NOTE 1: Statement of accounting policies

<<Previous  |  Contents  |  Next>>

Reporting entity

The Ministry of Transport is a government department as defined by section 2 of the Public Finance Act 1989 and is domiciled in New Zealand.

In addition, the Ministry has reported the Crown activities which it administers.

The primary objective of the Ministry is to provide services to the public rather than making a financial return. Accordingly, the Ministry has designated itself as a public benefit entity for the purpose of the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).

The financial statements of the Ministry are for the year ended 30 June 2014. The financial statements were authorised for issue by the Chief Executive of the Ministry on 30 September 2014.

The information in these financial statements comprises the revenue, expenditure, assets and liabilities associated with the Ministry operating its Wellington, Auckland and Christchurch offices and the Milford Sound/ Piopiotahi Aerodrome for the year.

Basis of preparation

Statement of compliance

The financial statements of the Ministry have been prepared in accordance with the requirements of the Public Finance Act 1989, which includes the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP) and Treasury Instructions.

These financial statements have been prepared in accordance with NZ GAAP as appropriate for public benefit entities, and comply with NZ IFRS.

Measurement base

The financial statements have been prepared on a historical cost basis, modified by the revaluation of certain assets.

Functional and presentation currency

The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency of the Ministry is the New Zealand dollar.

Back to top

Changes in accounting policies

There have been no changes in accounting policies during the financial year.

There were no revisions to accounting standards relevant to the Ministry during the financial year.

Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted

Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted and which are relevant to the Ministry, are:

  • New Accounting Standards Framework. The Minister of Commerce has approved this new Framework (incorporating a Tier Strategy) developed by the External Reporting Board (XRB). Under this Framework, the Ministry is classified as a Tier 1 reporting entity and it will be required to apply full Public Benefit Entity Accounting Standards (PAS). These standards were developed by the XRB based on current International Public Sector Accounting Standards.
  • The effective date for the new standards for public sector entities isfor reporting periods beginning on or after 1 July 2014. The Ministry will transition to the new standards when it prepares its 30 June 2015 financial statements. The transition to the new Accounting Standards Framework is not expected to materially impact financial reporting for the Ministry.
  • Accounting Standards Framework for public benefit entities. Due to the change in this framework, all new NZ IFRS and amendments to existing NZ IFRS were not applicable to public benefit entities. Therefore, the XRB effectively froze the financial reporting requirements for public benefit entities until the new Accounting Standard Framework is effective. Accordingly, no disclosure has been made about new or amended NZ IFRS that exclude public benefit entities from their scope.
  • NZ IFRS 7 Financial Instruments: Disclosures and NZ IFRS 9 Financial Instruments - these standards were amended to change the effective date of earlier amendments from 1 January 2013 to 1 January 2015. The Ministry has chosen not to early adopt the changes because the Crown is not early adopting. The transition is not expected to materially impact financial reporting for the Ministry.

Budget figures

The budget figures are those used in the preparation of the Information Supporting the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2014, which are consistent with the financial information in the Main Estimates.

In addition, the financial statements also present the updated budget information from the Supplementary Estimates. The budget figures have been prepared in accordance with NZ GAAP, using accounting policies that are consistent with those adopted in preparing these financial statements.

Back to top

Forecast figures

Significant assumptions

These financial forecasts are based on Budget Economic Forecast Update (BEFU) and have been prepared on the basis of assumptions as to future events that the department reasonably expects to occur, associated with the actions it reasonably expects to take. They have been compiled on the basis of existing government policies and Ministerial expectations at the date that the information was prepared.

The main assumptions are that the operations of the Ministry will continue as in 2013/14.

Estimated year end information for 2013/14 is used as the opening position for the 2014/15 forecasts.

There are no significant events or changes that would have a material impact on the BEFU forecast.

Factors that could lead to material differences between the forecast financial statements and the 2014/15 actual financial statements include changes to the baseline budget through new initiatives, or technical adjustments.

Basis of preparation

These forecast financial statements have been prepared in accordance with New Zealand Public Benefit Entity (NZ PBE) International Public Sector Accounting Standards (IPSAS). While a detailed impact assessment has yet to be completed, no significant impact is expected on transition from NZ IFRS to IPSAS.

