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Budget 2010-11

Indigenous Business Australia.

Section 3: Explanatory tables and budgeted financial statements

3.2 Budgeted financial statements

3.2.1 Differences in agency resourcing and financial statements

There are no differences between IBA's agency resourcing and financial statements.

3.2.2 Analysis of budgeted financial statements

An analysis of the primary causes of movements in the budgeted financial statements is provided below. The 2009-10 estimated actual results are used as the comparative year in the analysis.
IBA made a structural shift in its PB Statements process for 2010-11. In previous years, the PB Statements only constituted IBA Corporation stand-alone budgets; IBA's investment portfolio was accounted as financial assets and the income from such investments flowed through as dividends. This year, in order to fully align with the annual report process, budgets are prepared on a consolidated basis: assets, liabilities, income and expenditure of all subsidiaries flow through to individual line items in the consolidated budget. Individual budgets for 29 subsidiaries are now consolidated into IBA's budget under rules prescribed by the Australian Accounting Standards.

Budgeted agency income statement

IBA is budgeting for an operating deficit of $21.6 million in 2010-11 and an estimated actual deficit for 2009-10 of $31.2 million. The causes of the operating deficits across the two financial years are:

There is a significant increase in revenue items (i.e. goods and services, rents) and expense items such as employee expenses, supplier expenses and depreciation from the previous years PB Statements. This is due to the structural shift towards consolidated budgeting explained above. Consequently, dividend income from subsidiaries has been eliminated.

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Budgeted agency balance sheet

There is a significant upward movement in cash, land and buildings, infrastructure, plant and equipment, investment properties and intangibles from the previous year's PB Statements due to the structural shift towards consolidated budgeting. This has been matched by a decrease in other investments (in subsidiaries) on consolidation.

Budgeted net assets for 2010-11 of $961.5 million represent an increase of $11.6 million over the estimated actual for 2009-10, primarily due to:

A noticeable trend is the steady continued growth in financial assets, receivables and investments, as IBA continues its lending and investing activities, in line with its objectives of Indigenous economic participation and wealth creation.

Statement of cash flows

Lending activity will increase in 2010-11. New loans will increase from $99.8 million to $159.4 million due to the temporary transfer of $56 million in capital from HOIL to HOP. The interest from home loans is quarantined and ploughed back into the home loan program.

Statement of changes in equity

Total equity has increased by $11.6 million due to an additional equity injection of $33.2 million, offset by a decrease in retained earnings of $21.6 million.

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3.2.3 Budgeted financial statements tables


Table 3.2.1 comprehensive income statement (showing net cost of services)
(for the period ended 30 June)

 

 Estimated actual
2009-10
          $'000		 Budget estimate
2010-11
          $'000		 Forward estimate
2011-12
          $'000		 Forward estimate
2012-13
          $'000		 Forward estimate
2013-14
          $'000
INCOME          
Revenue          
Revenues from Government 38,840 38,831 39,533 39,561 39,505
Goods and services 51,600 39,303 41,133 42,778 44,557
Interest 41,887 43,068 43,500 45,231 47,347
Dividends - - - - -
Discount - 12 20 20 21
Rents 13,286 12,969 14,697 15,144 15,613
Other 1,251 200 231 282 335
Total revenue 146,864 134,383 139,114 143,016 147,378
Gains          
Sale of assets 3,625 - - - -
Total gains 3,625 - - - -
Total income 150,489 134,383 139,114 143,016 147,378
           
EXPENSE          
Employees 37,515 36,550 37,049 38,213 39,706
Suppliers 54,451 49,305 54,431 56,498 59,278
Grants 8,491 16,515 17,066 17,637 17,838
Depreciation and amortisation 3,618 2,622 2,687 2,320 2,316
Finance costs 79 74 79 74 237
Write-down of assets and impairment of assets 6,495 7,600 2,000 2,000 2,000
Concessional Loan Discount 54,747 45,597 20,200 20,792 21,690
Net Losses sale of assets 17,793 - - - -
Other 1,978 1,203 1,201 1,203 1,202
Total expenses 185,167 159,466 134,713 138,737 144,267
the equity method 4,036 4,000 4,000 4,000 4,000
Profit (Loss) before income tax (30,642) (21,083) 8,401 8,279 7,111
Income tax expense 567 530 649 656 694
Net profit (Loss) (31,209) (21,613) 7,752 7,623 6,417
           
Profit (Loss) attributable to the Australian Government (31,209) (21,613) 7,752 7,623 6,417
           
Total comprehensive income attributable to the Australian Government (31,209) (21,613) 7,752 7,623 6,417

Prepared on Australian Accounting Standards basis.

