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Notes to the financial statements for the year ended 30 June 2009

Notes to the Financial Statements for the Year Ended 30 June 2009

Note 1: Revenue Other

Revenue Other was derived from the following sources:

 

2008/09

 

2007/08

 

 

Other Government Departments
$000

 

Other Sources

$000

 

Other Government Departments
$000

 

Other Sources

$000

 

Contract history projects

 

175

 

 

102

 

 

Seconded staff

49

 

 

83

 

50

 

State Sector Retirement Savings Scheme (SSRSS)
–recovery from State Services Commission

169

 

 

161

 

 

Contribution towards Digital Broadcasting Strategy project

 

 

 

60

 

Publication sales/royalties

 

15

 

 

25

 

Kiwisaver recoveries

13

 

 

 

 

Antiquities dealers’ licences

 

2

 

2

 

1

 

Total revenue other

 

406

 

17

 

348

 

136

 

Note 2: Personnel Costs

 

2008/09

 

2007/08

 

 

Actual

 

Actual

 

 

$000

 

$000

 

Salaries and wages

 

7,869

 

7,305

 

Training and development

 

183

 

174

 

Employer contributions to superannuation funds*

 

246

 

218

 

Other personnel costs

 

154

 

202

 

Total personnel costs

 

8,452

 

7,899

 

 

* Employer contributions to defined contribution plans include contributions to the State Sector Retirement Savings Scheme, Kiwisaver, Government Superannuation Fund and the Global Retirement Trust Superannuation.

Note 3: Other Operating Expenses

 

2008/09

2007/08

 

Actual

Actual

 

$000

$000

Administration costs

 

1,782

 

2,582

 

Rental and leasing costs

 

472

 

476

 

Other occupancy costs

 

214

 

237

 

Publicity and research

 

194

 

248

 

Information communication technology

 

741

 

725

 

Transfers to International Cultural Diplomacy Programme agencies

 

1,223

 

1,675

 

Audit fees for financial statement audit (Audit New Zealand)

 

42

 

38

 

Audit fees for NZ IFRS transition (Audit New Zealand)

 

 

6

 

Total operating costs

 

4,668

 

5,987

 

Note 4: Depreciation and Amortisation

 

2008/09

2007/08

 

Actual

Actual

 

$000

$000

Depreciation – Property, Plant and Equipment

 

 

 

Computer equipment

 

93

 

83

 

Office equipment

 

19

 

21

 

Office furniture

 

52

 

17

 

Leasehold improvements

 

216

 

143

 

Works of Art

 

 

 

Amortisation – Intangible Assets

 

 

 

Computer software

 

58

 

54

 

Total depreciation and amortisation

 

438

 

318

 

Note 5: Capital Charge

The Ministry pays a capital charge to the Crown on its taxpayers’ funds as at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2009 was 7.5% (2008: 7.5%).

Note 6: Debtors and Other Receivables

 

2008/09

 

2007/08

 

 

Actual

 

Actual

 

 

$000

 

$000

 

Debtor Crown

 

 

1,000

 

Trade debtors

 

181

 

258

 

GST receivables

 

60

 

 

Total debtors and other receivables

 

241

 

1,258

 

 

The carrying value of debtors and other receivables approximates their fair value.

As at 30 June 2009 all overdue trade debtors have been assessed for impairment as detailed below (a provision is not required):

 

 

2008

 

2009

 

 

Gross

 

Impairment

 

Net

 

Gross

 

Impairment

 

Net

 

 

$000

 

$000

 

$000

 

$000

 

$000

 

$000

 

Not past due

 

241

 

 

241

 

181

 

 

181

 

Past due 1–30 days

 

 

 

 

 

 

 

Past due 31–60 days

 

 

 

 

 

 

 

Past due 61–90 days

 

 

 

 

 

 

 

Past due > 91 days

 

17

 

 

17

 

 

 

 

Total

 

258

 

 

258

 

181

 

 

181

 

 

A provision for doubtful debts has not been calculated. No losses are expected for the Ministry’s pool of debtors.

Note 7: Property, Plant and Equipment

 

 

Computer Equipment

Office Equipment

Office Furniture

Leasehold Improvements

Works of Art

Total

 

 

$000

$000

$000

$000

$000

$000

Cost or Valuation

 

 

 

 

 

 

Balance at 1 July 2007

562

170

365

1,084

20

2,201

Additions

83

16

173

229

501

Disposals

(25)

(18)

(158)

(201)

Other asset adjustment (rounding)

(1)

(1)

Balance at 30 June and 1 July 2008

620

167

380

1,313

20

2,500

Additions

90

14

29

71

204

Disposals

(29)

(17)

(46)

Other asset adjustment (rounding)

1

1

1

3

Balance at 30 June 2009

681

165

409

1,385

21

2,661

Accumulated Depreciation and Impairment Losses

 

 

 

 

 

 

Balance at 1 July 2007

414

110

301

523

1,348

Depreciation expense

83

21

17

143

264

Elimination on disposal

(25)

