Appendix 5 - Financial statements  

 

 

 

Statement of Comprehensive Income
for the period ended 30 June 2017

	Notes	2017 $'000	2016 $'000	Original Budget 2017 $'000	AASB 1055
NET COST OF SERVICES
Expenses
Employee Benefits	1.1A	14,927	14,687	14,437	1
Suppliers	1.1B	4,564	4,392	3,811	2
Depreciation and amortisation	2.2A	776	1,172	1,105	3
Other		19	12
Total expenses		20,286	20,263	19,353
Own-Source Income
Own-source revenue
Sale of Goods and Rendering of Services	1.2A	2,839	2,692	100	4
Interest	1.2B	252	271	320	5
Other Revenue		73	15	1,749	6
Total own-source revenue		3,164	2,978	2,169
Total own-source income		3,164	2,978	2,169
Net (cost of)/contribution by services		(17,122)	(17,285)	(17,184)
Revenue from Government	12.C	17,185	17,288	17,184
Total comprehensive income attributable to the Australian Government		63	3	-
OTHER COMPREHENSIVE INCOME
Items not subject to subsequent reclassification to net cost of services
Changes in asset revaluation surplus		-	152	-
Total other comprehensive income after income tax		63	155	-

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

FSANZs original budgeted financial statement that was first presented to parliament in respect of the reporting period (i.e. from FSANZs 2016-17 Portfolio Budget Statements (PBS)).

Explanations of variances +/ - 10% between the actual and original budgeted amounts for 2016-17 are provided further below (except for trivial amounts not considered significant to the performance of FSANZ)

AASB 1055 Explanations of major variances	Affected line items (and schedule)
1. Employee benefits The increase in employee benefits was primarily due to unbudgeted redundancy payments and on- costs on provisions.	Employee benefits (Statement of Comprehensive Income)
2. Suppliers The increase in suppliers expense was due to the increase in project work - refer rendering of services below.	Suppliers (Statement of Comprehensive Income)
3. Depreciation and amortisation The budget assumed that internally developed software assets would be consumed fully this year. Additional work to the asset has extended the useful life and reduced the depreciation.	Depreciation and amortisation (Statement of Comprehensive Income)
4. Rendering of Services The budget for other revenue actually relates to the Sale of Goods and Rendering of services. The income was still higher than this budget due to the uncertainty around project work that depends on demand. All project work was provided to other government departments and related to data analysis, labelling and running workshops	Rendering of Services (Statement of Comprehensive Income)
5. Interest Interest rates were lower than anticipated and this reduced the interest received.	Interest (Statement of Comprehensive Income)
6. Other revenue As noted in 4. the other revenue budget relates to the sale of goods and services and the goods and services budget relates to Other Revenue. This error will be corrected at the next opportunity.	Other revenue (Statement of Comprehensive Income)

Statement of Financial Position
as at 30 June 2017

	Notes	2017 $'000	2016 $'000	Original Budget 2017 $'000	AASB 1055
ASSETS
Financial assets
Cash and Cash Equivalents	2.1A	3,849	3,266	12,621	1
Trade and Other Receivables	2.1B	284	199	616	2
Investments - Term deposits	2.1C	7,647	7,536	-	1
Total financial assets		11,780	11,001	13,237
Non-financial assets
Buildings - Leasehold improvements	2.2A	650	551	503
Plant and equipment	2.2A	325	370	507
Intangibles	2.2A	2,168	2,172	1,480
Prepayments		296	282	123
Total non-financial assets		3,439	3,375	2,613	3
Total assets		15,219	14,376	15,850
LIABILITIES
Payables
Suppliers	2.3A	873	313	754	4
Other Payables	2.3B	1,660	1,671	2,747	5
Total provisions		4,878	4,647	4,759
Total liabilities		7,411	6,631	8,260
Net assets		7,808	7,745	7,590
EQUITY
Contributed equity		1,823	1,823	1,823
Reserves		2,254	2,254	2,102
Retained surplus		3,731	3,668	3,665
Total equity		7,808	7,745	7,590

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

FSANZs original budgeted financial statement that was first presented to parliament in respect of the reporting period (i.e. from FSANZs 2016-17 Portfolio Budget Statements (PBS)).

