Level 8, 607 Bourke Street Melbourne, Victoria, 3000 Australia
5 Docklands Studios Melbourne Pty Ltd
Directors’ Report
The directors submit their report for the year to 30 June 2015 and the Independent Audit Report thereon.
Directors The names and details of the Company’s directors in office during the period and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Elizabeth Eldridge (BA; LLM) Ms Eldridge was a senior executive in the Victorian Public Sector. She has held senior appointments with the Departments of Justice, Treasury and Finance and Business and Innovation. She is also a director of Victorian Traditional Owners Fund Limited as trustee of the Victorian Traditional Owners Trust and a member of the Queen's College Council.
She was appointed a Director on 19 November 2008 and appointed as Chair of the Company at the Board Meeting held on 4 December 2008. Ms Eldridge is also an alternating member of the Company's Audit Committee.
Ann Fletcher-Nicholls (BA, MAICD) Ms Fletcher-Nicholls has a wealth of public relations and marketing expertise, spanning more than three decades. She has operated at a senior executive level across a broad range of industry sectors. Currently, she is also a Board Member of Seymour Health, Director, Chadcorp Communications and Director, Resources for Resources. Her previous positions have included Managing Director, Porter Novelli in Sydney, a member of the Clemenger Group; Principal, P.R. Fletcher; Senior Consultant Marita Blood & Associates; Public Affairs Manager, Shell Australia.
She has been a Director of the Company since 1 March 2012 and is also an alternating member of the Company's Audit Committee.
Desmond Clark (ARMIT, SATC) Mr Clark has extensive experience in policy development, governance and management. He provides independent consulting advice in strategic communications and management services.
He was appointed Director of the Office of Film and Literature Classification in 2000 and completed his term in 2007. He was Deputy Chairman of the Australian Film Commission and Chairman of the Melbourne International Film Festival.
He was Lord Mayor of the City of Melbourne (1992 - 1993) and served three terms as a Councillor. He worked on the restructure of Local Government in Victoria as Chairman of Commissioners at the City of Port Phillip and in two other municipalities.
He has been a Director of the Company since 1 March 2012 and is also an alternating member of the Company's Audit Committee.
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Directors’ Report - (continued)
Company Secretary Viola Pythas BA (Legal), GradDipBus (Acc) Ms Pythas was appointed as Company Secretary of the Company on 5 August 2010. Viola has had over 15 years experience in Corporate Governance and Company Secretary roles with ANZ. She has extensive experience in various facets of company secretarial practice, including compliance with the Corporations Act, coordinating effective Board and Committee meetings, corporate structures, directors’ duties and administration of trusts. She has been an affiliate member with Governance Institute of Australia for over 15 years.
Audit Committee Chair Ian Gaudion (BCom, BEd, FCPA, MBA) Ian has extensive experience in financial management and financial management consulting. Prior to joining Deloitte, where he became a partner, he was a management accountant and since leaving the partnership he has concentrated on insurance and superannuation organisations as well as running a management consulting practice. Ian is currently a director of the VMIA and an alternate director of ESSSuper.
Interests in the shares and options of the Company and related bodies corporate The Company is a company limited by shares. Directors do not hold any shares in the Company.
Taxation Status The Company received a private ruling from the Australian Taxation Office (Authorization Number 90830) which states that the Company is exempt from Commonwealth income tax under section 24AM of the Income Tax Assessment Act 1936. The exemption commenced on 19 November 2008 and applied for the years ending 30 June 2009, 2010, and 2011. The exemption was extended for 3 years to 30 June 2014 during the course of 2010-11 and for a further 3 years to 30 June 2017 during the course of 2013-14.
Dividends No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made.
Principal Activities The Company’s principal activity is to hire sound stages, production offices and workshops to third parties for the production of film and television programmes.
Operating and Financial Review The Company’s objective is to service both domestic and international film and television production. 2014-15 was a successful year and in the reporting period the Studio hosted a range of different productions, again demonstrating its capacity to cater for all production types. The major bookings included: • GTV 9's production of Millionaire Hot Seat and The Footy Show; • The fifth series of the Seven Network's drama series, Winners and Losers; • The elimination rounds for the new series of Masterchef; • The Australian feature film The Dressmaker; and • The international mini-series, Childhoods End.
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Directors’ Report - (continued)
Operating and Financial Review - (continued) The Studio also hosted numerous smaller bookings, including television commercials, music videos, short films and several corporate events.
This year the Studio hosted Childhoods End, an international mini series. GTV9 (now in the final year of a five year contract) remains the most consistent source of revenue.
The Company’s appeal to the international market is strongly influenced by the exchange rate and how our dollar sits in relation to our competitors. If the US dollar rises but the Australian dollar retains parity with other currencies, our competitiveness will not improve significantly. This erosion of Australia’s competitiveness is not restricted to Victoria - both Fox Studios Australia - Sydney and Village Roadshow - Gold Coast studios are similarly affected.
International production remains a critical component of the Company’s long-term financial performance because these productions have big budgets and book multiple sound stages for long periods of time. Hence, the Studio supports the efforts by the film industry trade association, Ausfilm, to lobby the Federal Government to increase the financial incentives that attract footloose productions to Australia.
Operating Results for the Period The Company generated a successful result during 2014-15. Total operating revenue for the period was $3,798,219 (2014: $3,016,640) and total operating expenses before depreciation and interest were $2,842,936 (2014: $2,588,315).
This leaves an operational profit (or EBITDA) of $955,283 (2014: $428,325). After depreciation and interest, the loss is $1,338,715 (2014: $1,848,849).
Lease Agreement The Company occupies Crown land under the terms of a lease with the State of Victoria. The lease requires the Company to pay rent subject to review every two years according to movements in the Melbourne Consumer Price Index. The lease gives the Company the right to seek deferral of rental payments under certain circumstances. The Company sought and was granted deferment of rent of $1,986,675. Rental payments are no longer deferred and the Company has been paying rent monthly since 1 July 2010.
The Company is required to repay the deferred rent out of EBITDA once it reaches a threshold of $400,000 in any one year. The Company will pay 50 cents in the dollar of all EBITDA earned above the threshold.
During 2014-15, $10,806 was repaid leaving an amount payable at 30 June 2015 of $1,424,701.
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Directors’ Report - (continued)
Review of Financial Condition Liquidity The Company received cash from operating activities during the year which together with the opening cash balances was sufficient to cover all operating cash payments. The closing cash balance at 30 June 2015 including term deposits, was $3,916,734 up from $3,192,032 at 30 June 2014.
Non Current Assets At balance date the Company had non-financial assets totalling $42,866,190 (2014: $44,586,290) comprised of the written down value of buildings $42,688,720 (2014: $44,438,550) and plant and equipment of $177,470 (2014: $147,740).
Equity and Called Up Capital The issued and called up capital of the Company at 30 June 2015 was 58,001,625 The State of Victoria is the sole owner of the shares comprising: - 200,000 fully paid up 1 cent shares $ 2,000 - 45,492,625 fully paid up $1.00 shares $ 45,492,625 - 2,501,400 fully paid up $5.00 shares $ 12,507,000 $ 58,001,625 (i) (i) see Notes 13 and 14
Capital reserves The Company incurred a loss after depreciation and interest of $1,350,358 (2014: $1,849,716) which, when added to the prior year's accumulated losses, brings the accumulated loss at 30 June 2015 to $21,125,952 (2014: $19,775,593). The revaluation reserve at 30 June 2015 was $8,056,519 (2014: $8,056,519).
Significant Events after the Balance Date There are no significant events subsequent to the reporting date that will have a material effect on the Company's operations.
Auditor's Independence Declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 13.
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Directors’ Report - (continued)
Likely Developments and Expected Results The directors expect the 2015-16 financial year to operate at a slightly higher level of operating expenses to prior years.The operating revenue will be dependent on winning new bookings which will be reliant on market conditions and the level of competition.
Environmental Regulation and Performance The Company’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or State or Territory. The Company holds no licences or permits.
Indemnification and Insurance of Directors and Officers During the year, the Company paid a premium to insure officers of the Company. The officers of the Company covered by the insurance policy include all Directors.
The liabilities insured are legal costs that may be incurred in defending proceedings that may be brought against the officers in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Company.
The total amount of insurance contract premium paid was $13,333 (2014: $14,184).
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnity any current or former officer of the Company against a liability incurred as such by an officer.
Directors’ meetings and Committee membership
Mr. Ian Gaudion was appointed as an Independent Member and Chairman of the Committee in 2012. The Committee comprises three members, being Mr. Gaudion (Chair) and any two of the three non-executive directors.