These are the first set of prospective financial statements presented by the department under NZ PBE IPSAS. They are compliant with PBE FRS-42 Prospective Financial Statements and are consistent with GAAP. The purpose of the forecast financial statements is to facilitate Parliament’s consideration of the appropriations for, and planned performance of the department. Use of this information for other purposes may not be appropriate. Readers are cautioned that actual results are likely to vary from the forecast information presented and that the variations may be material.

Authorisation Statement

The forecast figures reported are those for the year ending 30 June 2015 included in BEFU 2014. These were authorised for issue on 15 April 2014 by the Chief Executive who is responsible for the forecast financial statements as presented. The preparation of these financial statements requires judgements, estimations, and assumptions that affect the application of policies and reported amounts of assets and liabilities, and income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual financial results achieved for the period covered are likely to vary from the information presented, and the variations may be material.

It is not intended that the prospective financial statements will be updated subsequent to presentation.

Back to top

Revenue

The Ministry derives revenue from the provision of outputs to the Crown and for services to third parties. Such revenue is recognised when earned and is reported in the financial period to which it relates. Revenue is measured at the fair value of the consideration received or receivable.

Capital charge

The capital charge is recognised as an expense in the period to which it relates.

Foreign currency transactions

Foreign currency transactions are translated into New Zealand dollars using the exchange rates prevailing at the dates of the transactions. The Ministry does not enter into foreign exchange contracts. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year- end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the surplus or deficit.

Operating leases

An operating lease is where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item. Lease payments under an operating lease are charged as expenses on a straight-line basis in the period in which they are incurred. Financial instruments

The Ministry is party to financial instruments as part of its normal operations. These financial instruments include cash and bank balances, and accounts receivable and payable. Financial assets and financial liabilities are initially measured at fair value plus transaction costs, unless they are carried at fair value through profit or loss, in which case the transaction costs are recognised in the statement of comprehensive income.

Back to top

Cash and cash equivalents

Cash and cash equivalents include cash on hand and funds on deposit with banks, and are measured at their face value.

Debtors, prepayments and other receivables

Short-term debtors, prepayments and other receivables are recorded at their face value, less any provision for impairment.

Impairment of a receivable is established when there is objective evidence that the Ministry will not be able to collect amounts due according to the original terms of the receivable. Indicators that the debtor is impaired include significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy, and default in payments.

The amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted using the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of comprehensive income. Overdue receivables that are renegotiated are reclassified as current (not past due).

Property, plant and equipment

Property, plant and equipment consist of leasehold improvements, furniture and fittings, office equipment, and the Milford Sound/Piopiotahi Aerodrome.

Property, plant and equipment is shown at cost or valuation, less accumulated depreciation and impairment losses.

Individual assets costing more than $2,000 are capitalised. Assets of a lower cost are capitalised if they are part of a group, or if they are attractive, to improve the control over them.

Back to top

Additions

The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential associated with the item will flow to the Ministry and the cost of the item can be measured reliably.

In most instances, an item of property, plant and equipment is recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition.

Disposal

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are included in the statement of comprehensive income. When revalued assets are sold, the amounts included in the property, plant and equipment revaluation reserves in respect of those assets are transferred to taxpayers’ funds.

Revaluation

The Ministry does not revalue its assets, except for the Milford Sound/Piopiotahi Aerodrome, which is stated at optimised depreciated replacement cost as determined by an independent registered valuer. It is revalued at least every 5 years. Additions between revaluations are recorded at cost.

The net revaluation result is credited or debited to the asset revaluation reserve for the aerodrome. Where a revaluation results in a debit balance in the revaluation reserve, the debit balance will be expensed in the statement of comprehensive income.

The net revaluation result is credited or debited to other comprehensive income and accumulated to an asset revaluation reserve in equity for the aerodrome. Where this would result in a debit balance in the asset revaluation reserve, this balance is not recognised in other comprehensive income but is recognised in the surplus or deficit. Any subsequent increase on revaluation that reverses a previous decrease in value recognised in the surplus or deficit will be recognised first in the surplus or deficit up to the amount previously expensed, and then recognised in other comprehensive income.

Subsequent costs

Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to the Ministry and the cost of the item can be measured reliably.

Depreciation

Depreciation is provided on a straight-line basis on all property, plant and equipment, at rates that will write off the cost (or valuation) of the assets to their estimated residual values over their useful lives.