Between the actual and original budgeted amounts for 2016-17. Explanations of variances above + or - 10% are provided further below.

Explanations of major variances	Affected line items (and schedule)
1. Cash and cash equivalents The original budget included the term deposit as cash. This has now been reclassified in the financial statements as an investment. The remaining variance is explained by higher than budgeted payments due to redundancies and some significant leave pay-outs during the period.	Cash and cash equivalents (Statement of Financial position)
2. Trade and Other receivables Budget is an estimated percentage of debtors at year end whereas the actual at year end represented agency efforts to reduce debtors.	Trade and Other receivables (Statement of Financial position)
3. Non Financial Assets Non financial assets additions were higher than budgeted in intangibles. This increase was funded from reserves and reflects the business need to improve data management and analysis.	Land & Buildings , Plant & Equipment and Intangibles (Statement of Financial position)
4. Suppliers Expenditure in June was higher than previous year trends on which the budget was set. This related to project timing.	Suppliers (Statement of Financial position)
5. Other payables The budget did not anticipate the redundancy of three staff at 30 June 2017 and the payable that related to the payout.	Other payables (Statement of Financial position)

Statement of Changes in Equity
for the period ended 30 June 2017

	Notes	2017 $'000	2016 $'000	Original Budget 2017 $'000
CONTRIBUTED EQUITY
Opening balance		1,823	1,823	1,823
Adjusted opening balance		1,823	1,823	1,823
Comprehensive income
Transfers between equity components		-	-	-
Closing balance as at 30 June		1,823	1,823	1,823
RETAINED EARNINGS
Opening balance		3,668	3,665	3,665
Adjusted opening balance		3,668	3,665	3,665
Comprehensive income
Surplus for the period		63	3	-
Total comprehensive income		63	3	-
Closing balance as at 30 June		3,731	3,668	3,665
ASSET REVALUATION RESERVE
Opening balance		2,254	2,102	2,102
Adjusted opening balance		2,254	2,102	2,102
Comprehensive income
Other comprehensive income		-	152	-
Total comprehensive income		-	152	-
Transfers between equity components		-	-	-
Closing balance as at 30 June		2,254	2,254	2,102
TOTAL EQUITY
Opening balance		7,745	7,590	7,590
Adjusted opening balance		7,745	7,590	7,590
Comprehensive income
Surplus for the period		63	3	-
Other comprehensive income		-	152	-
Total comprehensive income		63	155	-
Closing balance as at 30 June		7,808	7,745	7,590

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

Cash Flow Statement
as at 30 June 2017

	Notes	2017 $'000	2016 $'000	Original Budget 2017 $'000	AASB 1055
OPERATING ACTIVITIES
Cash received
Receipts from Australian Government		17,185	17,257	17,184
Receipts from New Zealand Government		2,021	1,912	-	1
Sale of goods and rendering of services		448	643	100	2
Interest		150	272	320
Net GST received		341	385	519
Other		75	15	1,573	1
Total cash received		20,220	20,484	19,696
Cash used
Employees		14,154	15,108	14,437	3
Suppliers		4,479	5,753	3,811	4
Net GST paid		-	-	519
Total cash used		18,633	20,861	18,767
Net cash from/(used by) operating activities		1,587	(377)	19,696	929
INVESTING ACTIVITIES
Cash received
Proceeds from sales of property, plant and equipment		-	1	-
Total cash received		-	1	-
Cash used
Purchase of property, plant and equipment		890	568	605	5
Investments		111	212	-	3
Total cash used		1,001	780	605
Net cash from/(used by) investing activities		(1,001)	(779)	(605)
Net increase/(decrease) in cash held		586	(1,156)	324
Cash and cash equivalents at the beginning of the reporting period		3,266	4,417	12,297
Effect of exchange rate movements on cash and cash equivalents at the beginning of the reporting period.		(3)	5	-
Cash and cash equivalents at the end of the reporting period	2.1A	3,849	3,266	12,621