The number of directors' meetings and audit committee meetings held during the period and attended by each director and member were as follows:
Directors’ Meetings Audit Committee Meetings 2015 2014 2015 2014 Number of meetings held: 8 8 5 4 Number of meetings attended: Directors E. Eldridge (Board Chair) 7 7 4 4 A. Fletcher-Nicholls 8 8 3 1 D. Clark 5 6 3 3 Audit Committee Chair I. Gaudion (Audit Committee Chair) 5 4
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Directors’ Report - (continued)
Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
No proceedings have been brought to or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001 .
Economic dependency There is an economic dependency in respect of financial support for the net losses of the Company by the State of Victoria. There is nothing to suggest that the financial support will be withdrawn or not renewed and the continuing financial support of the State is a fundamental element of the capacity of the Company to meet its debts as and when they fall due.
Options No options over issued shares or interests in the Company or a controlled entity were granted during or since the end of the period and there were no options outstanding at the date of this report.
Rounding Rounding has not been applied and all amounts are reported at the dollar level.
Signed in accordance with a resolution of the Board of Directors:
E. Eldridge Chair
26 August 2015
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Five year financial summary
Five year financial summary 2015 2014 2013 2012 2011 $ $ $ $ $
Income from rental of facilities 3,704,464 2,938,980 2,984,510 3,556,596 2,180,613 Interest income 93,755 77,660 107,191 82,185 44,527 Total expenses from transactions (5,136,934) (4,865,489) (4,641,015) (4,028,822) (3,868,423) Earnings before depreciation and interest 955,283 428,325 414,750 1,387,373 106,904 Net result from transactions (1,338,715) (1,848,849) (1,549,314) (390,042) (1,643,283) Net result for the period (1,350,358) (1,849,716) (1,549,342) (398,163) (1,643,300) Net cash flow from operating activities 1,086,205 309,825 (1,817) 1,632,711 200,892 Total assets 47,031,889 48,243,465 50,102,533 42,309,548 43,113,996 Total liabilities 2,099,697 2,188,892 2,198,244 2,472,386 2,309,876 Total net assets 44,932,192 46,054,573 47,904,289 39,837,161 40,804,120
12 Docklands Studios Melbourne Pty Ltd
13 Docklands Studios Melbourne Pty Ltd
Directors’ declaration
In accordance with a resolution of the Directors of Docklands Studios Melbourne Pty Ltd (the Company):
1 In the opinion of the Directors:
(a) the financial statements and notes of the Company are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company's financial position as at 30 June 2015 and of its performance for the year ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001; and
(b) the financial statements and notes of the Company have been prepared in accordance with Standing Direction 4.2 of the Financial Management Act 1994, and applicable Financial Reporting Directions, and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2 We are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate.
3 Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001 .
On behalf of the Board
E. Eldridge Chair
26 August 2015
14 Docklands Studios Melbourne Pty Ltd
Accountable officer’s and chief finance officer’s declaration
The attached financial statements for Docklands Studios Melbourne Pty Ltd have been prepared in accordance with Standing Directions 4.2 of the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards including Interpretations, and other mandatory professional reporting requirements.
We further state that, in our opinion, the information set out in the comprehensive operating statement, balance sheet, statement of changes in equity, cash flow statement and accompanying notes, presents fairly the financial transactions during the year ended 30 June 2015 and financial position of the Company at 30 June 2015.
At the time of signing, we are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate.
We authorise the attached financial statements for issue on 26 August 2015.
R. Allan Chief Executive
L. Cafari Chief Finance Officer
Melbourne, 26 August 2015
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Comprehensive operating statement for the financial year ended 30 June 2015
Note 2015 2014 $ $
Income from transactions Income from rental of facilities and recoveries for services provided 2(a) 3,704,464 2,938,980 Interest income 2(b) 93,755 77,660 Total income from transactions 3,798,219 3,016,640
Expenses from transactions Employee expenses 3(a) (1,077,473) (1,027,494) Supplies and services 3(b) (1,753,820) (1,559,954) Depreciation and amortisation expenses 3(c) (2,305,641) (2,277,960) Interest expense 3(d) - (81) Total expenses from transactions (5,136,934) (4,865,489)
Net result from transactions (net operating balance) (1,338,715) (1,848,849)
Other economic flows included in net result Other gains/(losses) from other economic flows 4(a) (11,643) (867) Total other economic flows included in net result (11,643) (867)
Net result (1,350,358) (1,849,716)
Comprehensive result (1,350,358) (1,849,716)
This comprehensive operating statement should be read in conjunction with the notes to the financial statements.
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Balance sheet as at 30 June 2015
Note 2015 2014 $ $ Assets Financial assets Cash and deposits 5 3,916,734 3,192,032 Receivables 6 232,973 461,876 Total financial assets 4,149,707 3,653,908
Non-financial assets Property, plant and equipment 7 42,866,190 44,586,290 Intangible assets 8 4,398 3,267 Other non-financial assets 9 11,594 - Total non-financial assets 42,882,182 44,589,557
Total assets 47,031,889 48,243,465
Liabilities Payables 10 1,990,350 2,078,442 Provisions 11 109,347 110,450 Total liabilities 2,099,697 2,188,892
Net assets 44,932,192 46,054,573
Equity Accumulated loss (21,125,952) (19,775,593) Physical asset revaluation surplus 15 8,056,519 8,056,519 Issued capital 13 58,001,625 57,773,647 Net worth 44,932,192 46,054,573
Commitments for expenditure 16 Contingent assets and contingent liabilities 17
This balance sheet should be read in conjunction with the notes to the financial statements.
17 Docklands Studios Melbourne Pty Ltd
Statement of changes in equity for the financial year ended 30 June 2015
Note Physical Asset Accumulated Issued Capital Total Revaluation Loss Surplus
Balance at 1 July 2013 8,056,519 (17,925,877) 57,773,647 47,904,289
Net result for the year - (1,849,716) - (1,849,716) Revaluation adjustment of buildings 15 - - - - Issue of new ordinary shares 13 - - - -
Balance at 30 June 2014 8,056,519 (19,775,593) 57,773,647 46,054,573
Net result for the year - (1,350,358) - (1,350,358) Revaluation adjustment of buildings 15 - - - - Issue of new ordinary shares 13 - - 227,978 227,978
Balance at 30 June 2015 8,056,519 (21,125,952) 58,001,625 44,932,192
This statement of changes in equity should be read in conjunction with the notes to the financial statements.
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Cash flow statement for the financial year ended 30 June 2015
2015 2014 Note $ $
Cash flows from operating activities Receipts Receipts from customers 4,733,875 3,523,872 Interest received 93,755 77,660 Total receipts 4,827,630 3,601,532
Payments Payments to suppliers and employees (3,502,743) (3,186,178) Goods and Services Tax paid to the ATO (i) (238,682) (105,448) Interest and other costs - (81) Total payments (3,741,425) (3,291,707)
Net cash flows from/(used in) operating activities 19(b) 1,086,205 309,825
Cash flows from investing activities Proceeds from sale of non-financial assets 205 - Purchases of non-financial assets (361,708) (152,284) Net cash flows from/(used in) investing activities (361,503) (152,284)
Net increase/(decrease) in cash and cash equivalents 724,702 157,541 Cash and cash equivalents at the beginning of financial year 3,192,032 3,034,491 Cash and cash equivalents at the end of financial year 19(a) 3,916,734 3,192,032
(i) Goods and Services Tax paid to the ATO is presented on a net basis.
This cash flow statement should be read in conjunction with the notes to the financial statements.
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Notes to the financial statements for the financial year ended 30 June 2015
Note 1. Summary of significant accounting policies
These annual financial statements represent the audited general purpose financial statements for Docklands Studios Melbourne for the period ending 30 June 2015. The purpose of this report is to provide users with information about the Company's stewardship of resources entrusted to it.
(a) Statement of compliance This financial report is a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 , Australian Accounting Standards (AAS), and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). Where relevant this financial report has also been prepared in accordance with the Financial Management Act 1994 and the Financial Reporting Directions issued by the Minister for Finance. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
(b) Basis of accounting preparation and measurement The accrual basis of accounting has been applied in the preparation of these financial statements whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid.
These financial statements have been prepared on an historical cost basis, except for the revaluation of certain non- current assets and financial instruments. Cost is based on the fair value of the consideration given in exchange for assets. All amounts are presented in Australian dollars.
Judgements, estimates and assumptions are required to be made about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and in future periods, if the revision affects both current and future periods.
Judgements and assumptions made by management in the application of the AASs that have significant effects on the financial statements and estimates relate to: . the fair value of property, plant and equipment (refer to Note 1(k)); . actuarial assumptions for employee benefit provisions based on likely tenure of existing staff, patterns of leave claims, future salary movements and future discount rates (refer to Note 1(l)).