Back to top

The useful lives and associated depreciation rates of major asset classes have been estimated as follows:

Asset class

Useful Life

Depreciation Rate

Furniture and fittings

10 years

10% per annum

Leasehold improvements

12 years

8.3% per annum

Milford Sound/ Piopiotahi Aerodrome

3-100 years

1-33.3% per annum

Plant and equipment

2-10 years

10-50% per annum

Leasehold improvements are depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is the shorter.

Capital work in progress is not depreciated. The total cost of this work is transferred to the relevant asset category on the completion of the project and then depreciated.

The residual value and useful life of an asset is reviewed, and adjusted if appropriate, at each financial year end.

Back to top

Intangible assets

Software acquisition and development

Individual assets costing more than $2,000 are capitalised. Assets of a lower cost are capitalised if they are part of a group, or if they are attractive, to improve the control over them.

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.

Costs associated with maintaining computer software are recognised as an expense when incurred. Costs that are directly associated with the development of software for internal use by the Ministry are recognised as an intangible asset. Direct costs include the software development, employee costs and an appropriate portion of relevant overheads.

Staff training cost is recognised as an expense when incurred.

Amortisation

The carrying value of an intangible asset with a finite life is amortised on a straight-line basis over its useful life. Amortisation begins when the asset is available for use and ceases at the date that the asset is derecognised. The amortisation charge for each period is recognised in the statement of comprehensive income.

The useful lives and associated amortisation rates of major classes of intangible assets have been estimated as follows:

Asset class

Useful Life

Depreciation Rate

Software

3-5 years

20-33.3% per annum

Capital work in progress is not amortised. The total cost of this work is transferred to the relevant asset category on the completion of the project and then amortised.

Back to top

Impairment of non-financial assets

An intangible asset that is not yet available for use at the balance sheet date is tested annually for impairment.

Property, plant and equipment and intangible assets that have a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell, and value in use.

Value in use is the depreciated replacement cost for an asset where the future economic benefits or service potential of the asset are not primarily dependent on the asset’s ability to generate net cash inflows and where the entity would, if deprived of the asset, replace its remaining future economic benefits or service potential.

If an asset’s carrying amount exceeds its recoverable amount, the asset is impaired and the carrying amount is written down to the recoverable amount. For revalued assets, the impairment loss is recognised against the revaluation reserve for that class of asset. Where that results in a debit balance in the revaluation reserve, the balance is recognised in the statement of comprehensive income.

For assets not carried at a revalued amount, the total impairment loss is recognised in the statement of comprehensive income.

The reversal of an impairment loss on a revalued asset is credited to the revaluation reserve. However, to the extent that an impairment loss for that class of asset was previously recognised in the statement of comprehensive income, a reversal of the impairment loss is also recognised in that statement.

For assets not carried at a revalued amount, the reversal of an impairment loss is recognised in the statement of comprehensive income.

Back to top

Creditors and other payables

Short-term creditors and other payables are recorded at their face value.

Employee entitlements

Employee entitlements include salaries and wages accrued up to balance date, annual leave earned but not yet taken at balance date, retirement and long service leave entitlements, and sick leave.

Presentation of employee entitlements

Sick leave, annual leave, vested long service leave, and non-vested long service leave and retirement gratuities expected to be settled within 12 months of balance date are classified as current liabilities. All other employee entitlements are classified as non-current liabilities.

Current liability for employee entitlements

Employee entitlements that the Ministry expects to be settled within 12 months of balance date are measured at nominal values based on accrued entitlements at current rates of pay.

The Ministry recognises a liability for sick leave to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that the Ministry anticipates it will be used by staff to cover those future absences.

The Ministry recognises a liability and an expense for bonuses where it is contractually obliged to pay them, or where there is a past practice that has created a constructive obligation.

Long-term employee entitlements

Employee benefits that are due to be settled beyond 12 months after the end of the reporting period in which the employee renders the related service, such as long service leave and retirement leave, are calculated on an actuarial basis. The calculations on likely future entitlements are based on:

  • years of service
  • years to entitlement
  • the likelihood that staff will reach the point of entitlement
  • contractual entitlements information
  • the present value of the estimated future cash flows.

Expected future payments are discounted using market yields on government bonds at balance date with terms to maturity that match, as closely as possible, the estimated future cash outflows for entitlements. The inflation factor is based on the expected long-term increase in remuneration for employees. The discount rates used are detailed below and are provided by the Treasury.