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Table 3.2.2: Budgeted departmental balance sheet (as at 30 June)

 

 Estimated actual
2009-10
          $'000		 Budget estimate
2010-11
          $'000		 Forward estimate
2011-12
          $'000		 Forward estimate
2012-13
          $'000		 Forward estimate
2013-14
          $'000
ASSETS          
Financial assets          
Cash and equivalents 123,384 144,369 190,644 234,441 275,284
Receivables 429,329 467,802 483,298 502,455 523,518
Investments accounted for using the equity method 44,613 44,613 44,683 44,721 44,760
Other investments 212,689 167,795 147,795 127,795 107,795
Total financial assets 810,015 824,579 866,420 909,412 951,357
Non-financial assets          
Land and buildings 12,566 12,127 11,638 11,241 10,954
Infrastructure, plant and equipment 10,844 9,099 7,465 5,610 4,128
Investment properties 136,358 136,358 136,358 136,358 136,358
Intangibles 10,658 10,599 10,399 10,225 10,071
Other 2,724 2,676 2,582 2,519 1,825
Total non-financial assets 173,150 170,859 168,442 165,953 163,336
Total assets 983,165 995,438 1,034,862 1,075,365 1,114,693
LIABILITIES          
Interest Bearing liabilities          
Loans 17,463 17,463 17,544 17,544 17,544
Total interest bearing liabilities 17,463 17,463 17,544 17,544 17,544
           
Provisions          
Employees 5,358 5,900 5,836 5,838 5,840
Other 1,304 1,325 1,304 1,304 1,304
Total provisions 6,662 7,225 7,140 7,142 7,144
Payables          
Suppliers 6,109 6,107 5,646 5,653 5,680
Other 2,941 3,096 2,063 1,764 1,476
Total payables 9,050 9,203 7,709 7,417 7,156
Total liabilities 33,175 33,891 32,393 32,103 31,844
Net assets 949,990 961,547 1,002,469 1,043,262 1,082,849
EQUITY*          
Parent entity interest          
Contributed equity 719,674 752,844 786,014 819,184 852,354
Reserves 13,402 13,402 13,402 13,402 13,402
Retained surpluses or accumulated deficits 208,687 187,074 194,826 202,449 208,866
Total parent entity interest 941,763 953,320 994,242 1,035,035 1,074,622
Attributed to minority interest          
Contributed Equity 8,227 8,227 8,227 8,227 8,227
Total minority interest 8,227 8,227 8,227 8,227 8,227
Total equity 949,990 961,547 1,002,469 1,043,262 1,082,849

* 'Equity' is the residual interest in assets after deduction of liabilities.

Prepared on Australian Accounting Standards basis.

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Table 3.2.3: Departmental statement of changes in equity - summary of movement (Budget year 2010-11)

 

 Retained earnings
          $'000		 Asset revaluation reserve
          $'000		 Other reserves
          $'000		 Contributed equity/capital
          $'000		 Total equity
          $'000
Opening balance as at 1 July 2010          
Balance carried forward from          
previous period 208,687 13,402 - 727,901 949,990
Opening balance adjustment - - - - -
Adjusted opening balance 208,687 13,402 - 727,901 949,990
Comprehensive income          
Comprehensive income recognised directly in equity - - - - -
Gain/loss on revaluation of property - - - - -
Subtotal comprehensive income - - - - -
Surplus (deficit) for the period (21,613) - - - (21,613)
Total comprehensive income recognised directly in equity (21,613) - - - (21,613)
Transactions with owners          
Contributions by owners          
Appropriation (equity injection) - - - 33,170 33,170
Other - - - - -
Restructuring - - - - -
Subtotal transactions with owners - - - 33,170 33,170
Transfers between equity components - - - - -
Estimated closing balance as at 30 June 2011 187,074 13,402 - 761,071 961,547

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Table 3.2.4: Budgeted departmental statement of cash flows (for the period ended 30 June)

 

 Estimated actual
2009-10
          $'000		 Budget estimate
2010-11
          $'000		 Forward estimate
2011-12
          $'000		 Forward estimate
2012-13
          $'000		 Forward estimate
2013-14
          $'000
OPERATING ACTIVITIES          
Cash received          
Goods and services 51,600 39,303 41,133 42,778 44,557
Appropriations 38,840 38,831 39,533 39,561 39,505
Interest 41,887 43,068 43,500 45,231 47,347
Dividends -        
Other 14,537 13,169 14,928 15,426 15,948
Total cash received 146,864 134,371 139,094 142,996 147,357
Cash used          
Employees 36,193 36,008 37,113 38,211 39,704
Suppliers 59,462 49,233 54,429 59,113 57,090
Grants 8,491 16,515 17,066 17,637 17,838
Total cash used 104,146 101,756 108,608 114,961 114,632
Net cash from (used by) operating activities 42,718 32,615 30,486 28,035 32,725
INVESTING ACTIVITIES          
Cash received          
Proceeds from sales of property, plant and equipment          
Investments 20,000 55,000 20,000 20,000 20,000
Repayment of loands made 63,310 79,979 96,618 99,336 95,041
Total cash received 83,310 134,979 116,618 119,336 115,041
Cash used          
Purchase of property, plant and equipment 18,656 379 364 344 393
Loans made 99,763 159,400 113,635 116,400 119,700
Purchase of investments 20,000 20,000 20,000 20,000 20,000
Total cash used 138,419 179,779 133,999 136,744 140,093
Net cash from (used by) investing activities (55,109) (44,800) (17,381) (17,408) (25,052)
FINANCING ACTIVITIES          
Cash received          
Appropriations - contributed equity 33,170 33,170 33,170 33,170 33,170
Total cash received 33,170 33,170 33,170 33,170 33,170
           