Consistent with AASB 13 Fair Value Measurement, the Company determines the policies and procedures for both recurring fair value measurements such as property, plant and equipment, biological assets, investment properties and financial instruments and for non‑recurring fair value measurements such as non‑financial physical assets held for sale, in accordance with the requirements of AASB 13 and the relevant Financial Reporting Directions.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: . Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities . Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and . Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
In addition, the Company determines whether transfers have occurred between levels in the hierarchy by re‑assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Valuer‑General Victoria (VGV) is the Company’s independent valuation agency.
The Company, in conjunction with VGV, monitors changes in the fair value of each asset and liability through relevant data sources to determine whether revaluation is required.
Going Concern: the financial statements are prepared on the basis of the Company being a going concern. As reported in the Directors' Report the Company has an economic dependency on the State.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2015 and comparative information is presented for the year ended 30 June 2014.
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Note 1. Summary of significant accounting policies (continued)
(c) Reporting entity The financial statements cover the Docklands Studios Melbourne as an individual reporting entity which manages the sound studios located in the Docklands precinct Melbourne.
Its principal address is: Docklands Studios Melbourne Pty Ltd 476 Docklands Drive, Docklands, VIC, 3008
(d) Scope and presentation of financial statements
Comprehensive operating statement
The comprehensive operating statement comprises three components, being 'net result from transactions' (or termed as 'net operating balance'), 'other economic flows included in net result', as well as 'other economic flows - other comprehensive income'. (Refer to Note 24- Glossary) The sum of the former two represents the net result. The net result is equivalent to profit or loss derived in accordance with AASs. This classification is consistent with the whole of government reporting fomat and is allowed under AASB 101Presentation of Financial Statements.
Balance sheet
Assets and liabilities are presented in liquidity order with assets aggregated into financial assets and non-financial assets. Current and non-current assets and liabilities (non-current being those assets or liabilities expected to be recovered or settled more than 12 months after the reporting period) are disclosed in the notes, where relevant.
Statement of changes in equity The statement of changes in equity presents reconciliations of non-owner and owner changes in equity from opening balances at the beginning of the reporting period to the closing balances at the end of the reporting period. It also shows separately changes due to amounts recognised in the ‘Comprehensive result’ and amounts recognised in ‘Other economic flows – other movements in equity’ related to ‘Transactions with owner in its capacity as owner ’.
Cash flow statement Cash flows are classified according to whether or not they arise from operating, investing, or financing activities. This classification is consistent with requirements under AASB 107Statement of Cash Flows .
(e) Changes in accounting policies
There have been no changes in accounting policies as a result of new and revised standards.
(f) Income from transactions Income is measured at the fair value and amounts disclosed as income are net of returns, trade allowances, duties and taxes paid.
Income from rental of facilities and recoveries for services provided Income arising from the provision of services is recognised when the following conditions have been satisfied: the amount of the revenue and transaction costs incurred can be reliably measured; it is probable that the economic benefits associated with the transaction will flow to the Company; and rental income in relation to the licensing of the Company's assets is recognised when received or receivable under the terms of the lease agreement.
(g) Interest income
Interest revenue includes interest on bank term deposits and is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.
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Note 1. Summary of significant accounting policies (continued)
(h) Expenses from transactions
Employee expenses Employee benefits expenses include all costs related to employment including wages and salaries, leave entitlements and superannuation contributions. These are recognised when incurred.
Superannuation The amount recognised in the comprehensive operating statement is the employer contributions for members of defined contribution plans that are paid or payable during the reporting period.
Supplies and Services These expenses generally represent the day-to-day running costs, including maintenance costs, which have been incurred in the normal operations of the Company. These items are recognised as an expense in the reporting period in which they are incurred. The carrying amount of any inventories held for distribution is expensed when distributed.
Rent The Company occupies Crown land under the terms of a lease with the State of Victoria. The lease requires the Company to pay rental subject to review every two years according to movements in the Melbourne Consumer Price Index. The lease gives the Company the right to seek deferral of rental payments under certain circumstances. The Company sought and was granted deferment of rent of $1,986,675. Rental payments are no longer deferred and the Company has been paying rent monthly since 1 July 2010. The Company is required to repay the deferred rent out of cash EBITDA once it reaches a threshold of $400,000 in any one year. The Company will pay 50 cents in the dollar of all EBITDA earned above the threshold. During 2014-15, $10,806 was repaid leaving an amount payable at 30 June 2015 of $1,424,701.
Depreciation and amortisation expenses Depreciation is provided on property, plant and equipment. The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the Company. For buildings and plant and equipment, depreciation commences from the time the asset is held ready for use.
Intangible assets with finite useful lives are amortised as an expense from transactions on a systematic (straight- line) basis over the asset's useful life. Amortisation begins when the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. The useful lives used to calculate depreciation for each class of depreciable assets are: Class of fixed asset Useful lives
Building 40 years Building improvements 6 - 20 years Plant and equipment 5 – 10 years Office equipment 10 years Computer equipment 2.5 years Vehicles 6 years Software 2.5 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. There has been no change to the useful lives since the previous year. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Interest expense Interest expenses are recognised in the period in which they are incurred. Refer to Glossary of terms and style conventions in Note 24 for an explanation of interest expense items.
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Note 1. Summary of significant accounting policies (continued)
(i) Other economic flows included in the net result Other economic flows measure the change in volume or value of assets or liabilities that do not result from transactions.
Net gain/(loss) on non-financial assets Net gain/(loss) on non-financial assets and liabilities includes realised and unrealised gains and losses from revaluations, impairments, and disposals of all physical assets.
Disposal of non-financial assets Any gain or loss on the disposal of non-financial assets is recognised at the date that control of the asset is passed to the buyer and is determined after deducting from the proceeds of sale the carrying value of the asset at that time.
Impairment of non-financial assets All assets are assessed annually for indications of impairment. If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written off as an other economic flow, except to the extent that the write-down can be debited to an asset revaluation surplus amount applicable to that class of asset. It is deemed that, in the event of the loss of an asset, the future economic benefits arising from the use of the asset will be replaced unless a specific decision to the contrary has been made. The recoverable amount for most assets is measured at the higher of depreciated replacement cost and fair value less costs to sell. Recoverable amounts for assets held primarily to generate net cash inflows is measured at the higher of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell.
Net gain/(loss) on financial instruments Net gain/(loss) on financial instruments includes impairment and reversal of impairment of financial instruments measured at amortised cost and disposals of financial assets.
Impairment of financial assets Bad and doubtful debts are assessed on a regular basis. Those bad debts considered as written off by mutual consent are classified as a transaction expense. The allowance for doubtful receivables and bad debts not written off by mutual consent are adjusted as 'other economic flows'. (j) Financial instruments including Financial assets Financial instruments Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Due to the nature of the Company’s activities, certain financial assets and financial liabilities arise under statute rather than a contract. Such financial assets and financial liabilities do not meet the definition of financial instruments in AASB 132Financial Instruments: Presentation. For example, statutory receivables arising from taxes, fines and penalties do not meet the definition of financial instruments as they do not arise under contract. However, guarantees issued by the Treasurer on behalf of the Company are financial instruments because, although authorised under statute, the terms and conditions for each financial guarantee may vary and are subject to an agreement.
Where relevant, for note disclosure purposes, a distinction is made between those financial assets and financial liabilities that meet the definition of financial instruments in accordance with AASB 132 and those that do not.
The following refers to financial instruments unless otherwise stated. Categories of non‑derivative financial instruments Loans and receivables Loans and receivables are financial instrument assets with fixed and determinable payments that are not quoted on an active market. These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial measurement, loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Loans and receivables category includes cash and deposits, term deposits with maturity greater than three months, trade receivables, loans and other receivables, but not statutory receivables.
Financial liabilities at amortised cost Financial instrument liabilities are initially recognised on the date they are originated. They are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest‑bearing liability, using the effective interest rate method (refer to Note 24).
Financial instrument liabilities measured at amortised cost include all of the Company's contractual payables, deposits held and advances received, and interest‑bearing arrangements other than those designated at fair value through profit or loss.
23 Docklands Studios Melbourne Pty Ltd
Note 1. Summary of significant accounting policies (continued)
Financial assets Cash and deposits Cash and deposits recognised on the balance sheet comprise cash on hand and cash at bank, deposits at call and these highly liquid investments (with an original maturity of three months or less), which are held for the purpose of meeting short term cash commitments rather than for investment purposes, and readily convertible to known amounts of cash with an insignificant risk of changes in value. For the cash flow statement presentation purposes, cash and cash equivalents include bank overdrafts, which are included as borrowings on the balance sheet.