 

2014/15

2015/16

Outyears

Discount rate %

3.70

4.04

5.50

Salary inflation factor %

2.00

3.50

3.50

Defined contribution superannuation schemes

Obligations for employer contributions to the State Sector Retirement Savings Scheme, Kiwisaver and the Government Superannuation Fund are accounted for as defined contribution schemes and are recognised as an expense in the statement of comprehensive income as incurred.

Back to top

Equity

Equity is the Crown’s investment in the Ministry and is measured as the difference between total assets and total liabilities. Equity is disaggregated and classified as taxpayers funds, memorandum accounts and property revaluation reserves.

Memorandum accounts

Memorandum accounts reflect the cumulative surplus/ (deficit) on those departmental services provided that are intended to be fully cost recovered from third parties through fees, levies, or charges. The Ministry does not provide such services and so does not maintain memorandum accounts.

Property revaluation reserves

The reserve relates to the revaluation of Milford Sound/ Piopiotahi Aerodrome to fair value.

Provisions

The Ministry recognises a provision for future expenditure of uncertain amount or timing when:

  • there is a present obligation (either legal or constructive) as a result of a past event
  • it is probable that an outflow of future economic benefits will be required to settle the obligation
  • and a reliable estimate can be made of the amount of the obligation.

Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as a finance cost.

Back to top

Goods and services tax (GST)

All items in the financial statements, including appropriation statements, are stated exclusive of GST, except for receivables and payables, which are stated on a GST inclusive basis. Where GST is not recoverable as input tax, then it is recognised as part of the related asset or expense.

The net amount of GST recoverable from, or payable to, the Inland Revenue Department is included as part of receivables or payables in the statement of financial position.

The net GST paid to, or received from the Inland Revenue Department, including the GST relating to investing and financing activities, is classified as an operating cash flow in the statement of cash flows.

Commitments and contingencies are disclosed exclusive of GST.

Income tax

Government departments are exempt from income tax as public authorities. Accordingly, no charge for income tax has been provided for.

Statement of cash flows

Cash means cash balances on hand and held in bank accounts.

Operating activities include cash received from all income sources of the Ministry and record the cash payments made for the supply of goods and services.

Investing activities are those activities relating to the acquisition and disposal of non-current assets.

Financing activities comprise the payment to the Crown of the operating surplus achieved by the Ministry and any capital withdrawals or investments by the Crown.

Back to top

Commitments

Expenses yet to be incurred on non-cancellable contracts that have been entered into on or before balance date are disclosed as commitments to the extent that there are equally unperformed obligations.

Contingent liabilities and contingent assets

Contingent liabilities and contingent assets are disclosed at the point at which the contingency is evident.

Statement of cost accounting policies

The Ministry has determined the cost of outputs using the cost allocation system outlined below.

Types of Cost

Direct costs are those costs directly attributed to an output. Indirect costs are those costs that cannot be identified with a specific output in an economically feasible manner.

Method of assigning direct costs to outputs

Direct costs, such as consultants, are charged to outputs on the basis of the cost of the service provided.

Personnel costs are allocated to outputs based on the time recording data from the Ministry’s time recording system.

Method of assigning indirect costs to outputs

Indirect costs are allocated to outputs through a two- stage process. The costs are assigned to cost centres within the Ministry, and then the costs are allocated to outputs on the basis of the direct staff time attributable to the outputs of that cost centre.

Back to top

Critical accounting estimates and assumptions

In preparing these financial statements, the Ministry has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Retirement and long service leave

Note 13 provides an analysis of the exposure in relation to estimates and uncertainties surrounding retirement and long service leave liabilities.

Useful lives of property, plant and equipment and intangible assets

Useful lives of assets are determined by the Ministry based on its best assessment of the asset’s use.

Critical judgements in applying the Ministry’s accounting policies

Management has exercised the following critical judgements in applying the Ministry’s accounting policies for the year ended 30 June 2014.

Operating lease

Determining whether a lease agreement is a finance lease or an operating lease requires judgement as to whether the agreement transfers substantially all the risks and rewards of ownership to the Ministry. Judgement is required on various aspects that include, but are not limited to, the fair value of the leasedasset, the economic life of the leased asset, whether or not to include renewal options in the lease term and determining an appropriate discount rate to calculate the present value of the minimum lease payments. Classification as a finance lease means the asset is recognised in the statement of financial position as property, plant and equipment. With an operating lease, no such asset is recognised.