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

Explanations of major variances	Affected line items (and schedule)
Cash received
Receipts from the New Zealand Government were included in Other income in the budget but are separated in the cash flow for more detailed disclosure. The budget was also prepared before the Partnership agreement between The New Zealand Minister for Food Safety and Food Standards Australia New Zealand had been finalised.	Receipts from New Zealand Government and Other
FSANZ do not budget for goods and service income due to the uncertainty of the amount.
Cash used
Cash used for employees is lower than anticipated due to redundancies which were payable as at 30 June 2017 when the budget anticipated a cash outflow in the 2016-17 year. This allowed an increase in investments.	Employees and Investments
Cash used for suppliers is higher than budget to reflect costs associated with the delivery of goods and services income, relating to projects.	Suppliers
Cash used for the purchase of property plant and equipment includes higher than anticipated internally developed software to meet emerging business needs and GST.	Purchase of property, plant and equipment

Overview

The Basis of Preparation

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.

The financial statements have been prepared in accordance with:

1. a) Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) for reporting periods ending on or after 1 July 2015; and
2. b) Australian Accounting Standards and Interpretations - reduced disclosure requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian dollars and rounded to the nearest thousand dollars ($'000) unless otherwise specified.

New Accounting Standards

All new accounting standards, revised standards or amending standards that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material effect on FSANZ’s financial statements.

Taxation

FSANZ is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Departmental Events After the Reporting Period

There has been no event since 30 June 2017 that had the potential to significantly affect the ongoing structure and financial activities of FSANZ.

Foreign Currency

Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Foreign currency bank account amounts are translated at the exchange rate current as at the reporting date. The primary foreign currency transactions are with New Zealand.

Financial Performance

This section analyses the financial performance of Food Standards Australia New Zealand for the year ended 2017.

1.1 Expenses

	2017 $’000	2016 $’000
1.1A: Employee Benefits
Wages and salaries	10,908	11,204
Superannuation
Defined contribution plans	919	827
Defined benefit plans	1,146	1,174
Leave and other entitlements	1,585	1,451
Separation and redundancies	364	-
Other employee expenses	5	31
Total employee benefits	14,927	14,687

	2017 $’000	2016 $’000
1.1B: Suppliers
Goods and services supplied or rendered
Consultants and contractors	837	929
Travel	796	806
Computer expenses	467	457
Subscriptions	247	200
Traning	235	135
Building running costs	111	107
ISFR Project Officer	144	139
Audit Fees	40	40
Other operating costs	674	544
Total goods and services supplied or rendered	3,551	3,357
Other suppliers
Operating lease rentals	980	1,007
Workers compensation premiums	33	28
Total other suppliers	1,013	1,035
Total other suppliers	4,564	4,392

Leasing commitments

FSANZ in its capacity as lessee has leases for its offices in Canberra and Wellington. The Canberra lease expires in February 2018 and the Wellington lease in March 2018. The commitments shown below this year are to the end of the lease.

	2017 $’000	2016 $’000
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within 1 year	916	1,311
Between 1 to 5 years	-	4,714
More than 5 years	-	1,898
Total operating lease commitments	-	1,898

1.2 Own-Source Revenue and gains

	2017 $’000	2016 $’000
Own-Source Revenue
1.2A: Sale of Goods and Rendering of Services
New Zealand Government funding	2,021	1,912
Fee for service	305	260
Surveys	-	164
Asia Pacific Economic Corporation (APEC)	172	85
Labelling	-	120
Other	341	151
Total sale of goods and rendering of services	2,839	2,692

	2017 $’000	2016 $’000
1.2B: Interest
Deposits	38	58
Investments	214	213
Total interest	252	271

	2017 $’000	2016 $’000
1.2C: Revenue from Government
Corporate Commonwealth entity payment	17,185	17,288
Total revenue from Government	17,185	17,288

Financial Position

This section analyses FSANZs assets used to conduct its operations and the operating liabilities incurred as a result.
Employee related information is disclosed in the People and Relationships

2.1 Financial Assets

	2017 $’000	2016 $’000
2.1A: Cash and Cash Equivalents
AUSTRALIA
Cash on hand or on deposit	3,765	3,246
NEW ZEALAND
Cash on hand or on deposit	84	20
Total cash and cash equivalents	3,849	3,266