Receivables Receivables consist predominantly of debtors in relation to goods and services, and GST input tax credits recoverable. Receivables are recognised initially at fair value and subsequently measured at amortised cost, using the effective interest rate method, less any accumulated impairment.
A provision for doubtful receivables is made when there is objective evidence that the debts will not be collected. Bad debts are written off when identified.
(k) Non-financial assets
Property, plant and equipment All non-financial physical assets are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment. Items with a cost value in excess of $1,000 and a useful life of more than one year are recognized as an asset. All other items are expensed. More details about the valuation techniques and inputs used in determining the fair value of non-financial physical assets are discussed in Note 7 Property, plant and equipment.
Buildings Buildings are reported at their fair value. At each reporting date, the Company reviews the carrying value of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimate of the recoverable amount of the cash-generating unit to which the asset belongs is used.
Revaluations of non-current physical assets Non-financial physical assets are measured at fair value on a cyclical basis, in accordance with the Financial Reporting Directions (FRDs) issued by the Minister for Finance. A full revaluation normally occurs every five years, based upon the asset’s government purpose classification but may occur more frequently if fair value assessments indicate material changes in values. Independent valuers are generally used to conduct these scheduled revaluations. Certain infrastructure assets are revalued using specialised advisors. Any interim revaluations are determined in accordance with the requirements of the FRDs.
Revaluation increases are recognised as income (other economic flows) in determining the net result, whereas revaluation decreases are recognised as expenses (other economic flows) in the net result.
Revaluation increases and decreases relating to individual assets within a class of property, plant and equipment, are offset against one another within that class but are not offset in respect of assets in different classes.
During the 2014-15 financial year, the fair value of buildings was reviewed by reference to the Valuer General indices applicable to the financial year. As a result of this review, no adjustment was made to the value of buildings during 2014-15.
The last full revaluation was undertaken on 15 December 2011.
Intangible assets Intangible assets are initially recognised at cost. Subsequently, intangible assets with finite useful lives are carried at cost less accumulated amortisation. Cost incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to the Company.
Prepayments Other non-financial assets include prepayments which represent payments in advance of receipt of goods and services or that part of expenditure made in one accounting period covering a term extending beyond that period.
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Note 1. Summary of significant accounting policies (continued)
(l) Liabilities
Payables Payables represent liabilities for goods and services provided to the Company that are unpaid at the end of the financial year. Payables are initially measured at fair value, being the cost of the goods and services, and then subsequently measured at amortised cost. The amounts are unsecured and usually paid within 30 days of recognition.
Deferred Rent The Company is required to repay the deferred rent out of cash EBITDA once it reaches a threshold of $400,000 in any one year. The Company will pay 50 cents in the dollar of all EBITDA earned above the threshold. During 2014- 15, $10,806 was repaid leaving an amount payable at 30 June 2015 of $1,424,701.
Provisions Provisions are recognised when the Company has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows, using discount rate that reflects the time value of money and risks specific to the provision.
Employee benefits (i) Wages and salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual leave are all recognised in the provision for employee benefits as 'current liabilities', because the Company does not have an unconditional right to defer settlement of these liabilities.
Depending on the expectation of the timing of settlement, liabilities for wages and salaries and annual leave are measured at: nominal value - if the Company expects to wholly settle within 12 months; or present value - if the Company does not expect to wholly settle within 12 months.
(ii) Long service leave Liability for long service leave (LSL) is recognised in the provision for employee benefits. Unconditional LSL (representing seven or more years of continuous service for Company employees including executives) is disclosed as a current liability even where the Company does not expect to settle the liability within 12 months because the Company will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months.
The components of this current LSL liability are measured at: undiscounted value - if the Company expects to wholly settle within 12 months; or present value - if the Company does not expect to wholly settle within 12 months.
Conditional LSL (representing less than seven years of continuous service for Company employees including executives) is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service.
This non-current LSL liability is measured at present value. Any gain or loss following revaluation to present value of non-current LSL liability due to changes in bond interest rates is recognised as an other economic flow (refer to Note 1(i)).
Employee benefits on-costs Provision for employee benefits on-costs such as payroll tax, workers compensation and superannuation are recognised separately from the provision for employee benefits.
(m) Leases Lease of Crown Land The Company occupies Crown land under the terms of one primary lease and two licences with terms ending on 21 November 2024 (licence for Crown Allotment 2004, licence for Crown Allotment 2003 and lease of Crown Allotment 2002). The Company has a right to purchase the leased land at the expiry of the lease if the Company has repaid the outstanding amount in accordance with the Lease Agreement. The Company has a right to renegotiate a further period occupancy if the land is not purchased in fee simple.
(n) Equity - Issued capital Contributions for new shares issued by the Company or for the payment of called up share capital are designated as issued capital.
(o) Commitments Commitments which include those operating, capital and other outsourcing commitments arising from non- cancellable contractual or statutory sources are disclosed at their nominal value and inclusive of GST payable.
(p) Contingent assets and contingent liabilities
Contingent assets and contingent liabilities are not recognised in the balance sheet, but are disclosed by way of a note (refer to Note 17) and, if quantifiable, are measured at nominal value. Contingent assets and liabilities are presented inclusive of GST receivable or payable respectively.
25 Docklands Studios Melbourne Pty Ltd
Note 1. Summary of significant accounting policies (continued)
(q) Goods and services tax Income, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities, which are recoverable from or payable to the taxation authority, are presented as operating cash flow.
(r) Income Tax During 2009 the Company received a private ruling from the Australian Taxation Office (Authorization Number 90830) which states that the Company is exempt from Commonwealth income tax under section 24AM of the Income Tax Assessment Act 1936. The exemption commenced on 19 November 2008 and applied for the years ending 30 June 2009, 2010 and 2011. The exemption was extended for 3 years to 30 June 2014 during the course of 2010-11 and for a further 3 years to 30 June 2017 during the course of 2013-14.
Accordingly, the trading results during the period 19 November 2008 to 30 June 2015 have been treated as exempt from income tax.
(s) Events after the reporting period Assets, liabilities, income or expenses arise from past transactions or other past events. Where the transactions result from an agreement between the Company and other parties, the transactions are only recognised when the agreement is irrevocable at or before balance date. Adjustments are made to amounts recognised in the financial statements for events which occur after the reporting date and before the date the statements are authorised for issue, where those events provide information about conditions which existed in the reporting period. Note disclosure is made about events between the balance date and the date the statements are authorised for issue where the events relate to conditions which arose after the reporting date and which may have a material impact on the results of subsequent years. Refer to Note 22.
(t) Functional and presentation currency The functional currency of the Company is the Australian dollar, which has also been identified as the presentation currency of the Company.
(u) Rounding of amounts Amounts in the financial statements have been rounded to the nearest dollar, unless otherwise stated.
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Note 1. Summary of significant accounting policies (continued)
(v) New accounting standards and interpretations
Standard / Interpretation Summary Application for Impact annual reporting periods beginning on
AASB 9 Financial instruments This standard simplifies requirements for the classification 1-Jan-17 The preliminary assessment has not and measurement of financial assets resulting from Phase 1 identified any material impact. It will of the IASB’s project to replace IAS 39 Financial Instruments: continue to be monitored and assessed. Recognition and Measurement (AASB 139 Financial Instruments: Recognition and Measurement).
In addition to the new standards above, the AASB has issued a list of amending standards that are not effective for the 2014-15reporting period (as listed below). In general, these amending standards include editorial and references changes that are expected to have insignificant impacts on public sector reporting.
· AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010). · 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets. · 2013-9 Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial Instruments.