The Ministry has exercised its judgement on the appropriate classification of accommodation leases, and has determined the lease arrangements to be operating lease

Back to top

NOTE 2: Revenue Crown

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

28,751

Policy advice and related outputs multi class output appropriation

31,855

31,143

31,858

-

-

Policy advice and related outputs multi category appropriation

-

-

-

30,843

1,135

Search and rescue activity co-ordination PLA

1,087

1,136

1,136

1,201

429

Fuel excise duty refund administration

429

429

700

429

30,315

Total revenue Crown

33,371

32,708

33,694

32,473

Back to top 

NOTE 3: Other revenue

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

45

From Crown entities

70

-

83

-

246

Other recoveries

209

230

278

230

291

Total other revenue

279

230

361

230

Back to top

NOTE 4: Personnel expenses

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

14,348

Salary and wages

15,635

16,100

16,100

16,300

512

Employer contributions to defined contribution schemes

556

635

560

560

1

Annual leave

36

-

-

-

11

Long service leave

(37)

120

90

90

185

Retirement leave

(96)

125

90

90

1

Sick leave

(1)

-

-

-

446

Other personnel costs

354

609

960

680

15,504

Total personnel expenses

16,447

17,589

17,800

17,720

Employer contributions to defined contribution plans include contributions to State Sector Retirement Savings Scheme, KiwiSaver, and the Government Superannuation Fund.

Back to top

NOTE 5: Other operating expenses

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

4,594

Consultant, research and legal expenses

6,783

5,650

6,509

5,578

2,161

Other operating expenses

2,667

1,727

1,652

1,615

1,440

Operating lease payments

1,476

1,580

1,580

1,580

1,931

Information technology expenses

1,677

1,700

1,700

1,700

174

Advertising and publicity

237

200

200

200

76

Fee to Audit NZ for the financial statement audit

78

83

83

86

9

Fee to Audit NZ for project assurance services

10

-

-

-

-

Loss on disposal of assets

1

-

-

-

10,385

Total other operating expenses

12,929

10,940

11,724

10,759

 Back to top

NOTE 6: Contractual payments to Crown Entities

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

 

NZ Transport Agency:

       

899

For rules programme activity

899

899

899

899

429

For fuel excise duty refund activity

429

429

700

429

1,200

Civil Aviation Authority: for rules programme activity

1,200

1,200

1,200

1,200

899

Maritime NewZealand: for rules programme activity

899

899

899

899

3,427

Total contractual payments to Crown entities

3,427

3,427

3,698

3,427

 Back to top

NOTE 7: 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 2014 was 8 percent (2013: 8 percent).

NOTE 8: Equity

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

 

Taxpayers funds

       

2,355

Balance at 1 July

1,947

1,947

1,947

1,947

(408)

Capital withdrawal

-

-

-

-

1,947

Balance 30 June

1,947

1,947

1,947

1,947

 

Property revaluation reserves

       

761

Balance at 1 July and 30 June

761

761

761

761

2,708

Total equity

2,708

2,708

2,708

2,708

The Ministry has no memorandum accounts in respect of operational services provided to third parties.

Back to top

NOTE 9: Debtors, prepayments and other receivables

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

-

Due from the Crown

3,047

36

-

-

113

GST refund

-

-

-

-

15

Other receivables

21

20

15

15

128

Total debtors, prepayments and other receivables

3,068

56

15

15

The carrying value of debtors, prepayments and other receivables approximates their fair value. No debtor is past due, and the Ministry has assessed that no provision for impairment is required.

Back to top

NOTE 10: PROPERTY, PLANT AND EQUIPMENT

 

Leasehold improvements
$000

Plant and equipment
$000

Milford Sound/ Piopiotahi Aerodrome
$000

Furniture and fittings
$000

Total
$000

Main Estimates
$000

Supplementary Estimates
$000

Cost or valuation

             

Balance at 1 July 2012

2,170

1,482

1,345

842

5,839

5,833

5,833

Additions

-

145

-

-

145

126

144

Disposals

-

(364)

-

-

(364)

(494)

(356)

Balance at 30 June 2013

2,170

1,263

1,345

842

5,620

5,465

5,621

Balance at 1 July 2013

2,170

1,263

1,345

842

5,620

5,465

5,621

Additions

-

111

-

3

114

100

100

Disposals

-

(66)

-

(12)