	2017 $’000	2016 $’000
2.1B: Trade and Other Receivables
Goods and services receivables	149	91
Other receivables
Interest	133	31
GST receivable	2	53
Other receivables	-	52
Total other receivables	135	136
Total trade and other receivables (gross)	284	227
Less impairment allowance	-	(28)
Total trade and other receivables (net)	284	199

	2017 $’000	2016 $’000
2.1C: Investments - Term deposits
Deposits	7,647	7,536
Total other investments	7,647	7,536

2.2 Non-Financial Assets

2.2A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles
Reconciliation of the opening and closing balances of property, plant and equipment for 2017
	Buildings - Leasehold Improvements $'’'000	Plant and equipment $'000	Intangibles $'000	Total $'000
As at 1 July 2016
Gross book value	911	370	4,457	5,738
Accumulated depreciation, amortisation and impairment	(360)	-	(2,285)	(2,645)
Total as at 1 July 2016	551	370	2,172	3,093
Additions
Purchase or internally developed	446	109	281	836
Revaluations and impairments recognised in other comprehensive income	-	-	-	-
Depreciation and amortisation	(347)	(144)	(285)	(776)
Disposals	-	(10)	-	(10)
Total as at 30 June 2017	650	325	2,168	3,143
Total as at 30 June 2017 represented by
Gross book value	1,188	469	4,738	6,395
Accumulated depreciation, amortisation and impairment	(538)	(144)	(2,570)	(3,252)
Total as at 30 June 2017	650	325	2,168	3,143

The carrying amount of computer software at 30 June 2017 included $0.259m purchased software and $1.909m internally generated software.

No indicators of impairment were found for property, plant and equipment or land and buildings and intangibles at 30 June 2017.

No property, plant or equipment or land and buildings is held for sale, however, some assets may be sold as part of the normal refresh process within the next 12 months.

All revaluations were conducted in accordance with the revaluation policy stated below.

Contractual commitments for the acquisition of property, plant, equipment and intangibles

FSANZ had no material commitments to purchase assets as at 30 June 2017.

2.2 Non-Financial Assets

Accounting Policy

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Asset Recognition Threshold

Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than [$5,000], which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘make good’ provisions in property leases taken up by FSANZ where there exists an obligation to restore the property to prescribed conditions. These costs are included in the value of FSANZ's leasehold improvements with a corresponding provision for the ‘make good’ recognised.

Revaluations

Following initial recognition at cost, property, plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets did not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depended upon the volatility of movements in market values for the relevant assets.

Leasehold improvement, property plant & equipment are carried at fair value, being revalued with sufficient frequency such that the carrying amount of each asset class is not materially different at reporting date from its fair value. An independent valuation of all asset categories was carried out by Pickles Valuation Services as at 30 June 2016 and a further desk audit as at 30 June 2017 resulted in no changes to asset values.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reversed a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

Depreciation

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to FSANZ using, in all cases, the straight-line method of depreciation. Leasehold improvements are depreciated on a straight line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

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

	2017	2016
Leasehold improvements	Lease term	Lease term
Plant and equipment	3-10 years	3-10 years

Impairment

All assets were assessed for impairment at 30 June 2017. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if the entity were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

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

Intangibles

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

Internally developed software and purchased software with values of $25,000 or greater are capitalised. Any purchases under these thresholds are expensed in the year of acquisition (other than when they form part of a group of similar items which are significant in total).

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the entity's software are:

	2017	2016
Internally developed	10 years	10 years
Purchased	4 Years	4 Years

All software assets were assessed for indications of impairment as at 30 June 2017.

2.3 Payables

	2017	2016
2.3A: Suppliers
Trade creditors and accruals	873	313
Total suppliers	873	313

Suppliers include trade creditors and accruals. Suppliers expected to be settled in no more than 12 months. Settlement was usually made within 30 days.