27 Docklands Studios Melbourne Pty Ltd
Note 2. Income from transactions
2015 2014 $ $
(a) Income from transactions Income from rental of facilities and recoveries for services 3,704,464 2,938,980 provided
(b) Interest On bank deposits 93,755 77,660 Total Income from Transactions 3,798,219 3,016,640
Note 3. Expenses from transactions
2015 2014 $ $
(a) Employee expenses Salary and wages including termination payments 889,839 834,189 Superannuation 82,348 73,323 Annual leave and long service leave expense 66,817 86,273 Other on-costs 38,469 33,709 1,077,473 1,027,494
(b) Supplies and services Contractors and consultants 125,833 67,652 Maintenance expenses 493,134 379,997 Insurance expense 83,715 110,738 Travel expense 16,106 24,224 Security expense 69,506 62,699 Rent 383,907 374,238 Electricity expense 202,794 193,293 Municipal rates 72,983 73,048 Water rates 15,183 14,376 IT and communication expenses 119,698 100,116 Legal expense 20,557 11,000 Audit fees 27,230 27,240 Other expenses 123,174 121,333 1,753,820 1,559,954
(c) Depreciation and amortisation expenses Buildings and building improvements 2,247,892 2,213,606 Office equipment 22,078 31,552 Computer 28,635 26,198 Motor vehicles 1,817 1,817 Revenue bookings software 5,219 4,787 2,305,641 2,277,960
(d) Interest expense Other interest expense - 81 - 81
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Note 4. Other economic flows included in net result
2015 2014 $ $
(a) Other (gain)/loss from other economic flows Net (gain)/loss arising from revaluation of long service liability (i) 1,568 143 Loss/(profit) on disposal of property, plant and equipment 10,075 724
Total Other economic flows included in net result 11,643 867
(i) Revaluation gain / (loss) due to change in bond rates
Note 5. Cash and deposits
2015 2014 $ $
Cash on hand 2,000 2,000 Cash at bank 1,939,238 1,351,775 Term deposits 1,975,496 1,838,257
Total Cash and deposits 3,916,734 3,192,032
Note 6. Receivables
2015 2014 $ $ Contractual (i) Trade receivables 118,412 397,501 Accrued Income - 8,678 118,412 406,179 Statutory GST input tax credit recoverable (net) 114,561 55,697
(ii) Total receivables 232,973 461,876 Notes: (i) The average credit period on sales of goods is 30 days. No interest has been charged on trade receivables. No allowance for doubtful debts has been recognised as all amounts have been determined recoverable by reference to past default experience.
(ii) All receivables balances held at reporting date are classified as current.
For details of ageing analysis of contractual receivables and the nature and extent of risk arising from contractual receivables, please refer to Note 18.
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Note 7. Property, plant and equipment
(a) Carrying amounts
2015 2014 Note $ $
Buildings and building improvements At fair value 1(k) 49,063,168 48,565,108 Less accumulated depreciation (6,374,448) (4,126,558) 42,688,720 44,438,550 Office equipment At fair value 304,593 290,729 Less accumulated depreciation (201,678) (179,600) 102,915 111,129 Computer equipment At fair value 216,899 148,503 Less accumulated depreciation (147,396) (118,761) 69,503 29,742 Motor vehicles At fair value 10,900 10,900 Less accumulated depreciation (5,848) (4,031) 5,052 6,869
Total property, plant and equipment 42,866,190 44,586,290
The following useful lives of assets are used in the calculation of depreciation:
2015 2014 Years Years
Buildings 40 40 Building improvements 6 to 20 6 to 10 Office equipment 10 10 Computer equipment 2.5 2.5 Motor vehicles 6 6
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Note 7. Property, plant and equipment (continued)
(b) Movements in carrying amounts
Buildings and Office Computer Motor vehicles Total building equipment equipment improvements 2015 $ $ $ $ $ Opening Balance 44,438,550 111,129 29,742 6,869 44,586,290 Additions 280,363 13,864 68,397 - 362,624 Transfer of assets from DEDJTR 227,978 - - - 227,978 Disposals (10,280) - - - (10,280) Depreciation expense (2,247,892) (22,078) (28,635) (1,817) (2,300,422) Closing Balance 42,688,719 102,915 69,504 5,052 42,866,190
2014 $ $ $ $ $ Opening Balance 46,542,306 127,873 36,792 8,686 46,715,657 Additions 109,850 15,532 19,148 - 144,530 Disposals - (724) - - (724) Depreciation expense (2,213,606) (31,552) (26,198) (1,817) (2,273,173) Closing Balance 44,438,550 111,129 29,742 6,869 44,586,290
(c) Fair value measurement hierarchy for assets
Carrying amount Fair value measurement at end of as at reporting period using: 30 June 2015 Level 1 (i) Level 2 (i) Level 3 (i)
Buildings and building improvements at fair value Non-specialised buildings and building improvements Specialised buildings and building improvements 42,688,720 42,688,720 Total of buildings and building improvements at fair value 42,688,720 - - 42,688,720
Office equipment at fair value Office equipment 102,915 102,915 Total office equipment at fair value 102,915 - - 102,915
Computer equipment at fair value Computer equipment 69,503 69,503 Total computer equipment at fair value 69,503 - - 69,503
Motor vehicles at fair value Motor vehicles 5,052 5,052 Total motor vehicles at fair value 5,052 - - 5,052
Carrying amount Fair value measurement at end of as at reporting period using: 30 June 2014 Level 1 (i) Level 2 (i) Level 3 (i)
Buildings and building improvements at fair value Non-specialised buildings and building improvements Specialised buildings and building improvements 44,438,550 44,438,550 Total of buildings and building improvements at fair value 44,438,550 - - 44,438,550
Office equipment at fair value Office equipment 111,129 111,129 Total office equipment at fair value 111,129 - - 111,129
Computer equipment at fair value Computer equipment 29,742 29,742 Total computer equipment at fair value 29,742 - - 29,742
Motor vehicles at fair value Motor vehicles 6,869 6,869 Total motor vehicles at fair value 6,869 - - 6,869
Notes: (i) Classified in accordance with the fair value hierarchy, see Note 1(b)
There have been no transfers between levels during the period.
Specialised buildings and building improvements For the Company's majority of specialised buildings, the depreciated replacement cost method is used, adjusting for the associated depreciations. As depreciation adjustments are considered as significant, unobservable inputs in nature, specialised buildings are classified as Level 3 fair value measurements.
Office equipment, computer equipment and vehicles Office equipment, computer equipment and vehicles are held at fair value. When equipment is specialised in use, such that it is rarely sold other than as part of a going concern, fair value is determined using the depreciated replacement cost method.
There were no changes in valuation techniques throughout the period to 30 June 2015. For all assets measured at fair value, the current use is considered the highest and best use.
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Note 7. Property, plant and equipment (continued)
(d) Description of significant unobservable inputs to Level 3 valuations
Valuation Significant 2015 2014 Sensitivity of fair value technique (i) unobservable Range (weighted Range (weighted measurement to changes in inputs (i) average) (i) average) (i) significant unobservable inputs
Specialised buildings and building Depreciated Useful life of 5-40 years 6-40 years A significant increase or decrease improvements replacement specialised in the estimated useful life of the cost buildings and asset would result in a improvements significantly higher or lower valuation
Direct cost per $158-$4,580/sqm $152-$4,574/sqm A significant increase or decrease square metre ($2,219/sqm) ($2,201/sqm) in direct cost per square metre adjustment would result in a significantly higher or lower fair value
Office equipment Depreciated Useful life of 10 years 10 years A significant increase or decrease replacement office in the estimated useful life of the cost equipment asset would result in a significantly higher or lower valuation
Cost per unit $1,001-$22,198 $1,045-$28,118 A significant increase or decrease per unit per unit in cost per unit would result in a ($6,904 per unit) ($7,296 per unit) significantly higher or lower fair value
Computer equipment Depreciated Useful life of 2.5 years 2.5 years A significant increase or decrease replacement computer in the estimated useful life of the cost equipment asset would result in a significantly higher or lower valuation
Cost per unit $1,291-$29,613 $1,291-$10,518 A significant increase or decrease per unit per unit in cost per unit would result in a ($6,308 per unit) ($3,588 per unit) significantly higher or lower fair value
Vehicles Depreciated Useful life of 6 years 6 years A significant increase or decrease replacement vehicles in the estimated useful life of the cost asset would result in a significantly higher or lower valuation
Cost per unit $10,900 per unit $10,900 per unit A significant increase or decrease in cost per unit would result in a significantly higher or lower fair value
Illustrations on the valuation techniques, significant unobservable inputs and the related quantitative range of those inputs are indicative and should (i) not be directly used without consultation with the Company's independent valuer. Refer Note 1(k).
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Note 8. Intangible assets
(a) Carrying amounts
2015 2014 $ $
Software At cost 18,319 11,969 Less accumulated amortisation (13,921) (8,702) Total Intangible assets 4,398 3,267
(b) Movements in carrying amounts
Software 2015 $ Opening Balance 3,267 Additions 6,350 Amortisation expense (5,219) Closing Balance 4,398
2014 $ Opening Balance 8,054 Additions - Amortisation expense (4,787) Closing Balance 3,267
The following useful lives of assets are used in the calculation of amortisation:
2015 2014 Years Years
Software 2.5 2.5
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Note 9. Other non-financial assets
2015 2014 $ $
Prepayments 11,594 -
Total prepayments 11,594 -
Note 10. Payables
2015 2014 $ $
Contractual Current (i) Trade Creditors 140,542 184,940 Accruals 119,839 136,865 Deferred rent 310,178 10,805 Security Deposits 225,000 287,000 Unearned Income 33,681 - Non Current Deferred rent 1,114,523 1,424,702 1,943,763 2,044,311 Statutory
Current Taxes Payable 46,587 34,131 46,587 34,131
Total Payables 1,990,350 2,078,442
Notes: (i) The average credit period is 30 days. No interest is charged on late payments.