(78)

-

-

Balance at 30 June 2014

2,170

1,308

1,345

833

5,656

5,565

5,721

Accumulated depreciation

             

Balance at 1 July 2012

1,333

1,006

65

563

2,967

2,960

2,960

Depreciation expense

217

141

28

80

466

478

466

Disposals

-

(282)

-

-

(282)

(494)

(274)

Balance at 30 June 2013

1,550

865

93

643

3,151

2,944

3,152

Balance at 1 July 2013

1,550

865

93

643

3,151

2,944

3,152

Depreciation expense

149

159

25

77

410

507

404

Disposals

-

(66)

-

(10)

(76)

-

-

Balance at 30 June 2014

1,699

958

118

710

3,485

3,451

3,556

Carrying amounts

             

At 1 July 2012

837

476

1,280

279

2,872

2,873

2,873

At 30 June and 1 July 2013

620

398

1,252

199

2,469

2,521

2,469

At 30 June 2014

471

350

1,227

123

2,171

2,114

2,165

Forecast at 30 June 2015 (unaudited)

341

334

1,207

55

1,937

 

 Back to top

Milford Sound/Piopiotahi Aerodrome was valued at 31 March 2010 by an independent valuer, G Hughson (BE,MIPENZ), of Maunsell Limited. This valuation was done on the basis of the aerodrome’s optimised depreciated replacement cost.

NOTE 11: Intangible assets

 

Crash analysis system
$000

Other software
$000

Total
$000

Main Estimates
$000

Supplementary Estimates
$000

Cost

         

Balance at 1 July 2012

408

1,605

2,013

2,421

1,959

Additions

-

99

99

374

145

Disposals

(408)

(54)

(462)

(408)

(408)

Balance at 30 June 2013

-

1,650

1,650

2,387

1,696

Balance at 1 July 2013

-

1,650

1,650

2,387

1,696

Additions

-

99

99

410

410

Balance at 30 June 2014

-

1,749

1,749

2,797

2,106

Accumulated depreciation

         

Balance at 1 July 2012

408

1,223

1,631

2,039

1,578

Amortisation expense

-

247

247

293

247

Disposals

(408)

(54)

(462)

(408)

(408)

Balance at 30 June 2013

-

1,416

1,416

1,924

1,417

Balance at 1 July 2013

-

1,416

1,416

1,924

1,417

Amortisation expense

-

216

216

225

209

Balance at 30 June 2014

-

1,632

1,632

2,149

1,626

Carrying amounts

         

At 1 July 2012

-

382

382

382

381

At 30 June and 1 July 2013

-

234

234

463

279

At 30 June 2014

-

117

117

648

480

Forecast at 30 June 2015 (unaudited)

-

481

481

 

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

The Crash analysis system assets were transferred to the NZ Transport Agency on 1 July 2012.

Work in progress

The total amount of software in the course of construction is $11,590 (2012/13: $45,542).

Back to top

NOTE 12: Creditors and other payables

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

783

Accrued expenses

1,502

1,000

1,000

1,000

924

Trade creditors

870

154

583

528

-

GST payable

264

32

-

-

-

Revenue received in advance

19

-

-

-

1,707

Total creditors and other payables

2,655

1,186

1,583

1,528

Creditors and other payables are non-interest bearing and are normally settled on the 20th of the next month, therefore the carrying value of creditors and other payables approximates their fair value.

Back to top

NOTE 13: Employee entitlements

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

 

Current liabilities

       

375

Accrued salary

498

500

500

555

916

Annual leave

952

1,278

915

915

106

Long service leave

104

100

100

100

79

Retirement leave

149

58

86

86

32

Sick leave

31

31

31

31

1,508

Total of current portion

1,734

1,967

1,632

1,687

 

Non-current liabilities

       

161

Long service leave

126

130

150

150

988

Retirement leave

822

848

999

999

1,149

Total of non-current portion

948

978

1,149

1,149

2,657

Total provision for employee entitlements

2,682

2,945

2,781

2,836

Accrued salary arises from the fortnightly paydays which do not equate to the year end. Days owed at 30 June 2014: 8 (2012/13:7).

Annual leave reflects the entitlement yet to be taken by staff.

Long service and retirement leave obligations are determined on an actuarial basis using several assumptions. Two key assumptions used are the discount rate and the salary inflation factor. Any changes in this assumption will impact on the carrying amount of the liability. The discount rate and inflation factors used are detailed in the accounting policies.