(17)

(156)

(198)

Impairment losses

Balance at 30 June and 1 July 2008

472

114

162

666

1,414

Depreciation expense

93

19

52

216

380

Elimination on disposal

(29)

(17)

(46)

Impairment losses

Balance at 30 June 2009

536

116

214

882

1,748

Carrying Amounts

 

 

 

 

 

 

At 1 July 2007

 

148

 

60

 

64

 

561

 

20

 

853

 

At 30 June and 1 July 2008

 

148

 

53

 

218

 

647

 

20

 

1,086

 

               

Note 8: Intangible Assets

 

 

Acquired Software

 

$000

Cost or Valuation

 

Balance at 1 July 2007

280

Additions

52

Disposals

(167)

Other asset adjustment (rounding)

(1)

Balance at 30 June and 1 July 2008

164

Additions

43

Disposals

Balance at 30 June 2009

207

Accumulated Amortisation and Impairment Losses

 

Balance at 1 July 2007

245

Depreciation expense

54

Elimination on disposal

(167)

Impairment losses

Balance at 30 June and 1 July 2008

132

Amortisation expense

58

Elimination on disposal

Impairment losses

Balance at 30 June 2009

190

Carrying Amounts

 

At 1 July 2007

35

At 30 June and 1 July 2008

32

At 30 June 2009

17

There are no restrictions over the title of the Ministry’s intangible assets, nor are any intangible assets pledged as security for liabilities.

Note 9: Creditors and Other Payables

 

2008/09

2007/08

 

Actual

Actual

 

$000

$000

Trade creditors

213

943

PAYE payable

88

87

GST payable

-

13

Accrued expenses

838

397

Total creditors and payables

1,139

1,440

Creditors and other payables are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value of creditors and other payables approximates their fair value.

Note 10: Employee Entitlements

 

2008/09

2007/08

 

Actual

Actual

 

$000

$000

Current employee entitlements are represented by:

 

 

Annual leave

385

341

Long-service leave

73

52

Total current portion

458

393

Non-current employee entitlements are represented by:

 

 

 

Long-service leave

39

22

Retirement leave

54

94

Total non-current portion

93

116

Total employee entitlements

551

509

 

The present value of the retirement and long service leave obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. Two key assumptions used in calculating this liability are the discount rate and the salary inflation factor. Any changes in these assumptions will impact on the carrying amount of the liability.

In determining the appropriate discount rate the Ministry considered the interest rates on NZ Government Bonds which have terms to maturity that match, as closely as possible, the estimated future cash outflows. The salary inflation factor has been determined after considering historical salary inflation patterns and after obtaining advice from an independent actuary.

If the discount rate were to differ by 1% from the Ministry’s estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $4,000 higher/lower.

If the salary inflation factor were to differ by 1% from the Ministry’s estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $4,000 higher/lower.

Note 11: Reconciliation of Net Surplus to Net Cash Flow from Operating Activities for the Year Ended 30 June 2009

 

2008/09

2007/08

 

Actual

Actual

 

$000

$000

Net surplus/(deficit)

1,494

1,241

Add/(less) non-cash items:

 

 

Depreciation and amortisation

438

318

Inc/(decrease) in non-current employee entitlements

(23)

26

Total non-cash items

415

344

Add/(less) items classified as investing or financing activities:

 

 

(Gains)/losses on disposal of property, plant and equipment

4

Add/(less) movements in working capital items:

 

 

(Inc)/decrease in debtors and other receivables

1,017

552

(Inc)/decrease in prepayments

20

37

Inc/(decrease) in creditors and other payables

(301)

655

Inc/(decrease) in current employee entitlements

65

32

Net movements in working capital items

801

1,276

Net cash flows from operating activities

2,710

2,865

 

This statement is to be read in conjunction with the accompanying Statement of Accounting Policies and Notes to the Financial Statements.

Note 12: Financial Instruments

The Ministry’s activities expose it to a variety of financial instrument risks, including credit risk, currency risk, interest rate risk and liquidity rate risk. The Ministry has a series of policies to manage the risks associated with financial instruments and seeks to minimise exposure from financial instruments. These policies do not allow any transactions that are speculative in nature to be entered into.

Credit Risk

Credit risk is the risk that a third party will default on its obligations to the Ministry, causing the Ministry to incur a loss.

In the normal course of its business the Ministry incurs credit risk from trade debtors and transactions with financial institutions.

The Ministry does not require any collateral or security to support financial instruments with financial institutions that the Ministry deals with as these entities have high credit ratings. For its other financial instruments the Ministry does not have significant concentrations of credit risk.

Currency Risk

Currency risk is the risk that debtors and creditors due in foreign currency will fluctuate because of changes in foreign exchange rates. Owing to the nature and limited number of foreign exchange transactions undertaken, the Ministry has no significant exposure to currency risk.

Interest Rate Risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. This could impact on the return on investments or the cost of borrowing. The Ministry has no significant exposure to interest rate risk on its financial instruments.