For maturity analysis and nature and extent of risks arising from payables, refer to Note 18.
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Note 11. Provisions
2015 2014 $ $
Current provisions (i) Employee benefits (iii) Annual leave (ii) Unconditional and expected to be settled within 12 months 33,017 41,735 (iii) Unconditional and expected to be settled after 12 months - - Long service leave (ii) Unconditional and expected to be settled within 12 months - (iii) Unconditional and expected to be settled after 12 months 22,905 16,572 55,922 58,307 On-costs (ii) Unconditional and expected to be settled within 12 months 4,837 6,114 (iii) Unconditional and expected to be settled after 12 months 3,356 2,428 8,193 8,542
Total current provisions 64,115 66,849
Non-current provisions (i) Employee benefits Long service leave 39,453 38,030
On-costs 5,779 5,571 Total non-current provisions 45,232 43,601
Total provisions 109,347 110,450
(a) Employee benefits and related on-costs (i) 2015 2014 $ $ Current employee benefits Annual leave 33,017 41,735 Long service leave 22,905 16,572 55,922 58,307 Non-current employee benefits Long service leave 39,453 38,030 39,453 38,030
Total employee benefits 95,375 96,337 Current on-costs 8,193 8,542 Non-current on-costs 5,779 5,571 Total on-costs 13,972 14,113
Total employee benefits and related on-costs 109,347 110,450
Notes: (i) Employee benefits consist of annual leave and long service leave accrued by employees. On-costs such as payroll tax and workers' compensation insurance are not employee benefits and are reflected as a separate provision. (ii) Amounts are disclosed at nominal values. (iii) Amounts disclosed are discounted to present values.
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Note 12. Superannuation
Employees of the Company are entitled to receive superannuation benefits and the Company contributes to defined contribution plans.
Superannuation contributions paid or payable for the reporting period are included as part of the employee benefits in the Comprehensive operating statement of the Company.
The name and details of the employee superannuation funds are as follows:
Number of Employees Paid contributions for the year Fund Name 2015 2014 2015 2014 $ $ Defined contribution plans
REST 1 1 4,509 4,151 Australian Ethical - - VicSuper Pty Ltd 1 2 9,211 10,200 Care Super 4 4 16,578 12,631 Australian Super 1 1 6,833 6,442 AMP Flexible Super 1 1 5,723 5,448 Suncorp Master Trust 1 1 4,572 4,287 Media Super 1 1 3,907 2,481 Other 5 5 31,015 27,684
Total paid contributions for the year 82,348 73,324
Contributions outstanding at year end - -
Note 13. Issued capital
2015 2014 $ $ Share Capital
Paid up share capital at the beginning of the year 57,773,647 57,773,647 Additional fully paid shares issued (i) 227,978 - Paid up share capital at the end of the year 58,001,625 57,773,647
Notes: (i) During the year, capital improvements to the value of $227,978 were transferred to the Company. As consideration for the transfer of these assets, the Company issued 227,978 ordinary shares with a par value of $1. The shares were issued to the State of Victoria on 1 May 2015.
Note 14. Number of shares The Company is a private company limited by shares. The shareholders are: Par Number of shares Number of shares Value 2015 2014
The Crown in right of the State of Victoria $0.01 200,000 200,000 The Crown in right of the State of Victoria $1.00 45,492,625 45,264,647 The Crown in right of the State of Victoria $5.00 2,501,400 2,501,400 48,194,025 47,966,047
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Note 15. Reserves
2015 2014 $ $
(i) Physical asset revaluation surplus
Balance at beginning of financial year 8,056,519 8,056,519 Balance at end of financial year 8,056,519 8,056,519
Net changes in reserves - -
Notes: (i) The physical assets revaluation surplus arises on the revaluation of infrastructure, land and buildings.
Note 16. Commitments for expenditure
(i) Lease of crown land The Company occupies Crown land under the terms of one primary lease and two licences with terms ending on 21 November 2024 (licence for Crown Allotment 2004, licence for Crown Allotment 2003 and lease of Crown Allotment 2002). The Company has a right to purchase the leased land at the expiry of the lease if the Company has repaid the outstanding amount in accordance with the Lease Agreement. The Company has a right to renegotiate a further period occupancy if the land is not purchased in fee simple.
The lease requires the Company to pay rental subject to review every two years according to movements in the Melbourne Consumer Price Index. The current annual rental is $429,895 (inclusive of GST).
The following lease commitments payable have not been recognised as liabilities in the financial statements:
2015 2014 $ $ Lease payments
Not longer than one year 429,895 417,665 Longer than one year and not longer than five years 1,775,533 1,721,371 Longer than five years 2,063,137 2,468,339 Total commitments 4,268,565 4,607,375
(ii) Property, plant and equipment commitments The Company has no contractual obligations to purchase property plant and equipment.
Note 17. Contingent assets and contingent liabilities
There are no legal claims against the Company nor any other claim that creates a contingency for the Company. (2014: Nil)
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Note 18. Financial instruments
(a) Financial risk management objectives and policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised, with respect to each class of financial asset, financial liability and equity instrument, are disclosed in Note 1 to the financial statements. The Company's main financial risks include credit risk, liquidity risk, interest rate risk, price risk and fair value. The Company uses different methods to measure and manage the different risks to which it is exposed. Primary responsibility for the identification and management of financial risks rests with the Audit Committee of the Company.
Table 18.1: Catergorisation of financial instruments
2015 2014 Financial assets Note Category $ $ Cash and deposits 5 Loans and receivables 3,916,734 3,192,032 Receivables 6 Loans and receivables 118,412 397,501 (i) Total contractual financial assets 4,035,146 3,589,533 Financial liabilities Trade creditors and accruals 10 Financial liabilities at amortised cost 260,381 321,805 Other payables 10 Financial liabilities at amortised cost 225,000 287,000 Deferred Rent 10 Financial liabilities at amortised cost 1,424,701 1,435,507 (i) Total contractual financial liabilities 1,910,082 2,044,311
Table 18.2: Net holding gains (losses) on financial instruments by category
2015 2014 Financial assets Note $ $ Cash and deposits 2(b) 93,755 77,660
Note (i) The total amounts disclosed here exclude statutory amounts (e.g. amounts owing from Victorian Government and GST input tax credit recoverable, and taxes payable).
The net holding gains or losses disclosed above are determined as follows: * for cash and cash equivalents, loans or receivables and available-for-sale financial assets, the net gain or loss is calculated by taking the interest revenue, plus or minus losses arising from revaluation of the financial assets and minus any impairment recognised in the net result; and * for financial liabilities measured at amortised cost, the net gain or loss is equal to the interest expense incurred during the reporting period.
(b) Credit Risk Credit risk arises from the contractual financial assets of the Company, which comprise cash and deposits, non-statutory receivables and available-for-sale financial assets. The Company's exposure to credit risk arises from the potential default of counter parties on their contractual obligations resulting in financial loss to the Company. Credit risk is measured at fair value and is monitored on a regular basis. Credit risk associated with the Company's contractual financial assets is minimal because it is the Company's policy to only deal with entities of a minimum AA credit rating for cash and deposits.Receivables are not rated, however the Company's policy of invoicing in advance and holding security deposits minimises the credit risk. In addition, the Company does not engage in hedging for its financial assets and mainly obtains financial assets that are on fixed interest.
Provision of impairment for financial assets is calculated based on past experience, and current and expected changes in client credit ratings. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Company's maximum exposure to credit risk without taking account of the value of any collateral obtained. In addition, the Company does not engage in hedging for its contractual financial assets and mainly obtains contractual financial assets that are on fixed interest, except for cash assets, which are mainly cash at bank. As with the policy for debtors, the Company's policy is only to deal with banks with high credit ratings. Provision of impairment for contractual financial assets is recognised when there is objective evidence that the Company will O not be able to collect a receivable. Objective evidence includes financial difficulties of the debtor, default payments, debts which are more than 60 days overdue, and changes in debtor credit ratings. L Except as otherwise detailed in the following table, the carrying amount of contractual financial assets recorded in the D financial statements, net of any allowance for losses, represents the Company's maximum exposure to credit risk without taking account of the value of any collateral obtained. T E 38 Docklands Studios Melbourne Pty Ltd
Note 18. Financial instruments (continued)
(b) Credit Risk (continued)
Table 18.3: Credit quality of contractual financial assets that are neither past due nor impaired
Financial Government Government institutions agencies agencies Other Total (Double-A (Triple-A (Triple-B (min Triple-B credit rating) credit rating) credit rating) credit rating) $
2015
Cash and deposits 3,666,734 250,000 - - 3,916,734 Receivables - - - 118,412 118,412 (i) Total contractual financial assets 3,666,734 250,000 - 118,412 4,035,146
2014
Cash and deposits 2,692,032 500,000 - - 3,192,032 Receivables - - - 397,501 397,501 (i) Total contractual financial assets 2,692,032 500,000 - 397,501 3,589,533
Note (i) The total amounts disclosed here exclude statutory amounts (e.g. amounts owing from Victorian Government and GST input tax credit recoverable, and taxes payable).