	2017	2016
2.3B: Other Payables
Salaries and wages	122	103
Redundancy payable	364	-
Leave payable	196	-
Performance pay	197	220
Unearned income	682	1,120
Lease incentive	68	228
Other	31	-
Total other payables	1,660	1,671

2.4 Other Provisions

FSANZ currently has 2 (2016: 2) agreements for the leasing of premises which have provisions requiring the entity to restore the premises to their original condition at the conclusion of the lease. FSANZ has made a provision to reflect the present value of this obligation.

People and relationships

This section describes a range of employment and post employment benefits provided to our people and our relationships with other key people.

3.1 Employee Provisions

	2017	2016
2.4A: Provision for restoration
	Provision for restoration $’000	Provision for restoration $’000
As at 1 July	345	327
Additional provisions made	6	-
Restatement of New Zealand balance	-	3
Unwinding of discount or change in discount rate	-	15
Total as at 30 June	351	345

3.2 Key Management Personnel Remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of FSANZ, directly or indirectly, including any director (whether executive or otherwise) of FSANZ. FSANZ has determined the key management personnel to be the Chief Executive Officer, Branch General Managers and Directors. Key management personnel remuneration is reported in the table below:

	2017	2016
3.1A: Employee Provisions
Leave	4,527	4,302
Total employee provisions	4,527	4,302

	2017	2016
Short-term employee benefits	1,707	1,562
Post-employment benefits	200	211
Other long-term employee benefits	101	111
Termination benefits	-	199
Total key management personnel remuneration expenses	2,008	2,083

The above table includes paid part time directors of 10 (2016: 11) board positions. The total number of key management personnel that are included in the above table are 16 (2016:16). There were no termination benefits paid in 2016-17.

The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio Minister. The Portfolio Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the entity.

3.3 Related Party Disclosures

Related party relationships

FSANZ is an Australian Government controlled entity. Related parties to FSANZ are directors and key management personnel.

Transactions with related parties:

Given the breath of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes. These transactions have not been separately disclosed in this note.

Significant transactions with related parties can include:

• the payments of grants or loans;
• purchases of goods and services;
• asset purchases, sales transfers or leases;
• debt forgiven; and
• guarantees.

Giving consideration to relations with related entities, and transactions entered into during the reporting period by FSANZ, it has been determined that there are no related party transactions to be separately disclosed.

Managing uncertainties

This section analyses how Food Standards Australia New Zealand manages financial risks within its operating environment.

4.1 Contingent Assets and Liabilities

FSANZ did not have any contingent assets or liabilities to report as at 30 June 2017 (2016: Nil).

4.2 Financial Instruments

	2017	2016
4.2A: Categories of Financial Instruments
Financial Assets
Receivables
Cash and cash equivalents	3,849	3,266
Trade and other receivables	282	174
Investments	7,647	7,536
Total receivables	11,778	10,976
Total financial assets	11,778	10,976
Financial Liabilities
Financial liabilities measured at amortised cost
Trade creditors	873	313
Total financial liabilities measured at amortised cost	873	313
Total financial liabilities measured at amortised cost	873	313

Impairment of Financial Assets

Financial assets are assessed for impairment at end of each reporting period.

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

Financial liabilities

Financial liabilities are classified as other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’. Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

	2017	2016
4.2B: Net Gains or Losses on Financial Assets
Receivables
Interest revenue	252	271
Exchange gains/(losses)	(3)	2
Net gains/(losses) on receivables	249	273
Net gains on financial assets	249	273

4.2C: Fair Value of Financial Instruments

	Carrying amount 2017 $'000	Fair value 2017 $'000	Carrying amount 2016 $'000	Fair value 2016 $'000
Financial Assets
Receivables	11,778	11,778	10,976	10,976
Total financial assets	11,778	11,778	10,976	10,976
Financial Liabilities
Trade creditors	873	873	313	313
Total financial liabilities	873	873	313	313

4.3 Fair Value Measurement

  Fair value measurements at the end of the reporting period 2017
$'000 2016
$'000 Non-financial asset Leasehold improvements 560 461 Other property, plant and equipment 325 369 Total fair value measurements of assets in the statement of financial position 885 830

← Previous section - Appendix 4 | Next section - Appendix 6 →