If the discount rate were to differ by 1% from the Ministry’s estimates, with all other factors held constant, the estimated carrying amount of the liability would be $80,000 higher/ lower.

If the inflation factor were to differ by 1% from the Ministry’s estimates, with all other factors held constant, the estimated carrying amount of the liability would be $98,000 higher/ lower.

Back to top

NOTE 14: Provision for lease make-good

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

660

Balance at 1 July

684

700

684

684

24

Discount unwind (Finance cost)

4

-

-

-

684

Balance at 30 June

688

700

684

684

At the expiry of the lease term for its leased premises, the Ministry is required to make good any damage caused to the premises and to remove any fixtures or fittings installed by the Ministry. The Ministry may have the option to renew the lease, which impacts on the timing of any cash outflows.

The finance cost reflects the annual cost incurred in making this provision and is based on an actuarial determination.

Back to top

NOTE 15: Reconciliation of the net suplus in the statement of comprehensive income with net cash flows from operating activities in the statement of cash flows for teh year ended 30 June 2014

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

320

Net surplus

-

-

-

-

 

Add non-cash items

       

466

Depreciation of property, plant and equipment

410

507

404

368

247

Amortisation of intangible assets

216

225

209

209

-

Loss on disposal of assets

1

-

-

-

713

Total of non-cash items

627

732

613

577

 

Add/(deduct) movements in working capital items

       

2,581

(Increase)/decrease in debtors and other receivables

(2,940)

-

-

-

(2,236)

Increase/(decrease) in payables and provisions

952

-

-

-

209

Increase/(decrease) in employee entitlements

25

-

-

-

554

Net movements inworking capital items

(1,963)

-

-

-

1,587

Net cash flowsfrom operating activities

(1,336)

732

613

577

Back to top

NOTE 16: Financial instruments

The Ministry’s activities expose it to a variety of financial instrument risks, including market risk, credit risk, and liquidity 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 obligation to the Ministry, causing the Ministry to incur a loss. In the normal course of its business, credit risk arises from debtors, deposits with banks, and derivative financial instrument assets. The Ministry is only permitted to deposit funds with Westpac, a registered bank, and enter into foreign exchange forward contracts with the New Zealand Debt Management Office. These entities have high credit ratings. For its other financial instruments, the Ministry does not have significant concentrations of credit risk.

The Ministry’s maximum credit exposure for each class of financial instrument is represented by the total carrying amount of cash and cash equivalents, net debtors, and derivative financial instrument assets. There is no collateral held as security against these financial instruments, including those instruments that are overdue or impaired.

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 draw downs from the New Zealand Debt Management Office. The Ministry maintains a target level of available cash to meet liquidity requirements.

The table below analyses the Ministry’s financial liabilities that will be settled, based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows, based on the liabilities in note 12.

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

1,707

Less than 6 months (note 12)

2,655

1,186

1,583

1,528

-

Greater than 6 months

-

-

-

-

Market risk

Interest rate risk

Interest rate risk is the risk that the fair value of a financial instrument will fluctuate, or the cash flows from a financial instrument will fluctuate, due to changes in market interest rates.

The Ministry has no exposure to interest rate risk because it has no interest-bearing financial instruments.

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Ministry has no exposure to currency risk because it does not enter into foreign exchange forward contracts.

Back to top

NOTE 17: Categories of financial instruments

The carrying amount of the financial assets and financial liabilities in each of the NZ IAS 39 categories are as follows:

Actual
2012/13
$000

 

Actual
2013/14
$000

Main Estimates
2013/14
$000

Supplementary Estimates
2013/14
$000

Unaudited Forecast
2014/15
$000

 

Loans and receivables

       

5,200

Cash and cash equivalents

3,365

4,721

5,096

5,323

128

Debtors, prepayments and other receivables

(note 9)

3,068

20

15

15

 

Financial liabilities measured at amortised cost

       

1,707

Creditors and other payables (note 12)

2,655

1,186

1,583

1,528

Back to top

NOTE 18: Related party information

All related party transactions have been entered into on an arms-length basis. The Ministry is a wholly-owned entity of the Crown.

Significant transactions with government-related entities

The Ministry has been provided with funding from the Crown of $33.4 million (2013: $30.3 million), for specific purposes as set out in the scopes of the relevant government appropriations.