Table 18.4: Ageing analysis of contractual financial assets
Past due but not impaired Carrying Not past due Less than 1 - 3 months 3 months - and not amount impaired 1 month 1 year
2015 Receivables Sale of goods and services 118,412 94,899 - 23,513 - (i) Total 118,412 94,899 - 23,513 -
2014 Receivables Sale of goods and services 397,501 219,637 - 164,242 13,622 (i) Total 397,501 219,637 - 164,242 13,622
(i) The total amount of contractual financial assets disclosed here exclude statutory amounts (e.g. amounts owing from Victorian government and GST input tax recoverable).
Contractual Financial assets that are either past due or impaired
As at the reporting date, there is no evidence to indicate that any of the financial assets were impaired. There are no financial assets that have had their terms renegotiated so as to prevent them being past due or impaired, and they are stated at the carrying amount as indicated. The ageing analysis table above discloses the ageing only of contractual financial assets that are past due but not impaired.
There are no material financial assets which are individually determined to be impaired. Currently, the Company does not hold any collateral as security nor credit enhancements relating to any of its financial assets.
39 Docklands Studios Melbourne Pty Ltd
Note 18. Financial instruments (continued)
(c) Liquidity risk
Liquidity risk is the risk that the Company would be unable to meet its financial obligations as and when they fall due. The Company operates under the Government fair payments policy of settling financial obligations within 30 days and in the event of a dispute, making payments within 30 days from the date of resolution.
The Company's maximum exposure to liquidity risk is the carrying amounts of the financial liabilities as disclosed in the face of the balance sheet. The Company manages its liquidity risk by: - close monitoring of future cash flows and maturities planning to ensure adequate holding of high quality liquid assets and dealing in highly liquid markets. All cash is deposited with the Westpac Banking Corporation (AA rating) and Treasury Corporation of Victoria. - maintaining an adequate level of uncommitted funds that can be drawn at short notice to meet its short-term obligations; and - careful maturity planning of its financial obligations based on forecasts of future cash flows.
The Company's exposure to liquidity risk is deemed insignificant based on prior periods' data and current assessment of risk. Cash for unexpected events is generally sourced from its cash and cash equivalents balance.
The carrying amount detailed in the following table of contractual financial liabilities recorded in the financial statements represents the Company's maximum exposure to liquidity risk. The following table discloses the contractual maturity analysis for the Company's financial liabilities.
Table 18.5: Maturity analysis of contractual financial liabilities
(i) Carrying Nominal Maturity dates amount amount 2015 Less than 1 1- 3 months 3 months - 1 - 5 years month 1 year $ $ $ $ $ $
Payables Trade creditors and accruals 260,381 260,381 260,381 Other payables 225,000 225,000 45,000 50,000 130,000 Deferred rent 1,424,701 1,424,701 310,178 1,114,523
Total (i)(ii) 1,910,082 1,910,082 305,381 360,178 130,000 1,114,523
(i) Carrying Nominal Maturity dates amount amount 2014 Less than 1 1- 3 months 3 months - 1 - 5 years month 1 year $ $ $ $ $ $
Payables Trade creditors and accruals 321,805 321,805 321,805 - - - Other payables 287,000 287,000 25,000 102,000 60,000 100,000 Deferred rent 1,435,507 1,435,507 - 10,805 - 1,424,702
Total (i)(ii) 2,044,311 2,044,311 346,805 112,805 60,000 1,524,702
Notes: (i) Maturity analysis is presented using the contractual undiscounted cash flows. (ii) The carrying amounts disclosed exclude statutory amounts (e.g. GST payables).
40 Docklands Studios Melbourne Pty Ltd
Note 18. Financial instruments (continued)
(d) Market risk Company’s exposures to market risk are primarily through interest rate risk and price risk. Objectives, policies and processes used to manage each of these risks are disclosed below:
Interest rate risk Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates. The Company does not hold any interest bearing financial instruments that are measured at fair value, and therefore no exposure to fair value interest rate risk. Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has minimal exposure to cash flow interest rate risks through its cash and deposits that are at a floating rate. The Company manages this risk by undertaking floating rate bank deposits, and its floating rate interest bearing liabilities. However, the Company's exposure to this risk is insignificant due to its policy to minimise risk by mainly undertaking fixed rate or non-interest bearing financial instruments with relatively even maturity profiles.
Table 18.6: Interest rate exposure of financial instruments
Weighted Carrying Interest rate exposure average amount 2015 interest rate Fixed interest Variable Non-interest rate interest rate bearing % $ $ $ $
Financial assets Cash and deposits 2.83 3,916,734 1,725,496 1,939,238 2,000 Receivables (i) - 118,412 - - 118,412 Total Financial assets 4,035,146 1,725,496 1,939,238 120,412
Financial liabilities Payables (i) - 1,910,082 - - 1,910,082 Total Financial liabilities 1,910,082 - - 1,910,082
Weighted Carrying Interest rate exposure average amount 2014 interest rate Fixed interest Variable Non-interest rate interest rate bearing % $ $ $ $
Financial assets Cash and deposits 2.82 3,192,032 1,838,257 1,351,775 2,000 Receivables (i) - 397,501 397,501 Total Financial assets 3,589,533 1,838,257 1,351,775 399,501
Financial liabilities Payables (i) - 2,044,311 - - 2,044,311 Total Financial liabilities 2,044,311 - - 2,044,311
Note (i) The total amounts disclosed here exclude statutory amounts (e.g. amounts owing from Victorian Government and GST input tax credit recoverable, and taxes payable).
41 Docklands Studios Melbourne Pty Ltd
Note 18. Financial instruments (continued)
(d) Market risk (Continued)
Sensitivity disclosure analysis and assumptions The Company's sensitivity to market risk is determined based on the observed range of actual historic data for the preceding five year period, with all variables other than the primary risk variable held constant. Sensitivity analyses shown are for illustrative purposes only. The following movements are 'reasonably possible' over the next 12 months. Taking into account past performance, future expectations and economic forecasts, the Company believes that a parallel shift of 200 basis points up and 200 basis points down (200 basis points up and down in 2014) in market interest rates. The impact on net result and equity for each category of financial instrument held by the Company at year end if the above movements were to occur is shown at Table 18.7.
Table 18.7: Interest rate risk sensitivity
Interest rate risk + 200 basis -200 basis 2015 Carrying points points amount Net result Net result
$ $ $
Financial assets Cash and deposits 3,916,734 78,335 (78,335) 3,916,734 78,335 (78,335)
Interest rate risk + 200 basis -200 basis 2014 Carrying points points amount Net result Net result
$ $ $
Financial assets Cash and deposits 3,192,032 63,841 (63,841) 3,192,032 63,841 (63,841)
Price risk Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is not exposed to price risk, but is aware that due to the strong Australian dollar, international productions may not find the current Australian market attractive. However, in the case that the Company does attract an international production, the proposed risk is managed through securing a license agreement to commit the international production.
(e) Fair value
The fair values and net fair values of financial assets and financial liabilities are determined as follows: Level 1 the fair value of financial instruments with standard terms and conditions and traded in active liquid markets are determined with reference to quoted market prices; Level 2 the fair value is determined using inputs other than quoted prices that are observable for the financial asset or liability, wither directly or indirectly; and Level 3 the fair value is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using unobservable market inputs.
The Company considers the carrying amount of financial instrument assets and liabilities recorded in the financial statements to be a fair approximation of their fair values, because of the short-term nature of the financial instruments and the expectation that they will be paid in full.
42 Docklands Studios Melbourne Pty Ltd
Note 19. Cash flow information
2015 2014 $ $ (a) Reconciliation of cash and cash equivalents Cash at bank and on hand 1,941,238 1,353,775 Term deposits 1,975,496 1,838,257 Balance as per cash flow statement 3,916,734 3,192,032 (b) Reconciliation of the net result for the period Net result for the period (1,350,358) (1,849,716) Non cash movements (Gain)/loss on sale of property, plant and equipment 10,075 724 Depreciation and amortisation 2,305,641 2,277,960 Movements in assets and liabilities (Increase)/decrease in current receivables 228,902 (117,951) (Increase)/decrease in other current assets (11,594) 406 Increase/(decrease) in current payables 222,722 146,112 Increase/(decrease) in current provisions (2,734) 14,562 Increase/(decrease) in non-current payables (318,079) (189,138) Increase/(decrease) in non-current provisions 1,631 26,866 Net cash from operating activities 1,086,206 309,825
Note 20. Responsible persons
In accordance with the Ministerial Directions issued by the Minister for Finance under theFinancial Management Act 1994, the following disclosures are made regarding responsible persons for the reporting period.