Net cash from (used by) financing activities 33,170 33,170 33,170 33,170 33,170
Net increase (decrease) in cash held 20,779 20,985 46,275 43,797 40,843
Cash at the beginning of the reporting period 102,605 123,384 144,369 190,644 234,441
Cash at the end of the reporting period 123,384 144,369 190,644 234,441 275,284

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Table 3.2.5: Departmental capital budget statement

 

 Estimated actual
2009-10
          $'000		 Budget estimate
2010-11
          $'000		 Forward estimate
2011-12
          $'000		 Forward estimate
2012-13
          $'000		 Forward estimate
2013-14
          $'000
CAPITAL APPROPRIATIONS          
Capital budget - Bill 1 (DCB) - - - - -
Equity injections - Bill 2 33,170 33,170 33,170 33,170 33,170
Total capital appropriations 33,170 33,170 33,170 33,170 33,170
Total new capital appropriations          
Represented by:          
Other 33,170 33,170 33,170 33,170 33,170
Total items 33,170 33,170 33,170 33,170 33,170
PURCHASE OF NON-FINANCIAL ASSETS          
Funded internally by Departmental resources 18,656 379 364 344 393
TOTAL 18,656 379 364 344 393

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Table 3.2.6: Statement of asset movements (2010-11)

 

 Buildings

          $'000		 Other property,
plant & equipment
          $'000		 Investment property

          $'000		 Intangibles

          $'000		 Other

          $'000		 Total

          $'000
As at 1 July 2010            
Gross book value 13,687 18,424 144,273 13,095 2,724 192,203
Accumulated depreciation/ amortisation and impairment 1,121 7,580 7,915 2,437 - 19,053
Opening net book balance 12,566 10,844 136,358 10,658 2,724 173,150
CAPITAL ASSET ADDITIONS            
Estimated expenditure on new or replacement assets           
By purchase - Government funding           
By purchase - donated funds           
By purchase - other   182   197   379
By finance lease           
Assets received as gifts/donations           
From acquisition of entities or operations (including restructuring)          -
Total additions - 182 - 197 - 379
Other movements          
Assets held for sale or in a disposal group held for sale           
Depreciation/amortisation expense 439 1,927   256   2,622
Disposals1         -
From disposal of entities or operations (including restructuring)         -
Other        (48) (48)
As at 30 June 2011           
Gross book value 13,687 18,606 144,273 13,292 2,676 192,534
Accumulated depreciation/ amortisation and impairment 1,560 9,507 7,915 2,693   21,675
Closing net book balance 12,127 9,099 136,358 10,599 2,676 170,859
  1. Proceeds may be returned to the OPA

Prepared on Australian Accounting Standards basis.

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3.2.4 Notes to the financial statements

The budgeted financial statements have been prepared in accordance with the requirements of the Finance Minister's Orders issued by the Minister for Finance and Deregulation.

The statements have been prepared

Revenue from government

This represents appropriation from government to IBA for the delivery of IBA's four programs in pursuit of its single outcome. Increases in the ordinary annual appropriations are a result of new measures and variations explained in Section 2.

Expenses-depreciation and amortisation

Property, plant and equipment assets are written off to their estimated residual values over their estimated useful lives using, in all cases, the straight-line method of depreciation

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

Concessional loan discount

IBA continues to designate its loan portfolio at fair value through profit and loss as per paragraph 11A of AASB 139, which provides for contracts with embedded derivatives, such as prepayment options, to be designated at fair value through profit and loss. The variation in the loan portfolio under the fair value basis is written directly to the income statement.

Financial assets-receivables

This includes loans and advances made by IBA to clients in the delivery of its outputs, in addition to amounts owing to IBA for delivery of goods and services, and dividends owed to IBA from subsidiaries, associates and investments. Loans receivable are carried at fair value under AASB 139.

Assets-non-financial

Except for any revalued assets, the reported value of plant and equipment represents the purchase price paid less depreciation incurred.

Land and buildings held for investment are carried at fair value.


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