Under section 46 of the Public Finance Act the Ministry cannot raise a loan without Ministerial approval, and no such loans have been raised. Accordingly, there is no interest rate exposure for funds borrowed (30 June 2008: Nil).

Liquidity risk

Liquidity risk is the risk that the Ministry will encounter difficulty raising liquid funds to meet commitments as they fall due.

In meeting its liquidity requirements, the Ministry closely monitors its forecast cash requirements with expected cash drawdown’s from the New Zealand Debt Management Office. The Ministry maintains a target level of available cash to meet liquidity requirements.

The Ministry’s financial liabilities will be settled in less than six months. The amounts disclosed are the contractual undiscounted cash flows.

Note 13: Related-party Information

The Ministry is a wholly owned entity of the Crown. The government significantly influences the roles of the Ministry as well as being its major source of revenue.

The Ministry enters into numerous transactions with other government departments, Crown entities and state-owned enterprises on an arm’s length basis. Those transactions that occur within a normal supplier or client relationship on terms and conditions no more or less favourable than those which it is reasonable to expect the Ministry would have adopted if dealing with that entity at arm’s length in the same circumstance are not disclosed.

There were two close family members of the senior management team employed briefly by the Ministry during the year at a combined cost of $5,500. The terms and conditions of their employment were no more favourable than the Ministry would have implemented in any other circumstances.

No provision has been required, nor any expense recognised, for impairment of receivables from related parties.

Note 14: Variance Explanations

Explanations for major variances from the Ministry’s estimated figures in the Statement of Intent are as follows.

Statement of Financial Performance

Personnel costs

Personnel costs are $278,000 higher than budgeted due to higher than expected increases in remuneration (than at the time of preparing the 2008/09 main estimates).

Operating costs

Operating costs are $2.759 million lower than budgeted in the Statement of Intent mainly due to timing differences for various projects which span a number of financial years, and savings returned as part of the line by line budget review. Approval in-principle was obtained to carry forward unspent operating funding in the 2008/9 financial year to 2009/10 for:

·         First World War Centenary Project $20,000

·         NZLive.com $230,000

·         Public Education Initiative and the Monitoring of Digital TV Take-up $80,000

·         Vietnam War Oral History Project $70,000

The above in-principle expense transfers total $400,000 and account for some of the variance between the 2008/09 total expenses (Actual) and total revenue (Supplementary Estimates) recognised in the Statement of Financial Performance. The actual amount of expense transfers is restricted to the amount of unspent appropriation available under the outputs to which the above activities relate (refer Statement of Departmental Expenditure Against Appropriations).

The Ministry returned a total of $730,000 as part of the line by line budget review, and this is the other significant factor reducing total revenue. During 2008/09 a total of $1.6 million was expense transferred from 2008/09 to 2009/10. The projects are as follows:

·         NZLive.com $300,000

·         Various Departmental projects $1,300,000

The $1.494 million operating surplus was primarily generated from the timing differences mentioned above. This surplus will be returned to the Crown as required under the Public Finance Act 1989.

Statements of Financial Position and Cash Flows

Debtors and Other Receivables

Debtors and other receivables are $91,000 higher than budgeted mainly due to the $60,000 balance for GST, which arose because of the May 2009 revenue Crown drawn downs from the NZDMO.

Creditors and Payables

Creditors and other payables are $294,000 higher than budgeted due to creditors submitting final invoices for work that was not finalised until late June 2009. In particular a significant invoice associated with the Ministry’s International Cultural Diplomacy Programme. When preparing the budget figures for the Statement of Intent it was envisaged that this project would be completed well before June 2009. The increase in total employee entitlements is mainly due to an increase in untaken annual leave, and milestone anniversaries being reached by some of the employees who are entitled to retirement leave.

Property, Plant and Equipment

Capital expenditure is $209,000 lower than budgeted due to expenditure on computer equipment. The Ministry revised it’s computer equipment plans during 2008/09, and this expenditure will now occur during 2009/10.

Working Capital                       

The Ministry’s working capital position in 2008/09 ($295,000) improved by $165,000 compared to 2007/08 ($130,000). Contributing factors include: capital expenditure was only $208,000 in 2008/09, and the residual capital expenditure was less than the depreciation and amortisation expense incurred.

Statement of Cash Flows

Cash outflows for payments to suppliers was less than budgeted due to the timing differences and late submission of invoices mentioned above, and the expense and in principle expense transfers previously mentioned.

Note 15: Key Management Personnel Compensation

Total Remuneration

 

30 June 2009

 

30 June 2008

 

Salaries and other short-term employee benefits

 

1,390

 

1,461

 

Post-employment benefits

 

 

 

Other long-term benefits

 

2

 

30

 

Termination benefits

 

 

 

Total key management personnel compensation

 

1,392

 

1,491

 

 

Key management personnel include the Chief Executive and the nine senior managers (2008: the Chief Executive and nine senior managers).

Note 16: Post Balance Date Events

There are no significant post balance date events to report (2008: nil).


Updated on 23rd July 2015