Names The persons who held the positions of ministers, directors and accountable officer in the Company are as follows: Minister Minister for Innovation The Hon. Louise Asher MLA 1 July 2014 to 3 December 2014 Minister for Creative Industries Martin Foley MP 4 December 2014 to 30 June 2015 Board of Directors Chairman Ms Elizabeth Eldridge 1 July 2014 to 30 June 2015 Director Ms Ann Fletcher-Nicholls 1 July 2014 to 30 June 2015 Director Mr Desmond Clark 1 July 2014 to 30 June 2015 Accountable Officer Chief Executive Officer Mr Rod Allan 1 July 2014 to 30 June 2015
Remuneration The number of responsible persons, other than Ministers, and their total remuneration in connection with the management of the Company during the reporting period are shown in the first two columns in the table below in their relevant income bands. The base remuneration of responsible persons is shown in the third and fourth columns. Base remuneration is exclusive of bonus payments, long-service leave payments, redundancy payments and retirement benefits.
Income Band Total Remuneration Base Remuneration 2015 2014 2015 2014 No. No. No. No. $10,000 - 19,999 2 2 2 2 $30,000 - $39,999 1 1 1 1 $220,000 – 229,999 - - - 1 $240,000 – 249,999 - 1 1 - $260,000 – 269,999 1 - - -
Total number of responsible persons 4 4 4 4 Total amount $327,472 $305,647 $309,808 $288,647
No other executive officers have been paid remuneration during 2015 and 2014 financial year.
Amounts relating to Ministers are reported in the financial statements of the Department of Premier and Cabinet.
Other Transactions Other related party transactions and loans requiring disclosure under the Ministerial Directions issued by the Minister for Finance have been considered and there are no matters to report.
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Note 21. Remuneration of auditors
2015 2014 $ $
Victorian Auditor-General's Office Audit of the financial statements 27,600 27,270 27,600 27,270
Note 22. Subsequent events
The Company is not aware of any events subsequent to reporting date that will have a material effect on its operations.
Note 23. Segment information
The Directors of the Company consider all of it operations to be covered by a single business segment operating in a single geographic area.
Owning and licensing the use of film and television stages is the sole business activity and this is undertaken within Australia.
Note 24. Glossary of terms and style conventions O L Amortisation O Amortisation is the expense which results from the consumption, extraction or use over time of an intangible asset. D L T The Company D E The Company refers to Docklands Studios Melbourne Pty Ltd. T X Comprehensive result E T The net result of all items of income and expense recognised for the period. It is the aggregate of operating result and other X comprehensive income. T Commitments Commitments include those operating, capital and other outsourcing commitments arising from non-cancellable contractual or statutory sources.
Depreciation
Depreciation is an expense that arises from the consumption through wear or time of a produced physical or intangible asset. This expense is classified as a ‘transaction’ and so reduces the ‘net result from transaction’.
Employee benefits expense Employee benefits expenses include all costs related to employment including wages and salaries, fringe benefits tax, leave entitlements, redundancy payments and superannuation contributions.
Effective interest method The effective interest method is used to calculate the amortised cost of a financial asset or liability and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument, or, where appropriate, a shorter period.
Financial asset A financial asset is any asset that is: (a) cash; (b) an equity instrument of another entity; (c) a contractual or statutory right: to receive cash or another financial asset from another entity; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity.
Financial instrument A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets or liabilities that are not contractual (such as statutory receivables or payables that arise as a result of statutory requirements imposed by governments) are not financial instruments.
44 Note 24. Glossary of terms and style conventions (continued)
Financial liability A financial liability is any liability that is a contractual obligation: (i) to deliver cash or another financial asset to another entity; or (ii) to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity.
Financial statements
A complete set of financial statements comprises: (a) a balance sheet as at the end of the period; (b) a comprehensive operating statement and other comprehensive income for the period; (c) a statement of changes in equity for the period; (d) a statement of cash flows for the period; (e) notes, comprising a summary of significant accounting policies and other explanatory information; (f) comparative information in respect of the preceding period as specified in paragraphs 38 of AASB 101 Presentation of financial Statements ; and (g) a balance sheet as at the beginning of the preceding period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements in accordance with paragraphs 41 of AASB101
General government sector The general government sector comprises all government departments, offices and other bodies engaged in providing services free of charge or at prices significantly below their cost of production. General government services include those which are mainly non-market in nature, those which are largely for collective consumption by the community and those which involve the transfer or redistribution of income. These services are financed mainly through taxes, or other compulsory levies and user charges.
Intangible assets Intangible assets represent identifiable non-monetary assets without physical substance and include such items as computer software.
Interest expense Costs incurred in connection with the borrowing of funds. Interest expenses include interest on bank overdrafts and short term and long- term borrowings, amortisation of discounts or premiums relating to borrowings, the interest component of finance leases repayments, and the increase in financial liabilities and non-employee provisions due to the unwinding of discounts to reflect the passage of time.
Interest income Interest income includes unwinding over time of discounts on financial assets and interest received on bank term deposits and other investments.
Net result Net result is a measure of financial performance of the operations for the period. It is the net result of items of income, gains and expenses (including losses) recognised for the period, excluding those that are classified as ‘other economic flows - other comprehensive income'.
Net result from transactions/net operating balance Net result from transactions or net operating balance is a key fiscal aggregate and is income from transactions minus expenses from transactions. It is a summary measure of the ongoing sustainability of operations. It excludes gains and losses resulting from changes in price levels and other changes in the volume of assets. It is the component of the change in net worth that is due to transactions and can be attributed directly to government policies.
Net worth Assets less liabilities, which is an economic measure of wealth.
Non-financial assets Non-financial assets are all assets that are not ‘financial assets’. It includes inventories, land, buildings, infrastructure, road networks, land under roads, plant and equipment, investment properties, cultural and heritage assets, intangible and biological assets.
Other economic flows included in net result Other economic flows included in net result are changes in the volume or value of an asset or liability that do not result from transactions. It includes: gains and losses from disposals, revaluations and impairments of non-financial physical and intangible assets; and fair value changes of financial instruments
45 Note 24. Glossary of terms and style conventions (continued)
Other economic flows - other comprehensive income Other economic flows - other comprehensive income comprises items (including reclassification adjustments) that are not recognised in net result as required or permitted by other Australian Accounting Standards. The components of other economic flows - other comprehensive income include; changes in physical asset revaluation surplus
Payables Includes short and long-term trade debt and accounts payable, grants, taxes and interest payable.
Public non-financial corporation sector The public non-financial corporation (PNFC) sector comprises bodies mainly engaged in the production of goods and services (of a non- financial nature) for sale in the market place at prices that aim to recover most of the costs involved (e.g. water and port authorities). In general, PNFCs are legally distinguishable from the governments which own them.
Receivables Includes amounts owing from government through appropriation receivable, short and long term trade credit and accounts receivable, accrued investment income, grants, taxes and interest receivable.
Sales of goods and services Refers to income from the direct provision of goods and services and includes fees and charges for services rendered, sales of goods and services, fees from regulatory services and work done as an agent for private enterprises. It also includes rental income under operating leases and on produced assets such as buildings and entertainment, but excludes rent income from the use of non-produced assets such as land. User charges includes sale of goods and services income.
Supplies and services Supplies and services generally represent cost of goods sold and the day-to-day running costs, including maintenance costs, incurred in the normal operations of the Company.
Transactions Transactions are those economic flows that are considered to arise as a result of policy decisions, usually an interaction between two entities by mutual agreement. They also include flows within an entity such as depreciation where the owner is simultaneously acting as the owner of the depreciating asset and as the consumer of the service provided by the asset. Taxation is regarded as mutually agreed interactions between the government and taxpayers. Transactions can be in kind (e.g. assets provided/given free of charge or for nominal consideration) or where the final consideration is cash. In simple terms, transactions arise from the policy decisions of the government.
Style conventions Figures in the tables and in the text have been rounded. Discrepancies in tables between totals and sums of components reflect rounding. Percentage variations in all tables are based on the underlying unrounded amounts. The notation used in the tables is as follows: - zero, or rounded to zero (xxx.x) negative numbers 200x year period 200x-0x year period The financial statements and notes are presented based on the illustration for a government department in the 2013-14 Model Report for Victorian Government Departments. The presentation of other disclosures is generally consistent with the other disclosures made in earlier publications of the Company’s annual reports .
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