Revenue was also received from other entities controlled by the Crown as described in note 3. This was to reimburse the Ministry for costs.

In conducting its activities, the Ministry is required to pay various taxes and levies (such as GST, PAYE, and ACC levies) to the Crown and entities related to the Crown. The payment of these taxes and levies, other than income tax, is based on the standard terms and conditions that apply to all tax and levy payers. The Ministry is exempt from paying income tax.

The Ministry also purchases goods and services from entities controlled, significantly influenced, or jointly controlled by the Crown. Purchases from these government-related entities for the year ended 30 June 2014 totalled $0.46 million (2013: $0.45 million) - electricity from Genesis Energy $0.05 million (2013: $0.04 million), air travel from Air New Zealand $0.40 million (2013: $0.40 million) and postal services from New Zealand Post $0.01 million (2013: $0.01 million).

The Ministry also purchases transport outputs from other transport entities controlled by the Crown. These transactions are detailed in note 6 of these financial statements.

Transactions with key management personnel

During 2013/14 and 2012/13, the Ministry did not enter into any transactions with key management personnel or their close families.

Key management personnel compensation

Actual
2012/13
$000

 

Actual
2013/14
$000

1,659

Salaries and other short-term employee benefits

1,691

-

Termination benefits

82

1,659

Total key management personnel compensation

1,773

At 30 June 2014, key management personnel includes the Chief Executive and the five members (2013: five members) of the senior management team.

Back to top

NOTE 19: Capital management

The Ministry’s capital is its equity which comprises taxpayers funds and property revaluation reserves. Equity is represented by net assets.

The Ministry manages its revenues, expenses, assets, liabilities and general financial dealings prudently. The Ministry’s equity is largely managed as a by-product of managing income, expenses, assets, liabilities and compliance with the government Budget process and the Treasury instructions.

The objective of managing the Ministry’s equity is to ensure the Ministry effectively achieves the goals and objectives for which it has been established, whilst remaining a going concern.

Back to top

NOTE 20: Major changes to the departmental output budgets

Minor changes were made to the Ministry’s departmental output budgets for the year 2013/14 by way of the Supplementary Estimates. Explanations for the changes were outlined in the 2013/14 Supplementary Estimates (page 757 onwards). The net changes appear in thefollowing table.

Appropriations for departmental output expenses

Main Estimates
$000

Supplementary Estimates
$000

Cumulative Vote
$000

Policy advice and related outputs - multi class output appropriation (MCOA)

31,143

798

31,941

Fuel excise duty refund administration

429

271

700

Milford Sound/ Piopiotahi Aerodrome operation and administration

230

48

278

Search and rescue activity co-ordination PLA

1,136

-

1,136

Total departmental appropriations

32,938

1,117

34,055

The adjustments to the appropriations were:

  • $0.715 million carried forward from 2012/13 for policy advice projects – the largest being the Clifford Bay ferry terminal output within Policy advice;
  • additional funding of $0.131 reflectingrevenue earned from non-Crown parties; and
  • reprioritisation of $0.271 million from a non-departmental output to the refund administration output class.

Back to top

NOTE 21: Explanation of major variances between actual and budget figures

The significant variances between the actual results and the figures included in the Supplementary Estimates of Appropriations for the year ended 30 June 2014 are:

Statement of comprehensive income

Revenue Crown

The actual revenue Crown figure was $0.3 million below the Supplementary Estimates. This amount was not drawn because it was not required to fund expenditure.

Expenditure

Personnel expenditure was $1.3 million below the Supplementary Estimates due to turnover and vacancies.

Other operating expenses were $1.2 million over the Supplementary Estimates due to additional legal costs for the Waitangi Tribunal hearing in relation to the Rena grounding.

Statement of financial position

Assets

Cash and cash equivalents were $1.7 million lower than the Supplementary Estimates due mainly to debtors being higher than anticipated.

Debtors, prepayments and other receivables

Debtors were $3.0 million higher than the Supplementary Estimates. Drawing of some Crown revenue was deferred because there was sufficient cash available to meet the Ministry’s needs in the short term.

NOTE 22: Events after balance sheet date

No event has occurred since the end of the financial period (not otherwise dealt with in the financial statements) that has affected, or may significantly affect, the Ministry’s operations or state of affairs for the year ended 30 June 2014.

<<Previous  |  Contents  |  Next>>